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Q: Hi, I am 70y old and on pension. My SMSF owns a vacant land and I want to build a house on it to live in.
1. Is this OK with the Superannuation rules?
2. Do I need to transfer the property from my SMSF to myself to be able to do this?
3. Transferring it from SMSF to myself I understand would attract a stamp duty. If so, how much stamp duty do I have to pay?
Thank you.
A: Hi Jocelyn,
James has hit the nail on the head here: get advice on what you CAN and CANNOT do.
you can read up on rules and get close to an answer, but the risks for you here are potentially huge.....if the ATO decides you have breached the sole purpose test, you could be up for a large hiding on tax!!!
Also the consequences of drawing amounts out of super might have adverse consequences for you and your pension.....
best thing for you right now is to seek out the assistance of someone who has a firm grip on the legislation, and has experience in dealing with retirees who own property inside a SMSF.....because its a minefield
good luck
BC
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Q: I have investment property in my name worth 500k. I wish to build a duplex and borrow in my wife’s name. When we sell both duplexes, will we be able to split the Capital Gains Tax based on our individual borrowings?
A: Yeah, nah!!! Sorry Jaydeep, Andrew is on the money here.
And he is also on the money about seeing an accountant, but what I would advise is go and see one NOW whilst you are planning this venture. You will have a much better idea of how things will pan out as far as CGT on disposal (when you sell) as well as the short-term tax implications for both yourself and your wife.
Also Also you should consider a wide range of tax planning and investment planning options available to you to
a) minimise tax now
b) manage tax in the future
c) maximise your net wealth over time
d) manage risk
you need a master plan mate, and investment properties are only one part of the puzzle
best thing you can do for yourself is find a good CA or CPA who can help you with a heap of these things.
good luck
bc
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Q: I have $350,000 in super and thinking of using to fund a property development in Brisbane where I can buy the property, move the existing Queenslander to own side and create space for two townhouses. The sale price is around $800,000 and I will need about $500,000 to build. I’m 53, not married, no kids and earn $180k a year. Own my own home and have an unencumbered investment property valued at $600,000. The idea would be to sell the property in Brisbane is 5 years to help fund retirement. Is this a good idea ?
A: Hi all. Here is my opinion.
the ATO has a burr under it's saddle about LRBA and eventually I expect it will get legislated out of super altogether
In the meantime you can expect ALL of the expenses associated with running a SMSF to double.....accounting, audit, ASIC, not to mention the pineappling you're gonna get in setup fees and legals to get the bare trust up and running
Get some FIRM quotes on running your SMSF AND BARE TRUST. Do some hard calculations on potential growth in property prices in brisvegas. (Hint: I bet it's WAYYYYY less than your planner is working on). Do best, average and worst case scenario.......
Then factor in the pain and suffering associated with the almost inevitable ATO audit......it's significant
Tgen compare all of that with what you will achieve by leaving your super right where it is.....and look at a long term plan to fund your retirement that doesn't make so many people rich at your expense......
Good luck
Bc
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Q: We currently owe $682,000 to ANZ and the rate is 4.19%. My income is $130,000 and my wife’s is $95,000. We have 3 kids under 10 but don’t have any other debts. The house would be valued at around $1.3M and we are thinking of refinancing. What’s the best rate could we get?
A: I bet someone could get you 1.9% Sam.
But the terms and conditions would have you tied up like a Christmas turkey
Talk to a broker. Make them find the loan tgat is best suited for YOUR situation. It's never just about chasing the lowest rate.
I have a list of brokers I can refer you to......or sit tight....one of the brokers here will respond pretty soon I reckon!!!!
Happy hunting
Bc
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Q: I’m a first home buyer and want to know what deposit I’d need to buy a unit around $900,000 and could I still access the first home buyers grant as it wouldn’t be a brand new unit, Thanks
A: Hi Nathan
www.service.nsw.gov.au/transaction/apply-first-home-buyers-assistance-scheme
I think you fall at the first hurdle mate: the value of the home needs to fall between $650k - $800k
www.revenue.nsw.gov.au/grants-schemes/first-home-buyer/assistance-scheme
but I think you will get the stamp duty concession which is better than a poke in the eye with a burnt stick, as my dear old Dad used to say.
I am sure that there are loads of people out there who have much better knowledge than I do, but the links I have added are straight from Service NSW which is the go to place for this scheme.
cheers
BC
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Q: We have a 108 acre farm in Qld which is registered for GST and has been in steady operation for 12 years as a beef cattle farm. We are planning to sell the farm and understand that GST will be payable unless we sell it to another party who wants to carry on farming. We are in an area where the lifestyle buyer will probably be the more likely buyer so we are wondering about ways to get around this. If we wind up the partnership and sell all the cattle and do not operate as a farm for say 6 months to a year and then sold to a private buyer, would the sale be GST exempt?
A: Hello Glory B,
short answer is yes GST is going to be payable on the sale if you cant manage a going concern sale.
but its probably not going to deter any developers, because they will simply claim the GST back so the net cost to them is going to be net of GST anyway
and either way, you will end up no worse off....if you sell with GST, you get to keep the other 10/11th of the proceeds, which would be exactly the same as if you sold as GST free going concern.
If it is a "lifestyle" buyer, the chances are they will want to run some cattle, grow some crop, do something.....so the GST free going concern option may still be on the table.......but they are paying the GST, you need to be able to stand your ground on price to say $XXXX PLUS GST if applicable........
and like AJ has stated, get some advice on this.....its too costly to get wrong!!
cheers
BC
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Q: SMSF. I have worked at 2 jobs in the beginning of 2017 - 3 days a weeks a Permanent employee, the other job doing odd jobs as self employed.
I stopped the odd job role in 2017
Under the superannuation rules is this ceasing of an employment arrangement, yet still being employed as a permanent part time worker, sufficient to move me into retirement mode for my SMSF fund?
If you can locate and include any references it would be appreciated.
I am 63 years of age.
A: The short answer to this is most likely yes.
the longer answer is go and see your accountant and discuss it with him/her!!
there are so many ways for you to shoot yourself in the foot here it is absolutely in your best interests to talk to someone who understands not only the legislation, but also YOUR specific circumstances.
because just because you CAN do something, doesnt necessarily mean you should do it. There are many potential flow on effects from commencing a pension, and you need to be across them all.
It seems you have a SMSF. If you use an accountant to assist you with it, then talk to them. If you use one of those bottom-feeding el-cheapo online snake-oil peddling super fund providers that charge you sweet FA and give you a "free" audit because you have signed up to one of their investment "platforms" which pays them a massive commission which you never knew about......run a mile. They are NOT there to assist you in any way shape or form.
any way you cut this up Ian, you need specialist advice from someone who has the skills to help and the integrity not to shaft you in the process. So be very picky about who you use:)
good luck
'
BC
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Q: As a builder using non-GST-registered contractors, do I add GST to the principal (before margin) when charging the client? Or does the client not pay GST for that service, as the contractor is exempt?
e.g.
Scenario A:
Contractor GST exempt -$100
Margin 15% - $15
GST - $11.50
Total - $126.50
or, Scenario B:
Contractor GST exempt -$100
Margin 15% - $15
GST - $1.50
Total - $116.50
A: who is paying the contractor??? It sounds like you are engaging the subbie, and then you are charging the client.
On that basis the client is not paying for the subbie, they are paying you. And you are registered for GST, so they pay GST on your invoice. All of the invoice, not some of it.
and then you will claim GST on those expenses from subbies that you pay ......but only claim GST on subbies that are registered for GST and provide a valid GST invoice.
EG
subbie 1 costs you $10,000 (not registered for GST)
subbie 2 costs you $11,000 (including $1,000 GST)
total net cost to you is $20,000
you claim a GST credit of $1,000 in your BAS
you add your margin of (say) 25% to the cost
cost $20,000
margin $4,000
invoice to client $24,000+GST of $2,400 = $26,400
you include $2,400 GST payable in your BAS
net profit to you is $4,000
hope this helps
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Q: Just started my own business and wondering if there a rating system or platform where I can find a good accountant. There’s only two of us in the business but we will be looking to expand in the coming months with a number of new contracts being negotiated. Any help would be great
A: Hi Demi,
WARNING!!!! WARNING!!! DANGER!!!!! DANGER!!!!
well, maybe you should be alarmed and maybe not.
If you have already started a business jointly with someone else and you DONT already have an accountant, you may need more help than you think. There is a bucketload of stuff that you need to make sure is covered off, ranging from tax, risk management, conflict resolution, business structure, exit strategy, the list just goes on and on.
Here is my rating system: find a CA.
There is no course or training program that is more difficult to achieve than the CA Program. You have a much better chance of getting someone with a wider range of skills and more indepth knowledge with those two letters after their name.
CPA's are also very highly trained and I would not hesitate to go with a CPA if you are comfortable with them.
There are plenty of accounting types out there with qualifications ranging from a bachelors degree in accounting to nothing more than a brass shingle on the door. Ask them what they are actually trained in. I know plenty of "accountants"whose academic background is a diploma of farm management, or they started out life as a sales rep, or any number of other professions..... which are themselves honourable vocations.......but nigh on useless when you want to get tax and business advice. Its a funny profession in that you dont need to have a qualification in accounting to call yourself an accountant.
But the major accounting bodies (CAANZ and CPA Australia) have very high standards......so start there.
And remember, if you dont "click"find someone else. You need to be confident that you can communicate with your bean counter, so they need to be able to explain things to you effectively.
good luck
BC
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Q: I have been contracting to a business for 4 months and they want to extend the contact for 18 months but have requested 3 months’ notice period and a restraint clause. I’m not an employee and don’t feel comfortable about either but the income is very good. Is this considered normal?
A: Hi emily,'
I do the same thing with some subbies I use in my business. And I dont feel that its unreasonable......because the last thing I need to see is my goodwill being handed on a silver platter to a subcontractor.
the notice period thing is clearly for them to lock you in......it sounds like it should be a two way street, so maybe this will give you confidence that you wont be getting a "DCM"anytime soon either.
I dont think that anything you have mentioned is necessarily a bad thing at all.
cheers
BC
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Q: Do i need an ABN?
I have a full time job and a side job managing a website. I spend about 12 hours a month working on the website and was told to send him an ‘invoice’ so does this mean i am a contractor? I personally think it is a hobby but my friends said to open an ABN ‘just to be safe’. If so how do i declare this additional income when i don’t have an ABN.
Thanks
A: Gday Tony,
is your employer the same person you are doing your website management for???? If you are doing work for your employer but also as a subbie, that is going to smell a bit off to the ATO.......but that is really a matter for your boss, not you.
If you are a genuine subbie, and you DONT have an ABN, your client is required to withhold 47% of the payments and remit this to the ATO......that in itself is pretty good incentive for you to get yourself an ABN
IT consulting is next on the list to be subject to the Taxable Payments Reporting regime.....this is where your clients HAVE to report your details and the amounts paid to you to the ATO......its an integrity measure designed to catch people out who claim their business is a "hobby"
And I can give you a solid gold guarantee Tony: its not. When (not if) the ATO catches up with you, they will spank you HARD. And then hit you with penalties to encourage you to report ALL your income next time. So be warned mate, the ATO is becoming EXTREMELY adept at matching data, and IT professionals are very high on the ATO hit list.
In relation to your deductions, you will be also subject to the Personal Services Income rules.....where your deductions are limited to the same deductions as allowed for an employee......so the list of things you can and should claim as a tax deduction may not be as extensive as you might think!!!!
SOOOOOOO......................bite the bullet, make an appointment and go see someone with the skills and expertise to help you. In my experience IT gurus are extremely good at that white mans magic which makes computers work......but sometimes they try to fool themselves that they know enough to dodge a bit of tax with some IT smoke and mirrors. Trust me mate, the ATO is ALLLLL over every trick you can come up with, they have seen it all, and they have $130million EXTRA to splash on tax audits than they had 2 years ago.
Get yourself set up properly, find out what you CAN and CANNOT do, and then the outcome of an ATO audit will be much less painful than if you just wing it. Preferrably someone with the right letters after their name mate.....CA or CPA. It will cost you a bit for the advice, but it will save you bucketloads in the long run.
Please believe me, you WILL get someone who will tell you this: "ahhhhhh dont listen to that panic merchant Brendan Curran, I aint never seen an IT guy cop a full tax audit......so dont worry about that garbage he was banging on about" .............that person is living in the past. The ATO is gunning for individuals and micro businesses who are not doing the right thing. They have the tools. They have the technical expertise. And now they have an extra $130million to pay auditors to ruin your day. Its not a case of "IF"........its a case of "WHEN"
cheers
BC
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Q: There are three partners in the business, it’s a digital media business. I work in the business full time, one partner is part time and the other works a full time job but helps out every now and then. I am wanting to put a shareholders agreement together but the others are assisting on equal share each. I am finding this difficult as I’m doing 80% of the work and generating the little revenue we have and it has become a bit of a disincentive to work harder as the rewards are not commensurate with the effort and contribution. How do I handle the predicament respectfully so everyone feels it has been handled appropriately and we can maximise the opportunity? Thank you
A: G'Day Dale,
without trying to sound trite, the answer is to simply put in the same amount of hours as the other guys, and share in whatever shakes out of the tree.
This is very good example of why a clear written and signed partnership agreement is necessary. Saves on a bucketload of headaches......
as for what to do right now, I would stop any work and sit down with the other two to discuss the issues, thrash out a workable partnership agreement and see if you can get the business back on track.
You might find that the expectations of your business partners is such that you cant find a workable solution, and without an agreement as to how to manage differing contributions of labour and expertise, you are snookered. The standard division of partnership profit is equal shares. If the other guys dont agree to some sort of notional partners salary to compensate for your higher contribution of labour, then they have the right to demand an equal share
good luck
BC
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Q: I have only had my home loan for a couple of months so don’t know much about what happens when interest rates move. My loan is with NAB and I read they are reducing rates by 0.25%, does that mean my repayments will be lower and should I keep making the same repayments I do now?
A: Hi Liz,
depends on whether you are fixed or variable I suspect. If you used a mortgage broker, call them. Otherwise call the bank:)
cheers
bc
blog post
ATO SCAMS STILL GOING STRONG!!!!! And I missed my true calling........
I received one of those fake ATO Scam emails yesterday. At the end of the day it took me about 5 seconds to identify the fact it was a scam…..because the first thing they did was ...
Brendan Curran
6 years ago
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Q: The RBA has cut official interest rates to a new record low of 1.25 per cent.
Will the Banks and all other Lenders pass on the full rate cut for their borrowers?
A: nope.
I am tipping a rate INCREASE.......they will trot out the same tired old garbage about how the cost of money is soooooo high that they can hardly afford their $5m bonus' this year.
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Q: Hi, I’m looking at buying a business where the distribution base is contractors. I’ve had a looking at the contractors existing agreements and there is no mention of super entitlements which is a concern for me if I take it on and find out later that there should be. The contractors aren’t employees but should the business be paying their super?
A: Look up iCare Wages Definition Manual 2018. Look at "Deemed Workers".......this is what will determine how much pain you are in for.........
I refer to it as the "Duck Test": if it walks like a duck and quacks like a duck, chances are its a duck, right? Same goes for a deemed worker: if he turns up when you tell him to, and does what you want, and goes home when you tell him to, chances are he is a deemed worker, no matter what you call him in your tax return.
this is a workers comp definition, but the ATO have applied exactly the same tests as these for the purposes of Super Guarantee.
By the way, I give you a solid gold guarantee that if you get a super guarantee audit from the ATO, and they decide your subbies are "deemed workers"; you might as well put the kettle on for the workers comp audit because they will be coming to visit
Get some advice on this so you know what you are signing up to.
cheers
BC
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Q: I bought a franchise a few years back and it turned into a nightmare and a 200,000 debt. I finally got out of the contract and set up a new business but I don’t seem to be able to borrow money to help it grow. There is little equity in our home and what to ask what options we might have to get finance?
A: Hi Ian,
sorry to hear you had a bad experience with yout franchise. It is unfortunately all too common I fear.
In terms of obtaining finance, you are probably going to find yourself up against it here. Banks dont like risky investments, and most new businesses fail in the first couple of years. Hence, banks dont like lending to new businesses.
There are second and third tier lenders who have a greater appetite for "riskier" projects......but they generally charge a premium for the additional risk....
Best thing I can advise you is to find a good broker who deals in commercial finance. They should be able to advise you on who what and how much. But dont get ahead of yourself. You need to find out what you can borrow, and how much its going to cost you first.
good luck
BC
answered
Q: Hi,
Can someone explain franking credits and how they work?
A: http://frankingcredits.com.au/
Nice one Joel!!! also check out the diagram on this website, which helps a bit if you want to see a visual representation of the system.
Obviously, with a clear election result, the hype over refundable franking credits is going to die down......but I rather suspect that the issue of refundable franking credits is going to crop up again one day. It seems clear that Australia is one of the few countries that allows for the refund of imputation credits.
The argument will probably change from "its a free ride for self funded retirees" to "this country cannot afford to pay this tax benefit anymore".......
And then I suspect what will happen is that the rules will change to put a cap on the maximum refund available to any individual.......which would have been a much more logical method of dealing with this contentious issue in the first place........
cheers
BC
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Q: Hi I have client they are both first home buyers brother and sister. They both going to purchase owner occupied property together jointly. Can both claim first Home Owners Grant so they can use for deposit?
A: Im gonna go out on a limb without checking any legislation and say probs not. If that was the case you would cobble together a fleet of people to buy a property as tenants in common and pay for the whole shooting match from FHOG
cheers
BC
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Q: I have a partnership with my wife but will be eligible for the age pension in 12 mths. If we close the partnership and she continues as a sole trader can I still get the pension
A: Just to add on from Joels comment:
pensioners who own a company get introduced to a whole new level of paperwork, starting with a little gem called a Mod C form.......where you get to put in ALLLLLLLLLL the details of your company, and then wait for Centrelink to blow holes in your pension entitlements, and/or drag out processing time for months whilst someone who doesnt know one end of a balance sheet from another reviews the details and makes ridiculous assumptions about what the company might be worth, and how much income it generates.
and a company brings with it a raft of additional reporting and compliance issues and also COSTS heaps more to run.
In short: if it wasnt worth your while to run your business via a company PRIOR to retirement, there is not a snowflakes hope in hell its gonna be worth your while after your birthday.
Sorry to sound all doom and gloom here, I have seen too many people try every conveivable method to maximise their pension whilst still running a business, and they never win. I dont agree with the outcome in many cases, but I really doubt the benefits of going down this road.
BC
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Q: Hi,
I just started as sub-contracting and want to know if I can charge travel time for visit my clients. If so, is it just travel to and from the job I’m attending
Thank you
A: Hi felicity. Time IS money, and you need to recover enough out of your clients to make it worth your while to stay in business. Some people CAN get away with charging separately for their travelling time (sometimes at a lower rate) and some people have to absorb the travelling time into their costs.......what do others in your industry do??? In all likelihood, what you can get away with is going to be based on what others doing the same thing do.....
eg: contract cleaning......maybe not much chance of getting someone to pay you for travelling if ther eare lots of other contract cleaners willing to cop the travelling on the chin??
or contract business coaching......maybe a better chance if there is sufficient demand for your specific services???
cheers
BC
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Q: I am interest in buying a business, it is for sale for $100,000 and has been operating for 5 years. I have seen the financials as has my accountant and we are both happy. I only have $18,000 in savings and don’t own a property … is it possible to get finance to help with the purchase, I need about $85,000, thanks
A: Hi Tim,
as you have already had your bean counter go over the figures and you are happy, I guess you have already had discussions about risk, business structure, record-keeping, and tax management. If not, let me know and I will be more than happy to give you some pointers.
In terms of getting your hands on some cash, without knowing what the business is, it seems to me that you are leaving yourself VERY light on for working capital.
you have $18k
bank gives you $85k
you buy the business for $100k
that leaves $3k of wiggle room.
I try to get people to look at their cash requirements and make sure that they can handle a reasonably predictable drop in cashflow without running out of cash to keep the doors open.
for example if you are selling $1 widgets averaging 1500 widgets a day......and sales are consistent and predictable, the amount of cash reserves wont be as high as (say) a business that sells lamborghini cars.....because you might not sell a single car for weeks and months.....so you need to have some cash in reserve to keep things ticking over until you sell a car.
I am sure you have covered off the cashflow requirements with your accountant. Good luck. I have to warn you that obtaining finance through traditional means (ie Big Four) for business purposes will need substantial assets to back up the loan.......which means you are likely going to have to deal with second or third tier lenders......who generally charge significantly more interest, and the payback period is generally a lot shorter......which puts a LOT more pressure on the cashflow equation.
let me know if you would like to discuss it further mate
bc
I hope this makes sense Tim.
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Q: my husband earns $110000 on investment income and we earn together in our super $70000 all before GST. (PASSIVE INCOME) what we need to know is can we register our goat hobby farm and claim some tax benefits, plus we wish to employ someone ( with experience) and want to know can we claim for the wages we pay them. thank you for your time Julie
A: I think the key word here is HOBBY.
if you have a hobby farm, then I suspect the enterprise is not large enough to warrant registering as a business.
but then again, maybe it does.......it depends on a range of factors as to whether you should be looking to apply losses in your PP enterprise against other assessable income.
there are a whole range of tests that apply to micro-businesses that prevent people applying losses in a hobby against other assessable income to obtain a tax advantage.....they are called Non-Commercial Loss Rules. check this out:
www.ato.gov.au/Business/Non-commercial-losses/
You may have other options to manage tax that dont involve trying to convince the ATO that Binky and Bonky the pet goats are a farm.......and this will probably involve getting face to face with your bean counter.....
what income do YOU earn???? if it is possible to get some of that investment income in YOUR tax return then there could be some significant tax savings to be had....however transferring investments may have tax consequences too.....
what about transferring some of the investments into super, and starting a tax-free income stream from that????
you have potentially LOTS of options, including the hobby farm game. Best thing to do is find a good CA or CPA to help you with some tax planning and see what options pop up.
good luck
BC
answered
Q: Hello, I want to create an online platform to help people experiencing anxiety and stress related issues. I have the professional qualifications and over time would invite other professionals to form part of the community. The question I have, is what do I need or should have to protect myself, other professional and the platform, what could we be liable for?
A: Hi Peta,
I presume that whatever professional body you are a member of has a requirement for a certain level of professional indemnity cover. Then I suppose if you have an office to meet people you will need the usual Public Liability cover. Then you might want to do as much as you can to isolate your personal assets from any business risk (as all businesses should do) so you need to consider what business structure gives you the most proptection....for example a company provides a certain level of protection to the owner of the business.....provided the owner doesnt shoot him or herself in the foot by doing silly things like lodging BAS late and trading whilst insolvent.
so, for you I woul recommend a good CPA or CA closely followed by a good insurance broker, which your accountant would probably be able to recommend.
Find someone local(ish)....and ask for some references....if the bean counter is any good they will have hundreds of people willing to sing their praises!!!
good luck
bc
answered
Q: I have a partnership with my wife but will be eligible for the age pension in 12 mths. If we close the partnership and she continues as a sole trader can I still get the pension
A: If you were ineligible with a partnership then you arent likely to fare any better with your name off the business. You are assessed on your Joint Income, so it wont make any difference if the income is shared between you and your wife or all in her name, the test will come up with the same result.
Best thing you can do right now is talk to someone about what options you might have. Get your ducks in a row before you become eligible, because Centrelink doesn't believe in back-pay when it comes to pension payments, and they love dragging the chain on processing applications. In my experience, you wont be allowed to commence an application before your birthday, so you need to ensure you have every box ticked on the paperwork so you can submit the application as early as possible in the hope of getting fast approval and payment.
good luck
bc
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Q: I want to get some advice on buying an investment property with my daughter. The property is about $500,000 and we will be using our home as security and borrowing 100% plus costs in both names. If after a couple of years the property appreciates and my daughter can handle the loan on her own can we gift her the property without her incurring stamp duty or capital gains tax?
A: Hi Sean,
Stamp duty will definately make this strategy expensive for you.
Capital Gains Tax will also rear its head if the value of the property goes up.
Will you be declaring any income from your share of the property?
Will you look to claim a tax deduction for outgoings (including interest on the loan)???
Best thing you can do is sit down with someone to go through all the permutations and combinations of how this can be set up to protect everyone.
what happens if you cant work any more? Does the loan go down the toilet without your income??
what happens if your daughter marries someone you are not super-keen on????
there are around a gazillion "what ifs"to consider......so get some professional advice, and if you are thinking about getting any of that negative gearing joy before if gets knocked on the head by Bill Shorten and his crew of merry men, you should get this advice pretty quick:)
good luck
bc
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Q: I’m think of buying a commercial property using our SMSF and then leasing the property through my business. We operate as a sole trader is this possible or would the lease need to be in a company name?
A: Hi Jarrod,
I just would like to stress the point that you CANNOT fall behind in rent if the SMSF owns the property.
The ATO view is that if the SMSF allows the tennant to fall behind in rent, then this amounts to providing a "benefit"
If this happens before the members retire, the fund will be deemed to be "non-complying"
A "non-complying" fund pays tax at 45%.
and that eliminates 99% of any benefit you may have had in setting up the SMSF in the first place.
soooooo......make sure you know what you CAN and CANNOT do when you are leasing commercial property from a SMSF!!!!!!
cheers
BC
answered
Q: What is the primary measure used for asset valuation on the statement of financial position? What is the source of this measure and justification for its use?
A: Hi Pip,
there are a few different definitions and reasoning's out there, but in terms of Accounting Standards, the definition of Fair Value goes on about the amount which would be realised in an orderly transaction between market participants on the assumption that they each act in their own best interests. The document you probably want to refer to is the Accounting Standard for Fair Value Measurement (AASB 13).......unless this has been superseded by something more complex recently.
https://www.aasb.gov.au/admin/file/content105/c9/AASB13_08-15.pdf
or to break it down a bit: the price which would be agreed on with a willing buyer and a willing seller in an open market.
For Public Companies, they have to comply with Accounting Standards, the idea being that anyone can rely on the financial statements as being accurate
For most Mum& Dad businesses, the accounting standards dont apply, and Generally Accepted Accounting Principals (GAAP) generally get used.......which for the most part mean that the items on the balance sheet are reported as Cost less Accumulated Depreciation....or Book Value. Which is unlikely to be Market Value.
hope that helps.......without knowing the context of your question, its difficult to give you a more specific answer..
cheers
BC
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Q: Hi, I am 53 and would like to know what the difference between a pension fund and a superannuation fund?
