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About Me

Brendan Curran

Current Rating: 4.9 / 5
Accountant
BPC Accounting Chartered Accountants
www.bpcaccounting.com.au
Newcastle, New South Wales
0437 864 594
Chartered Accountant, SMSF Auditor and Tax Agent. I enjoy any sport that has a leather ball, and many that dont. I moved to the coast over a decade ago after growing up in the bush, but still cant surf. I am passionate about getting my clients the best advice, knowledge is power, so the more information you have the better your decisions are going to be!!

My Activity

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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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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answered
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 ...
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
blog post
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 ...
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
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
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!!
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!!!
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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
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Q: Hi, I purchased an investment property off the plan in 2015 and now have to sell it and it has been sold for $50,000 less than I paid. The property was in my name so if we settle on the sale before 30 June is it possible to offset the loss against my personal income for the year?
A: Hi Will,

James is on the money here. It sux big time but your captial loss is only useful to you if you make a capital gain somewhere.

here are some extra bits of info you will want to bear in mind:
1: the capital loss will carry forward until you make a gain later on...so it is not lost forever in the first year (small comfort I know, but I'm a glass half-full kind a guy)

2: the critical date for you here is CONTRACT date not SETTLEMENT date. The CGT event takes place when you sign the contract, not when the cash is paid.

good luck
bc
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Q: Hi,

2 friends and I are starting a property renovation business where we help people with the designs and renovations with their own properties. We hope to one day to buy, renovate and sell properties as well and would like to get some advice on the things we need to consider in setting up the partnership?

Thank you
A: Where to start..........
here is a small list of things that you need to firstly consider before you start trading:
*what structure is best? Partnership is easiest and cheapest but not often the best, especially if you dont like the thought of being personally on the hook for 100% of your business partners decisions
*GST rego?
*Insurance: I hope you have PI and public liability, but what about income protection?
*decision-making: who makes the decisions? how are they decided?
*employees
*super
*record-keeping
*profit distributions
*tax management
*personal expenses
*cash flow management
*budgeting
*risk management
*dispute resolution (it wont be all beer and skittles, trust me!!!!)
*working capital
*equipment/vehicle finance and expenses
*goodwill
*exit strategy
the list goes on and on and on....and on......
The best thing you can do is collectively decide to go and see someone who can advise you on how best to set things up and assist with running the show. AND ACTUALLY GO!!! I have seen too many cases where one of the partners gets lumped with the tiresome job of talking to the bean-counter because the others are too busy faffing about with the business. A partnership has the potential to set you up for life or financially ruin all of you.....so it is CRITICAL that you are ALL on the same page at the outset.
remember that more than 80% of new businesses fail in the first 12 months. and as trite as it sounds the six P's can go a long way to ensuring you are the 20%, and even the 1% of that group that make a good return on the investment and RISK you are taking!!!
find a CA or CPA who wants to deal with a new business and can help you to grow over the long term.....in my experience, the big end of town with the mahogany wood paneling and Italian suits wont be interested......so find someone who has dealt with setting up and advising new ventures and be prepared to pay for the initial advice. It will be worth it!!!
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Q: What is the one thing, your major priority, you would do to help ease housing affordability in Australia?
A: the places that have a housing affordability problem are very small in comparison to the whole country. There are no end of places where the cost of housing is extremely low

https://www.domain.com.au/news/the-10-cheapest-towns-in-nsw-to-buy-a-house-20180420-h0z0hb/

and whilst many people wont be super keen on a tree change to Broken Hill, the point is that there are lots of options for people to invest in direct property whilst renting and living perhaps nowhere near their investments.

If there was a single thing that could act as a silver bullet, it could be to actively work on incentives that allow businesses to decentralise without crucifying themselves by distance. because the people will go where the businesses are.......

And that involves long term infrastructure planning: roads, rail, air transport. Electronic data management is crucial to any plan like this: and I mean something OTHER than the hokey NBN we have here!!!

I doubt there is a politician alive with the cajones to plan and FUND this, so we are probably stuck with the shitty situation with a teeny tiny portion of the country worth gazillions and the rest of the place you cant give away......except to foreign investors....and THAT boys and girls is a discussion best left for another day:)
bc
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Q: Hello
My business has been operating for 10 months and we have just secured a couple of new contracts which means I need 2 new staff. As the business has just started to grow I am finding it difficult to get the finance needed to take advantage of the new contracts. Is it possible for me to invest some of my super into the business? I have $220,000 in super and only need about $40,000
A: NO!!!
a really big no no that the ATO will make you regret.
The only way to get your hands on super to satisfy a condition of release: ie retire or die.
lending money from the fund to a member is the most common contravention and the ATO takes a very dim view of this, and the penalties can be as high as 47% tax on the fund earnings AND 47% tax on the fund ASSETS!!!
so your short term loan could cost you over $100k
So whilst it is massively frustrating to sit there watching potential business growth evaporate for the want of some seed capital, super is not the answer.
Talk to a broker about what you CAN do that wont give rise to a massive tax bill. There ARE options out there, however the further away from the big FOUR lenders you get, the more expensive the funding becomes.....and there is a point where the cost of capital is simply too high.
good luck
bc
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Q: Hi, is there a way I can calculate how much mortgage insurance will be?
A: ask your mortgage broker??
I know it sounds a bit over-simplified, but I work on the theory that I find myself a good broker, with a good reputation and some runs on the board, and make it his problem. A good broker will work for you to get you the best deal overall, not just the lowest mortgage insurance premium.
cheers
BC
blog post
The ATO hates good advisors!!!!
So, One of the many items to come out of the recent Federal Budget is $130million EXTRA for the ATO to audit individuals with higher than "normal" work related deductions.
Or, as I like to ...
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Q: If we do some minor renovations on an investment property - about $40,000, how much of it tax deductible?
A: if you ask the ATO, probably none.
but the correct answer is that it depends:)

the thing that you need to bear in mind is that if the expense is a REPAIR it is deductible, and if it is an IMPROVEMENT it is not.

so what is a repair???? A repair is something that returns an asset to the state it was when you acquired it. If you IMPROVE the asset, then this is a CAPITAL IMPROVEMENT, and not deductible.

the ATO has been banging on for a few years about something they have dubbed "initial repairs" on investment properties. This means you cant buy a doer-upperer on the cheap, then spend a mountain of cash to do it up, and call it "repairs" because the property is better than it was when YOU first acquired it.

You need to break it down to what things are being done and itemise the cost of each thing, and look at each item on its own merits.

the good news is that you should be able to claim either depreciation or a capital works deduction for anything that is not a "repair"
cheers
BC
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Q: What do people recommend as a starting point to set up a SMSF... I understand there is a fair bit of work involved so would $200,000 be worth it?
A: SO there you have it Phillip. Ask two people: get two completely different answers!!!! The thing to do is get as much information as possible, and educate yourself as much as you can on what you CAN and CANT do. I have said in other posts that super is the BEST thing since sliced bread, and is really and truly a legal tax haven, and EVERYONE should look at their super more than they do. I suspect that Glenn will agree with me on that hahahaha!!!
the more experts you talk to, and the more research you do off your own bat, the better infomred you will be......and the decisions you make about super will also be better suited to your own needs!!!!
good luck
bc!!!!!
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Q: What do people think of the 2018 Federal Budget?

What does it mean for Small Business Australia?

Who wins, who misses out?
A: There are a few things in the budget that might be seen as the thin edge of the wedge by some:

1: increased audit activity in relation to work-related expenses for wage earners. Many in the industry see this as a precursor to standard deductions, which itself will be a precursor to no individual returns at all. This would bring Australia into line with a large number of countries, eg UK and NZ. In the short term the effect will be that the cost of your tax return will go UP, or your tax agent will simply not include large work-related claims for such things as car expenses. This can have plenty of flow-on effects: eg who will want to take a car allowance from their employer??? no-one.....so the employer might find himself providing cars to employees who need them for work rather than pay a car allowance.........

2:new industries that will be required to report payments to subcontractors: currently the building industry, but will also include security providers, road freight businesses, and computing services. Its only a matter of time before ALL businesses will be reporting ALL payments to ALL subcontractors.

3: limit to deductions for businesses who pay cash for services to $10,000. Who pays ANYONE $10k CASH????? seriously????

but there are some good measures too:

tax cuts: tick
deduction for assets under $20k extended for another year: tick
simplification of Division 7A (director loans) : tick
cracking down on phoenix arrangements (liquidating a company to avoid debts): tick