A: so, we have a range of terms which can mean several different things:
pension fund
superannuation fund
accumulation fund
TTR fund (TTR means transition to retirement)
the list goes on.........
and many people including advisors and accountants use them interchangeably, and not always correctly.
so.....if you have questions about super......which means if you have a pulse and you are over the age of 25......then you MUST get advice from someone who actually knows what they are talking about.
some people will say "see a financial planner" they have the qualifications.....but I have seen some extremely poor advisors giving people very poor advice.
some people will say "see an accountant. They have the knowledge".......but I have seen some very poor excuses for bean counters out there too.....providing very poor advice as well.
so who do you talk to????? not your industry fund, thats for sure. They provide a low cost super service. I have never seen anyone get decent advice about retirement options from their industry fund. Sorry to tread on any toes there, but it is simply not the job of an industry fund to give "bespoke" advice......and hence they cannot give you advice specifically tailored to your needs.....
The perfect setup for most people is twofold:
1: an accountant who understands enough about super and financial planning to ensure they dont give you stupid advice that negatively impacts your super
2: a financial planner who understands enough about tax to ensure they dont give you stupid advice that negatively impacts your tax
If the two can work together then you have got yourself a very useful resource that will give you the best possible opportunity to build a nest egg and get the most out of your retirement. They dont necessarily have to come out of the same office, but sometimes they do. But they DO need to communicate with you and each other.
cheers
bc
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Q: CBA and Westpac have announced cuts to their fixed rate home loan options, is know a good time for borrowers to be looking at fixed rates?
A: All the advice I have seen points towards keeping a hefty amount in variable. The only people who are fixing rates are VERY highly motivated by having certainty.......
That being said, I have ALSO noticed that brokers are being subjected to a barrage of questions and heaps more waiting for answers from the banks. I would hate to use the term "credit rationing" but you could be forgiven for thinking the banks are taking their sweet time with approvals for their own purposes......
"what has this got to do with the fixed v variable argument?" I hear you say.......well, not much except that if you decide to ride the variable roller-coaster for now with the expectation of quickly locking yourself into a fixed rate loan, you MIGHT find that things are not as simple or straightforward as they used to be back in the good (BAD) old days.......
And the moral of THAT particular story is, despite the banks push to make the BRC about brokers, I think it is more important than ever to use a professional to help you through the maze of products and rates and options......because as sure as there is sh%t in a goose, things are not gonna get simpler!!!!
BC
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Q: Hi, I'm starting my own business and have registered a business name, ABN and for GST and hoping to start in early May. My question is will l have to pay tax in June this year or could it be held over until June 2020 to help with cashflow stating up... thank you
A: Hi Yasmin,
If I can add a bit to Todds comments: when you lodge a tax return through a tax agent, it is generally not due to be lodged until March the year AFTER the end of the financial year:
SO....for the year ending 30 June 2019, you dont have to LODGE your 2019 tax return until March 2020.
And then you pay the tax in June 2020
which is great.
except, if you have tax to pay on business profits, you will fall into the PAYG Instlament System.
This means that the ATO will want you to pay tax in advance on the next years tax return.
Which means that after you lodge your tax in March 2020, you will receive a PAYG Instalment that will need to be paid in July. this is in ADDITION to the tax bill due in June.
here are some numbers to give you a n idea on what you are up against:
for the year ending 30 June 2019, my income if $80,000. this gives me a tax liability of something like $19,000.
so I dont have to lodge or pay the return until March 2020. Which I do because I dont like parting with my money until I absolutely have to. And the ATO sends me a notice of assessment for $19k, payable in June.
Then after I lodge my 2019 tax return, the ATO sends me a PAYG Instalment for around $20,000, payable in July.
which means that in the FIRST year of lodging returns, I am gonne get slugged TWICE for tax.
soooooo, this is where you need to get up close and personal with your accountant!!!! if you dont have one, GET ONE!!!!! and make sure he(she) is a good one!!!!!
good luck
bc
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Q: We have a business and try and keep the business assets separate from the business income as the income is shared with family members. We have been advised to set up two trusts, one for the assets of the business and one to run the business. Is this the right option or are there others........... thank you?
A: Todd is right on the money!!!!
There are no end of sad stories about people who got their business structuring advice from a well-intentioned freind who doesnt know a discretionary trust from Adam.
in terms of your specific question, as a strategy to isolate business assets from business risk, the concept of a different entity holding the P&E and leasing the gear to the trading entity, this works. It will go a long way to helping you keep the equipment if your business fails for any reason.
But its an extra entity, an extra set of books and an extra tax return......all of which cost money to manage. And there needs to be a benefit to you of going to all this trouble and expense....what you need to do is a RISK ASSESSMENT on your business:
how this works is like this:
likelihood of bad shit happening times level of pain equals relative risk level:
for example
high likelihood (say 9/10) times send you broke amount of paind (say 9/10) equals 81/100......so cover our arse!!!!!
low likelihood (say 1/10) times cost you bugger all if it happens equals 1/100.....so dont lose any sleep over it.
for example, if you are in the building game, my advice is DO IT!!!! the building industry is rife with shonky fly by nighters who will be more than happy to sign you up to a subcontracting gig, and leave you high and dry in the dead of night owing many hundreds of thousands of dollars........ the risk is high and the consequences of things going pear shaped are large.......so protect your assets.
or......lets say you run a lawn mowing business.....your clients are a couple of hundred pensioners each of which pays you $50/week......if one of them skips town owing you a couple of hundred dollars, its not gonna break you, so dont get too excited about asset protection.
And as Todd has advised.......the best protection you can probably get right now is GOOD ADVICE SPECIFIC TO YOUR SITUATION.
good luck
bc
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Q: If my partner & I buy an investment property together where I provide the deposit via a line of credit & she provides the main loan (80% value), what would be the best way to structure ownership to ensure we both claim our % of interest in our own names?
A: Hi PJM,
there needs to be a "nexus"between the outgoings (the interest) and any income or gains on the property
(the ATO LOOOOVES the word "nexus".......it gives them a sense of superiority to be able to spout Latin at people)
To translate this into Australian, you need some skin in the game mate!!! Unless you are holding the asset at risk, you dont get any benefit from taking out a loan.
so, if your partner owns the property, and you have borrowed some money to acquire it, that loan has no tax benefit for you, and none for your partner either.
Given what Big Hearted Bill Shorten is proposing, I would suggest that the window on having any sort of negative gearing fun is closing fast. And that also presupposes his promise to "Grandfather"existing arrangements once they get in. Because there is NOTHING to stop them from selecting a different date than election day to "grandfather"the negative gearing provisions........
So, If you dont have one already, I think you should find yourself a good bean counter, and make some time to discuss what you are doing and why you are doing it. I have seen a number of people get REAL excited about ripping into something just to lock in some perceived negative gearing nirvana, without having a long hard look at the merits of the actual investment.
I presume that you are savvy enough to avoid investing in bridges and opera houses PJM, and I reckon you probably do have an accountant to help you out. but in case you dont, (and for the benefit of anyone else reading this), go see someone to help you out before you load up to something that may or may not be the best thing since sliced bread.
there are a number of different structures you CAN use and SHOULD consider, apart from owning the property as joint tennants or tennants in common. This is where a good bean counter can pay for their fees ten times over......by helping you pick the best structure for YOU!!
good luck
bc
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Q: I would like to ask about a meeting my parents had with their financial advisor where it was suggested they should look at putting their money into investment bonds instead of super – they are in the mid 50’s and working full time. Is this a wise strategy?
A: Hi nicholas,
I agree pretty much with everything that everyone has said so far. I have a general comment about Statements of Advice:
In my opinion, there are many advisors out there who use the SOA as a means to cover their own arse rather than provide any meaningful information to their clients.
For the most part a SOA to most people is 80 pages of meaninless dibble and reading it will most likely leave you more confused about what has been recommended rather than solving any riddles for you.
I can only presume your parents have stumped up between $2 and $8,000 for this document. If the advisor has not got the time or the ability to sit down with ALL THREE OF YOU and explain the whole shooting match in plain English in under an hour, I would suggest that they dont understand what they are recommending themselves. Bear in mind that the advisor will possibly also be receiving ongoing commissions on the recommendations, which is even more incentive to ensure that your parents fully understand and are comfortable with what they are paying for.
If you parents dont understand what they are signing up to, then they need to get in front of their advisor, then take that advice to their accountant to see if the accountant can explain it. I am guessing that they have already paid the advisor, but they will probably have to pay for the accountant, but this will probably be money well spent.
good luck
bc
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Q: Hi, I started my own marketing consultancy business 2 years ago and have a question about GST. Are you required to pay GST when your turnover reaches $75,000 or is turnover less expenses?
A: Gross Turnover.
It makes no difference what the expenses are.
Also the requirement to register goes along these lines:
As soon as you are reasonably confident that your turnover is GOING TO exceed $75k, you need to register for GST
eg
If you turn over $15k per month, you cannot wait until you have traded for 5 months and then register for GST.
cheers
bc
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Q: Hello,
About to start a business with 2 other business partners and we’ve been to see an accountant to make sure the structure is correct. We have each had a discussion separately and I would like to ask other people if they think it is wise for us to share the same accountant for our personal stuff?
A: G'Day Carmel,
having the one person dealing with everyone is almost certainly going to minimise confusion and provide the best chance for the accountant to achieve the best outcome for everyone.
I have clients that are part of a larger group, and I have found that sometimes the "group" accountant doesn't have all the information pertaining to ALL the members of the group, and hence sometimes one or more members dont get the best possible outcome
I also have clients that are handled all the way through as part of a large group, and I know that ALL the different aspects of all the members of the group are considered
they key here is COMMUNICATION. If there are numerous accountants, they all need to know what is going on and how things will impact their clients......
but what I think is MUCH more important to you than deciding who will do each persons tax return is ensuring open lines of communication between the partners. Nothing kills a partnership faster than secrets. You would be astounded over some of the minuscule grievances that get blown out of all proportion when one partner gets the idea that he is getting the short end of the stick.
Do not ignore your partners. Make time for them and make sure that you all talk to each other. Even to the extent of formalising a "partners meeting" where you do nothing but discuss strategic planning, big picture stuff, budgets and opportunities and threats etc........
I absolutely agree with Todds comments about conflicts of interest to:)
and good luck
bc
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Q: I am thinking of starting a import export business. I like to know 1. the process & requirement to strat that business? 2. Customs & banking procedures. 3. Insurances & freight 4. How to deal with buyer & will they pay for the product before i supply?
A: Step 1: find a Chartered Accountant
Step2: call him and ask for an appointment
Step 3: ask him about all the stuff you have thought of
Step 4: ask him about the stuff you haven't thought of.(there will be stuff you haven't thought of)
Step 5: expect to pay for the advice
The process of starting the business depends on a thousand factors that are specific to YOU and YOUR situation. Sole Trader, company, partnership, discretionary trust, unit trust.......lots to cover here
hopefully you can find someone to advise you who has experience in the industry....and clients who can vouch for his expertise
Hopefully you can forge a relationship with someone who can assist you in starting and running and GROWING your business.......and then also assist you in managing things, and advise you on what to do with all your wealth that you have accumulated in your business.......
and someone like that is not likely to be cheap.....but they will be absolutely worth the expense......
good luck
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Q: Hi, we were at an auction on Saturday and we have been notified the successful bidder is not going ahead and the agent has contacted us as the under bidder and wants to negotiate a higher price. The property was for sale and we went to our max at the auction and would like to know legal why our offer can’t be accepted?
A: Hmmmmm, I cant see any reason for the agent to take your highest bid to the vendor......the question is "will the vendor accept my offer now that the successful bidder is not going ahead?"
Another question might be "how can the winner at auction simply "pull out" after the property has been knocked down to them??" I was always of the opinion that there are no comebacksies at auction......otherwise every man and his dog would run the prices up through the roof and pull out pending finance, or approval from the missus, or a favourable aura-reading or whatever......
If I were you I would be FILTHY with the agent. Someone somewhere has dudded you of the property which you would have expected to be knocked down to you at auction had the other bidder not bought the place and pulled out.....and now the agent looks like he is chiseling you for more.....seems less than upfront and above board to me........to be honest I would give the agent and his vendor a spray and advise them in no uncertain terms what they can do with the house........
but.....maybe its your foreverhome......and you want it come hell or high water.....
good luck
bc
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Q: Hi, finally I am taking the plunge and will launch my own business from July this year. My question is if I incur expenses in setting up the business like website, marketing material before July will I be able to claim the expenses in this financial year?
Thank you
A: Hi Penny.
Congratulations on the big step!!
The expenses incurred this year MAY be deductible this year, however this depends on a whole raft of factors:
1: establishment costs. these are generally deducted over a 5 year period
2: operating costs would be deductible IN GENERAL, but again, it depends on a few things.
You need to take into account what the business structure is, and WHO is actually incurring the expense. for example, if you intend to trade using a company, and incur establishment fees, the tax deduction for this should be claimed by the individual who set up the company, because (logically) a company cannot incur expenses until it exists: it cannot exist until someone pays for this to take place.
There is also a set of rules around non-commercial business losses that you also need to take into account, which may or may not affect you.
the best thing you can do now, is talk to a good bean counter about your business, so you can cover off all these issues, as well as a heap of other things that will impact you and your business.
find yourself a CPA or CA with expertise in setting up and advising new small businesses, and have a chat with them, it will most likely pay for itself several times over.
good luck
BC
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Q: Hi,
Just turned 60 and want to ask a question about my pension. My partner of 8 years and I have decided to go our own ways and we will look to sell a little investment property we have in Forster. It is 50/50 and probably sell for about $380,000, no debt.
I own my own home, about $640,000 so if I get $190,000 less costs from the sale, how will it affect my pension, thank you
A: Hi Jessie
The ASSETS test will obvioulsy apply, however based on what you have said you will be under the asset test threshold of $258,500 for a single homeowner.
www.humanservices.gov.au/individuals/enablers/assets/30621
The INCOME test is the thing that might catch you:
for every dollar you earn over $172/fortnight, your pension gets reduced by 50 cents.
www.humanservices.gov.au/individuals/services/centrelink/age-pension/eligibility/income-test-pensions
I note that you are 60, so your pension is probably not the age pension.....however the income and assets tests are applied to a wide range of pensions.
Best advice I can give you is make an appointment with Centrelink and go through it with them.
You also have another issue: Capital Gains Tax. For that I strongly recommend you talk to a good accountant BEFORE you sell the property
good luck
BC
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Q: I have received a fine for not cutting the grass on my vacant block of land which I paid. My question is: with the money that I paid the fine, can I claim it back in tax because we use that block of land as an investment.
A: GDay AnneMarie,
my first question is what council has that much time on their hands that they identify all the long grass and fine people to whom it belongs???!???!??!?!?!!!!!!
As much as I hate to get all Tax law nerdy on everyone, s26.5 of the ITAA 1936 says you cannot deduct a fine under AUSTRALIAN LAW: meaning federal, state or territory law.
So the question "can I claim this in my tax return?" has an answer in two parts:
PART 1: you can claim "holding costs"on vacant land where the intention is to derive assessable income from that land.........so maybe YES you CAN deduct it.
PART 2: you cannot claim fines if they are as a result of a federal, state or territory law......so maybe NO.....
Its all in the details, so do some research, talk to your bean counter, and mow the grass before some clown gives you another fine!!!!
cheers
BC
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Q: Hi,
We have our own self managed superfund and now struggling with the all administration work. We want to roll into an industry fund and would like to ask about fees and hopefully pay less than 1%. Any recommendation, the funds is about $1.2M?
A: Hi tim,
Industry funds ARE generally cheaper than retail funds.
Industry funds also outperform retail funds sometimes.....and sometimes they dont.
But if your focus is on fees, then I think you need to look at the performance of your own fund, and take into account the benefits you are getting......which you may not necessarily get from an industry/retail fund.
If you want to be in the drivers seat with your super, and you want your investment strategy to be tailored to you specifically, and you want to make sure that the guy buying and selling the shares is accountable DIRECTLY to you.....then an industry fund is not in your best interests.
I know that industry funds are actively advertising how great they are performing, and how they are soooo much better than SMSF, but if this were true, why is the SMSF sector growing SO rapidly???? (and bear in mind that the prime time ads being shown on telly are coming out of members' funds.......and none of them ticked a box to say "yes, please spend my retirement nest egg on advertising")
And on the subject of cost: if you cant get EVERYTHING sorted for less than $10,000 pa, give me a ring....which is less than the 1% you mentioned. I will be more than happy to put you in contact with any number of accounting and planning types who will dazzle you with service and expertise for a LOT less than what I suspect you might be paying at the moment.
Last word from me is this: dont get wrapped up in fees, look at your position after all the fees come out, consider the risks, get good advice and run the show yourself.
good luck
bc
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Q: I have been operating a business under a company structure with two directors for 5 years and recently started a photography business as a hobby (it is going well too). Do I need to set up another company or can I be a sole trader so it doesn’t affect the other business?
A: GDay Pat,
short answer is sure, you can trade off your own bat with the photography business.
the longer answer is you need to look at the photography gig critically and assess how to deal with issues like income tax from this business structure, losses from this structure, how does this business tie in with the existing business, is there any risk associated with the photography business, and what is at risk?
So, Anuraag is spot one when he said go see someone: that is good advice and you should take it.
Another thing to consider is how (or even if) the photography business will impact your business relationship with your existing business partners. Whilst the photography thing may have no connection of any kind with the existing business, how will this new venture impact your ability to "pull your weight" in the existing business?? Are there any potential headaches arising from someone who might think that you have taken your eyes off the road whilst you grow your photography business.
I have seen business relationships turn sour in a very short period of time when one person gets the wrong impression about something. So communication is VERY important to ensure that this cant happen to you.
cheers
BC
answered
Q: Fun Friday
What quote resonates with you, inspiring you to move forward?
A: Life moves pretty fast. If you don’t stop and look around once in awhile, you could miss it.
Ferris Beuller
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Q: Hi, my mother has retired and wants to buy into a retirement village. She has no debt on her home and wants to look at renting her existing home until the property market picks up again. That means she will need to borrow against her home to buy into the retirement village. The rent should cover the loan. Our concern with what’s gone with the Royal Commission is will she be able to get a loan? If she has to sell her home that could take a while, or worse still, she gets a bad price in an under-performing market.
A: Hi Anthony,
my advice would be to get in front of an advisor with experience in this area. There are lots of things that need to be considered when making this transition, and I have found that its often not as simple as what you are proposing above.
this is a very important step for your mother, and I believe that the money you spend on some advice at this point will pay for itself tenfold down the track
good luck
bc
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Q: There is a lot of talk about rates in the media and I would like to ask how people think the election will impact rates for the next 12 months?
A: Hi Jackson,
worry less about interest rates and more about the effect of a couple of key Labour proposals:
1> no more negative gearing
2> no more refunds of imputation credits
3> reduction in contributions caps
these things have more potential to affect you than a change in interest rates......because these things could cause a significant shift in the investment strategies of a large number of people, both in retirement and still working. And THAT could extract every last drop of jam out of your investment donut!!!
Interest rates will be determined by the bank themselves......the RBA really has little or no actual control over what the banks charge, as evidenced by recent rate increases by some of the banks.
And in reality rates are LOOOWWWWWW!!!! Anyone who can remember as far back as 1985 will tell you stories of paying over 20% on P&I loans to the Major banks (not the toe-cutter mafia types....the BIG FOUR!!!)
So if rates go from 3.8 to 4.1......what impact does this have on you???? Do yourself a budget, figure out how much pain you can tolerate and make your decisions based on this. I am sure you already have done this, but as general advice to anyone reading this, do a budget, and use figures that assume worst case scenario as well as best case to do your planning
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Q: Hi,
I heard an ad on the radio today about buying property in Brisbane if you want to help your children. We are thinking of helping our eldest get into the market and we will have to look outside Sydney, is Brisbane the right place, what other places do people suggest. Our budget would be up to $700,000 with our son owning around 25%?
A: G'Day Geoff,
I think the earlier you get your son into property the better, BUT......you have a couple of things that you will want to have sorted out before you sign on the bottom line:
1: ownership share of property: this has a few thing to consider:
a) first home owners stamp duty exemption. If your name is on the title then you are probably paying full freight on the stamp duty
b) what is the "master-plan"??? if it is to transfer the property to your son, then you will be up for a second round of stamp duty and CGT later on.....perhaps you can still help your son without having your name on the title???
c) what happens if(when) your son finds a partner and the perfect balance between parents and child evaporates because his new partner wants to run the show (this is more common than anyone would expect)
2: Property Marketing:
I have seen lots a people get trapped into arrangements where they are fed a line about a property, taken for a ride, and find out too late that they have paid massive overs on a property because they trust the advisor, and have no experience in the area in which they are purchasing.
Things like a guaranteed rental return and up front market valuations prior to construction are massive red flags for me. I have seen people find out that they have paid up to $100k OVER what they could have paid for exactly the same property......but once you are signed up you have no choice but to hang on to the property and wait for the market to catch up with you.
And its not just properties in Queensland. there are property spruikers operating in every state. So DO YOUR OWN RESEARCH!!!!
My advice to you is talk to a qualified and experienced professional about the issues you may face. I suggest someone with CA or CPA after their name, who can demonstrate they have runs on the board in this area. A little bit of advice before you start will definitely be worth the expense!!!!
good luck
bc
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Q: Hello there. My friend and I would like to setup a design service business and need to know the difference between a partnership and a company? If it’s a partnership can we use a domain with .com.au or is that solely for a company? What is cost difference between setting up a partnership and company.
A: Hello Martina,
Partnership is definately cheaper to set up than a company
Also Partnership is generally simpler and easier and cheaper to administer year in year out
BUT!!!!
In a partnerhip you are 100% responsible for everything that happens in the partnership. Its called JOINT AND SEVERABLE LIABILITY.
If your partner enters into a contract to buy the Sydney Opera House, you are stuck with it. If your partner runs up a heap of debt with someone and skips town.....you are stuck with it....not half of it. ALL of it!!
And ALL your personal assets are up for grabs...including the family home.
SO my advice to people is be very very careful who you form a partnership with. Because its something that can bite you in the backside....
EG.....if you form a partnership with a person, and that person dies suddenly, then the assets of that person (including the partnership share) goes to a spouse or a child or a parent or somebody that you may not want to be in business with.....I have seen exactly this situation, where a family were forced to sell a property that had been held by the family for 4 generations......
A company provides you with a LOT more security around your personal assets. Its not 100% but as long as you are sensible with business decisions you are for the most part isolated from business risk.
Get in front of a CPA or CA and get advice about what you are looking to do. It might cost you a bit to start with, but this will be chicken feed compared to potentially losing your house!!!!
good luck
bc
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Q: Hi,
I have 2 negative geared investment properties and not doing a very good job in understanding the policy changes the Labour Party is suggesting to negative gearing. Is someone able explain in basic terms what their policy is and how it would impact my investments? thank you
A: It sounds like Labour is going to Grandfather the old rules for those who already HAVE investment properties, so I think that anyone who is already set up wont need to worry about selling up due to the changes........
ALSO
It also appears that the negative gearing embargo will only apply " in aggregate"
www.afr.com/news/negative-gearing-tax-institute-finds-loophole-in-labors-plan-20181115-h17y59
sooooo, if you have a fleet of properties, and there are some that generate positive income and some that generate negative income, the losers will be offset agains the winners, however if the TOTAL result is a loss, then that loss gets quarantined.....
call me cynical, but this would make life more difficult for a middle-low income earner with a single negatively geared investment property than a cardio-thoracic surgeon who owns 15 properties......so long as the new negatively geared property can be offset against some other property or other investment income.
I dunno......it just seems like a poorly thought out grab for votes......
cheers
BC
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Q: Hi. I have just received confirmation that a tpd claim has been accepted after many years. From my accident in 2015 to now I have continued paying premiums. Does the payout figure be the 2015 amount of the 2019 that is some $40 k higher
Regards
Linda
A: Hi Linda, sorry mate but your question doesnt make much sense?? Could you try to reword it a bit????
cheers
BC
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Q: Hi,
I started my own beauty salon 6 months ago and would like to ask what budgeting tools people find helpful. I am finding it difficult to manage cashflow with suppliers and orders, thank you
A: Hi Pru,
A budget is only going to be of use to you when you can accurately measure your performance. Step 1 for you is to make sure that whatever you ARE using to record your income and expenses is accurate and timely. Then you can set up some targets to aim for based on 1) estimates of expected income and expenses.....and 2) actual historical data.....(which is where the ability to accurately record what you do.
It is probably a great move to get face to face with someone who can advise you on what tools are available. Almost certainly a cloud-based accounting system that allows you to get up to date data recorded "live"will be a massively useful tool
If it was me, I would be looking at MYOB Essentials or something similar. Someone else would recommend maybe Xero, or QuickBooks, perhaps Invoice2Go or any number of other products. Whatever you use, you MUST make sure that it will actually give you what you want:
1: accurate historical figures
2: ability to set targets.
You COULD do all this yourself in an excel spreadsheet, but this will take up a mountain of time, and nobody setting up a new business has that much time on their hands.
Find someone you can get access to, who can advise you and also help you along the way. Get references from that persons other clients. Ask you friends and family who they use and talk to more than one advisor before you make up your mind.
good luck
bc
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Q: Hi,
I have 2 negative geared investment properties and not doing a very good job in understanding the policy changes the Labour Party is suggesting to negative gearing. Is someone able explain in basic terms what their policy is and how it would impact my investments? thank you
A: Hi again Ellie,
Scotts comment about the proposed changes potentially affecting property values is valid, and there will clearly be some sort of change in demand for an established investment property
I think that the proposed changes has potential to have a significant effect on your cashflow if your properties are heavily geared and you now receive a significant tax benefit (which will evaporate under the proposed changes).
As an example I was talking to a client who has been gearing up over the last 4 years and has acquired a number of investment properties, each one leveraged against existing properties.......this guys is in a position where he has to lodge a PAYG W variation which reduces the PAYG W on his wages each week instead of waiting until the end of the year to get a giant tax refund. This extra cash paid to him each week is used to pay the shortfall in cashflow created by having a mountain of debt.
Just so everyone understands I didnt advise this guy to employ such an aggressive investment strategy: he had the help of a property guru who set him up on a program to own a fleet of rental properties by the time he was 50........