There is a LOT more reading and analysis of the budget to be done, but I am sure that LOTS of opinions will be forthcoming...........
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Q: What do people recommend as a starting point to set up a SMSF... I understand there is a fair bit of work involved so would $200,000 be worth it?
A: The ATO rule of thumb has always been $200k......any less than that and they may well look at the risk of it being set up as an early access scheme.
This is based on a rough assumption that most industry funds charge somewhere around 1% of the members balance as admin charges, so the logic is that $200k x 1% = $2000 which equates to what many firms traditionally charge in accounting and audit fees.
BUUUT.......there are many funds out there with a LOT less than $200k in them. I know this as a SMSF auditor, I get to review lots of them. If the fund has a genuine investment strategy and conforms to the rules there is no reason why a fund cannot be set up with very small member balances......its just that it doesnt make sense to set up a fund with a member balance of (say) $50k, because the cost of administering THAT fund is still going to be around that $2000 mark, and that makes the fund rather expensive......so the investment return would want to compensate the members for this high cost.
oh, and if you set one up with $50k, I give you a solid gold guarantee: you WILL get audited by the ATO.....they are sick of people setting up super funds to pinch the cash and pay off their mortgages......
have a chat with a good advisor, tell them what you want to do and why...and the advisor should tell you whether you are on the money or not.
cheers
PS SUPER IS THE BEST THING EVERRRRRR!!!!!!! It is seriously and truly a legal tax haven and anyone who isnt doing everything they can to maximise their own super balance needs their heads read!!! (just sayin is all).
good luck
BC
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Q: Hi , I'm looking for some advice on the following.
I'm 50 , working full time , married. We have combined super of 330k , 200k savings , A mortgage of 250k. The house is valued at 550k.
My goal is to pay of my home and live comfortably into retirement. Should I put the 200k onto the mortgage , or into my super, or invest it to gain more growth?
On top of that Im looking at having a career break for 12 months.This would be unpaid.Any help would be great.
A: Hi Paul.
As james has very rightly advised, your appetite for risk will determine what is appropriate for you.

Let me say that I have never seen anyone take a massive punt with their life savings and NOT regret the decision. It may be that I have been working with people at a time where things were a bit shakey.....eg GFC......eg droughts.....eg mining downturns........eg Wool Floor Price collapse (remember that one???). Or maybe bad shit happens all the time????

And remember that your ability to recoup losses associated with investment decisions at the age of 50+ is WAAAAYYYY less than your ability to recoup investment losses at the age of 40.

get some advice about what you should do with the $200k. It seems logical to conclude that if you are having a year off unpaid, the mortgage could use a fair chunk of it?


good luck
bc
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Q: I have been running my own engineering business for 5 years and nearly 50. I have life insurance but a few people have suggested I should really be looking at business and income protection. I would like to get some advice on the insurance options I should look at?
A: I would expect that these issues all probably apply to you:
1: major breadwinner in family
2: massive mortgage
3: business would collapse overnight without you running it
4: kids/schoold fees/lifestyle costs
5: without your income everything goes down the gurgler.

Soooo, if you say yes to even half of these, you need to look at risk management!!!!! One way to manage risk is to ignore it (ie self-insure) but that only really works if you dont really need the income anyways.......another is to get the right amount of cover so you and your family dont end up living under a bridge eating road-kill. (well, thats maybe a bit of a stretch, but you get what I mean)
Find someone who will have a look at your whole picture and give you advice on what you need and what you DONT need, and help you find a way to fund it without going broke, because it aint cheap!!!

good luck

BC
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Q: I run a small business… does anyone know if the $20,000 tax incentive still available before 30 June?
A: yup
https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Applying-the-$20,000-instant-asset-write-off-/

rip in!!!

cheers
bc
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Q: Are there any good stockbroking software to assist in buying and selling shares on the stockmarket?
A: I am sure there are better qualified and experienced people out there to help you here Steven, but are you looking to manage your own portfolio, do you wish to be an active "day-trader", is it your SMSF you are looking to manage a portfolio on, or do you want to offer services as a stock broker to all and sundry??
I presume everything hinges on how much you are willing to pay for the service and that depends on what you are looking to acheive with it.
for example, if you just want to be able to sell a few IAG shares that you were issued back when it was floated, you probably wont see much value in an online trading account with market analysis, and the ability to provide you with a full suite of CGT, dividend, market trends and movements tracking etc etc etc.
but good luck. I am sure someone will be able to assist:)
bc
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Q: What is the best superfund that has the lowest fees and best returns?
A: James is a genius. Listen to James.

seriously though, there is most likely too much at stake to guess the answer and you need to talk to a professional who knows their stuff. And you WILL have to pay for the advice, no different to paying a solicitor or a doctor or a mechanic or a builder......you should expect to pay for skills and expertise that you do not have. And you should be VERY wary of people who give advice away for free.......because they all have to get paid by someone, and if that someone is NOT you, then you have to ask is the advice the best advice for ME or the best advice for someone else?????

good luck
bc
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Q: Hi…we have just completed our first property development of 6 units.

We have decided to keep one unit in the family trust so if we sold 5 at a profit do we just pay CGT on the profit or do we have to include the value of unit we want to keep?
A: That depends on whether the unit is "trading stock" or an "asset"

and that, in turn depends on whether you are in the business of developing property or you are a one-off developer and the units are capital in nature.

And that, in turn depends on what your intention was at the commencement of the development.

If you ask the ATO, they will tell you its trading stock and you get to pay tax on it. And I presume you are not super keen on this, so your best bet is to have a chat with your accountant about what it is you are doing (ie property developing business or investment vehicle) and be guided by him/her.

cheers
BC
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Q: My husband and I are down to one income and would like to take some pressure off our home loan by selling an investment property. It was purchased using SMSF. We are hoping to use the equity to pay down the loan but not sure if we can?
A: if you have an SMSF and the SMSF owns the house then the cash from the sale of the house must stay in the SMSF. The only way you can access this cash is to satisfy a condition of release (eg retire, die, etc) to access your super benefits as a lump sum or income stream.

If your SMSF has a shortfall in its cashflow that means youhave no choice but to top up the super fund with personal contributions then it would seem sensible that the fund has to sell the property. But the question needs to be asked: "who would have advised you to load up your SMSF with such a high level of debt in the first place???"

I STRONGLY recommend you go and see a financial planner and an accountant with runs on the board with SMSF and get some help.

good luck with it

regards
Brendan
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Q: Hi,
My business partner and I have had a printing business for 9 years…. We both now want different things and I have agreed to buy him out within the next 6 months. Are there finance options to help me buy his shares?
A: Hi Raj,

is the buyout ämicable??? Is there any chance that your partner will allow you to pay him out over time with the profits generated by the business?? This might provide you an option that will get you both what you need......if he has the time to wait for his money.....you can factor in a commercial rate of interest on the arrangement to compensate your partner for the time he has to wait to get paid.
Get yourself a good commercial lawyer: they ARENT cheap. I am sure that the advice will pay for itself many times over.

good luck
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Q: We want to buy an investment property in Port Macquarie, Price - $720,000. We own are own home and want advice if we can use the equity to buying the property and cover all the costs. Our home would be around $330,000. Can the property in Port just be in my husband’s name as he works full time - income $85,000, thank you?
A: Hi Debbie,
I have clients all over the country, including Tamworth:) I grew up between Tamworth and Armidale, so have plenty of ties to the area.
shoot us an email to: admin@bpcaccounting.com.au
regards
BC
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Q: My sister, brother and I would like to buy a property together and we have been asked if we want to buy the property as joint tenants or tenants in common. What do people recommend?
A: http://www.waterwaysconveyancing.com.au/blog/the-difference-between-joint-tenants-and-tenants-in-common/

Joint Tenants is where a number of people (usually husband and wife) "jointly"own 100% of the property. If someone passes away, the surviving property owners automatically get the deceased persons share of the property. this is most commonly done with a spouse.

Tenants in Common: each persons "share"of the property is not passed on to the surviving owner(s) and forms part of the deceased estate. This is less common for people who are not living together, eg siblings who would want their share of the property to revert to spouse or children rather than a sibling.

Get a solicitor to advise you (each of you) on what you can and cannot do, and what the consequences are for each of you. It will cost more, but you need to get the right advice to make an informed decision
good luck
bc
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Q: We want to buy an investment property in Port Macquarie, Price - $720,000. We own are own home and want advice if we can use the equity to buying the property and cover all the costs. Our home would be around $330,000. Can the property in Port just be in my husband’s name as he works full time - income $85,000, thank you?
A: have you done a budget to see what the cash shortfall would be: ie add up the rent and take off all the property expenses, then see how much you would need to contribute to make sure you dont end up living on cat food and wheet bix??

there is absolutely going to be someone out there who will happily lend you 3/4mil dollars. but you need to be comfortable with the cash side of it to ensure you can handle the cash shortfall, on $85k

the bank may wish to have both names on the mortgage, and often the property is purchased as joint tennants with the property allocated 99% to the high income earner and 1% to the lower income earner. this allows you to claim the loss where it generates the greatest tax benefit.

but remember, when you sell the investment property, 99% of the capital gain is allocated to that person too.....which means you dont get to smear the CGT across two tax returns......

good luck
bc
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Q: I have just set up my own business, what’s the best way to choose a superannuation fund. What questions do I need to ask?
A: https://www.ato.gov.au/Super/SuperStream/

go to this link. As an employer you have obligations to report AND pay super on time. It doesnt matter what business structure you use, YOU are PERSONALLY liabile for the super payable in respect of the employees of the business.