In this example, the client is now trying to figure out how to sell a property without creating a disaster. His loans have been based on valuations from banks before they all got ultra-conservative on lending, and also before the property market eased.
His concern now is that should he sell one property, this will result in potentially needing to revalue ALL his properties. If this is the case, it is likely that he wont have enough equity across the board to manage the whole show.
But he also knows that without the extra cash created by the negative gearing tax benefit, he cant maintain the loan payments for the long term.
This bloke has made decisions based on a set of rules that are mostly likely going to change, and in his case, the consequences of the changes are not great at best, and potentially catastrophic at worst.
Hopefully you have employed a much more conservative approach to your investment strategy, and the effect on you is nowhere near as dramatic.......but you really should do some budgeting and see if you have a hole in your cashflow that is currently being filled by a negative gearing tax refund
cheers
bc
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Q: Hi,
As a father of a mortgage broker who has 8 years’ experience I want to know why the Royal Commission and Government would be denying brokers the opportunity to be paid $3,250 by the lender on a $500,000 loan yet be happy for real estate agents to be paid up to $10,000 for the sale of a $500,000 property. My son has worked hard, built a business and now what?
A: Here is another little rant about this issue for everyone:
the current system of commission plus trail for brokers was set up as an incentive to minimise "churn"
for those who dont know, "churn" where a broker will set you up in a brand new loan every few years to maximise the up front commission.
the trailing commission ensures that the broker has a good reason to leave the client in the best product FOR THE CLIENT. The broker gets an ongoing reward for providing the customer with the product which is best suited to the needs of that customer.
so when the trailing commission system is dismantled, what do you reckon is going to occur??? Churn. And lots of it.
"so what?" you might ask. "As long as I am in the loan with the lowest rate I dont mind changing loans every 3-4 years"
well......consider this:
in the first 5 years of a Principal and Interest loan, virtually 100% of what you pay is Interest.
so if you jump ship every 3-4 years, then you will never pay the loan off.
It seems to me that the banks have effectively shifted media focus from the appalling conduct demonstrated across the board by banks in the last 15 years. Remember the days when you used to go to your bank for a loan, or to set up a bank account, and they DIDN'T pepper you with offers for additional services: life insurance, super, financial planning, investment advice, estate planning, retirement advice, the list goes on.
this is the reason why we ended up with a Royal Commission. Banks are no longer banks. They are multi-layered service providers, and they use the excuse that you opened a bank account to systematically provide you with as many "value-added" services as possible......because there is a LOT more money to made out of life insurance and estate planning than there is in holding a savings account and issuing a credit card to you
And they have the clout to influence the media and make the mortgage brokers the bad guy in this........which for the most part is not justified.
I dunno what the answer IS, but I suspect the answer is NOT removing commissions for mortgage brokers.
BC
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Q: Hi,
I have 2 negative geared investment properties and not doing a very good job in understanding the policy changes the Labour Party is suggesting to negative gearing. Is someone able explain in basic terms what their policy is and how it would impact my investments? thank you
A: Hi Ellie,
happy to:)
Lets use an example where you have 1 property and earn $10,000 pa in rent
lets assume your outgoings like insurance, rates, agent fees etc are $3,000
And lets further assume you pay interest of $11,000 per year
so income = $10,000
expenses = $14,000
rental loss = $4,000
Now under the CURRENT rules, you get to apply this investment loss as a tax deduction against your other forms of assessable income: lets assume you earn $60,000 in wages and to keep things simple you have NO other tax deductions
so, your taxable income is as follows
gross earnings = $60,000
allowable deduction = $4,000
taxable income = $56,000
in this case you will get a tax refund of $4,000 times your marginal tax rate.
so $4,000 x 32.5% = $1,300.
this is the EXTRA refund you are currently entitled to because the current rules allow you to claim the rental loss against your other income
Big Hearted Bill is proposing that this tax benefit is removed. I am not sure whether this loss can be applied to the property to help you manage Capital Gains Tax or whether it is lost altogether (and for the purposes of this explanation I wont go into this further complication)
So the million dollar question for you is this:
"WILL LOSING THE TAX BENEFIT I CURRENTLY ENJOY CAUSE ME SO MUCH FINANCIAL HARDSHIP THAT I HAVE TO SELL MY INVESTMENT PROPERTY???"
My advice to you is to get yourself in front of a good tax advisor and figure it out. My example is very simplistic and your numbers may well be a lot larger than the figures I have used. And the last thing you need is to find out you have a $10,000 hole in your budget by getting a nasty letter from the bank. Plan this out and see if you have the funds to continue to hold both your properties. And if you cant, then you need to see how much of a hiding you are going to take when you sell.
Get last years tax return and use that as your starting point to budget for the future.
good luck
bc
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Q: In light of the Banking Royal Commissions recommendation to have the upfront commissions currently paid to mortgage brokers by lenders changed to a fee for service model over the next couple of years, can we ask:
Do people believe consumer’s would be prepared to pay an upfront free to a mortgage broker to help them obtain a suitable home loan?
What impact would such a change have on consumers?
What impact would such a change have on the home loan industry?
A: Prior to 1920 the Michelin Guide was free. Then the company placed a price on it, reasoning that "man only respects that which he pays for"
Unfortunately most people dont draw the connection between what they pay to the BANK and what the bank pays to the broker. The Bank pays the broker a fee: which is nothing other than the payment of a fee to the broker for the service of connecting the client to the bank so the bank can lend the client a truckload of money and charge the client interest.
And because the clients dont see the cost being ultimately borne by themselves, they hold no value for the service.....
The bank "absorbs"this cost.....but the reality is that all the costs associated with providing funds to willing customers are passed on in the interest, fees and charges paid by the customer over the life of the loan.
So lets all assume that in our new Utopian society where everyone pays for their own broker "up front": lets say the broker gets $4000 on a $500k loan. And the bank doesn't have to "absorb"this cost........And the loan term is 25 years........the bank would presumably reduce your fees by this amount amortised over 25 years......or roughly $3.05 per week. Do you reckon the bank is ACTUALLY going to reduce your bank fees because they didnt pay a broker?????
The reason I would use a broker is because I would expect the broker to:
a) find me the best rate
b) negotiate with the bank on my behalf
c) provide a clear and simple system and service so as to reduce the workload on myself
Your potential savings by using a broker could easily cover the costs of using him or her........
answered
Q: Hi,
As a father of a mortgage broker who has 8 years’ experience I want to know why the Royal Commission and Government would be denying brokers the opportunity to be paid $3,250 by the lender on a $500,000 loan yet be happy for real estate agents to be paid up to $10,000 for the sale of a $500,000 property. My son has worked hard, built a business and now what?
A: Hi Mark,
you will get no arguments from me on your statement. I find no end of irony in the fact that the TITLE of the Royal Commission says BANKING, however the BANKS seem to be able to suffer the slings and arrows of outrageous fortune a lot more comfortably than the BROKERS who havent been charging dead people for services which have not been provided.........
I have to say I am viewing all the current spin from the banking community about "lessons learned" and "regaining the confidence of the community"as nothing other than marketing.
And the push to hold brokers under the microscope is itself simply a strategy to shift attention from the major players, because the major players dont like the spotlight, and have the budget and ability to shift the focus onto those who are much less able to defend themselves......the brokers.......
I take my hat off to all the hard-working and conciencious brokers out there who actually DO care about their clients needs, and take immense pride in what they do. they deserve every cent they earn, and trust me, its no licence to print money any more than selling cars, or laying bricks is......its determined by the skill, intelligence and work ethic of the person doing the job.
rant over, have a great day!!!!!
bc
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Q: A family member is a qualified chef and has moved to Australia from France and wants to start a restaurant. He has a working visa but is there any legal issues from starting his own business. Could he borrow money?
A: Hi Phillip,
Putting aside the issue of whether your cousin CAN set up a business under his visa, Andrew is on the money regarding failure rates of restaurants, and the personal liability that can arise from a business failure.
I STRONGLY recpmmend that you put your cousin face to face with an accountant, preferrably with CA/CPA qualifications, and runs on the board with hospitality businesses.
It will cost money for the advice, however you probably need to be wary of someone who offers a free consultation, because that time needs to be recouped somewhere by the advisor......and its either out of jacked up charges once you're locked into an engagement, or cutting corners on service......which is worse!!
good luck. And let us all know where this fancy new eatery is so we can all give it a run before it gets all its Michelin hats!!!
regards
BC
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Q: Will my declared income on a bank home loan application be data matched with the ATO?
So does the ATO receive information from banks about income declarations in loan applications?
A: Hi Tony,
Todd is right mate, the ATO wont match your application to your return.
The bank, however WILL, but as you have already stated, as long as you are accurate the bank wont make a fuss.
The ATO already has a thousand ways to data match peoples incomes, and I suspect that loan applications wont help their cause much at all
cheers
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Q: Does an employer have to pay superannuation on top of bonuses or can they pay it out of the bonus?
A: Hi Luke,
the correct answer is "it depends"
and what it depends on is whether or not the bonus is classed as "Ordinary Times Earnings" or not.
If the bonus is as a result of what you do in the ordinary course of your work, then it IS subject to Super Guarantee
eg, Chistmas Bonus, Performance Bonus, etc
If it is in respect of work performed entirely outside your normal hours, then NO super
eg Overtime Bonus
this might help
https://www.ato.gov.au/business/super-for-employers/in-detail/ordinary-time-earnings/ordinary-time-earnings-and-super-guarantee---examples/
best thing to do is TALK to your employer and find out what they think is the way it is, then if you dont agree you should come prepared and explain why you think it should have super on it
good luck
bc
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Q: Hi, my husbands runs a small business as a contractor to a number of builders and developers and I do the books, He has had to bring on subcontractors to complete the work on time and we want to check about how we pay them, do they need a ABN, do we pay GST on their invoices, what about super, our accountant is away so any help would be great?
A: Hi Sophie,
Stephanie has covered the main issues for you:
1: your subbies MUST have an ABN, otherwise you MUST withhold tax at the highest marginal rate
2: you must ensure that if your subbies issue an invoice including GST, that they ARE registered for GST
3:workers comp: if the subbie is a "deemed employee" then you are up for workers comp on the payments
4: super: if the subbie is a "deemed employee" then you are up for super too
5:You ABSOLUTELY have to lodge a TPAR, you are in the building and construction industry, you have no choice in the matter
https://www.sira.nsw.gov.au/__data/assets/pdf_file/0004/385717/Wages-Definition-Manual_2018.pdf
Get this, read it, and make sure you understand what it means. It is the tool that you use to protect yourself against the inevitable workers comp and super guarantee audits that you WILL have. Trust me, Murphy's Law states that the liklihood of a workers comp audit is directly linked to how poor your records are.
ANd when you get a workers comp audit, you can be 150% certain that a super guarantee audit will follow soon after.
I dont want to be all "doom and gloom" on you but your subbies wont be coming out of the woodwork to help you when the auditors are there.....you have to cover your own backside.
Which brings me to my next point: are you conducting your business in the correct structure to protect yourself???? If your husband is operating as a sole trader or even in a partnership with you, then ALL your personal assets are at risk!!!! If this is the case then I STRONGLY recommend you find yourselves a good CPA or CA who can help you with ALLL of this and heaps more besides.
good luck
bc
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Q: Hi there,
I have been working for the same company for 9 years and have been offered a redundancy package. I’m trying to calculate my entitlements and I’d like to ask if I should do the calculations from the time they made the offer or to my last day which would be in 6 weeks. Do I include a percentage long service leave as an entitlement even though I’m 6 months away from 10 years’ service?
A: Hi Shaun,
you will be entitled to a pro rated percentage of the LSL.
if your service was 9 years exactly, you would get 90% of the full 8.66 weeks leave.
cheers
bc
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Q: I would like to get the opinions of other business owners to how long before a new staff member needs to be working for the business before they become part of the employee share options. We introduced it last year for staff who have been with the business almost from the start 4 years ago but not sure whether new employees should have to wait 1, 2 or 3 years. What do people think?
A: Hey Matt,
if your existing crop of employees were issued shares after 4 years, howe will they feel when someone else gets issued shares after a much shorter period of time????
maybe this wont bother anyone, but it might be worth considering on the off chance that someone might get their nose out of joint??
but I suppose it really depends on what you reckon is fair and reasonable.......
cheers
BC
answered
Q: Hi
Submitted to 'Real Estate' page but also a 'Legal' question:
6 months ago I purchased a house off the plan. I negotiated a 5% deposit but will have to pay the remainder next month.
I recently enquired in the same development for a relative and realised that they are now selling the same property as mine for a significantly lower price, a large financial rebate, many added features thrown in for free and even a $12k gift card. Whilst it is not ideal, I'm considering the opportunity this may present. My question is - what are my legal rights in terms of selling before settlement or forfeiting the contract and then repurchasing in the same development with the new terms? If it is simply a matter of forfeiting my deposit, then I would still be significantly better off. Are there other ramifications which would stop people doing this? I take it they won't simply amend my contract.
Any advice would be much appreciated!
Dan
A: Im no legal or property expert, so it will be good to hear from someone who knows exactly what the legal ramifications are for you.....
I would imagine that the developers are well and truly all over this. It sounds too good to be true that you can walk away from your obligation to purchase the property at a price you previously agreed on.
My thinking is that you have made an agreement to pay $XXX on completion of construction of he unit/house. I think that you are under a legal obligation to pay the balance of the funds and just because someone negotiated a sweeter deal (due to the market deteriorating) doesn't provide you the ability to walk away from the contract........but maybe I am over-simplifying things????
consider this:
How do you reckon you would feel if you had paid your deposit, and the market had improved, so the developer found someone willing to pay a higher price 6 months later, so they send you a cheque for your deposit and say "its been fun, but we got a better offer"
I reckon you would lawyer up and get your property back.
So this is why my gut feeling is that you are stuck with the deal you signed up to.
But...
A Im not a lawyer...and
B the terms of the contract will explain what you can and cannot do.
cheers
BC
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Q: I am a self-funded retiree with a share portfolio of $300,000 with a high proportion of bank shares. I feel as though they will continue to be strong but would like to ask if others think the same?
A: G'Day Leo.
hate to get all political, but how do you feel about losing 30% of the cream out of your dividends when that idiot Bill Shorten gets in???
My point is, it really doesnt matter how well your shares perform if you all of a sudden lose the tax concessions you currently enjoy.
What do you reckon the share market is going to do when 1 million self-funded retirees decide that the share market isnt such a great investment after all, and collectively take their $250 BILLION dollars which is currently invested in direct shares and put it all somewhere else???
I dont know, and I am guessing there are a LOT of other people who dont know either.
For my money, I am thinking that shares are looking very shakey until people get some certainty on what is going to happen when big-hearted Bill gets the keys to The Lodge.
You problem may be that getting advice from someone is going to be difficult when that someone may be motivated to have you invested in the products and investments that provide him/her the best commission (Banking Royal Commission )........so what you need more than anything I suspect is someone who is going to give you advice based on YOUR BEST INTERESTS.......which means you will pay for it, up front, and you should be happy to do this, because this is the only way you ensure that the advice is not going to be biased.
There are actually lots of advisers out there who provide this type of service, and they are HIGHLY ETHICAL and take great pride in helping their clients. Find yourself someone like that, and listen to what they have to say
good luck
BC
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Q: We are waiting on the loan approval to buy a property but it is taking longer than we thought. The agent has said they will take the property off the market if we pay a 0.25% deposit but we want to know if the loan is not approved will we lose the deposit? Property price is $970,000 so it is a bit of money?
A: Hi Susan,
deposits are generally NOT refundable, but best ask the agent to confirm (in writing) to cover your backside.
cheers
BC
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Q: The house we have been renting for 3 years has been sold and the new owner wants to move in. What is the minimum notice period we should be receiving?
A: Hi Cathy,
You probably have a signed lease that tells you this. My understanding is that if the new owner wants to break the lease they need to compensate you for the inconvenience.
https://www.consumer.vic.gov.au/housing/renting/ending-a-lease-or-residency/if-the-landlord-or-owner-wants-the-tenant-to-leave
call these guys. They will be able to give you all the advice you need
good luck
BC
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Q: I am going to work as a contractor and charging $40 an hourly rate. Do I include gst in this amount of do i add the gst on?
A: its up to you.
I presume you ARE registered for GST???
so if this is yes, then your hourly are is going to be one of two things:
1: $40/hour INCLUDING GST (ie $36.36 per hour plus $3.64GST = $40)
OR
2: $40/hour PLUS GST (ie $40 per hour plus $4 GST = $44)
you need to talk to your clients about what they want to pay. If the client thinks they are only getting a bill for $40/hour TOTAL and they get a bill for $44/hour TOTAL then they wont be pleased.
I am guessing that this is not the only question you are going to have about GST, so PLEASE find a good bean counter to advise you BEFORE you get too far into this arrangement. You will be heaps better off knowing exactly what you can and cant do before you rack up a heap of GST liabilities without knowing it.
Good luck!!!!
BC
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Q: Hi, I’m a shareholder in a small business (own 40%) but don’t work in the business, not a director but there is a shareholders agreement in place. Is there any business insurance I should have in place to protect my investment?
A: Hi Charles,
as a shareholder I dont think you can be held responsible under the new Director Penalty Regime....which makes the Directors of companies personally liable for company liabilites such as GST, income tax and the like.
Unless you are a "shadow director" which is fancy talk for you are really actually helping to run the business but not reported as a director to ASIC.
if thats the case then your ummmmm NECK is on the chopping block just as much as the director of the company.
the thing that a liquidator or ASIC or the ATO will look at is why would you buy shares in a private company when you have no control over what goes on, and no comeback if the company blows your invesment???? If the other director is a family member of close friend, then the director penalty regime will possibly come into play, and you are possibly carrying a lot more risk than you want.
and there is no insurance for this: Director Duties are not something covered by public liability or professional indemnity.........
best find yourself a good accountant and solicitor to discuss the risks and remedies for you......
good luck
bc
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Q: We have been researching websites like RateCity and Finder where they saw home loan rates can be as low as 3.44%. Our rate is 3.99% and we contacted our broker and they said because we have only had the loan for a year we shouldn’t refinance. They said we could refinance but it would cost them money if we did and we would have to pay the fees on their behalf. Is this normal for brokers?
A: Hi guys,
here is my two bobs worth:
you used the broker to start with, and I guess you paid him nothing up front, and he was compensated by way of commission?
and the rate at 3.99 doesn't sound outrageous to me....in fact its probably a pretty good rate....
and now you want to refinance to get a lower rate?
so the mortgage broker has to do all that work again, get the commission (again) but also lose the original commission in clawback.........
so in effect the second loan is for zero fees for the broker for the same amount of work
is this fair to the broker?
on a $1m loan, you are looking at saving around $5k pa
the commission on a $1m loan is around $5k (not per annum, just once)
soooooo.........and forgive me for playing the devils advocate here........you want to save $5k, every year, and the person you want to to help you do this is going to pay the bank $5k for you to benefit from the lower rate........
the whole problem with the broker commission system is that because the borrower never gets an invoice, they place little or no value on the service.
Can I suggest that you talk to your broker about this before you refinance.....for example, if the loan is more than 12 months old the clawback might be only 50% of the commission (ie only a $2500 hiding).
If the first anniversary is not far off, perhaps you can help the mortgage broker to limit the pain???? Perhaps also the broker might be in a position to come to an arrangement with a view to getting you the lower rate, and not taking a $5k hiding just before Christmas????
communication is the key here.
good luck
BC
PS I have to say counting beans for a living is perhaps not the most exhilerating profession, but I dont have deal with any of this clawback malarkey either!!!! I do the work, issue an invoice, and the vast majority of my clients pay with a smile on their face, because they know up front what they are paying for, and can choose to pay it because they see value in it, or they can choose to go somewhere else. I would hate to have to rely on a third party to pay me for services I provide to my clients, especially when my clients for the most part dont know what the service is worth.......so I take my hat off to brokers....its a tough gig, and they can keep it:)
cheers
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Q: Hi, I would like to ask a question about buying a franchise/licence. The parent company is not calling it a franchise (just a licence) but the agreement looks and feels like a franchise and we have to commit to KPI’s and a 3 year term. If it is just a licence agreement does that mean the parent company is required to pay tax on our behalf or is that our responsibility – thank you?
A: Hi tim,
I think if it walks like a duck and quacks like a duck then its probably a duck.
so if you reckon its a franchise agreement you are probably right.
and the other guys are spot on about getting advice from a good solicitor and a good accountant. not only do you have to get a clear picture of your obligations under this agreement, you need to get advice on what is the best structure to conduct your business.......you can operate the franchise as a sole trader, partnership, trust or company.......and each option has pros and cons.....so I STRONGLY advise you to talk to a good accountant about the business structure (if you have not already done so).......best aim for someone with some letters such as CPA or CA after their name.
and good luck with the franchise.......I hope it goes well for you, but dont make the assumption that the franchise is a big happy family there to support you, because I have seen some absolute disasters arise from a franchise which went sour, and it generally starts with the franchisee not knowing enough about what his obligations were under the franchise agreement.
cheers
bc
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Q: Hello,
I work for a not for profit organisation 4 days a week and get a paid fortnightly. I noticed recently there is no mention of super on the payslip, not that I could find. Are not for profits exempt from paying super?
A: Hi Tracey,
NFP will not be exempt from super guarantee: so f your income is over $450/month and you are over 18 then they dont have any choice.
But the payslip my not have the SG information on it.....
Like james said......talk to your payroll people
cheers
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Q: Hi,
I have purchased a property in 2010 and used my first home buyers grant. Now, my partner (never had a property under his name) and I are thinking of buying a apartment as an investment property together. What I would like to know is
1. In future, if my partner can afford to buy a property purely only with his name on the title and use as his primary residence, will he be entitled to the first home buyers grant?
2. What happens if both our name with be on the loan just not both name on the title.
Hope someone can help me out!
Regards,
A: Hi,
sorry but the answer is no
https://www.sro.vic.gov.au/first-home-owner
you cannot access the FHOG if your partner has accessed this concession already.
so unfortunately the FHOG is not available to you partner
regards
bc
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Q: I have purchased a Mazda CX-7 2010 as a private sale and1 day ago and I have noticed it’s lagging when I accelerate the car. Whenever I stop the car at the lights and when I accelerate to go it lags and feels like it has no power to the car. What are my rights as a buyer? Can I sue the seller for misleading me?
A: I reckon that old saying caveat emptor is going to apply to your situation. Buying privately generally saves you a bit of coin but all the risk is on the buyer.
Perhaps you do have a case in law to argue but i would say the cost of pursuing this legally will far outweigh the cost of fixing the car......
Bc
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Q: We want to buy a property in Port Macquarie with a view to relocate and retire in 5 or so years. Can we purchase the property through our SMSF, borrow money and then pay it off when we make the move?
A: Short answer is no
The longer answer is still no with a heap of boring super gibberish attached.
Your biggest headache is whether or not the investment in the house by your super fund is for the SOLE PURPOSE of providing for your retirement.
SOLE PURPOSE is going to be very difficult to prove after your super fund takes a hiding in stamp duty and legals just to sell the property in a very short window of time.
You need to look at the potential cost of getting smacked for being a non complying fund where the sole purpose test has been failed.
It may be that the fund gets to pay tax at 47%...... and maybe you are prepared to take the hit on the rental income to secure that property.......
BUT..
It MAY be that the fund gets smacked with 47% tax on its ASSETS too.
how keen are you on risking losing half of your super on a gamble that the ATO wont pick up on this pesky sole pupose thing?????
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Q: Hello, my wife and I have been discussing buying a unit off the plan close to Sydney CBD. The loan have been approved but with the talk about the labour party negative gearing policy is now a good time to buying off the plan or should we look to a place like Newcastle or other regional areas and buying an existing home. Thank you
A: Hi Matthew,
I think you actually are asking two questions:
1: will Labour knock negative gearing on the head?
AND
2: what and where should I buy?
I dont think that Labour will get negative gearing eliminated. And if they do, the Libs will reinstate it as soon as they regain power......which would not be too long after the change to negative gearing legislation gets passed.
as to what and where to buy........thats out of my pay grade:) I think that anything on the east coast of australia is probably going to end up making money, but I do tax advice, not property
cheers
BC
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Q: I have just set up my own business and want to ask about super. I’m a sole trader and just starting out so do I have to make super contributions based on the income I earn or can I wait until the business is making more money
A: G'Day Dale,
There is this technical concept referred to as mutuality, which means you cannot employ yourself. So a sole trader is not required to pay super under Super Guarantee legislation.
BUT SUPER IS THE BEST THING EVERRRRRRRRRR!!!!
I cannot stress enough how important it is that you make regular super contributions!!!! There is almost certainly going to be no reason for you to make super contrubtions for TAX reasons........but trust me if you dont make regular super contributions as a sole trader it is highly likely that your retirement plan is going to centre around the Age Pension, and that is not the best outcome after working your backside off for yourself for 30 years.
the thing that I try to impress on people embarking on a career working for themselves is that whilst being your own boss if wonderful, none of your clients will seek you out in your retirement to make sure you are happy and comfortable. You have to be greedy enough to make provision for your retirement whilst you are young. and that means making sure that you dont price super out of the equation when you work for yourself.
And dont kid yourself into thinking that your business is your retirement. Very few businesses are worth much more than the machinery and stock.....and it may not be enough for you to retire on.
hope that this frightens you enough to start thinking about a super plan without scaring you away from being self employed entirely......because working for yourself really IS good......you just need to havea long term plan which includes your retirement
it is almost certainly worth your while to sit down with a CA/CPA and develop a long term business plan. It would be money well spent at this stage of the business:)
good luck
BC
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Q: Hi, we have put an offer on a new home and concerned the agent hasn’t passed it through to the owner. Is it ok for us to submit the offer directly to the owner … put in their letterbox?
A: It is my understanding that the agent is legally obliged to pass on EVERY offer within the price range they have told you. No exceptions.
So unless you have submitted a lowball offer in the hope that you get the vendor at a weak moment I rather suspect that the vendor has this and is holding out.