The ATO set up the Super Stream reporting regime to assist them in identifying who is actually paying super for their employees and who is not.

make sure that you dont fall into the "not" catagory, because there is no amount of "oops I forgot" or "cash was a bit tight, and I'll catch up next quarter" that the ATO will tolerate in respect of employers seeking to avoid their super obligations. And they really should go hard on people who dont pay super.

I wont get on my soap box today about how much impact this has on a persons retirement, but it is HUUUGE!

so, if you have an accountant, get them to lay you out a business plan that takes into account all the stuff that no one considers:
- super
- workers comp
- income protection
- public liability
- GST
- PAYG Instalment system
- managing staff
- managing clients
- handling business growth
- budgeting
- cashflow
- tax
- bookkeeping
- KPI
- borrowing for the business
- borrowing FROM the business
the list goes on....

get yourself hooked up with a GOOD accountant to help you manage your business. Remember that you need to get THREE things out of a business:
1: at least the same wage you would earn as an employee
2: a commercial return on your investment
3: an entreprenuerial "reward" for taking a risk and betting on yourself

if you are not getting those three things, you are making a lifestyle choice, and you may not be super-excited about what the future holds for you.

sorry to sound all doom and gloom, Ingrid. I see too many people who get stars in their eyes and forget to do the groundwork and the results for them are rarely worth the effort.

If, however you do your homework, get a plan and make your business work for you, then potentially you can have both the lifestyle and the financial reward you deserve.

good luck with it:):)

bc
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Q: We have been discussing school holiday options for our young family, 2 kids 9 and 7..... does anyone have a hidden gem within 3 hours of Sydney they would be happy to recommend?
A: Laook at anywhere from the south end of Lake Macquarie to Port Stephens. Fishing, bushwalks, moutain biking, beaches, hire a boat and rip around Lake Macquarie, swim with sharks, surfing, fancy-pants restaurants and cafes everywhere, the Port of Newcastle is unbelievable now. go carts, laser tag, crazy high rope climbing in the bush (the kids will looooove it). Reptile park is on the way up here. Wineries not far away aither!! No crazy traffic and pretty much everyone is laid back. You can almost always get a park AT THE BEACH!!!
but dont tell anyone ok??? The genuine locals think that Newcastle is some sort of State Secret so tell them you live in Kahibar when tehy ask where youre from hahahaha
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Q: I work 20 hours a week in my office job and have my own florist business where I operate from home

I’d like to know what I claim for my own business and working from the home office, thank you?
A: Hi Kris,

I say pretty much what Scott said!!

I would advise that you be VERY careful with what you claim as a tax deduction for your home, as you might create a capital gains tax headache for yourself without knowing it.

deifinately get advice on what you can and cant do.....as well as what you should and shouldnt do........because just because you can claim something doesnt mean you SHOULD claim it:)

cheers
bc
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Q: I am thinking of buying my first investment property. Would you recommend a negative gearing strategy and have the loan interest only or should I go principal and interest and look to create more equity?
A: Hello Margot,

as Sam and Awesome Albert have said: "it depends". So you need to get in front of someone and go through all the various issues and make a decision.

I will say this: if you are interest only for 10 years you still owe the whole amount when you sell. I know it is painfully obvious, but it is a huge factor.

And the other comment I would make is about the relative merits of negative gearing:

In order to get a tax benefit from negative gearing, you need to spend more than you earn (again really obvious I know but please bear with me)

LEts say your net loss on the property is $10,000.
Lets also say your tax rate is 32.5%
the tax benefit is $3250. yippee!!!
but the OTHER $6750 is GOOOONE !!!! never to return. bye bye.

do if your property doesnt increase in value by at least that amount, you are actually going backwards......

if your property doenst lose any money, then you have the $10,000 in your pocket, right?? But no big tax refund either.....but you are actually $6750 BETTER off but not bleeding $10,000 in the first place.

Im not saying dont get into a negatively geared property.
I AM saying do your sums and take into account ALL the factors to see whether something is a "good" investment.

good luck
bc
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Q: I am 54 and my super is about $220,000. I own my home and have an investment property in Bathurst worth about $200,000.

There has been very little capital gain as it needs a bit of work.

I want to retire at 60…. should I sell Bathurst and put it all into my super?
A: Hi Phillip,

anyone who can give you a straight answer based on the info you have provided is a charletan or a moron. There are sooooo many things to consider here it would be impossible for someone to get even close to a proper response.

what do you do?
how much do you earn?
are you married?
kids?
mortgages??
life insurance?
What CGT considerations do you need to think about on the Bathurst house?
do you want to downsize?
what lifestyle are you hoping to acheive in retirement?
etc
etc
etc
etc
get yourself in front of a GOOD planner and a GOOD accountant and get the right advice about what you can and cannot do
also take into account RISK!!!! because if you want to live like a king in retirement but dont have the ability to do so now, then you will be tempted to look at high return investments to bulk up super in retirement.......DONT!!!! I have seen too many people in their mid 50's take a risk and lose far more than they can afford to.

the sooner you get a master plan together then better your retirement is going to be. It will cost you money for good advice, but that will pay for itself very quickly.

good luck
BC
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Q: Can I use funds in my SMSF to invest in a business and are there any limits in terms of how much I can invest?
A: Wellll, actually you CAN invest in a business......you just cant get paid from that business......

its complicated and boring as batshit until someone gets spanked by the ATO for doing the wrong thing.....but this is the laymans version:

A super fund has to have the sole purpose of providing for the members retirements. That means that if it invests into a business, and the business pays a member or associate of the member, then the member is seen as deriving a benefit (zzzzzzzzzz) without satisfying a condition of release (I told you it was boring), so the fund is deemed non-complying (yawn!!!) and gets to pay 47% tax on its earnings (WHAAAAA?????) and also 47% on its ASSETS!!! (WTF???!??!??!??!)

I told you its boring until something bad happens........

I have seen funds that genuinely operate a business on an arms length basis and are as clean as a whistle as far as sole purpose test goes......but they get an ATO audit every 2 or 3 years which really sucks the jam out of their donut, if you know what I mean.

The moral of the story is....just because something is technically feasible, doesnt mean you should do it.....keep your SMSF for passive investments, even if that passive investment is the business premises from which you run your business.

cheers
bc
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Q: I set up my own marketing business 12 months ago and have just won 3 new contracts which will mean putting more staff on. We have one cornerstone client on a 2 year retainer at 15k a month and would like to ask if it is possible to get a 50k business loan to help fund the new staff?
A: GDay Beth,
Scott is a GENIUS!!! Listen to Scott!!!!
If you dont have rock solid figures and budgets then you are courting disaster. Get in from of your accountant, and be brutal on your business figures when you do the budget. If you are unable to sustain the growth, then dont take on all 3 new jobs. Taking on work for the pure joy of additional turnover is no fun. If it isnt going to pay its own way, then I would be VERY wary of proceeding.

remember: cash is king!!! If your cash in doesnt at least match your cash out, debt wont help you, it will simply delay and guarantee the inevitable.

good luck
bc
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Q: I have tax losses from a previous business and about to set up a company with a new partner. Can I transfer the tax losses across to the new company?
A: nope.

if your losses are in another entity then they are stuck there. If your losses are personal (eg sole trader) then you can apply those losses to income you earn from your new business.

cheers
bc
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Q: In 2014 I purchased an off the plan apartment ion the Gold Coast in a company name for $ 1.05m. The property was completed in 2016 but I recently had to sell and it was sold for $965k. Does the loss have to stay in the company name or can it be set against personal income?
A: nope. its stuck there.
if the company is the trustee of a trust and held the property in trust for the benefit of the trust beneficiaries....its still stuck there.
bit of a bugger that. I presume that there was a good reason to acquire property in a company name, but it limits your options come time to sell said property.
sorry Tony. no good news for you today I am afraid

bc
answered
Q: My wife and I are quite risk adverse when it comes to investing. We are about to receive a sizeable inheritance of about $700,000 and want to ask if we should buy an investment property or put the money into super as we’re in our early 50’s and both still working?
A: I am guessing you are about to receive about 1500 messages from financial planners who will be drooling at the prospect of looking after you and your inheritance!!!!
you clearly have many options, and there are a few important factors to consider:
1: $700k is a LARGE sum of money
2: you are in your 50's so cant afford to blow it
3: anything you decide needs to be very carefully researched and all options considered.

If you dont have a good accountant get one!!! Your accountant can help you manage the taxation consequences of what you are proposing

If you dont have a good financial planner get one!!! Your planner can help you to manage your investments and help you figure out a course of action.