Standard practice is to turn up at the next open house, stay until everyone leaves, and tell the agent that your offer has gone down by $5k. After all, its not really a sellers market right now:)
Ooooorrr.......submit a higher offer.......maybe you are not that far off getting into some serious negotiations
oooooorrrrrr...........talk to the agent. tell him you are serious about the house and ask them how far from the money the offer actually is.....the agent is not on your team, but he/she DOES have to communicate with you.....if he/she can see you are serious, he/she will work to get you close to an offer that the vendor WILL accept......because thats how he/she gets paid:)
good luck
bc
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Q: I have been running my online business for 2 years ago and 6 months ago an old business colleague started helping out with advice. I haven’t been able to pay him a full salary but we’ve spoken about having some equity as a reward and ongoing incentive. Some of the advice relates to him having to pay capital gains tax straight away of the value of the shares. Is this correct and what other options are available?
A: Hi Jason,
I think that what you are referring to is an Employee Share Scheme (ESS). There are a mountain or rules and regulations and yes there may be some CGT issues to deal with.
https://www.ato.gov.au/General/Employee-share-schemes/
this will help a bit, but in reality you should probably look to talking to someone who can help you set up the scheme and help you manage the scheme.
And this will cost you. The expertise and experience necessary here is not going to be found down at the local ITP shop. If you dont have one already, find yourself a CA or CPA with some experience in this area, and be prepared to pay for advice. It probably wont be cheap, but if a ESS is going to be a good strategy to help you grow your business and retain the best team to get the most out of it, then the cost of the advice is going to look like chicken feed compared to the benefits you get from a properly executed plan.
good luck
bc
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Q: Hi,
I have a SMSF and finding it difficult to maintain it time wise. Is it possible to unwind and what do I need to do?
Thanks
A: Hi jonah,
'"unwind" is not quite the correct terminology. but in short you have the following options:
1: take the super as a lump sum if you are old enough to receive it tax free
2: roll it into another complying super fund.
3: sort things out so that the administrative burden is not all on you and keep your SMSF
There is a LOT of detail and all sorts of ifs buts and maybes to figure out what is your best option. Get yourself in contact with a CA or CPA that isnt going to try to peddle something you dont want. Then figure out what your option are and the COSTS associated with those options.
THEN make a decision about what you should do.
the worst part of having a SMSF is setting it up and figuring out how to manage it. And you have stumped up a significant amount of cash to get the fund set up and get your super rolled into the SMSF. If you decide to roll it out, this money is wasted.
The ongoing cost of running a SMSF is (in general) a LOT less than many industry and commercial funds charge......so rolling funds out is almost certainly going to cost you more per annum.
The ongoing management of your fund can be made relatively simple. It all boils down to what you are trying to acheive and HOW you are trying to acheive it.
For example, if you want to run a share trading enterprise in your fund, then you are up for a mountain of work. If your fund is going to be a passive investor in (say) property, the mountain of paperwork gets reduced a LOT. If you want to invest in (say) a trade weighted index fund, then the paperwork becomes VERY managable.
It is really up to what you want to do, and how much input you want to have.......my gut feeling is that you have a significant amount of interest in your own retirement, because not many people set up a SMSF on a whim......so if you can figure out a way to manage things in a simpler way, perhaps a SMSF is not such a bad option for you.
find someone to talk to you about what you do and what you have and what you want and then you will be in a better position to make a good (AND INFORMED) decision
I am happy to chat by telephone if you want.
good luck
bc
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Q: Hi, we are putting our business on the market and want to ask if a buyer gets any benefits from the carried forward loses from our first 2 years setting up the business. Thanks?
A: Hi mark.
It depends.
IF you traded using a company.....and IF that company hasnt applied the losses to assessable income in a subsequent profit making year.. .....and IF the purchaser is buying the company off you (rather than buying the "business" off the company).........then,yeah, probably.
BUT
in 20 years i have seen only ONE time that the trading company get sold rather than the business.......
I think you need to get in front on a good bean counter to doscuss this as well as all sorts of other issues such as capital gains and small business concessions there... .
Cheers
Bc
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Q: I’m in my last year at Uni and have a job starting in February next year in I.T.
For the last 6 months I have been doing freelance work and have earned around $30k. I want to keep doing this work when I start the job but as my starting salary is $85k will that mean I will need to set up a company and register for GST for the freelance work?
A: no.
you can trade as a sole trader no matter how much the business income is.
your gross income from the enterprise is going to be $30k, so its way below the GST threshold of $75k......so no need to register for GST either
whether you should set up a company is a much more complicated question than just how much the business turns over: you need to talk to an accountant about business risk, and a whole heap of other things......
so find a CA or CPA who can help you out. it will probably cost you a bit, but you will be heaps better off after you get the right advice from the guys that know what they are talking about.
and who knows......accountants neeed IT gurus.....you might pick up a client along the way:)
good luck
BC
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Q: As the importance of company culture is widely recognised for not only financial success, but also staff retention, job satisfaction, and productivity within the business, I’m wondering, what strategies have others found effective in building and promoting a positive and high-spirited team culture?
A: Richard branson is a ding bat of the first water.......but he values his team more than his clients.
Be like that
My old boss was more than happy to hurl an employee under the bus when something went wrong and a client was not happy.
Dont be like that!!!!!
I have always strived to back my staff 100%......and i ALWAYS take the heat when something isnt right.... and then we ALL sit down and fix whatever the problem was.......
Look after your team and they will look after your clients and happy clients dont leave
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Q: Hi all,
First time user.
My income is three times that of my wife. We also have kids. We are looking at an investment property and were wondering does it matter who we put our investment property under and who collects the income?
We were also looking at possibly putting the investment property and our principle place of residence in a trust. What would be the benefits of a trust?
I appreciate your help with the above.
A: Hi MR
Lots and lots and LOTS of ifs buts and maybes here
In general the tax benefits of retaining your home in yours and or your wifes names outweigh any other consideration
Mostly
Land tax will make your desire to own property in a trust expensive.......
And if your incom is 3 times that of your wife.....it doesnt tell us what either of your incomes actually might be..... 50k.......500k.......5m??????
Any discussion about planning for your future will need to include your super too.....
In short......find a good CA or CPA and start with some basic advice on what you currently do and what your current position is and then see what you want to do and where you want to be in retirement.
It might cost you a couple of grey nurses to talk about things but it will help you clarify what your questions should be......then you can work on the answers
Good luck
Bc
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Q: Hi, we are about to engage a builder for renovations and the quote has come in at $600,000. The builder is buying the materials on our behalf and we assume paying GST on the costs so if we breakdown the quotes should we then be paying further GST based on the builders overall quote?
A: I would have thought the quote is the quote........and i would presume the gst paid by the builder would also get claimed back by the builder in his BAS.....so net cost to builder =$0
......but perhaps the simple thing to do is ask the builder to clarify this point
Cheers
Bc
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Q: Hi - I have been contracting for 4 years and just been using a business name and ABN. My income is now consistently $12-13,000 a month and wondering whether it’s time to set it up under a company – what would be the benefits to do so?
A: Hi mel.
PERSONAL SERVICES INCOME.
This will limit any tax advantage of having a company or trust.
And on the subject of trusts.... ..the ATO has taken a LOT of the fun out of having a discretionary trust......
So the best thing you can do is sit down with someone and talk about options.
Good luck
Bc
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Q: Hi
2 years ago we started a new business and spent about $300,000 so far. It’s not working out as well as we hoped and now thinking about closing it down and getting a job – the question we have is about the losses we have in business… can they be offset against the future income when we find employment?
A: Hello Sam,
sorry to hear things are not working out for you mate.
Knowing when to pull the pin on a non-performing business is very important. It seems that you have already made that decision so I wont bang on about this.
But the losses are significant and you need to ensure that you can utilise them if possible.
so as a rule, if your business was sole trader or partnership then the losses are yours and carry forward to be applied against future assessable income
If you traded through a company or trust, then the losses are trapped in that entity and you cannot apply then against your future wages income. IF the company or trust gets income it will be able to apply those losses, so you should think about whether or not you might be able to utilize those losses somehow, because those losses never expire....at some point you might find yourself in a positiion to use them.
Best thing to do is get in front of a good accountant and figure what you CAN and CANNOT do from here.
good luck
BC
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Q: Our business uses Xero accounting and about to set up another business with an investor. As the financial reports will be different is there a way around having to set up another Xero account, could we just use the one?
A: Todd is spot on here, the cost of an additional Xero file will look like chicken feed compared to the bill from your accountant who will have to extract data for each entity at tax time.
cheers
bc
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Q: Hello, my wife and I are in our late 60’s and have 600,000 in our self-managed superfund. We have 2 kids in their 30’s who are struggling to buy a home we would like to ask if it was possible for us to distribute the funds a gift so they could buy their first home?
A: Hi Peter,
the short answer is almost certainly yes.......but as James has said, its complicated and there are boxes that need to be ticked off to ensure you dont cruel yourself with tax on a lump sum withdrawal, or end up living on weetbix and catfood down the track whilst your kids live it up in their fancy new homes:):)
If you have a SMSF then you must already have an accountant. If your bean counter cannot explain the ins and outs of this in about 15 minutes then I suggest you go shopping around for someone who can.
there will be a bucketload of paperwork to ensure your fund complies with the legislation, but your question is pretty common, so the solution shouldnt cause your accountant any real headaches:)
cheers
bc
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Q: I’m 46 and been in sales and business development for 20 years. I have had an idea in my mind for many years and would love the freedom of running my own business but the fear factor and financial commitments have always held me back. I’d like to ask other people’s opinion on how they took the first step, how hard they found it – the good and bad, thanks?
A: Hi Peter,
https://www.youtube.com/watch?v=VAdlkunflRs
this will be you in 40 years mate, along with the rest of us entrepreneurial types!!!!!
but in all seriousness, if you have that genetic flaw that tells you to work longer hours for less pay than many, and kiss goodbye family time or sick leave, then more power to you!!!!! Because it really is people like you that can make a massive leap from what you should get and what you COULD get.
But the biggest word of advice I can give you is be aware. And the best way you can do this is to be informed and educated yourself about what you are doing and why you are doing it. If you dont know why you are doing something, find out. Then figure out a better way to do it.
my most successful client challenges me constantly. He is aware of every aspect of his business. EVERY aspect.
there is nothing he cant tell you about every peice of equipment he owns, why he needs it and how long before its going to be replaced.
He knows every staff members family names
he knows how to do the payroll, drive the truck, negotiate the contract, change the tyres, make the coffee, lock up and set the alarm, because he has done it all and has no problems pulling his weight, but he also knows that his time is better spent doing certain things.....
He NEVER asks a question unless he already has a pretty good idea himself of what the answer is. Which means I have to be on my game every time he calls. He knows exactly what is going on in his business, he respects his employees, and he doesnt waste anything, let alone something as scarce as his own time.
and he has just sold a business that he started from zero about 16 years ago for around $10m.
so be like that bloke.
good luck
bc
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Q: Purchased my first investment property in St Kilda and looking for an agent to manage the property. Any recommendations and what should their fee be?
A: same as all the other agents in St Kilda? 6-7%????
I would focus on level of service and ability to act when your tenant has issues. A shitty agent can sour a perfectly happy tenant, and a sour tenant is not something you want ever let alone in your first investment property
for example, if you screw your agent down to 5% on a $600/week property, you are talking maybe $15/week. If $15/week is going to drop you to the bottom of the property managers "to do list" its not a good investment.
Imagine how happy your tenant is going to be when the leaky tap drips for a month before a plumber finally arrives.....
the plumber cops a spray from the tenant , who has had no sleep.....
and the plumber files this address away in the "shitty tenant-AVOID AT ALL COSTS" list......
the plumber gives the property manager a spray because of the verbal he copped from the tenant....
so the next time something needs doing......no-one is highly motivated to do anything for you at all.
Now this is an example of property management "Fawlty Towers" style.......but if you are going to try to screw your agent down on price, you might find you lock yourself out of the players who perhaps conduct themselves more professionally than some......
have fun with it. I hope you dont end up with a plumber from Barcelona:)!!!!!
bc
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Q: Hi
Just wanting to work out my concessional contributions for the financial year ending 30 June 2019.
I do not want to exceed the $25k Cap.
Do I calculate my Salary Sacrifice and Employer Contributions from 1 July 2018 to 30 June 2019, or by the actual amounts that were deposited into my Account. I know there is a timing difference as it is generally deposited by the 21st day of the month after its been earned/sacrificed.
Many thanks in advance.
David
A: Hi david,
late response here, but the general statement that the determining factor is the date that the fund actually RECEIVES the cash is probably true.......but the technically correct answer is that the thing which determines whether or not the contributions counts towards the members concessional cap is the date the contribution is allocated to a member account.
And a super fund trustee has 28 days to decide what to do with the cash once it is received:
1: accept the contribution and allocate it to a member account
2: accept the contribution but allocate it a contributions reserve
3: refuse the contribution and refund it.
If the fund goes with option 2, the member doesn't actually receive the allocation until later on, when the trustee gets around to it.
soooo lets try a practical example of what happens:
1: David receives $24500 in employer concessional contributions between 1/7/17 - 1/6/18
2: all these contributions get allocated to his member account,
3: they all count towards his contribution cap of $25k
4: david makes another concessional contribution on 15 June 18 of $25000
5: now if this is allocated to a contribution reserve until AFTER 30 June, then it DOESNT count towards his contribution cap
6: but it is still a concessional contribution, and is still deductible to the contributor.
In practice the fund will almost ALWAYS allocate the contribution to the member account on the day it is received, so it might look like I am splitting hairs here....
but this is a strategy that has been employed many times by people to achieve a specific result, in special circumstances:
eg
if someone makes a large capital gain and wishes to maximise tax deductions in one year
if someone wishes to bump up their super balance so that they can enter into a specific plan which requires extra cash held in super
the devil here is in the detail, and this is a pretty technical area, which requires a high level of planning......and it always revolves around people with SMSF, because they need complete control over what happens at the fund level.
SO, remember to get advice BEFORE you do anything, and make sure that everyone knows what the master plan is.
And also bear in mind that you can now make a PERSONAL deductible contribution. It doesn't have to come from your employer......this is significant, because it might give you the ability to wait until mid June to decide how much you need to put into super, and if your employer cannot act quickly or precisely enough for you, then you can make the required contribution and claim the tax deduction in your own tax return.
regards
BC
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Q: Currently looking at a couple of commercial properties as an investment and want to know if the contracts have to say if the sale price is inclusive or exclusive of GST ..... do we also have to register for GST?
A: Hi ben,
firstly YES the contract need to state whether or not the sale includes GST or is GST free.
secondly you need to make up your mind if you want to be registered for GST, or perhaps whether you must be registered for GST.
For most people, the temptation of getting 1/11th of your investment back is a very good motivator for making sure that you ARE in fact eligible to claim this back, or able to complete the sale as a GST-free going concern.
Soooo, get yourself in front of a good adviser who can walk you through the pros and cons......the cost of the advice will be a drop in the ocean compared to the potential cost to you if you get this wrong at the start.
regards
BC
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Q: My family just inherited a large sum of money and i know we don't pay tax in the inheritance but if we invest in managed funds do we pay tax on the returns we get?
A: Hi Joseph,
a "large sum of money" can bring with it some large tax headaches!!! It is very important that you spend some time in figuring out exactly what you are receiving (eg death benefit lump sum from a super fund has different tax consequences than the cash left in Aunty Ethyls sock drawer)
then you need to decide what to do with it.
get in front of a good bean counter and a good planner to figure out what is what and what you need to do. If you are not the executor of the estate then I suggest you talk to the executor about what you have received and what tax implications there might be.....
cheers
BC
answered
Q: Who is going to win Caulfield cup?
A: Best Solution
Homesman
The Cliffsofmoher
Duretto
The Taj Mahal
you heard it here first;)
cheers
bc
answered
Q: Hi!
My youngest sister has been Granted Letters of Administration for my dad’s estate. His house is the only asset left to distribute. It’s equally owned amongst 4 siblings. 3 of us have cleaned and emptied it, ready to sell. One of my siblings is a meth addict and has since moved in to the house, without our consent. Looking for recommendations on how to go forward. We need to sell and we need to get them out to do that. I don’t know where we stand legally as we’re all equal beneficiaries. Can we force them out if they refuse to leave?
A: Patrick is on the money here.......it would seem you dont have any real option other than to get a solicitor involved
Im pretty sure that the police will not be able to provide you any assistance at all......
BC
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Q: Just wanting advice on how to positive gear we have an estate and wanted to buy something of lesser value than the estate which there is no monies owed to the house would we need to get a loan or is the equity in the house used
Thankyou in advance
A: Hi Vanessa,
There are simply too many variables here to do your question justice!!! Tax law, trust law, land tax, etc etc etc etc.......it is not possible for anyone to give you an answer worth reading without first getting a bucketload of details on how, when, who, what, why, where......which is where a decent bean counter with experience in estates is going to be a must for you.
As I often say, as a rule of thumb get someone with CA or CPA after their names......it sounds elitist, but many other accounting designations are nothing more than memberships, without any real qualifications and training behind them.....
training, qualifications and experience are the things that you need here.....and ALSO an ability to communicate with you......do some homework before you fork out your hard-earned money on some advice, and be prepared to ask a LOT of questions......because if the adviser has not got the ability to break it down for you in terms that you CAN understand, the chances are they really dont know what they are banging on about.
good luck
BC
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Q: Can you help me with an official job description from a reputable source, of a Commercial Leasing Real Estate Agent?
A: Hi john,
not sure what you are actually after here mate......can you explain this a bit more so someone with the nouse can give you some advice? Are you looking for a commercial real estate agent or writing a job description for one???
cheers
BC
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Q: About to complete our first development of 4 units and so far have sold three and thinking of keeping one. Our question is do we have to pay CGT on the unit we keep… how does it work?
A: Hi Leo,
Everything lies in the detail. But in general you are only liable for CGT on disposal. It depends on what you mean by "keeping one".......what you need to have a clear picture of is what your CURRENT structure is that is doing the development (are you doing this through a trust or off your own bat?) and who is ultimately going to hold the property.
Other issues that might also need to be sorted out include the GST ramifications of what you are doing, and perhaps even the possibility that the ATO might determine that you are in the business of "developing property" and hence the sales are not CGT events at all.....and the proceeds are simply ordinary income from the business of property developing.
Sooooo, if you dont already have one, I strong suggest you get in front of a GOOD accountant. You need to have all your answers sorted before the ATO starts asking questions!!!
I suggest someone with the letters CA or CPA after their names......and perhaps your best way to find one is through conversations with friends, family and colleagues who have had similar issues (ie property development) previously.
good luck
BC
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Q: Attending my first auction tomorrow as loan approval came through yesterday. Does anyone have any words of advice or tips on bidding?
A: If a fly lands on your nose whilst the auctioneer is saying "going twice" the you need to resist the temptation to shoo it away........when I was about 12 I bought a chisel plow at a clearing sale doing just that!!
I think all the smart people would actually tell you to stick to your budget and dont get caught up in the adrenaline and hype. The world is full of people who paid over their budget because the temptation to "run" someone is too high.
good luck
bc
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Q: Hi
I work full time as digital marketer and do some freelance work after hours. My work salary is $78,000 so do I need an ABN and register for GST for my own work?
A: Hi jamie.
everything they said......PLUS this:
DONT go cheap and nasty on the record-keeping!!! You know how computers work, but dont feed yourself some line that you can do a spreadsheet in Excel for nothing, and that will be just as good as Xero/QuickBooks/MYOB.
Its NOT!
an excel spreadsheet is worse than useless for my purposes as an accountant.....unless I prepared it and I entered every single number and I checked the formulas and I am 100% confident that what is in it is legit.
otherwise its the electronic equivalent of a shopping bag full of torn and faded receipts.
Quickbooks can be had for $17/month. get that. or Xero. Or MYOB. Get something, but for pitys sake dont go with one of those "free"packages like Invoice2go. Free = shit.
And DO see someone about record-keeping and making sure you maximise your deductions whilst ALSO minimising risk of an audit:)
have fun!!!!
BC
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Q: hi ..I work as a shop assistant in a clothing store and we are told we have to wear the clothes from the shop. We do get the clothes at a discount …can I claim the cost as a tax deduction
A: Todd is on the money!! And dont think that the ATO wont be interested in auditing you.....there is a massive increase in audit activity by the ATO...and they are not wasting any of their audit budget on the big end of town.
The ATO has clearly got their eyes on wage earners......it is the tax equivalent of beating up the fat kid at school. wage earners have 3 attributes which make them perfect for an ATO audit:
1: they cant afford the $3000/hour barrister to defend them
2: they generally dont know enough about the rules to do it themselves
3: they generally are not great at keeping records
so, please get advice about what you can and CANNOT do. and KEEP records!!!!!!
almost everyone is missing out on deductions they should be claiming so a chat with an expert WILL benefit you. And is itself a tax deduction :)
cheers
BC
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Q: Does the governments fuel tax rebates include small owner operators?
I have just started a small furniture delivery business and getting conflicting information from two different accountants… what are the rules?
A: www.ato.gov.au/Business/Fuel-schemes/Fuel-tax-credits---business/
this will help you to figure out what you can and cant claim.
Small operators are still eligible. Small trucks are not.
so if your truck has a GVM of less than 4.5 tonnes your goose is cooked I am afraid.......but as long as you drive a bigger truck then you should be eligible.....so long as you are registered for GST.
cheers
BC
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Q: Hello,
I’m 48 and a late starter to superannuation and I have been thinking about salary sacrificing into my superannuation account.? Is it a good idea and is there a limit to how much I can salary package?
A: Hi Pamela,
Is it a good idea? Almost certainly yes, but you probably need to talk to someone about YOUR situation and what you are doing and why and how....etc
Your concessional contributions cap is $25,000 this is the amount that can be contributed into super tax-effectively WITHOUT creating an excess contributions tax headache.....and it includes:
1: employer super guarantee contributions
2: employer salary sacrifice contributions
3: personal concessional contributions
It would be wise to sit down with someone to discuss your situation......because whilst super is the BTO (Best Thing Out!!!) you need to have confidence that what you are doing is in your best interests....and that depends on all sorts of other factors.
find someone who charges you for advice.....because then you will hopefully end up with someone who is motivated to give you the best strategy for YOU, rather than the strategy that pays him the most in commission.
talk to your friends, and ASK a LOT of questions......and ask the adviser to put you in contact with some of his (her) clients for a recommendation.
good luck
BC
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Q: When are all property, infrastructure, lend lease and ist property quarterly dividends due by date of that period quarter and how many do you receive each quarter at hostplus.?
A: Hi Steven,
It might be that the dates when the distributions are paid to Hostplus and the dates the income is distributed to you are not the same. They have to factor in fees and other costs, and attribute the income to its members which means it will probably take time for someone in Hostplus to figure it all out before paying it to your member account.
Is that what you are driving at????
regards
Brendan
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Q: Hi everyone, I have a question about my Super, I am 61, Lately I have been watching my super with AMP,( with them for many years) and it appears that half of my return goes in Fees and Charges? is this normal? by my calculations, and my hours being cut down, I think I will end up with less than I have now. Do I need to find another fund ?
A: HI Vickie,
AMP have traditionally been happy to charge their clients like wounded bulls......and for the majority of people unfortunately the costs are either ignored or the client remains blissfully unaware of the cost until something gives them a reason to look at their super....like impending retirement......
so you need to get some advice.....not only on your super but on developing a master plan for your retirement. this includes super but super is only part of the picture.
find someone who can discuss super, tax, insurance, asset management, downsizing, estate planning and a whole heap of stuff.......many advisors will do a bit of the whole picture but most wont be able to do everything for you.....and maybe you will end up dealing with a number of people to fill in all the blanks.....but at your age you need a plan to manage things moving towards and throughout your retirement. And the sooner you get this sorted the better.
And bear in mind that you WILL have to pay for this advice. And you should be happy to do so.
Because advisers who dont charge you for advice must be getting paid by someone......which means they are making money on commissions.......and you always look after who pays you.....so if the adviser can get a better commission from somewhere they might be motivated to steer you in a direction that might not be in YOUR best interests......
So discuss fees and commission and remuneration with the advisor up front!!!
good luck
BC
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Q: We operate a transport business and have been using ABM accounting software for many years. Finding it very manually reliant and our accountant had said their moving all their clients across to Xero but we would like to get some opinions on how they find Xero , MYOB, Quickbooks or others – thank you
A: By the way, if you search around the world wide web you CAN find FREE software........FOR GODS SAKE DONT USE IT!!! Free = Garbage.
It might let you do online quotes and invoicing, and might give you some pretty graphs, but my experience is that there is not a single free accounting package that is worth using. The ones I have been exposed to provide virtually none of the benefits of the packages I mentioned earlier, and when we get a job on one of the free platforms, we inevitably end up referring back to bank statements and receipts to get the work done, which costs the client (ie YOU) a BOMB!!!.
Save money up front.....and cop it in the neck from your accountant when he/she has to sort out the info into something sensible.
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Q: Hello
I recently became an Australian citizen and have a full time employment in I.T software. If I do some freelancing work for overseas companies do I have to pay tax on the money I get paid
A: Hi guys, there is a difference between Australian RESIDENT and Australian CITIZEN for tax purposes........
and for TAX purposes, it is residency that determines how you are taxed. If you are NOT an Australian resident then you will be taxed on your Australian sourced income only.
now the million dollar question for you is "what is the source of my income from IT services provided to an overseas company"??
If your freelancing work involves you staying up late and dialling into your clients server from your lounge-room, then there is a pretty strong argument that the income is generated in Australia, and will be assessable as Australian income.
If your freelancing work involves you jumping on a plane and shooting off to Germany and you earn your money there, then its probably not Australian income........but then if you are an Australian resident you are going to pay tax on it regardless....
then you will probably have to look at claiming tax credits for tax paid on that income in the foreign country.....and double tax agreements and whatnot.......
so the BEST thing you can do is talk to your accountant BEFORE you start, and get advice on what your tax obligations are......it gets complicated pretty quickly and you can very easily shoot yourself in the foot if you are not careful:)
good luck
answered
Q: We operate a transport business and have been using ABM accounting software for many years. Finding it very manually reliant and our accountant had said their moving all their clients across to Xero but we would like to get some opinions on how they find Xero , MYOB, Quickbooks or others – thank you
A: Hi Penny,
we have experience with a wide variety of online accounting packages......and to be honest they all pretty much do the same thing:
- online access from anywhere
- bank transactions automatically loaded into software (BIIIG time saver!!)
- can automatically allocate transactions based on amount, payee, narration (HUUUUGE time saver!!!)