Also remember that the inheritance is only one part of the puzzle: you also have a home, perhaps a mortgage, other investments, SUPER, and a whole host of things that need to be looked at: kids, debts, life insurance, plans to retire, asset protection, downsizing, upsizing, retirement, what to do for the rest of your lives, estate planning, etc etc etc

Your accountant and your planner dont have to be in the same office, but they will need to work together to some degree to ensure that everyone is pulling in the same direction. So, ask your accountant who you should use. Also ask your financial planer who to use.

This looks to me to be a once-in-a-lifetime opportunity for you to set yourselves a master-plan that will take into account ALL the things that you will encounter over the next few decades. Dont waste the opportunity to make the most of what you are receiving and ensure that you have the best possible retirement!!!

And dont be afraid to tell either your accountant or your financial planner that you will get a second opinion on things!!! they should welcome it!!

good luck
bc
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Q: Just bought a pub freehold and we will be owner-operators. We are going through the insurance process and been told we need to insure the pub for 60% more than the purchase price. Does that sound right or would we be paying a higher premium unnecessarily?
A: hmmm, I would be getting a second opinion on this. Maybe the reason is that the replacement cost would actually be that much, and being under-insured is no fun. Or maybe someone is just having a lend of you. get some more quotes and see what they look like:)
cheers
BC
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Q: I have stable employment and earn $220,000 a year. Unfortunately, I made a poor decision to get involved in one of those investment schemes where you get tax deductions up front.

The tax department has since closed down this scheme and I now have to pay $180,000 to the ATO. I have 2 properties but there isn’t enough equity to refinance and pay the ATO.
I don’t want to declare myself bankrupt and would like to know what other options are available?
A: One more tip for you Marcus.
Interest paid to the ATO IS deductible
Interest paid to a bank in respect of a tax debt ISNT
worth keeping in mind when deciding to whom you wish to pay interest.
Also if you can come up with a decent story to demonstrate mitigating circumstances (eg dodgy advisor) then the ATO will look at remitting the interest AFTER you have paid the debt.
good luck!!!
bc
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Q: I have stable employment and earn $220,000 a year. Unfortunately, I made a poor decision to get involved in one of those investment schemes where you get tax deductions up front.

The tax department has since closed down this scheme and I now have to pay $180,000 to the ATO. I have 2 properties but there isn’t enough equity to refinance and pay the ATO.
I don’t want to declare myself bankrupt and would like to know what other options are available?
A: First thing to remember is the TALK TO THE ATO. A lot!!!!!!!

the ATO is NOT there to send you broke, or force you into bankruptcy. They are always willing to cut a deal which allows you to address the tax debt over time, rather than take you to court. its bad publicity for them, even when the debt is genuine they are seen as the bad guys.

the other thing to bear in mind is that it is almost certainly true that the reason you have two houses is at least partially due to the $180k that the ATO refunded you in the past, and they are 100% aware of this, so crying poor isnt gonna help.

sooooo, you need a payment plan. The ATO will be very happy to talk to you about this. And I will predict how the conversation is going to go......

ATO: Hi Marcus, you owe us $180k
MARCUS: yes, I do
ATO: can you pay the whole amount today?
MARCUS: no
ATO: can you pay 50%???
MARCUS: no, I dont have a pillowcase stuffed full of $50 notes
ATO: hmmmm, you need to pay this debt as soon as possible
MARCUS: yeah, no shit Sherlock. I have done a budget, and based on my income and expenses, I can afford to pay you XXXXX (this is where you have to figure out what the amount is you can actually afford. lets say $1500/week = $6000per month).
ATO: thats no good Marcus, it will take you almost 3 years to retire the debt at this rate
MARCUS: I know this, but its the most I can afford. I have a family and school fees and a mortgage and I have cut to the bone on this: my family is going to live on cat food and weet-bix for the next three years due to the actions of a shonk artist who gave me advice that I could employ a certain strategy, and I paid him a LOT of money for this advice. Turns out he was a) wrong and b) a fraud. And I am paying a heavy price for this shit advice offered by someone who is registered with the Tax Practitioners BOard....ie the ATO to give me this advice.......what are you doing about this individual? Has he been charged with any criminal offences? Have you removed his practicing certificate? Have you investigated his dealings with other poor suckers like me??????
ATO: thanks Marcus, $6000 per month will be fine. We cannot discuss the other issues. Privacy laws you know.
MARCUS: thanks ever so much

I have taken a bit of poetic licence here MArcus, but this is a common enough story. Bear in mind that you have been bent over and drilled hard by the piece of shit who gave you the crap advice. And as a result you WILL suffer a financial loss. You also have received a benefit from the scam, which is why the ATO is all over you now.