- payroll functions
- super streaming
- track subbie payments (this will eventually become a mandatory reporting chore for everyone)
real time reporting for banks.
GST reporting
budgeting (VERY USEFUL TOOL)
etc
etc
the time you can potentially save with the online packages will BLOW YOUR MIND!!! AFTER you learn how to use it!!! This is the issue that people get stuck on.....the potential benefits you can get from having up to date and accurate figures 24/7 without the need to beg your accountant to punch out a quick set of figures are huuuuge......but you really and truly need to factor in the time it will take you to get proficient with the software.....so the software providers in house (FREE) support services become VERY important in this decision.....
MYOB has traditionally been the market leader with online stuff.....and their support services have traditionally been better than some of the others.....but they will try to steer you towards their FAQ's and "how to" videos......which in reality are pretty decent
XERO looks funkier, and lots of people love it, and its a bit cheaper than MYOB......but you wont want to hold your breath waiting for them to call you back......support is pretty much email and "how to" video streaming.....but still a good package
QUICKBOOKS has not been a big player in AUsitralia, despite being one of the largest software providers in the US (intuit owns Quickbooks I think).....and they are pushing really hard to get a foot in the door in Oz......their prices are ridiculously cheap ATM, and I have found support services recently to be very fast and effective.....and they do still have the traditional FAQ's and "how tos".......
the thing is you probably want to talk to your bean counter about what they prefer......because if your accountant likes XERO, and you use Quickbooks, you protentially have a headache.....especially if your accountant really HATES Quickbooks......
but it all boils down to deciding which one is going to be the best for YOU.....because you are the one doing the data processing late at night when the kids are asleep......so have a look at them all......they all have free trial periods, but that is just a velvet noose.....because once you start with one of them you are unlikely to dump one to try another.....
good luck
BC
answered
Q: Hi All,
I hope you're all winning!
I have a tax question for the accountants here.
If someone has held a company for over 12 months and is now selling the business, will they be up for full CGT? Or do they get a similar concession to a real estate asset?
The business has been held by 2 directors and shareholders and will each have an equal share of the proceeds from the sale.
Cheers,
Frank
A: hi guys,
the company MAY be entitled to Small Business Entity CGT Concessions......so its really really REALLY important to ensure that the person preparing the accounts understands what is going on and what concessions are available.....so talk to a qualified and experienced CPA or CA who can help you
cheers
BC
answered
Q: Hi,
I have just moved from being an employee to a contractor – same role with greater flexibility. My question is what percentage of my income should I put aside for tax and is there anything else I need to consider, thanks?
A: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/practice-management/employee-versus-contractor-factsheet.pdf?la=en
this factsheet put our by CPA is a good start.
I have a really good saying that was given to me by a very clever barrister once...." if it walks like a duck and quacks like a duck, then chances are its probably a duck."
you have gone from being an employee on the payroll, to a contractor. The ATO will take one look at this and thing two things:
1: your employer is looking to dodge super and workers comp
AND
2: you are looking to claim a whole heap of expenses that you probably shouldnt.
soooooo be very very careful about what you do in your own tax return. And make sure that your employer is actually fulfilling his obligations re super and workers comp!!!
and talk to your accountant about what you can and cant do and what you SHOULD and SHOULDNT do!!!!
good luck
BC
answered
Q: Hi,
I am currently transitioning jobs and I have been asked if I would prefer PAYG or to be paid as a Sole Trader.
Can you please tell me if I am financially better to PAYG or be a Sole trader?
Rate per day I will be earning is $550 including super.
Any advise would be greatly appreciated!
A: Hi Jade,
I have found that in every case where an employer wants to report an employee as a "subcontractor" the real reason has nothing to do with making things "convenient" or "flexible" for you.
Its because the employer wants to avoid paying workers comp and super. And it saves them the trouble and inconvenience os paying your PAYG W every three months.
So as a subbie, you will get a dirty great big tax bill at the end of the year: as a rough guide bank on around 25% of your gross income: so $80k total income will get you a $20k bill next July.
And you wont be covered if you get injured
And you wont be getting any super
And you have no rights as an employee: so you can get punted at any time for no reason
Oh, yeah no sick leave, and no holidays.
All in all its a crap deal dressed up as something its not.
Sometimes you have no choice. Sometimes the only work going around is as a subcontractor and sometimes you have to take a shitty deal rather than no deal.
But if you DO have a choice make sure you take into account all the things you might be missing out on.
cheers
BC
answered
Q: I would please like to know the best type of home loan for a couple, where one partner has children from a previous marriage, especially if the partner without the children is putting in the deposit. Is it best to set up "Tenants in Common" or "Joint Tenancy".
Question 2.
Could you also give me the advantages of "Tennants in Common" and the disadvantages of "Joint tenancy" (and if there are any advantages in Joint tenancy?)
Many thanks
A: Hi claire,
the best answer for you is "its complicated!!!"
there is no single answer that is best for you. The best setup for you depends on a multitude of factors:
- each persons objectives
- is this the "forever home"??
- is it likely to become income-producing at some point?
- what do you want to do with your share when you pass away?
- what does your partner what to do with his share when he passes away?
- how old are the children?
- what is your expectation regarding your share of any joint assets in the event that one or the other or both of you pass away suddenly
- what is going to happen with the children in the event that your new partner passes away and leaves the kids with you? or the children go to someone else??
best thing you can do is get in front of someone who can advise you on a range of things. BOTH of you. So you are all on the same page with what is going on what the issues are and how to address things sensibly.
good luck
bc
answered
Q: I have a automotive question. I live in Victoria and one machanic said to me that my car oil needs to be flushed and put new oil in. I have a 2010 Mazda CX-7. How much would that cost?
A: Hi AnneMarie,
It would be sensible to get a second price for an oil change, but trust me when I tell you the oil change is gonna be a lot less expensive than a new engine.......because if you dont change your oil thats what you are looking at.
PS I did not learn this from the Institute of Chartered Accountants in Australian and New Zealand hahahahahaha!!!
cheers
BC
answered
Q: Hi, I have a young family and want to go back to work and thinking of starting my own mortgage broker business. Previously I had 8 years in lending with one of the major banks and wondering if I should just go out of my own or join a franchise type model. I’d really like to get the thoughts of others in the industry and to also ask what else I should be considering, thank you
A: Hi Melanie
I am almost certain to tread on a few toes here, but for the life of me I cannot see any benefit in stumping up a heap of cash for a franchise.
If you already have the qualifications skills and experience in mortgage broking, why do you need a franchisor to hold your hand???
If you need support for your back office, surely there are solutions out there that dont carve out a huge percentage of your turnover??
I am sure there are plenty of brokers out there who can help you with practical real world advice, good luck!!!
Just my two bobs worth.......
bc
answered
Q: I was just reading an article from a broker about rates dropping and thought:
What's the lowest Low Doc rate these days?
A: Dropping???? I thought they are all heading in the other direction now that the Big Four have decided to multiply their fines by a factor of 15 and recover this in 12 months from increased rates under the assumption that
1: everyone will accept their lame story about the cost of money from o/s and no one really notices anyway, because after all its only a couple of basis points and
2: everyone will get wound up for a day or so, and then get comfortable with the new rates and forget to do anything.
but it would be good to know what the best rate going is?
bc
Graham Doessel - CEO - MyCRA (Specialist Credit Repair) Lawyers (LPH)
6 years ago
answered
Q: I was reading in the Financial Review that I could potentially rent out my SMSF investment property to a family member as long as it is done at a commercial rate. I much prefer to rent to someone I know. Is this true?
A: HI again guys.......great case example Wayne!!!!!.........I would be very surprised if the ATO doesnt appeal this decision.....the last thing the ATO will want to see is a fleet of SMSF renting out houses to Aunty Ethel....
....and even if they appeal and lose the case, this wont alter the ATO's interpretation of the law.....because that individual case is VERY specific in its details......
My point here is that you can have all the fine details and case law in the world to back you up, and the ATO will make your life a misery anyway if they think you are having a lend of them........sometimes it has more to do with minimising the risk of an ATO audit than it has to do with the correct application of the legislation
cheers
BC
answered
Q: I was reading in the Financial Review that I could potentially rent out my SMSF investment property to a family member as long as it is done at a commercial rate. I much prefer to rent to someone I know. Is this true?
A: Well........."technically" you can..........but you will be opening a Pandora's Box of poo and tipping it all on your own head.
https://smsmagazine.com.au/columns/avoiding-in-house-asset-complications/
if you really really want to know, start with this article......then get yourself a copy of the SIS Act 1993, and become VERY familiar with Part 8 of the Act......because Part 8 is the section of the SIS Act that will explain that after you rent out your SMSF home to a family member (on commercial terms), the fund will:
a) lose its complying super fund status and pay tax at 47%
AND
b) be forced to sell the house
I am being VERY tongue in cheek here Adam. if you follow the letter of the law, you CAN do the thing mentioned in the Fin Review, but the adverse consequences will want you to find the journalist who wrote that article and cut off his toes with a set of bolt-cutters.
Super legislation is crazy complicated, so you need to have confidence that you are across it, OR have an advisor who is......and trust me there are PLENTY who arent!!! I have seen some dead set clangers when auditing SMSF........
So talk to your advisor about this......and question them.....their job is to explain it to you in a manner that you can understand. If all you get is gibberish then it means that your adviser doesnt understand it well enough to explain it to you, or they DO understand it, but are incapable of communicating......either way you are up the creek in a barbed wire canoe with no paddle........
good luck,
BC
answered
Q: If we build a granny flat out the back of our home (primary residence) could we claim the rent on our tax or would we have to apply for a sub division and have the flat on a separate title?
A: Hi Eddy,
yes you can (and should) declare the rent as income and claim the outgoings as deductions. Remember that you will have to apportion the outgoings on a reasonable basis, otherwise the ATO will get snakey with you for having a lend of them.
For example, a portion of the rates will be deductible, because a portion of the property will be used for a "creditable purpose"......to generate assessable income.....but is NOT 100% of the rates clearly because you live in part of the property.
same goes for interest on the mortgage and other things that are based on jointlt spent or used items.
Repairs specific to the granny flat will be 100% deductible.
You may consider getting separate meters for gas and electricity: it will make life easier to allocate who pays what and also make life easier at tax time too.
Now for the bad news: if you use a portion of your home to generate assessable income, then the ATO will want to take a slice of the action when you sell the home later on and make a capital gain:
for most people the home is exempt from Capital Gains Tax.
however if you use some of your home to generate income (rent) then a portion of the home becomes subject to CGT.....which is never a great feeling, but thats just how it is.....
Best thing you can do is sit down with a qualified accountant and go through it with them....find out all the things you CAN do and all the things you CANT do.....then you will be able to assess for yourself whether a granny flat is a good idea or not.
good luck
BC
answered
Q: I am looking for investors who might be looking for a change from the same old same old avenues. My company is mining Crypto Currencies and we have an opportunity for investor's to get involved. We are an Australian company registered with ASIC. And our Investment offer's returns equal to 20-40% per annum. Currently running at 27%.
Where can i find people who might be interested in having a look at what we offer ?
I call hundreds of Australian's a week and many have not even heard of this industry.
here is a brief introduction to what we do ...
What is Bitcoin Mining ... How it works.
Mining Bitcoin is a bit like a bank taking fee's when you use an ATM.
Around the world approximately 250 thousand times a day there are transactions made between two parties , buying and selling Bitcoin. Everytime one of those transactions happens , it needs to be verified as true and correct.
This verification is done by very powerful computers that solve algorithm's that each transaction create's. The first computer to solve the algorithm gets paid a fee in Bitcoin. This is how Bitcoin is minted. After the first computer solves the algorithm then multiple other computers also check to see if the transaction is true and correct before the transaction is deemed successful. However only the first computer gets paid.
This is called Proof of Work.
The investment opportunity , would be a great conversation !
A: This mining thing is beyond my comprehension, because it doesnt actually come out of the ground, but since the term mining IS something I have some experience in, I will try to frame my questions around the mining analagy:
what is the estimated size of the resource?
what is the cost of production?
what are the markets for the product?
What are the taxation consequences of mining bitcoin
what is the risk of business failure from competition
how volatile is the market
I gather that the whole blockchain cryptocurrency concept is complicated and there is a lot of technical expertise that is required to fully understand all the ins and outs of the industry......but there is a lot of technical guff that nobody knows or cares about in the iron ore industry, but people are still happy to invest in BHP. How can laypeople get informed about cryptocurrency to the extent that they need to...as investors in the industry....to assess the merits of this as compared to other investments that they might use???
cheers
BC
Geoffrey Wighton
6 years ago
answered
Q: Im interested in bitcoin starting it up soon but i want to know the tax's involved. As far as i e heard there is no tax on the coin itself in australia but something about capital gains? please explain
A: Hi Geoffrey,
not necessarily convinced that Bitcoin is the best thing going......I still dont know what it is and how it works, and what the risks are. happy to talk anytime.
cheers
BC
answered
Q: I am looking for investors who might be looking for a change from the same old same old avenues. My company is mining Crypto Currencies and we have an opportunity for investor's to get involved. We are an Australian company registered with ASIC. And our Investment offer's returns equal to 20-40% per annum. Currently running at 27%.
Where can i find people who might be interested in having a look at what we offer ?
I call hundreds of Australian's a week and many have not even heard of this industry.
here is a brief introduction to what we do ...
What is Bitcoin Mining ... How it works.
Mining Bitcoin is a bit like a bank taking fee's when you use an ATM.
Around the world approximately 250 thousand times a day there are transactions made between two parties , buying and selling Bitcoin. Everytime one of those transactions happens , it needs to be verified as true and correct.
This verification is done by very powerful computers that solve algorithm's that each transaction create's. The first computer to solve the algorithm gets paid a fee in Bitcoin. This is how Bitcoin is minted. After the first computer solves the algorithm then multiple other computers also check to see if the transaction is true and correct before the transaction is deemed successful. However only the first computer gets paid.
This is called Proof of Work.
The investment opportunity , would be a great conversation !
A: Hi Geoffrey,
I know that there is a market for cryptocurrencies, but for the life of me I cannot understand where the value lies. the currency itself is not regulated, nor is it backed by the guarantee of a government or a reserve bank. I have never seen anyone advertise to sell a product or service in Bitcoin, so I dont actually know what I can buy with my bitcoins.
But somehow there seems to be a demand for the cryptocurrency. I suppose its much like demand for diamonds, or gold: you cant eat it, you cant spend it, but you can trade it......is that a reasonable analogy???
My (very) limited reading on the subject tells me that there are a finite number of algorithms that can be calculated with current computing technology, so we are talking about a finite resource.....which you are mining. Where does the cost of production exceed its market value???
Another thing that I dont understand is the 250,000 transactions trading in Bitcoin.......people are buying bitcoin and selling bitcoin and the process of verification means that someone else gets paid in bitcoin: who pays this fee?? the bitcoin buyer or the bitcoin seller???? is the act of solving the algorithm the thing that creates a bitcoin? how do you know that the bitcoin even exists....and where does it live??? and how can I sell my bitcoins to someone else????
The more I think about it the more confused I get.......
So can you break it down for dumbos like me, and explain what one is, and how one can hold onto a bitcoin, and maybe this will help everyone to understand better what they are and how people can benefit from them.
cheers
BC
Geoffrey Wighton
6 years ago
answered
Q: Hello, on a commercial property loan of $330k from a tier 1 lender we are borrowing about $120,000 through our SMSF. Are such fees usually requested by the broker, the broker wants to charge $1,000 upfront? ? Is this standard industry practice for non resi loans or a matter of which broker can get away with these fees from the borrower?
A: I have seen a number of SMSF loans in the past couple of years and never seen an up front payment. what is the commission structure? Is he likely to rebate this back to your fund somehow out of his commission??????
Maybe you should shop your business around, because the broker will getting the commission on the lending and also the trail.....so there is every chance of you finding someone out there who will do the loan for you without an up front payment.
good luck
BC
answered
Q: Hi, I have recently become the Executor of my dad’s estate. Through his current accountant, I have been recommended to see a Financial Planner as the whole estate is in ASX listed shares. I am worried about getting bad advice. What are some of the questions I should be asking the adviser to know if they are any good?
A: Hi Sam,
agree with everything said here. One thing to keep in mind as the executor: your fathers estate can run for a period of time and still be taxed at normal rates.....which means it gets the $18200 tax free threshold etc......this is important in deciding WHEN the estate should dispose of the shares....there can sometimes be a significant tax advantage if the shares are retained in the estate.....for a short period......then the estate will have to distribute the income to the beneficiary (you) or transfer the estate assets to the beneficiary (you)
sooooo.......make sure your accountant is across those issues too.
good luck
BC
answered
Q: Hi there
Got some great responses last time I posted here so hoping for a similar result!
I am a beneficiary of a deceased estate split into 3. We recently put the property up on Airbnb for some rental income whilst we wait for the property to be sold.
We did some work to the property readying it for lease such as painting walls, purchase of linen, crockery etc.
1) Can these expenses be claimed? Obviously it's work done prior to being leased but integral to be able to do so. Or does any receipt need to show that the date of purchase was AFTER the commencement date of lease?
For our tax returns, we will be splitting income/expenses between the 3. The property had no TV or Vacuum and so one party paid for these items out of their own personal money as they will take these items as soon as the property sells.
2) Will their be any red flags if one party claims higher expenses despite splitting income by 3?
Looking at it now, I guess if the answer to question 1 is 'NO' then question 2 is probably void as these items were obviously purchased before our first tenant.
Thanks so much for assistance. Great community of help!
Steph
A: Hi Steph,
Scott is on the money: there is too much going on here to give you a straight answer.....and there are too many what ifs
Firstly has the estate been finalised, or is the property still held in the estate?? This itself is critical, because if the property is owned still by the estate then it is the estate that needs to report the income and claim any expenses......
SEcondly the work done on the house is likely to be capital in nature.....each case is different so you need to look at what was done, on an item by item basis......but if you did a lot of small things that doensnt necessarily make them individually "repairs".....so off to the accountant with this one:)
Thirdly: if one party incurs a higher cost than the rest, and you guys have agreed that everyone can catch and kill your own deductions, then I would say that there is no reason why one persons deductions must be the same as anothers. BUT bear in mind this is affected by who actually owns the property.....because if the property is held by the estate then none of you has any assessable income to offset with allowable deductions......another good reason to track down a decent bean counter.
My last comment is the literature put out by the ATO: the ATO does not write the law. It doesnt decide how the tax system works. It interprets the legislation and administers the taxation system. PArt of what they do is provide guidance to taxpayers on how to apply the law.....based in the ATO interpretation of the legislation.
What this means is that the ATO will put their "spin" on a given issue. And trust me that the ATO "spin" os quite often a LONG way from how the law can be interpreted by some people.
Sooooo, by all means have a look at the ATO for their guidance, because it is important to know how the ATO will react to a certain issue. Then talk to a CA or CPA who knows what they are on about. Then make up your own mind about what you want to report in your tax return....its the SELF ASSESSMENT SYSTEM......which means it is really up to you to decide how to report your income.
good luck, I hope you find a good CA/CPA who can assist you with your AirBNB.
cheers
answered
Q: I’m on disability support pension. I want to start working if I can. But my disability is infinite, and will progress to become an in ability to work. What is the maximum I can earn, before it starts affecting my Pension. I do not want my pension to be affected at all.
A: https://www.humanservices.gov.au/individuals/enablers/income-test-pensions/30406
Hi Sip.
the income test varies for single or couple, but as a rough guide, 172/fortnight before your pension starts being reduced.....and it gets reduced at 50c pre dollar of earnings over $172.
Which in my view is a massive DISINCENTIVE for someone to go back to work......because your "effective" tax rate is going to be no less than 19% + 50% = 69% or perhaps 32.5% + 50% = 82.5%. who would go back to work if you get to keep 17.5cents in every extra dollar you earn?????.
The link at the top of the page is to the Centrelink website, which is actually quite easy to navigate. Hope it helps mate, please feel free to contact me direct if you think I can be of any further assistance.
regards
BC
answered
Q: Home Loan News
Westpac Bank has announced an increase of 0.14% to all their variable home loan rates for new and existing customers
The rate increase will take effect on 19 September 2018.
A: Hmmmmm, in the middle of the Royal Commission, no less!!!
Call me a cynic, but given that a google search shows interim cash surplus of over $4billion dollars, and 100% of NSW and most of Qld in the worst drought in recorded history, maybe taking the foot off the throat of their victi....errr CUSTOMERS is going to result in a better public view of what they do and how they roll......
by the way, in increase of 0.14% on a home loan rate of 4.5% is actually a 3.3% increase in revenue......more than CPI which is expected to be around 2%.....whats the bet that this is NOT the only rate increase we will see in the next 12 months????
Australian banks are the soul-less profit machines we have created, and because they are a power unto themselves we have no control over them. They act with impunity. They have zero regard for the law, because the law doesn't hold the individuals accountable for the corporate greed, and lack of compassion displayed by all banks. CEO's are rewarded for share prices and dividends, not growing family businesses, and developing industries. And until something fundamental changes in the banking industry we are going to be stuck with what we have created.
Brendo
answered
Q: I have always thought I was good at budgeting - turns out I might not be!! I need help with free financial counseling, someone looking at our budget, finding ways to save, pay the debt off faster or possibly Debt Consolidation? I don't think the latter would be an option though...and I just don't know how to tweak it anymore... I have attempted to contact a free Financial counseling service in WA with no luck yet...Any suggestions?
A: Hi Stef,
being very light on detail I dont know whether you are looking for help to get some savings happening, or you are in a position that you dont have enough money for the basic essentials to survive
I found a dozen different free services in and around your area, so if none of those are any use to you, then I suspect what you need is something more than some advice on how to make your income stretch far enough to pay the rent and groceries?????
I know that some financial planners offer a service to track and report on household expenditure.....but this is far from free, and in my opinion only useful for people who need to be told that they are spending too much on chai latte if they want to go to Spain next winter.
And I dont know where you fit into the spectrum of people who need advice Stef.
I would start with the free counselling services in Perth and get them to recommend other service providers if what they can give you doesnt suit your needs.
And remember, once you get past the free services offered to people in genuine need of counselling and advice, you do actually have to pay for advice......
good luck
bc
answered
Q: My husband should be treated as an employee , he is employed as a subcontractor , he is carpenter . His boss has not paid into super or PAYG. So he not paid tax this year. He works full time and on an hourly rate , uses his own car and tools for the job- he invoices his boss weekly and provides an ABN . What should he do.
A: Hi Kate,
the building game is awash with people who dont like paying super, or workers comp, or PAYG W either for that matter.
You hubbys boss will almost certinaly get slugged with super and workers comp if he gets looked at by ATO and workers comp, however I beleive the PAYG W is going to very difficult to get around.
If your hubby has given the boss invoices, even if the invoices just say "40 hours at $50/hour"or something like that, then the boss has paid him that amount.....then for TAX purposes his income is business income and he will be taxed on it accordingly......which means that you guys are getting a tax bill no matter what happens.
best thing you CAN do is get in front of a GOOD tax agent who can help you minimise the pain of paying tax on busines income.
you also need to make decisions about whether you hate your hubbys boss enough to dob him in for avoiding super and workers comp.....which he clearly is....and deserves everything he gets. But that is often a problem because as soon as he get wind that you have dobbed him in you will probably find yourself looking for another gig as a builder......
and dont forget that its your retirement nest egg he is NOT paying into......and when he has retired to Hobart and living the life of Reilly he wont lay awake at night wondering if you guys have enough to retire on. this is something else you should discuss with your accountant.
Soooo get yourself a GOOD QUALIFIED Accountant who is CPA or CA qualified and knows what he is talking about with super and workers comp....and business returns.
And also talk to him/her about what BUSINESS STRUCTURE is best suited to you specific circumstances.......maybe sole trader is not the best option for you either.....
good luck
BC
blog post
SCAM ALERT!!!! DONT GET FOOLED!!!
Today I found out a client of mine has been stung by a very well planned and executed scam. Lets call this guy Billy.
Yesterday Billy received a phone call from someone who said they were f ...
Brendan Curran
6 years ago
answered
Q: I have an abn and just registered for GST, how long can I expect to wait before it shows up on my abn search?
A: The ATO has a "standard service period" of 56 days.
this means that if you call them to find out what is going on before the 56 days is up, they will say "we have a standard service period of 56 days. Please call us after 56 days"
then, after you have waited 56 days, and you call them up, they will say "we have a standard service period of 56 days. We will escalate this matter for you. The standard service period for escalated matters is 56 days. Please call us after 56 days"
true story. this has happened to me on a number of occasions.
In practice though, unless you are a terrorist money-laundering type you should see this in a few days....maybe a week at the outside:)
cheers
BC
answered
Q: What is the best Hostplus super option to choose for someone nearly 60?
A: Hi Steven,
the answer is "it depends"
and the number of variables that may or may not affect the decision is HUUUUGE.
so you need to talk to an expert who knows the rules and can give you the advice that best suits your individual situation.
Now, Hostplus will possibly be able to offer you advice, however I have seen some extremely stange advice come out of industry funds......and I suspect that its because the people providing the advice dont actually know as much as they think they do.
sooooooo:
step 1: get advice from HostPlus
step 2: take this advice to someone independent and get it reviewed
step 3: make decisions
good luck
bc
answered
Q: Hello there!
I am 19 years old and looking to buy 2x 40 ft shipping containers and converting them into a home nicely set up, I've done the research and the profit can be there with the right planning and budget, but I am currently not earning enough to save $20,000 in the next year due to rent and other day to day expenses also I cant get a loan with any banks as a parking ticket was being sent to the wrong adress and I didn't know about it for over a month! Which affected my credit score quite badly. So my question is does anyone know where I can find private investors or something along that line to help with the costs of my project I have seen a financial advisor and have professionally drawn up plans that suggest a $25,000 profit in 2 months work! Thankyou really need advice.
A: Hi Jackson,
I am guessing you already have the land upon which you are going to build the Shipping container house? I have seen some container homes and some look great, and some look like...well...a couple of shipping containers welded together. SO not knowing your budget I cant say how you plan on pulling this off for $20k, but Lets assume you have got your sums right, and you have the market picked too, because a plan that says $25k profit is no good to you when you cannot find a buyer and the bank is breathing down your neck:)
Go see a mortgage broker. There will definately be someone out there willing to lend you something. If not a bank or a building society, there are third tier lenders like Liberty who might take an interest. Then you have private equity style lenders like Archery Capital who lend for property.......
But remember that the further away from the big 4 banks you get, the higher the interest rate and the shorter the repayment terms, and the harder it gets to make the payments if you are on a tight budget. Which is where your budget needs to be 100% on the money, because it only takes a little boo boo to make life extremely uncomfortable.
Im sure there is a mortgage broker out there who can help you out:), but make sure you have ALL the information for them, and present it in a way that they can use to sell your project to a potential lender. And remember that you might end up with a "commercial" lending product rather than a "residential" lending product, which means you may have none of the rules and regulations that protect people from being punted out of their homes if things go south. Ask the broker to explain the difference in the rules so you know what you are signing up for......because not all loans are created equal!!!!
good luck
BC
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Q: Hi team
My wife is a teacher that has just finished up mat leave but yet to return to any full time employment.
Whilst on mat leave, she undertook a makeup course. The course has assignments that require you to purchase makeup supplies but they advise to buy significant more to build up the kit once she starts working as a makeup artist. Currently, she hasn't got an ABN though will do as soon as the course is complete.
In her tax return, can she claim these significant expenses as either educational or work expenses? Reallistically they are both but not sure if recognised by ATO. How can we best structure this?
Thanks in advance.
Daniel
A: GDay Dan,.
The guys are spot on. In order for the expense to be deductible it needs to have a direct connection to CURRENT income. You cannot claim an expense against future potential income.
the expense will not be deductible against her income as a teacher, nor as a self-education expense, because there is no income from this business or employment.
It is likely that if you shop around you could find someone happy to stick it in your return, but PLEASE think very carefully about this. I guarantee the ATO will take a dim view if you give it a run. And I know that the ATO has a massive budget to audit peoples claims for work-related expenses......so the chance of getting looked at are roughly 100 time higher than they were even 12 months ago.
And an ATO audit is an experience that no-one walks out of thinking "that was fun".
sorry Dan, but the money for the course is not deductible and any supplies she buys is going to end up non-deductible or reported as closing stock in a business schedule......which wont help her at tax time either.
regards
BC
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Q: I am thinking of gifting a friend's newborn with a $1000 investment in Spaceship Voyager's Universe portfolio. It is a new fund with ZERO fees up to $5000. No other hidden fees involved. The annual management fee moves to 0.10% after $5000. I like it because it provides a platform that is well suited to the millennial generation and beyond and since my investment is below $5000, it will be free. There are no in-out/brokerage fees.
I understand there are now high taxes imposed on children's unearned income (? income taxed at 66% once it exceeds $416pa). My question is, will this be imposed on the income from the portfolios dividends? And what kind of share portfolio value would yield more than $416 a year (I know this could be a wide range but am just curious if anyone had a rough idea)?
I have been told insurance bonds are another alternative and that low-cost ETFs are another option. I just wanted a platform that would be more targeted towards the younger generation and love how simple the platform provides a way to learn a little bit about different stocks on a mobile device.
P.S if anyone is interested in trying the platform themselves, if you use this link (www.goo.gl/sBDuCa) we will both get $20 to invest in the portfolio. I think if you sign up through the app without the link like I did, you won't get any free money to invest.
A: The income from the portfolio WILL be assessable income in the hands of your friends child. The tax rates apply to all forms of income.....but the income is not likely to be high enough to give rise to a tax liability.
If you are looking at an investment of $1000, then there wont be an investment platform on earth that will yield you $416 in assessable distributions.......not without taking on a ridiculous amount of risk anyway.
cheers
BC
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Q: I am intending to purchase a commercial property - what advice can you offer to not pay GST and reduce stamp duty?
A: Hi Lina,
I dont know that you will dodge Stamp duty......property is property and stamp duty is something you just have to make room for in your budget. (I know there are exemptions but in general not many investors buying property from unrelated parties dodge this bill)
As for GST....it depends on all sorts of things:
1: whether the vendor is registered for GST
2: whether the sale is a "going concern"
3: and also if you are registered for GST.......because if you ARE and the property is subject to GST then you are out of pocket for a short period of time only.....
So the best thing you CAN do to ensure that you dont accidentally shoot yourself in the foot is get advice from someone who knows what they are talking about. And be prepared to pay for it, because it IS a complex area, and the consequences of getting it wrong are potentially quite expensive.
good luck
BC
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Q: Hello, I use my car for work as a business development manager in the finance industry. Are there any grounds for my employer to limit the expenses I can claim each month. I own my car and only claim petrol and tolls but it is a struggle getting paid each month?
A: Agree with Anuraag 100%!! Getting reimbursed by your employer is ALWAYS better than having to claim the expense in your tax return!!!
eg: if you incur $10,000 of car expenses and get reimbursed $10,000 you are sweet!!
BUT if you spend $10,000 in car expenses and claim this in your tax, the absolute best result for you is a refund of $4650. You are still over $5k in the hole!!!
I would have a chat with your payroll people and employer/manager to make sure that everyone is on the same page re reimbursements......mush better to discuss the issue and know exactly what is going on I would say.
Good luck
BC
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Q: Hi I am 68 and retired. My accountant has suggested I put all the money from my superannuation account into an income stream as the profits are now being taxed at 15%. However I must withdraw 5% every year. At present I don’t need this money Wouldnt I be better off to leave it in the accumulation account where it is earning a reasonable amount? If I withdraw it I will have to pay more than 15% on any earnings. Or should I just travel more?
A: Hi susan,
Best thing you can do is get in front of someone who can look at your WHOLE situation. The tax on earnings in the super fund is one aspect of your situation, but only ONE part of it.
Talk to your accountant and find out what other aspects of your whole situation they have taken into account, and consider getting an opinion from someone else
cheers
BC
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Q: Homer Simpson is selling his farm of two titles (one old title and one Torrens Title) and the parties have agreed the vendor will provide two Transfer of Land Act titles. However, the new purchaser does not want to pay GST and keep stamp duty to a minimum. What advice could you offer to not pay GST and reduce stamp duty? What documents have to be prepared for the conversion to a transfer of title?
A: https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Property/GST-and-property/?page=7
there will be no GST on the sale of farm land if the property has been used as a farm for 5 years.
If the property has not been used as a "farm" and held as a passive investment then in all likelihood the sale should not be subject to GST as the owner is not registered for GST, and the property is not part of a business "enterprise"........ie if you are not a farmer and not in business and not registered for GST then there will be no GST anyway.
Get yourself a good CA or CPA and get the right advice.....because the cost of getting it wrong is probably going to be pretty big:)
good luck
bc
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Q: Where do I find a loan shark in Adelaide that will take a chance on me for a loan
A: Hi Cameron.......when you say "loan shark" and "take a chance on me" you are painting a picture that might frighten off many traditional lenders.......but perhaps a mortgage broker can find a second or third tier lender willing to help you out.....but remember the further away you get from the big four loan sharks (hehe) the higher the interest rate is likely to be.
And the last choice may well be a private equity lender but as a rule they really drive the knife in on interest rates.......and my advice to most people at that point has been if you cant get it anywhere else it means that there is a serious problem in what you want to acheive.........and a private equity lender is not going to solve the problems for you
best of luck
bc
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Q: I'm 55 my preservation age is 59. I have an personal super plan maturing soon. If I let it mature and don't spend the money, will I be taxed on this money. Or should I reinvest before maturity?
Also, I have an investment property I wish to sell. Can I avoid CGT if i live in this property? If so, for how long?
A: Hi Ian,
Im not sure what you mean when you say your super plan is "maturing". You probably have some sort of investment held in a superannuation environment where the investment itself is going to "mature"......and on the balance of probabilities I would say that this will not give rise to a tax liability in your hands....as long as the investment (whatever it it) remains IN super......but that being said you havent given us enough detail to know what we are dealing with....so your best bet is find an advisor who can go through it with you and advise on what your options are:)
Short answer on the investment property is no.
if it is an investment property, then moving into it wont stop it from being an investment property......it will probably NEVER be exempt from capital gains tax. Sorry mate.
But there are LOTS of rules about property where it was once your principal place of residence, and if you ever lived in it then MAYBE you can get a partial exemption from CGT.....best to get in front of a CA or CPA with all the details and work through it.....then also work through the options you have available to you to minimise the tax burden: eg deductible super contributions can potentially save you big $$$$
good luck
bc
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Q: Looking for some general advice in this kind of situation:
- Purchased investment property within a company structure for the purpose of renovation and subdivision to sell on
- Market and personal circumstances have changed and so now the primary purpose of this property is to hold for capital growth (rental income does not cover interest repayments)
- Property is on >800sqm of low density zoned land on the northside of Brisbane and has good long term growth prospects
- Selling at this point would most likely lead to a small loss due to sales costs involved
- Due to the holding structure, the is a small land tax bill every year which would not be an issue if held in my own name
- There is a potential to proceed with original subdivision plan in the distant future (most likely >5 years)
Would it be wise to wait till the capital growth covers these losses and sell the property to break even OR hold on for capital growth in the much longer term, knowing it is in a structure that won't be eligible for the capital gains discount in the future?
A: Hi PJM,
What you have provided raises a whole heap more questions.....mostly along the lines of "who advised you to do this in a company structure in the first place????" And sometimes there are really valid reasons to invest using a company, because in general it has some issues which you have outlined above......
It looks like you have asked the best question of all which is "sell or hold"???
As nerdy as it sounds, this looks like the sort of thing you need to chuck into a spreadsheet to figure out the break even point where you know that after X number of years and Y% growth you will be better off to sell rather than hold.
Do your sums and project your loss over 5-10 years and then project a gain that eliminates this loss.......any rate of gain better then this means you should hold, and if the gain doesnt recover the holding costs then you should cut your losses and sell.......
.....but that all presumes you have a crystal ball and you can tell what the property market is going to do over the next 5-10 years.......
cheers
BC
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Q: Consider for a moment or two.
In 2008 (GFC) the Australian Government gave a guarantee on bank deposits to Australian Financial Institutions to the tune of $600B. It was in the eyes of the Government a necessary initiative to shore up local confidence and protect the nation’s international competitiveness and funded by taxpayers.
Fast forward 10 years and Australia is drought-stricken.
The big four banks in Australia now have a combined market value of approximately $384B. When you consider, 82% (20,500,000) of Australian’s are over the age of 15, the $384B represents a value of $18,731 per person.
As a Friday 3 August 2018 the big 4 banks have donated $3,300,000 to The Big Drought Appeal to help the Australian Farmers.
• Commonwealth Bank - $2M
• ANZ - $1M
• Westpac $200,000
• NAB - $100,000
Using the same parameters as above their donations represents $0.16c per and 0.0008% of the value each person over the age of 15 delivers to the banks.
We’d love to get your thoughts. Are the bank's donations fair and reasonable or should they be donating more?
A: https://www.nff.org.au/farm-facts.html
I found this on the National Farmers Federation website. It gives people an idea of the scope and scale of agriculture in Australia, and perhaps a clue as to actually how many people are under the pump right now.
I find it amazing that our farmers produce virtually everything we eat. Each farmer produces enough to feed 150 people in Australia and another 450 overseas!!!!
300,000 DIRECT JOBS!!!
1,600,000 flow-on jobs!!!
As a DIRECT RESULT of the export income generated by farming, we enjoy a comparatively high international exchange rate......which means when we import stuff we dont have to pay as much to get it here......this means that the Korean car you bought last year cost you $18,000, not $36,000.
SO thank a farmer......not every time you tuck into a big juicy steak, or eat an apple that is not laced with DDT, or rip into your quinoa smoothie.....or buy a car......or that fancy new i-phone.....or your Italian suit....just thank a farmer, and remember that they generally work longer hours for less pay than most other people......farming people dont go farming for the financial reward......its mostly in the genes....and they are for the most part happy to work 7 days a week in the middle of nowhere in conditions that would generally cause an OH&S rep to have an apoplectic fit.
so thank a farmer:)
BC
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Q: Hi, my husband is 62 years old and is being made redundant from his role. He has reached preservation age for his super. My question is, can he take a lump sum payment of his super and then return to work at a later date, even though he won’t he 65?
A: Hi Julie,
yes. One of the conditions of release is "retirement" however another one is "ceasing an employment arrangement after the age of 60"
so your husband has no need to "retire" he is good to go:)
this article is specific to SMSF, but its the same set of rules for all super funds:) Ignore the dorky cartoons.....the actual content is spot on:):)
www.ato.gov.au/Super/Self-managed-super-funds/Paying-benefits/Conditions-of-release/
cheers
BC
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Q: Consider for a moment or two.
In 2008 (GFC) the Australian Government gave a guarantee on bank deposits to Australian Financial Institutions to the tune of $600B. It was in the eyes of the Government a necessary initiative to shore up local confidence and protect the nation’s international competitiveness and funded by taxpayers.
Fast forward 10 years and Australia is drought-stricken.
The big four banks in Australia now have a combined market value of approximately $384B. When you consider, 82% (20,500,000) of Australian’s are over the age of 15, the $384B represents a value of $18,731 per person.
As a Friday 3 August 2018 the big 4 banks have donated $3,300,000 to The Big Drought Appeal to help the Australian Farmers.
• Commonwealth Bank - $2M
• ANZ - $1M
• Westpac $200,000
• NAB - $100,000
Using the same parameters as above their donations represents $0.16c per and 0.0008% of the value each person over the age of 15 delivers to the banks.
We’d love to get your thoughts. Are the bank's donations fair and reasonable or should they be donating more?
A: Hmmmmm, my initial response is "OF COURSE THEY SHOULD BE DOING MORE!!!!"
perhaps a more considered response would start with the following questions:
1: how much money do the Big 4 have currently on their books loaned out to primary producers?
2: how much profit do they make on those loans?
3: how much money do they have loaned out to regional businesses who DIRECTLY rely on primary producers???
4: how much profit do they make on those loans?????
Australian banks are a protected species. they are regulated, and governed by sets of rules made by our government(s). They are also guaranteed by those same governments......which gives everyone who uses our banks an extremely high level of confidence in our financial system
Now, because they are protected and guaranteed by the government, they make an obscene amount of profit year in, year out. Banks suffer from no drought. When the economy is booming, they make money.....when the economy is tight they still make money. Maybe not as much, but they never EVER lose money.
And the vast majority of Australians share in the spoils earned by our banks. Most Australians are invested to some degree or other in the banks: either through direct shares, or through shares held by their super funds. EVERYONE benefits from the massive profits reported by the banks each and every year. Profits derived in part by lending money to the agricultural sector.
Australians ALSO benefit from our farmers: directly AND indirectly. We are fortunate to benefit from the most efficient primary producers in the world. No one produces grains as cheaply as Australian farmers can. No one produces beef, or lamb or fruit, or vegetables as cleanly, or as cheaply as Australian farmers can, and do.
Take a look at the health scares from foods sourced in other parts of the world. Take a look at what Europeans have to pay for steak. The fact that we can go pretty much anywhere in Australia, and buy a steak free from all sorts of bad chemicals without having to sell a kidney to pay for it speaks volumes for our primary producers and what they do.
So, given that pretty much everyone everyone benefits from our banks and pretty much everyone benefits from our primary producers, it seems pretty clear to me that the two are connected a whole lot more than many of us realise......and it seems also very logical that the banks CAN and SHOULD do a whole lot more than what they have done to date to ensure that as many farming families get through the drought without loading up to crippling debts as they work to keep their breeding stock alive through this terrible drought.
Also the cropping farms that have sowed their winter drops dry in the hope of winter rains will not earn anything until AFTER it rains....and they need to finance the next crop somehow.....and also somehow survive through to their next harvest....which could be 18 months away.......
soooo......yeah. The Banks can do a whole heap more. And the only way they will is if their shareholders demand it of them......which is pretty much every person in the country. So maybe a good start is by getting a bit vocal in your local branch about what the banks are doing or NOT doing to support farmers.....
anyway that my two bobs worth.....
BC
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Q: Hi. Is child support calculated from gross income or taxible income? Cheers
A: Hi Lucas,
your child support payments are based on an "adjusted taxable income" which means that they take your TAXABLE income and add to it things like fringe benefits, additional superannuation (eg salary sacrifice) and also I believe they add back rental property losses too.
hope that helps
BC
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Q: I know salary sacrifice cap to Super is $25k per year (incld employer contribut) and up to $100k after tax. I received inheritance - paid off mortgage, and have balance in term deposit atm. Once that money comes off term deposit, is that classed as after tax and can I contribute $10k straight into my super as a one off?
A: Hi Jacqui.
You need both types of advice: because they BOTH affect what happens. So in terms of taxation management advice a financial advisor will probably not have the skills to help you (and making concessional personal contributions WILL need tax skills).....however many tax gurus wont have a clue about the issues pertaining to setting up your master plan.
I would recommend you look for someone who can help you in BOTH areas......the perfect candidate for you will be someone who is CPA or CA qualified and is ALSO a qualified financial planner.....and trust me that people like this are thin on the ground......so what you should really look for is two people who can work TOGETHER to help you formulate and manage your investment, retirement, taxation planning.
I note that you say "all" you want to know is if you will be penalised for making super contributions......and you believe that $275 is a bit steep for this advice.
Without trying to sound facetious, its not really a difficult question to answer: "all" you need to is read
the Income Tax Assessment Act 1936
and the Income Tax Assessment Act 1997,
and the Superannuation Industry Supervision Act 1993,
and the Superannuation Industry Supervision Regulations 1994, and you should probably be able to figure it out pretty quickly.
For you to get advice on this subject, you need to find someone who is qualified and licenced to provide you this advice......in fact any muppet can provide you advice....but only someone qualified to provide financial advice can LEGALLY do so. And I garuantee you that no-one is going to provide advice like that without sitting down with you to cover off a whole heap of questions first. The Professional Indemnity risk for everyone who acts in this area is too high.
Jacqui, you also mention that you are not keen on taking huge risks with your money: very sensible!!! Getting advice from a planner and a tax expert will go a LONG way to helping you manage risks along the way. If you arm yourself with as much information as possible and utilise people with the skills and knowlege to help you manage risk then you will absolutely be better off.
What you need more than advice about how much money you can drop into super today, is a plan that will take into account ALL your circumstances, and quantify where you want to be in the future, and look at your current situation, and identfiy the things that you can do to get from here to there with the least amount of risk, so as to ensure a lifestyle in your retirement that you are happy with. Which covers a whole lot more territory than what are tax consequences of dropping $10k into super...
good luck:)
BC
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Q: I know salary sacrifice cap to Super is $25k per year (incld employer contribut) and up to $100k after tax. I received inheritance - paid off mortgage, and have balance in term deposit atm. Once that money comes off term deposit, is that classed as after tax and can I contribute $10k straight into my super as a one off?
A: Hi jacqui
agree with everything said here......particularly the bit about getting good advice. Super is the BEST THING EVERRRRR but only as part of a master plan that YOU manage and YOU put together with the help of appropriately qualified and experienced professional types........which means someone who is not all bells and whistles (and big commissions) but someone who will give you advice appropriate for YOU and YOUR situation......and for this assistance you can expect to pay something.
People say that their home is the biggest investment most people make, however I dont agree: you biggest investment is your retirement. The sooner you start planning for this the more comfortable you life is going to be in retirement. You have received a massive leg up in your inheritance, so its very important you make the most of this opportunity and get the best out of it.
good luck
BC
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Q: I have a property valued at $450k, with a $158k interest only mortgage at 3.4% and $158k in an offset a/c. Also $100k sitting in a low interest a/c , i get approx $75 p/mth interest.... i have $30k in super, im currently not working....
Im a widow, and 48yrs.... not recieving any benefits, and no debts, aside from the mortgage.... im hoping to go back to work next year.
My question is with what i have whats the best way to secure my retirement?
Use all my $$ and get a investment property? Put a lump sum onto my super? Wait till i start working again?
A: Hi Deanne.
your options are endless. But you need to sit down with someone who can help you plan the rest of your life. Because you can chase short term objectives but those decisions may significantly affect your life later on. You need to consider all sorts of things:
where do I want to live?
HOW do I intend on paying for this?
how long am I going to keep working?
how am I going to fund my lifestyle next week? nextr year? next decade? etc???
everything is connected Deanne. Find someone who can help you with a decent LONG TERM strategy to work towards that takes into account everything.
and make sure that they have the SKILLS AND QUALIFICATIONS to really help you.......
good luck
bc
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Q: Hi,
I have moved closer to work and rented my home and using it as an investment. If I transfer my loan from principal and interest to interest only is it likely my rate will increase and by how much?
Also, I had to pay mortgage insurance previously, will I have to pay it again if it’s interest only?
Thanks
A: GDay Shaun,
If you have not already done this, please get some advice on the taxation side of things......you need to make sure you are getting the best bang for your buck on the property in your tax return....including perhaps depreciation on property improvements if it is a viable option. (it depends on when the dwelling was constructed and when any significant renovations were done)
Also you need to file away some critically important information pertaining to Capital Gains Tax......and the best thing you can do here is find someone who knows their stuff and sit down with them to go through the CGT implications of what you are doing.
cheers
BC
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Q: Interested to get people’s opinion on how the banking royal commission and the stricter lending policies of the banks will have on the housing market in Australia?
A: My opinion is that the banks have pretty much shut their books to investors looking to acquire property....on the back of the changes in their lending covenants, it seems that they are all now overcooked on investor business. Atr the same time the Royal Commission has everyone running scared (not necessarily a bad thing) and they are making everyone jump through a LOT more hoops to secure funding.
SO this leaves the market with a few less buyers, which is having the same effect as jacking up interest rates......its taking the "heat" out of the market.
Great news for the government, because they dont need to lean on the Reserve Bank to jack up interest rates to manage inflationary pressure from an out of control housing market.
Or am I just being cynical??? surely the monetary system in Australia is robust and free from influence from a controlling government????? Surely there is no collusion between the very small number of large main players in the housing market???? Surely the always pass on 100% of the rate cuts as demonstrated over the past few years of ever-decreasing cash rates???? Oh......hang on.....they DIDNT pass on the rate cuts did they.....so the banks ALLLLLL independently made the decision to maintain rates despite a cut in the cash rate....each and every time......go figure.
I know that this has turned into an anti-bank rant, but the banks and pseudo banks need to get their shit sorted. Until they do, I suspect its not going to get any easier to obtain finance, which cannot help but have an effect on the housing market.....
cheers
BC
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Q: Our farmers continue to experience tough times due to drought. What suggestions do people have in relation to Government and community assistance to help provide some relief?
A: This might sound crazy, but collectively the industry experts here have probably tens of thousands of hours of experience in helping people in need. SO what can this group do?? I dont mean hold a gala ball, I mean something that can provide PRACTICAL assistance to people.
We all know that farming types are nothing if not practical. you dont survive out west for very long if you are all about the emotional journey.
I know that a crusty old grazier from Binnaway is probably not going to be as appreciative of someone offering a hug and cup of chamomile tea that he would be of someone offering to help liaise with the ATO, or look at his finances with a fresh set of eyes.
Trouble is I dunno how to proceed with an offer to assist. I dont want to pinch clients off an accountant in Coonnabarabran, but I am pretty sure that the bean counters in Coona are probably feeling the pinch too.....so how do you go about offering assistance to those in need who are probably too proud to ask for it?? And how do you manage the ongoing relationship this grazier has with his existing accountant?? Dunno......anyone got any clues????
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Q: Hi, 6 months ago I started as a BDM for a print solutions business and finding it really difficult to get to the managers who make the decisions.
Does anyone have a couple tips or ideas I could use, very frustrating?
A: Difficult to get their attention I am sure. If you can find out what motivates them perhaps you can get their attention that way: eg if the supply manager is spending all his time sweating on problem suppliers maybe you can find a common thread that you can work on together to establish a connection with this manager??? if you can help solve some small issue maybe he/she might be more tuned into what you have to say next time around????
good luck
bc
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Q: Our farmers continue to experience tough times due to drought. What suggestions do people have in relation to Government and community assistance to help provide some relief?
A: the Murray Darling System supplies nearly 4,000 Gigalitres a year to irrigation. Wonthaggi could produce enough fresh water a year to support those industries for about a week and a half.
The current drought is the worst in 100 years.
Banks need to take a haircut and freeze interest rates. Not shelve the debt and accrue the interest. STOP charging interest until the farmers can start producing again....which is anything up to 18 months AFTER the drought ends.
The government should be providing support to the families who are staying on their properties, support in the form of financial support, AND psychological support, because the stress of dealing with dead and dying livestock, failed crops and pressure from everywhere is enormous.
If it starts raining today, and the dams fill up and the rivers run again, it will take many farming families 10 years to recover from the current drought. Some may never recover. But those family farms create jobs, they redistribute income throughout the local community in a way that massive corporate-owned primary production enterprises dont. The family farm has been in decline in this country for decades, and what lots of people dont seem to get is that for every family farm that disappears, another regional job goes with it. maybe the local fencing contractor runs out of work, or the local shearer, or the local contract hay cutter, or the local livestock transport business, or the local abbotair, or the local livestock agent, or the local saleyards, They all get a bit less because there is a bit less to go around. its death by a thousand cuts for the whole regional community, not just the farmers.
Banks and government. They cant make it rain. But they have the power to retain what is left of the family farming population, and support them for as long as it takes to get them back on their feet, so that they in turn can support the communities in which they live.
as you might gather this is a subject pretty close to my heart. I hope that someone DOES decide to do something that CAN make a difference, but experience tells me that no one with the power to make real change will actually do it.
bc
answered
Q: I have 50K that I want to invest into a managed fund. How do I go about deciding which one ?
A: What do you want to achieve with this investment? is it short term income or long term? do you want a huge return on your investment and are you prepared to accept a lot of risk? is this your life savings or a slush fund you can afford to splash around a bit?
mate you need to get someone to help you decide what you want to do with this money, you trouble is that for many advisors, the commission on managing $50k is not worth the time it takes to sit down with you and find out what is your best option. Get some investment gurus to give you some prices on doing a Statement of Advice and see what it will cost you to get some expert guidance before you start looking at what fund you might invest in
good luck
bc
answered
Q: Setting up an online fashion business with three partners and looking for a tax specialist to help structure the business as we hope to have a number of overseas customers. What else do we need to be considering in regards to insurance, shareholders agreements, thank you
A: overseas customers are still customers. income is still income. unless you are looking to avoid reporting income on overseas activity, which may or may not be legal or acheivable.......
but if you are looking for a bullet-proof one-size-fits-all business structure then you will probably be dissapointed.
maybe a company is your best bet
maybe a unit trust
maybe a partnership
maybe a unit trust held by three family trusts
there are plenty of options.......
they all have pros and cons.
DEFINITELY GET AN AGREEMENT IN WRITING!!! call it a partnership agreement or shareholders agreement or whatever but you absolutely need to get it on paper.
If you dont already have one, find a CPA or CA who can provide the advice and support as your business grows......and factor these costs into your budget....and remember if you cheap out on advice early you are almost certainly short-changing yourselves in the long run. Good advice aint cheap, and cheap advice aint good.
Find someone who you are all comfortable with, and make sure that the firm can provide you ALL with advice specific to each of you, and also takes into account everyone when offering you that advice
good luck
bc
answered
Q: Hi,
I have a mix of direct shares and managed funds in my super. The return for last year was 15% which was good, but our financial advisers has shared some concerns about the market and the potential for volatility. They’ve made a suggestion to consider a cash out strategy into a diversified portfolio of managed funds. The return may not be as high but there’s less risk. Is this considered a good strategy at this point of time?
A: So why is a diversified portfolio of managed funds any less exposed to risk than a diversified portfolio of shares???
maybe the question to your investment guru is how does the change in strategy benefit me?? what actual risk is being mitigated?? what costs am I saving? How much CGT is being triggered?? what is in it for me??? Why would I punt shares that are giving me such a good return???
I rather suspect that a fleet of managed funds is a lot easier for your investment guru to manage than a fleet of direct shares.
or maybe I am being a bit cynical.....
but definitely ask a LOT of questions.....that cant hurt!!
cheers
BC
answered
Q: Me = separated from ex for 2 years ( but not divorced )
We have our marital home in Brisbane ( Wakerley 4154 ) sitting empty for sale since Feb 1 . We had one offer for 710 K and all other offers under 700 K .
My ex refused the offer for 710 K insisting that it is worth 725 + K and more like 745 K .
No more offers coming in .
She is offering to drop the price if I give her 60/40 split or if I change from current real estate to purple bricks who offer less commission which I don’t agree to either .
In the mean while we are both paying $1200 each per month on a dead mortgage and other associated costs Eg rates .
How do I force a sale for market price just to get closure ?
A: Hi again Brent,
do you have a solicitor? I presume this is a Family Court issue, and I am guessing that you need to get involved with a solicitor to get things sorted.
Hopefully there are a few lawyer types on this platform who might be able to assist you with legal advice. I do tax:)
good luck
bc
answered
Q: Me = separated from ex for 2 years ( but not divorced )
We have our marital home in Brisbane ( Wakerley 4154 ) sitting empty for sale since Feb 1 . We had one offer for 710 K and all other offers under 700 K .
My ex refused the offer for 710 K insisting that it is worth 725 + K and more like 745 K .
No more offers coming in .
She is offering to drop the price if I give her 60/40 split or if I change from current real estate to purple bricks who offer less commission which I don’t agree to either .
In the mean while we are both paying $1200 each per month on a dead mortgage and other associated costs Eg rates .
How do I force a sale for market price just to get closure ?
A: My guess is a court order, which is going to cost you more $$$$. Talk to your solicitor, but 50% of 725 is $362, whereas 60% of 710 is $426. That is a massive haircut to take just to get the sale over the line!!! At that rate you can afford to hold out for 53 months at $1200/month and be no worse off.
Maybe you can offer her $362 out of the gross sale proceeds.....that works out to be 51%.....this might be a more cost effective way of achieving the sale and moving on with your lives????
Its an unfortunate fact that common sense goes out the window when families split: so there is a whole lot more to this than just the sale price.
And I have heard some horror stories about purple bricks.....it makes no sense to me to go with a low-fee, low-service agent rather than a traditional agent, especially in the current environment where sales are increasingly difficult to negotiate.
good luck, I hope common sense wins out.
bc
answered
Q: Should financial literacy such as savings plans, credit scoring, personal finance, credit cards, interest rates, home loans, interest calculations, buying and selling and the value of money all form an important component of the high school curriculum?
A: INCOME TAX!!!!!!!
sorry guys but its my personal crusade, but if schools could explain to students how the ATO determines someones liability to pay income tax, then they would START their working life actually engaged in the process.
There are soooooo many people who go through their entire working lives without the slightest clue how the tax system works.
For example, this is a very common conversation in my office:
CLIENT: why is my refund less than last year?
ME: well, there are a number of factors, in your case your income went up but the PAYG W was not quite enough to cover the extra tax on your extra income......hence smaller refund
CLIENT: but I kept all my receipts like you told me
ME: yes, tax deductions are imporant, but the biggest single determining factor for your refund is how much tax your employer takes out each week
CLIENT: but all the boys in the crib room are getting much bigger refunds
ME: that might be true, but I bet they wont be able to substantiate all their deductions and wont enjoy the consequences of an audit
CLIENT: but my refund is too small, it needs to be at least as much as they other guys
ME: fine, but can you substantiate all your claims for deductions
CLIENT: thats your job
ME: no my job is to prepare your tax return, give you advice and keep you out of jail
CLIENT: but all the boys in the crib room are killing it.
you see how the conversation goes around in a circle????
If I could wave a magic wand I would get these two subjects into the school curriculum:
1: INCOME TAX BASICS
2: HOW SUPERANNUATION WORKS
Happy to join in any discussion with anyone on how to get this off the ground.
BC
answered
Q: What's the best thing you can do when negotiating with someone who clearly is a better negotiator?
A: If you know what you want and you stick to your budget on that, the differences in negotiation skills become irrelevant.
for example, if you go to a car salesman and tell him you can only afford $25,000 for his car, then all the negotiation skills in the world wont help him get $26,000 out of you. Unless you change your mind and decide that you really can afford to pay $26k.
SO maybe the thing to do is know in your own mind what it is that you will accept as a fair and reasonable outcome and anything you get over and above that is a bonus.
And as Anuraag has correctly pointed out, its fear of loss that drives you to compromise. Sometimes the fact that you could not reach an agreement on something is the win: because you are not locked into s shitty deal that you cannot afford. SO walking away is potentially the best outcome.
good luck with the horse trading:)
BC
answered
Q: I have been offered 4.09% fixed for 3 years and the variable rate is 3.69% for a split loan. The 5 year rate would be 4.29%. Would it be better to go for 3 or 5 years?
A: Hi Margot,
I doubt you are going to get someone to give a clear yes or no on this, because there are too many things that will affect you differently than anyone else, so ultimately the only person who can make that decision is you.......but you are doing the right thing in getting some opinions on what to do. Im sure that there are plenty of planning types on this platform who will be able to offer you advice on rates, and OTHER factors you probably should consider as well......because the RATE is not the only thing you need to look at.
good luck
bc
answered
Q: Do you use consent orders or financial agreement to protect against future spousal maintenance claims when separating assets during a divorce (NSW)
A: Hi Ali,
I hope you are getting good legal advice. I know a very good family law guru in Canberra. Let me know if you need details.
regards
bc
answered
Q: Hi all, if a shareholder of an unlisted public company is wanting to sell their shares what information is the company obliged to provide in relation to the financials and performance of the business to allow the shareholder a reasonable chance of selling their shares?
A: An unlisted public company is no different to a listed public company except that it doesnt list its shares for sale in a share market. the shares are traded privately, and as Todd has said the other shareholders get a say in who buys them.
I believe that the company must provide copies of financial statements and audit report on demand by the shareholder. But I think the documents that must be provided are limited to the financial statements, notes to the financials and auditors report. I dont think that shareholders have the right to demand internal management reports or the underlying financial data. I would hope that the audit and the integrity of the financial reports would be enough to give the potential buyer confidence in what he was looking at......
hope this helps
bc
answered
Q: We are putting a business information pack together to raise capital and our question is do we need to get permission from our customers before we include their logo’s in the information pack?
A: Not sure if you can do this legally, but I would probably be a bit miffed if someone used my logo without talking to me about it first.
I would certainly be advising my clients about using their logo.
cheers
bc
blog post
To Salary Sacrifice...or not to Salary Sacrifice...that is the question
Whether 'tis nobler in the mind to suffer the cost of paying for it yourself???
Apologies to all the Shakespeare buffs out there......
but really, should you salary sacrifice a c ...
Brendan Curran
6 years ago
answered
Q: Hi I am currently preparing my husband and I company tax return ourselves, and have got through it all with no problems until I came to section 9. Capital Allowances.
My question is what details do I put in or not put in
"other depreciating assets first deducted"
It may not be relevant to us this financial year but our bookkeeper had filled in a number the past 2 years so I am unsure??
A: I have never attached supporting docs to a tax return. If the ATO wants to see something I am sure they will let you know:)
cheers
bc
answered
Q: Hi I am currently preparing my husband and I company tax return ourselves, and have got through it all with no problems until I came to section 9. Capital Allowances.
My question is what details do I put in or not put in
"other depreciating assets first deducted"
It may not be relevant to us this financial year but our bookkeeper had filled in a number the past 2 years so I am unsure??
A: thats about it:)
cheers
bc
answered
Q: Hi I am currently preparing my husband and I company tax return ourselves, and have got through it all with no problems until I came to section 9. Capital Allowances.
My question is what details do I put in or not put in
"other depreciating assets first deducted"
It may not be relevant to us this financial year but our bookkeeper had filled in a number the past 2 years so I am unsure??
A: here is the link to the company tax return instructions and an extract of the instructions (I know you have already read this, but if anyone is crazy enough to read this on a Friday night, the link will help them:)
so, in short: yes, you are right. Any NEW depreciating TANGIBLE assets go in here:)
regards
BC
https://www.ato.gov.au/forms/company-tax-return-instructions-2018/?page=14#9__Capital_allowances
B Other depreciating assets first deducted
A depreciating asset that the company holds starts to decline in value from the time the company uses it (or installs it ready for use) for any purpose. However, the company can only claim a deduction for the decline in value to the extent it uses the asset for a taxable purpose, such as for producing assessable income.
Write at B the cost of all depreciating assets (other than intangible depreciating assets) for which the company is claiming a deduction for the decline in value for the first time.
If the company has allocated any assets (other than intangible depreciating assets) with a cost of less than $1,000 to a low-value pool for the income year, also include the cost of those assets at B. Do not reduce the cost for estimated non-taxable use.
answered
Q: Hi I am currently preparing my husband and I company tax return ourselves, and have got through it all with no problems until I came to section 9. Capital Allowances.
My question is what details do I put in or not put in
"other depreciating assets first deducted"
It may not be relevant to us this financial year but our bookkeeper had filled in a number the past 2 years so I am unsure??
A: Hi Kehoma,
good on for you for having a crack!! a company tax return can be a nightmare for the unwary, but as long as you understand what you are doing, its not the most complicated document to complete.
to get to section 9 before you hit a hurdle is either great news because its almost done, or bad news because you have missed some important sections.
So if I mention a few items for you to look at, and you say to yourself "Ha! All over that one!!!" then happy days, but if you say "Never heard of it" then you probably want to get an accountant involved to make sure you arent shooting yourself in the foot.
S3 F1 and F2 these are questions regarding whether your company is a small business entity
S6 X depreciation (which is not tax deductible)
S7W non deductible expenses (eg depreciation)
S7F deduction for decline in value of depreciating assets (which IS deductible)
S8J total debt
S8M franking account balance
S8N loans to associates
S8Q payments to associated persons
then we get to S9, which deals with depreciating assets. If you have claimed depreciation and or decline in value of depreciating assets then you should not have any trouble answering the questions at 9B and 9C and D, E F G H and I.
this is because you have calculated the accounting depreciation (which aint deductible) and put this in 6X, and also calculated the deduction for decline in value of depreciating assets (which is) and put this at item 6F. And you have also included depreciation at 6W, because depreciation isnt deductible for tax purposes......
And if you have covered off all those items then you will already know what your new assets are for the year, and also know what the adjustable values are at the end of the year, and all this will fill itself out based on numbers you have already calculated in respect of both depreciation (which isnt tax deductible) and decline in value of depreciating assets, (which is)
then all of this will flow through to the calculation statement where you advise the ATO what the taxable income is and tell them how much tax you have to pay
easy peasy.
but IF you dont know what your depreciating assets first deducted are, I strongly suspect you might have incorrectly filled out other parts of the return. So on that basis I STRONGLY urge you to take your figures to a qualified accountant, who can help you through this process. You have obligations as a director of the company to report things accurately, and the ATO takes a dim view of directors who dont report figures the way they aught to.
good luck!!!
Brendan
answered
Q: Hello
My husband and I have just been advised by centrelink that we are not entitled to receive the aged pension because we have too much assets in the form of money, over the $290,000 allowed savings sum. My question is when we live off our savings and deplete it to the allowed savings mount or less, will we then be entitled to receive the full aged pension?
Thank you
Vanessa
A: https://www.humanservices.gov.au/individuals/enablers/gifting
the rule is (roughly) up to $30k over 3 years.
thats not to say you are not ALLOWED to give money away, however if you do, Centrelink will pretend that you still have it, and furthermore they will "deem" you to have earned income on it for the purposes of the income test.
so they get you either way.
the assets test is roughly $390k in assets OTHER than the family home for couples who are home owners. If you do not own your home the assets test is roughly $600k. So if you have $290k in cash you would likely be under this threshold.
but you may have other assets.....and here is a little tip for you: the value of your personal effects and household items is rarely what you think it is. REPLACEMENT COST and MARKET VALUE are two very different things.
maybe a good question for you is "what are you doing with your $290k??" if its in the bank earning 0.5% in a savings account then you are losing purchasing power every day, but its not likely to evaporate overnight in the event of a stock market crash either.
I would strongly recommend you talk to someone who can advise you on your options.....including things like:
1- Centrelink
2 - investment options
3 - risk management
4 - estate planning
5 - tax management
6 - super
good luck.
bc
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Rabbit in the Headlights......
Don’t get caught like a rabbit in the headlights!!
Its almost EOFY, which is like Bean Counters Christmas. Its likely that after about 1:00 pm today all you are going ...
Brendan Curran
6 years ago
answered
Q: So, I am a 57 year old male, one almost-not-dependant daughter and a financially independent partner. I worked overseas for 15 years from the age of 27-42 and so never started a super fund. In 1992 I left a salaried profession and entered the world of tech startups which I continue in today. As a result, I have no salary income and no employer to contribute to a super fund. I rely on sale of a business from time to time. I have put all spare cash into my primary residence as I see it as the most tax effective vehicle available. I have several investment properties overseas and generate enough income that I haven't had to skip a meal yet. My question is whether putting cash into a primary residence is always a better option than a super fund? I find super fund rules are complex and seem to change all the time...whereas cash into my primary residence is tax free and can be released when I retire and downsize which is the moment when I would want to draw down on any super anyway. Thoughts on a postcard please...
A: Hi Geoff,
I would say the best thing you can do is find time to sit down with someone who can advise on the following:
business CGT concessions
tax planning
superannuation
investment management
so you need someone who does tax, investments, accounting, super, and understands that there is ALWAYS a trade-off when making decisions: eg, I can pay tax at my marginal rate today and use the money left over to reduce debt on my home, but this means I cant poke money into super and save tax, but use the cash in super to reduce debt later on.....
who on earth would have such a skill set????? i hear you ask????? start with a CA or CPA and find out what they know about the investment side of things......they generally have a pretty good idea, and/or have contacts to help you piece the puzzle together.
I know lots of people who have avoided super in favour of paying off the home. mostly they end up with a house, and not much else. IF that house can fund your retirement happy days, however if you dont have much left after you downsize, you are really up the proverbial creek in a barbed wire canoe with no paddle.......because you will not have time to do anything about it at that point.
get some advice from someone who knows what they are doing. A postcard response wont be doing you any service at all.....
cheers
BC
answered
Q: I'm getting divorced, I moved out of the family home about 12 months ago and my ex has kept living there. It's taken us this long to work through all the negotiations for the financial consent orders and agree on a settlement. Soon he'll buy me out of the house we lived in together and he'll also transfer some of his superannuation into my super fund. Will I need to pay capital gains tax on either of those?
A: the rollover of super from your ex-husbands fund to your fund will have no tax implications. But bear in mind that the rollover needs to be as a result of a FAMILY COURT ORDER, otherwise there may well be tax headaches for both you and your ex. talk to your accountant about this. and while you are there talk about where your super currently is held and do some homework on what is it doing, and things like life insurance and investment performance etc etc.
I know you probably have plenty on your plate getting organised post separation, but dont forget that your super is the thing that will fund your lifestyle in retirement, and its NEVER too early to look at it.
good luck
bc
answered
Q: It is reported 75% of Australians over the age of 65 receive the full or part pension from the Government.
Compulsory superannuation was introduced into Australia in 1992 (26 years ago) for employees to have a percentage (now 9.5%) of their income invested into a superannuation fund to help fund their retirement years. The desired outcome was for people to be self-funded retirees as opposed to being reliant on government pensions.
The superannuation industry is a $2.6 trillion dollar industry with something like $26B of fees paid annually.
If after 26 years, 75% of Aussies over 65% are still reliant on the government it begs the following questions
1. Is the current superannuation policy working?
2. Who is really benefiting from the compulsory superannuation regulations?
3. Should superannuation be compulsory or voluntary?
We’d love to get your thoughts and opinions.
A: Super is the
BEST
THING
EVERRRRR!!!!
what most people look past is the fact the super is a legal tax haven, right here in Australia. You dont need to fly to the Cayman Islands to park your retirement nest egg.....it can be done here.
I am constantly astounded by the number of people who have no clue what their super is doing. Many cant even tell you what super fund they are even a member of. Whilst lots of people agonise over .01% savings on their homeloans, they dont know how much life and TPD they have in super, who their Death Benefit beneficiaries are, what their super is invested in, what the fees and charges are, etc etcetc
Super is such a large part of the economy now, which means it has power. so much that super funds can influence all sorts of things, like the share market, property market, POLITICAL PARTIES...... (do you know that industry funds are LARGE donators to both major policital parties????) The level of influence wielded by super funds is immense.......and growing.
Its interesting to note that the numbers of people who USED to run trade unions and are now high up in management positions in industry funds........that tells its own story, doesnt it.
soooo, super is great. but because its soo big, it attracts all sorts of characters.......fund managers, planners, accountants, politicians, members, regulators, etc, etc.....they all have an agenda and all have an opinion, and not all of them are there for the benefit of the members......
the biggest thing any person can do to help themselves is to educate themselves to SOME degree about their own super:
- who is managing it
- what is it invested in
- how much insurance cover is there
- what are the costs associated with it
- what risks are there with the investments
- what are the basic rules around super.
GETTING people interested enough when they have kids, jobs, mortgages, school fees, car payments, that bitch up the road who said something nasty about my little Billy, Masterchef, etc etc is a massive challenge. And as much as I bang on about it the trouble is that there really is only 24 hours in a day and people are tired. And lets face it, its sooo complex that most people dont have the head space for it.
If I could get people's attention at (say) 25, before they get wrapped up in life and mortgages, and get them to sit down for long enough to look at what their life is going to be like with or without super, then the question of whether or not super should be compulsory would never even get asked. The question should be "why is the contribution cap so LOW/????"
*brendan gets off soapboax and goes back to work*
cheers
bc
answered
Q: My brother, mother, and I want to purchase an investment property, but we were thinking to only take out the loan in mine and my brothers’ name. The plan was to occupy the property for 6 months so that we will be eligible for the first homebuyers grant (Mum would not be eligible as she has purchased property before). Can all three of our names still be on the deed for the property, if only 2 of our names are on the mortgage?
A: Hi Jared. You have a pretty obvious conflict in your plan:
a: you all want to buy an INVESTMENT property
b: you also want to get the first HOME owners grant.
see where I am going here?????
Its called the first HOME owners grant for a reason. Its not the first INVESTMENT PROPERTY owners grant.
You first problem is that whilst it is technically feasible to buy the house, move in for 6 months, grab the money and then move out and put a tenant in it.......its not that simple, because the pesky banks and their stupid rules about having people named on the title deed and listed as a borrower make life a little difficult. So you need to make a decision about whether you Mum is part of the deal or not in the equation. Then you need to make sure that IF you are entitled to a FHO grant that you dont shoot yourself in the foot.
And dont forget if your INTENTION at the outset is to move out on day 184 of ownership, then you might be pushing the friendship with the grant. I have never heard of anyone who has been told that they have to pay it back, but you need to be crystal clear on the rules around what you need to do to
check out this :
http://www.revenue.nsw.gov.au/info/compliance/prosecutions
this is on the website above as an example of what NOT to do:)
21/04/2016 – Oaths Act and Crimes Act offences
Detail: A 27 year old male Business Analyst pleaded guilty to one offence under s.25A of the Oaths Act 1900 and one charge under s.192G(b) of the Crimes Act 1900 before Magistrate Still. The defendant had applied and received a First Home Owner Grant of $7,000 along with an Exemption from paying the duty of $12,873. The defendant failed to reside in the property that was the subject of the benefits and supplied a number of false documents to support his claim that he had resided in the property, including two false Statutory declarations. On 21 April 2016, Magistrate Still sentenced the defendant to 150 Hours Community Service Order for the s.192G(b) Crimes Act charge and a $2,000 fine in respect of the s.25A Oaths Act charge. His Honour made an order for professional costs of $12,000 to be paid by the offender and to report to Hurstville Police Station to be finger printed, pursuant to s.134 of the Law Enforcement (Powers & Responsibilities) Act 2002.
Related legislation: Oaths Act 1900, Crimes Act 1900 and Law Enforcement (Powers & Responsibilities) Act 2002.
good luck
BC
answered
Q: Hi, starting a new job as a contract courier and have to set up an ABN. I don’t have an accountant (anyone know a good one in the Shire) – my question is do I have to keep a log book for just one month or so I have to all the time for claiming expenses back?
A: https://www.ato.gov.au/business/income-and-deductions-for-business/deductions/motor-vehicle-expenses/claiming-motor-vehicle-expenses-as-a-sole-trader/
https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-by-industry/Transport,-postal-and-warehousing/Courier-services/
these will come in handy. Remember that Big Brother has an extra $130m to audit people who claim "too much"....and remember that "too much" is what the ATO says it is.....so if you want to claim amounts that the ATO says are "too much" you can expect to get an audit......
And when you get an audit you are guilty until proven innocent: the presumption used to be that the ATO had to beleive you unless they had proof that you were not telling the truth. Now they are actively looking to hang you out to dry.
so the moral of this little rant is COVER YOUR ARSE!!!! get in front of a qualified tax agent and discuss the ins and outs of audits. And if the tax agent says "that'll never happen" run a mile. trust me, winter is coming with the ATO and anyone who uses a vehicle for work. So you need to be ready.
good luck
BC
answered
Q: Hello,
My husband and I are recently married and in our mid-50s. We have been discussing setting up an SMSF and joining our super to invest in property and would like to know what steps we need to take, is there a certain percentage of our individual super we can only contribute or can it be all of it?
A: Todd has hit the nail on the head here Fiona. Whilst SMSF are great, they are complicated and you need to ensure that you know what you are getting yourself in for BEFORE you go setting one up.
And to give you an idea of the costs of getting it wrong consider this: if a SMSF is deemed to be non-complying it can be taxed as follows:
a) 45% of the funds income for the year
AND
b) 45% of the funds ASSETS too!!!
I must admit that I have never seen a fund get hit with 45% tax on its assets, but the ATO CAN do this.
so the moral of this story is that your retirement nest egg is VERY important, hence you need to make sure that if you want to manage it yourself, you know what you are doing!! This doesnt mean you need to memorise the SIS Act, but you need a good working knowledge of what you CAN and CANT do, and you need to engage experts to assist you in this.
And for Gods sake, dont go to one of those cheap-arsed online SMSF hawkers: the ones that promise you heaps, eg
- free setup
- free first years accounts
- guaranteed fees including audit $750
These cheap and nasty "service" providers make their money by forcing you to invest in a very small selection of assets: ones that pay them a nice commission. So, whilst you think you are getting a sweet deal, you are actually getting ZERO advice, and you are paying through the nose for it!!
if your accountant doesnt have CA or CPA tacked onto their name, ask questions!!!
If you planner doesnt have runs on the board and a list of VERY satisfied clients to talk to, ask questions!!
actually......ask questions anyway:):)
and good luck. Despite the horror stories there are a LOT of very happy SMSF trustees who are not being locked up for pinching their super early:):)
cheers
BC
answered
Q: I read an article suggesting the RBA should look at raising interest rates by 0.25% so what do people think, is now a good time to be locking in a fixed rate term?
A: I think that for every article that you can find that tells you rates are on the rise, you can find one to say rates wont rise anytime soon. I also suspect that if the banks' collectively dont see interest rates going up in the short term, they would be happy to lock as much as possible in (higher) fixed rate products......
a poofteenth of a percent one way or the other is really going to make bugger all difference to anyones life. Look at rates in the context of what has been perceived as normal. You dont need to go too far back in time when anything under 10% was seen as a sweet deal. My PB was 23.5% back in the mid 1990's .......and this was with one of the BIG FOUR banks.....now THAT was painful, so forgive me if I seem a little amused when someone paying 5.5% carries on like their throats been cut:)
Sooo, look at what you want to achieve: if its certainty you are after, then lock it in and deal with the slightly higher rates. If you want to ride the variable roller-coaster, then do that. Or hedge your bets like all the advisers tell you and lock in some and keep some variable.
But get some advice from someone who doesn't stand to benefit by way of a fat juicy commission on your mortgage. And be prepared to pay for it.
good luck
BC
question
Q: Further to my philosophical rant about corporate tax rates, what does everyone think about individual tax rates??? Is the marginal tax system the best tax system??? are the rates and margins right? Should the wealthy end of town pay more? Do low income earners pay enough??? Is the current system of rebates and government benefits based on income too complicated?? (YES!!!) Should families be taxed as "families" not as "individuals"????
cheers
BC
Brendan Curran
7 years ago
answered
Q: With the Federal Parliament, today securing personal income tax cuts is it now time for Parliament to do the same for company and business tax cuts. Let's rally Business Australia and share your thoughts?
A: Further to my philosophical rant about corporate tax rates, what does everyone think about individual tax rates??? Is the marginal tax system the best tax system??? are the rates and margins right? Should the wealthy end of town pay more? Do low income earners pay enough??? Is the current system of rebates and government benefits based on income too complicated?? (YES!!!) Should families be taxed as "families" not as "individuals"????
cheers
BC
answered
Q: With the Federal Parliament, today securing personal income tax cuts is it now time for Parliament to do the same for company and business tax cuts. Let's rally Business Australia and share your thoughts?
A: https://taxfoundation.org/corporate-income-tax-rates-around-world-2016/
I found this a very interesting article. I noted that the countries with the LOWEST corporate tax rates are not necessarily somewhere I would want to live. Because taxes pay for a whole heap of really cool things that we probably take for granted in Australia, like hospitals and schools and the like.
Dont get me wrong, I hate paying more tax than I have have to, but I also believe that you should "render unto Caesar that which is Caesars"...
I am not necessarily convinced that the presumption that a lower corporate tax rate will automatically trickle down into everyones pockets, because not everyone is as altruistic as they potentially need to be.
so there is always that conflict between letting people be the masters of their own destiny and allow market forces to dictate where the money goes, and having the moral compass to provide for those who may not be able to provide for themselves......that probably makes me a capitalistic communist (aka hypocrite)......and I doubt there is ever going to be a perfect answer for everyone.....
but for me, the idea of reducing the corporate tax rate is in principal a good idea, but there is a cost somewhere else.....and we dont get to decide who gets to pay that cost.....its in the hands of the incumbent government.....who are motivated by votes, not altruism.......
wow thats deep for a Friday morning isnt it!!!!!
answered
Q: Hi,
just a quick query. Any advice would be greatly appreciated.
My partner and I wish to purchase a home for 990k
We have 400k as a deposit and that is in the form of an apartment we have a sale contract on.
We have 25k in savings and we have an income of 6k nett a fortnight.
The issue is that I myself can not be part of the loan - I previously separated 4 yrs ago and had to take a part 9 debt agreement to continue on in life.
Without my income, my partners is 2k a fortnight,
however - for the past 12 months, one form of my income (superannuation) has been paid into her account and never touched (2k a fortnight). Will the bank be able to take this into account? What are her chances alone on that income to be approved?
I am asking because we would like to place our offer and don't want to be stuck in the dark.
Regards,
PartnerA1
A: Hi A1,
I think Craig is right in that you seem to have the cart before the horse.
Get your finances sorted, get approved for some money and THEN go shopping.
Right now you have too many things that can change to allow you certainty, so go get some certainty first:)
good luck
BC
LL Consultancy L
7 years ago
answered
Q: Does someone (not working) need to lodge a tax return?
Circumstances: Over 65 and retired. Approx. $10,000 of investment income (including franking credits) plus an additional $10,000 of assessable capital gains (after 50% discount).
So, with SAPTO and LITO, they won't have to pay any tax. But, their total income is over the $18,200 tax free threshold.
On the ATO website on the 'do you need to do a tax return' tool, one of the things says "Does dividends and distributions exceed $18,200"? and if you pick yes, then it says you do need to do a tax return. Dividends/distributions haven't exceeded $18,200 but they've had a capital gain that has resulted in taxable income being over $18,200.
So, do they need to lodge a return or can they just submit a franking credit refund form for their franking credits?
Thanks,
Glenn
A: I would advise your client to lodge a return so that the capital gains are reported correctly. The trouble you have here is not so much the tax payable (or the franking credits refundable) but the fact that the ATO will have all the information on the sales of shares reported to them. What could happen is that the ATO will see a Return Not Necessary or a Franking Credit Return lodged and think to themselves "hang on!!! this guy has $50k in sales of shares that he is failing to report"
bear in mind that the ATO will only know the gross sale revenue from the disposal of shares. So the COST BASE of the shares wont come into it for the ATO. they wont give a shit how much the shares cost, they will assess your client on the GROSS REVENUE and then it will be up to your client to object to the assessment.
And trust me when I tell you that the process of objecting to an assessment issued by the ATO is long, slow, painful and expensive.
here is an example: One of my clients had a parent who was NOT a client of mine, and looked after her tax affairs as she didnt need any technical advice and was happy to lodge things herself. She was retired, sold her home and didnt report the CGT event in her tax return. (she had moved out of the property a couple of years earlier and rented it out, but the principal place of residence exemption still applied).
so this is what happened: the ATO knew a couple of facts:
1: she had previously reported rental income
2: she stopped reporting rental income
3: land titles office knew how much the house sold for and when it was sold
sooo the ATO sent her a notice of assessment based on the GROSS SALE PROCEEDS of the house!! the tax bill was $192k!!!!
needless to say, she near died of shock, and when she came to me with her problem, she had worked herself into a frenzy, and was halfway through pulling money out of a hefty term deposit to pay the bill. Once I figured out that the ATO had got the wrong end of the stick, it still took months of letters, emails and phone calls to straighten it all out. Had she reported the CGT event in her tax return with the correct (nil) assessable gain in it, the matter would never have occurred.
Your client will be infinitely better off if he just gets the return done properly in the fist place.
cheers
BC
answered
Q: Hi, I set up my own contracting business in April this year and have quite a bit of money owing with invoices due to be paid. When I left my old job in March I had quite a bit of holiday pay owing and paid more tax than normal so if the money owed to the business comes in after 30 June will it need to be included in this year’s tax returns as the invoices were dated pre 30 June?
A: Hi toni,
most small businesses elect to report their business actvity ona CASH basis. ie you declare ONLY the income that you receive, and only claim the expenses you pay by 30 June.
this is not a bad idea, because the idea is to match your tax liability to your cashflow. Also if you have a bad payer, you dont really ever want to pay tax on something you are never ever likely to see:)
And listen to Todd: go to your bean counter and run the numbers BEFORE 30 June
cheers
BC
answered
Q: Hi,
Just turned 50 and have $450,000 in my super. I want to diversify my investment portfolio and invest some money in a few start-up businesses through crowdfunding. Do I have to set up a SMSF and are there any restrictions on how much I can invest, I have been told no more than 20% of my super balance, is that correct?
A: thanks for the kind words James:):)
Stephen, your plan is unusual to say the least!!! I am not sure how the crowdfunding and a SMSF are going to tie in together, but it is very clear you need to get face to face with someone with the skills, experience and QUALIFICATIONS to help you. The more "boutique" the investment strategy in a SMSF, the more likely you are going to be under the microscope, and the more likely that you are going to run into hurdles with SMSF auditors, and also ATO auditors!!!! Because if the ATO gets the idea that your fund is some sort of tool to allow you to fund your own business and lifestyle on the sly, they will want to go through your books, and then you, like a dodgy curry!!!
Get in front of someone who can advise you clearly on what you can and cannot do with a SMSF. They are really a wonderful vehicle for the accumulation of wealth to fund your retirement. They arent good for much else. And do some reading yourself
https://www.ato.gov.au/Super/Self-managed-super-funds/Thinking-about-self-managed-super/
the more internet searching you do the better. Please dont get sucked into anything that looks like an online platform for setting up and running your super on the cheap!!! But do get informed!!!
good luck
bc
question
Q: This is my favourite story about a taxpayer who walked in planning on going to jail and walked out the happiest man in Lake Macquarie.
Ron (whose name has been changed for obvious reasons) had failed to lodge a tax return for 17 years 17 YEARS!!!!!!! He got busy for a few years and kept putting it off and then got nervous about being late and getting fines, so he just stopped altogether, and the longer this went on the more terrified he became about getting in trouble, and the less likely he was to get his affairs in order.
Meanwhile, his wife Jill, who had no clue what was going on, kept all his receipts in a shoebox, with his group certificate and bank statements every year and gave it to him on an RDO and told him to go get his shit sorted. Every year
You know what Ron did???? He went to the pub, every year and every year he would sit at the pub staring at his shoebox of pain and consider how much he would enjoy sharing a cell with Bubba. and then he would go home, tell Jill he was all sweet and the refund was on its way........he even gave Jill a bit of cash every year to perpetuate the myth, a few weeks later.
So after 17 years of living in terror, Ron finally worked up the courage to come have a quiet chat with me......and he was seriously the most miserable-looking bloke you could ever see in a reception.....you would have thought I was gonna tie the noose around his neck.
Ron had no idea that for each and every year he was entitled to a refund, and as it turned out, it was not an insubstantial refund for each year.....because god bless his employer, who failed to update his tax tables regularly, so the PAYG W was overcooked by a significant margin.
So when I did all his returns and called him in to get the news, he came in, sat down and sighed and then said, "right son....what is the damage?"
"Well, Ron, after claiming all your work-related deductions, and taking into account rebates and whatnot, the total amount is $42,000"
"$42,000!!!!! Where am I gonna find $42,000???? My missus is gonna KILL me!!!"
"No Ron, I think you misunderstood me mate. It’s a $42,000 REFUND mate."
Ron got himself a new set of dentures, took his wife on a long-overdue holiday, and paid a big chunk off his home loan.
Needless to say, Ron is now my first tax return each and every year now.
Good old Ron......puts a smile on my face every time I see him. He is my biggest fan, and I get a kick out of seeing him every year!!
Brendan Curran
7 years ago
answered
Q: Hi there, I was made redundant 4 months ago and had a novated lease with my previous employer. I have now been offered a 'vehicle hand back option' regarding the car from the Lease Protection insurance company. They will cover up to 25k (less car payments and petrol costs already paid) if I hand back the car to the financier. The current payout figure is 39k on a 2016 Jeep Grand Cherokee. Is there anything I need to consider before I decide?
A: Hi Fiona,
can I start by saying that I have never been a fan of novated leases. If you take into account the fact that you are required to make a contribution to your employer as part of the whole FBT nightmare that comes with providing vehicles to employees, you will not be any better off. The literature from the leasing company never makes this connection, and all they want to do is bang on about tax savings......trouble is that the employee contribution ALWAYS ends up being exactly the same as the amount of tax you save.....funny that.
so now that I have had my little rant here is my two bobs worth on your situation: be VERY VERY VERY WARY of Greeks bearing gifts!!!
you need to get an EXACT figure of what you are going to be up for, and compare this with the fact that if you maintain the lease, you will eventually end up owning the car, which itself has a value......
the thing that makes me nervous is that you currently owe $39k on a vehicle worth substantially LESS than $39k, and trhey propose to pay you an indeterminate amount to hand back your vehicle.
I would want to be EXTREMELY confident that you are not going to end up with no car and a financial liability to service before I signed up to anything.
hopefully there is an equipment finance guru out there who can help you with more specific advice
good luck
bc
answered
Q: I have just started working for a new employer as a full time Sales Representative and the employer is paying fortnightly a car allowance reimbursement. Car allowance of $20k annually which also includes fuel and running costs. I am not sure if I should purchase a new or used car or lease a car and which is the best option tax wise, given the car will be used for business purposes 80- 90% time? Thank you Gen.
A: Hi Gen.
I presume the payment you will get is an ällowance" as opposed to a "reimbursement" The reason for this distinction is that that an allowance is something you will pay tax on, whereas a reimbursement is not going to appear on your group certificate, and hence you wont pay tax on it.
so, on the assumption that you are being paid an allowance, and you are expected to catch and kill your own vehicle, then the FIRST thing you will need to do is get a log book and FILL IT OUT!! If you dont have a properly completed log book you can only claim a very small amount in your tax return.
Then you need to get in the habit of paying for ALL your car expenses using a debtit card so you have a good simple way to track your expenses. AND KEEP ALL YOUR RECEIPTS!!!!!! the ATO is going batshit crazy right now on people who want to claim large amounts of car expenses, and you will be one of these people.
to give you an example of the difference to your tax refund a large car claim can make, have a look at this example:
sales rep on $120k, including a $20k car allowance.
car expenses:
fuel 5200
rego 1150
insurance 900
servicing 700
tyres 2000
depreciation 6000
interest on finance 3000
total car exp 18950
log book % 90%
claimin tax return 17055
tax benefit 6480 (ish)
if you dont have a log book, then you are limited to 5000km @ 66c/km = 3300.
tax benefit = 1250 (ish)
SO a log book (and all the documents) will put an extra $5000 in your pocket!!!!!!
as to what to buy, the benefit of having a new car is that you get the new car warranty and smell, and maybe the finance might be a lower rate than second hand....
or you can buy (and still finance) a second hand car for a LOT less than a new car.
What I aim for is generally a good second hand car with not too many miles up on it, and drive the thing until the wheels fall off.
but that is up to you...it depends on whether you like the idea of a new car or not.
find a GOOD bean counter to help you with the log book and documentation stuff!!!
cheers
BC
answered
Q: Hi,
We put an offer on a property today in Glenwood, in writing to the agent. The agent rang straight away and said the offer wasn’t high enough and we asked if that was the answer from the owner and the agent said he wouldn’t bother the owner. Do we have any rights to make sure the owner gets to see our offer?
A: Put yourself in the Agents shoes: if your offer is (as he says) too low, and he calls his client the vendor with every lowball offer, then his client the vendor will rapidly get the poos with the time wasting and find another agent who wont call them 20 times a day when he knows full well that the answer is going to be no.
You have to bear in mind that the agent is not working for you. and what you want may not suit the vendor.....its the agents job to be the gatekeeper to a certain degree.....so low offers usually get filed in the bin.
I presume you have done your homework and know values in the area: if your offer is reasonable then perhaps the vendor is living in dreamland, in which case you are wasting your time until reality sets in. Or maybe your offer is a bit low.....and maybe you need to look at your figures??
But maybe the squeaky wheel gets the oil: keep annoying the agent....maybe he will relent and pass on your offer after a number of calls...
good luck
answered
Q: Question on behalf of my mum, she is 78 and still very active. She is looking at buying a house and land package near Goulburn for $450,000 as an investment. Mum owns her own home valued at $1.2M and an investment property valued at $1.6M and she lives off her super. Apart from the super she has around $200k in savings and would use $150,000 to purchase the property. With a strong net asset position would she be able to get a loan of $300K and what lenders would look at a loan like this?
A: Have a look at the entry and exit fees for acquiring and disposing the property.
lets guess this for now:
stamp duty: 16000
legals 3000
agents fees to sell 15000
legals 3000
so your mum has over $35k of dead money involved in this project. Is she (or her estate) going to recoup this in between now and when the estate is wound up???? thats the million dollar question........
I hope you can steer your mother towards someone who can look at the big picture, because the short term objective of buying a house is not the only consideration she needs to consider
good luck
bc
answered
Q: My husband is set on buying a handy man franchise costing us $40,000 to join. He is very good around house and I think he can do it himself but he thinks he needs support and the brand. For us it is a lot of money and how do we know they will support him with new customers?
A: Hi Angie.
I am probably going out on a limb here, but I have never been a fan of franchises. For me I dont see a huge amount of value in the upfront and annual fees.
I gather that there is value in a recognised brand name, but exactly how much value is debatable.
I woud STRONGLY advise you to go and get advice from someone with experience in dealing with the franchisees: ask the franchisor for names and numbers, and then when you are talking to the accountants of the franchisees, ask them to talk to the actual franchisees. If they have invested $40k and are loving it, you probably wont struggle to find people to talk to.
Then get the figures looked at by someone who can advise you independantly of a franchisor.
then go home and talk it over A LOT.
if you are going to stump up $40k up front and then sign up to an annual committment of (say) $10k pa, that adds up to a six-figure sum very rapidly. So how much EXTRA turnover do you need to generate $100k??? my guess is a LOT!!
talk to a CA or CPA with small business advisory skills. they can help you go through the ins and outs of small business without any agenda or barrow to push.
regards
bc
answered
Q: Hi,
I am 48, single, no kids and been working for the same company for 15 years. I recently set up my own SMSF with $320,000 and would like to get some advice on what people think is the best long term strategy, purchasing a residential property, buying shares or managed funds. Can you buy an apartment with SMSF or does it have to be house with land?
A: WOW, look out Eliza, the advisors will be stampeding for your door as you read this!!!
First thing to bear in mind is that super is only PART of the whole picture. Sure its a legal tax haven, and you need super like air, but you also need to look at super in the context of your whole life master plan.
In terms of what is the best investment mix, the planners will tell you that risk management is the key. And that in turn depends on who you are and what you do and how old you are and a whole range of other factors.
super funds can invest in all sorts of things: apartments, land, commercial property, shares, cash, gold, llamas, baseball cards, time machines, the list goes on!! but the thing is you need to know what you SHOULD invest in, as well as what you CAN invest in.
and this is whee you need the help of a TRUSTED ADVISOR!!! Pick someone who is going to be around for the long haul. someone on the cusp of retirement is great for now, but in 3 years they wont want to talk about your non-concessional contributions cap because they are a grey nomad. get someone who you reckon can help you all the way through to your retirement (and beyond). someone with QUALIFICATIONS in accounting AND super AND investments. Someone with EXERIENCE, and knows what they are talking about.
It might be that you align yourself with one person, or perhaps two specialists: say a planner AND and an accountant. They need to be able to work TOGETHER to get you the best outcomes.
so look for people with qualifications and experience and ask for a reference from a satisfied client.
and expect to pay a reasonable amount of money for the best advice. You dont go cheap and nasty if you are getting a knee operation if you dont have to ......and the same applies to your retirement nest egg!!! make sure you are comfortable and happy with the advice:)
good luck
bc
answered
Q: Hi, ....been offered a job as a contracted courier not employee. I have to get an ABN but not sure about things like super, holidays and the taxes. I’d like to get some advice on all the questions I should be asking the business?
A: This mate could be squeaky clean, OR it could just as easily be a shit deal for you!!!
your "employer" is looking to pay you as a subbie instead of an employee. This means you WONT BE COVERED for:
- tax
- super
- workers comp
- annual leave
- sick leave
- long service leave
this has long been a tactic to reduce the red tape associated with being an employer. I get the gripe from the employer's end, there is a BUCKETLOAD of paperwork and extra expense associated with this and it adds considerably to the cost of employing staff, so lots of employers have gone down the "subcontractor" road to minimise their costs.
So now that I have painted the employer as an evil b#stard, here is what this COULD be:
if you are a subcontractor, and the job is legit and is APPROPRIATELY PRICED then it can work well for everyone:
so if what you are being paid takes into account things like income tax, super, workers comp, annual leave, sick leave, etc etc etc, then being a subbie can be great.
Get yourself in front of a CA or CPA with experience in these arrangements and go through the terms of the contract.....it will not be cheap, but it can save you thousands if you get the right advice and get things set up for yourself properly from day 1. Make sure that the accountant explains the definition of a DEEMED WORKER to you so that you will have a better idea of what sorts of arrangements are likely to be viewed as "employment dressed up as a subbie" and what arrangements are genuine subcontractor arrangements
so you are on the money in that you need to ask about tax, super, insurance, etc etc etc. You also need to make sure the way your business is structured is best suited to YOU and your needs.
good luck
BC
answered
Q: Being able to help people is the cornerstone of a successful business.
We would love for people to be able to share a story of how you were able to help a particular customer in 2018 and why it put such a smile on your face?
A: this is my favourite story about a taxpayer who walked in planning on going to jail and walked out the happiest man in Lake Macquarie.
Ron (whose name has been changed for obvious reasons) had failed to lodge a tax return for 17 years 17 YEARS!!!!!!! he got busy for a few years and kept putting it off and then got nervous about being late and getting fines, so he just stopped altogether. and the longer this went on the more terrified he became about getting in trouble, and the less likely he was to get his affairs in order.
Meanwhile his wife Jill, who had no clue what was going on, kept all his receipts in a shoebox, with his group certificate and bank statements every year and gave it to him on a RDO and told him to go get his shit sorted. Every year.
you know what ROn did???? he went to the pub. every year. and every year he would sit at the pub staring at his shoebox of pain and consider how much he would enjoy sharing a cell with Bubba. and then he would go home, tell Jill he was all sweet and the refund was on its way........he even gave Jill a bit of cash every year to perpetuate the myth, a few weeks later.....
so after 17 years of living in terror, Ron finally worked up the courage to come have a quiet chat with me......and he was seriously the most miserable-looking bloke you could ever see in a reception.....you would have thought I was gonna tie the noose around his neck.....
Ron had no idea that for each and every year he was entitled to a refund. and as it turned out, it was not an insubstantial refund for each year.....because god bless his employer, who failed to update his tax tables regularly, so the PAYG W was overcooked by a significant margin.
so when I did all his returns and called him in to get the news, he came in , sat down and sighed and then said , "right son....what is the damage?"
"Well, Ron, after claiming all your work-related deductions, and taking into account rebates and whatnot, the total amount is $42,000"
"$42,000!!!!! where am I gonna find $42,000???? My missus is gonna KILL me!!!"
"No Ron, I think you misunderstood me mate. Its a $42,000 REFUND mate."
Ron got himself a new set of dentures, took his wife on a long-overdue holiday, and paid a big chunk off his home loan.
Needless to say Ron is now my first tax return each and every year now.......
Good old Ron......puts a smile on my face every time I see him. He is my biggest fan, and I get a kick out of seeing him every year!!!
answered
Q: I run a small business with 3 staff and the business is going ok apart from staff issues. Their work is great but after 5 years I feel I would be making more money for my family if I chose to operate on my own. With super, taxes, paperwork and their personal issues.. it is wearing me down and I’d like to get some advice from other business owners who may have or have been through a similar experience. I do feel obligated to support them but at what cost, thanks in advance?
A: Hi Sally,
I also run a small business and have a small crew working with me. I feel your pain. However I have a wonderful working relationship with my troopers. I am blessed in that I am pretty confident that my business would not be where it is without my staff. They are integral part of the business, and as much as they need me to pay them a wage, we all know we are in it together and everyone benefits from the business growing......so they are all highly motivated to see the business succeed.
Thats not to say its all beer and skittles every Friday, sometimes I have to drop a rocket on someone when they are not pulling their weight. Equally, my employees have the confidence to rip into me when I am letting them down too.
Its a bit like a marraige: we all work at it:)
It may well be true that you could make the same or more money on your own, but the risk factor increases too: if you are not at work, then the business stops. If you have staff you can trust, then the business can still operate with you away.
The last thing you need is a 7 day a week job that ties you to the millstone all day every day.
It is difficult to advise you on what you can do without a better idea of what you DO do. The best advice I reckon I can give you is to find a good qualified accountant (CA or CPA) who can help you with not only tax and compliance, but also help with the business management stuff. Give you ideas on what you can do to motivate and engage your staff.......I think Richard Branson is one of the biggest bone-heads on the planet, but I read where he said that his clients are not the most important thing in his business: his STAFF are!!! If you have staff that are all engaged, and everyone is rowing the boat in the same direction, then I am very confident that your outlook on being the boss will change enormously.
I LOOOOVE being in business for myself. I have owned a business where everyone was looking out for themselves at the expense of everyone else and it was POO!!! I now own a business where I have 150% confidence in my staff, and I know that I will back them to the hilt, and we all get on (mostly) like a house on fire!!! I cant recommend it highly enough.
but getting there will take time patience and guidance from someone who knows what they are talking about. thats where you need to find yourself a TRUSTED ADVISOR, not just a bean-counter. And you will pay for the advice, and you should have confidence in your advisor so that you feel the cost of the advice is good value for money. If that is not the case, find a new advisor:)
good luck
answered
Q: What would be considered an ideal mix between shares and property when developing an investment portfolio?
A: My ideal mix is about $20m in shares and another $20m in property!! oops that is childish and silly, sorry mate. Scott and James have much more sensible suggestions: talk to someone about your circumstances and get help in developing a plan for you....which WILL change over time depending on your age and needs....
cheers
bc
answered
Q: We are going to an auction on Saturday and the agent and conveyancer have differing views on us using a deposit bond to buy the property. Is it ok to use a deposit bond at an auction?
A: https://www.lawyersconveyancing.com.au/faq/deposit-bond-faq/
this is the first thing I found online when I googled "deposit bond" and it is actually quite good:) It explains how a deposit bond is not a deposit and its not a bond.....its an insurance policy that guarantees the vendor gets paid on settlement.
and it costs the property purchaser a premium to fund this guarantee.
so when Deposit Power went belly-up a few months ago, lots of these guarantees evaporated. the property purchasers all had to run around like headless chooks lining up new deposit bonds, and one of them was not able to do so......so she had to pull cash out of a TD which was a pretty expensive excercise for her.....thousands.
so yeah, they are a convenience thing. And I am not a fan :)
cheers
bc
answered
Q: I am looking at opening an SMSF but I am not experienced in this area. What should I be careful of when approaching a Financial Planner (ie. questions I should ask), amid the media coverage of the Royal Commission?
I am not interested in taking on products that the Financial Planner might offer. I want financial investment advice and I also want the Financial Planner to manage the SMSF as I have compliance concerns if I were to do it, myself. Thank you in advance.
A: Hi Julie:
Q1: what are your qualifications?
Q2: how much experience do you have?
Q3: who will ACTUALLY be doing the work? a trainee? an accountant in Malasia? You?
Q4: give me names of three of your clients that are like me (age, income, profile) that I can call to ask how you roll.
Q5: how are your fees structured?
Q6: how many times will I have to come in and annoy you before you get annoyed?
Q7: can I get real-time online access to my super fund? (yes you CAN!!)
Q8: what commissions rebates kickbacks do you get out of this?
Q9: how much do you understand about the actual legislation?
Q10: how many SMSF do you manage?
Q11: who is your SMSF auditor of choice?
Q12: can you guarantee me turnaround time and lodgment performance?
Q13: do I get a quarterly meeting with you to discuss my investment performance and opportunities/risks?
etc
best person you can probably look for is a planner who is ALSO or closely attached to a good CA or CPA firm. It is a constant source of irritation to me that the number of people who purport to know what they are on about is a lot higher than the number of people who actually DO know what they are on about.
good luck and ask lots of questions!!
bc
PS, you can expect to pay a premium for someone with experience, qualifications and the ability to provide you sound advice. They are not cheap, and are worth every cent!!!
answered
Q: We are going to an auction on Saturday and the agent and conveyancer have differing views on us using a deposit bond to buy the property. Is it ok to use a deposit bond at an auction?
A: http://www.afr.com/personal-finance/10000-property-buyers-caught-in-deposit-power-collapse-20180306-h0x460
I have a number of clients caught up in this disaster. Cost to each of them in thousands. ONE client has not been able to renegotiate another bond.
so if a deposit bond is the best way forward then rip in. But dont let anyone tell you they are risk-free. Deposit Power was by no means a tiddler in the deposit bond "pool".
so with all due respect to Albert, the first question maybe should be "how does one of these things work and what are the risks involved?"
good luck
bc