so here is what I would do if I were in your shoes:
1: get a decent accoutnant to go in to bat for you to help you negotiate a payment plan
2: find a solicitor and sue the pants off the advisor who put you in this position
3: make as many complaints as possible to as many bodies as possible about the advisor: eg accounting bodies that he might be a member of; bullshit dealer groups that he works under; Tax Practitioners Board; ASIC; etc etcetc

If this sounds like I have got up in my stirrups a bit here MArcus, it is because people like this who offer shit advice to people like you are the f%cking scum of the earth and are a scourge on my industry. They act with impunity, have no regard for professional and ethical conduct, and are largely immune from penalty, because the people like you who are being stitched up are too busy sorting out the mess to deal with them. GRRRRR!!!!

good luck with it mate. If you need a hand please contact me.

Brendan
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Q: Any feedback would be greatly appreciated. There was a mobile speeding camera that was attached to the car and it was at night time that I went past it at the opposite direction. Now, my question is, because I was going opposite direction, and their was a very island in the middle of the road with big trees that was separating the road, do you think the speeding camera would of caught me if I was speeding (considering there was a long island in the middle of the road with trees in the way)?
A: if you are talking about the RMS mobile cameras that are set up in the back of a twin cab ute, you may be lucky: they are designed to pick up people travelling in the same direction the ute is facing.

If you are talking about a speed camera on a police car facing towards you as you drive towards it, then you might get a nasty surprise, but only if the police car could identify your car....and it was night....so maybe you managed to dodge a bullet......

and yeah, slow down:)

bc
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Q: Is it possible to minimise tax when you receive a TPD payment? I’m 53 and expecting about $300,000 – do I put into super and will that stop me from being able to access fund when I need it?
A: VERY complicated and VERY easy to get it wrong.
Get yourself a planner to help you sort this out. TPD means this is probably the only chance you are going to get to do this, so make sure you do it right.

Dont try to sort this out yourself!!!! You cant go back and have another crack at it if you find its been botched.

good luck
bc
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Q: We're looking for a good financial advisor to help sort our finances so it works best for us as we move into retirement. My husband is 60yrs (semi retired) and I'm 55yrs (working). We own our own home, have 4 investment properties (2 in NSW and 2 in SA) plus another property overseas. We have $650,000 in a savings acc earning minimum return and we need this to be properly invested. I have $160k super in a industry fund plus we have our own SMSF with $35k. Any recommendations?
A: Hi tracey,

give me a call 02 4399 1833. happy to chat:)
(if you have already done this, please have another crack!! I will keep my eyes open for an email from this site.)
cheers
BC
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Q: We are looking at retirement village options for our parents and wanted to know if stamp duty is payable at any time, thank you?
A: It depends.
some provide a "residence right" which is not a legal title of ownership
some are a strata title, hence legal ownership
so the moral of the story is take the paperwork to a solicitor with experience in this area and pay for a legal opinion. It has the potential to save your parents many thousands of dollars.
and be VERY wary of sharks......there is no shortage of slippery characters who are happy to prey on the elderly.

cheers
BC
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Q: A member of our sports club was cooking a BBQ as a volunteer. The BBQ began to catch fire as someone had removed the original fat catcher and replaced it with a smaller object. Fearing there would be injuries to children in close proximity 2 members decided to try and remove the source of the fire (the fat catcher). In doing so one member was seriously burnt. Now the club and insurance company are refusing to compensate saying they are not liable as they made the wrong decision. Is this correct?
A: Hello Linda,
its interesting that the Barrister representing the club hasn't joined the dots regarding the duty of care and where it will end up residing.......ie someone PERSONALLY will become liable for this. Most likely one of the executive committee members.

I hope your friend recovers...those fat burns can be very nasty!!!!

regards
BC
answered
Q: A member of our sports club was cooking a BBQ as a volunteer. The BBQ began to catch fire as someone had removed the original fat catcher and replaced it with a smaller object. Fearing there would be injuries to children in close proximity 2 members decided to try and remove the source of the fire (the fat catcher). In doing so one member was seriously burnt. Now the club and insurance company are refusing to compensate saying they are not liable as they made the wrong decision. Is this correct?
A: Wow.
What sort of message is the club executive sending to its members???? "we would love you to help out, but if something bad happens you are on your own, sport!!"
I know that as a member of a number of volunteer organisations, every member is covered, its simply not worth it for the club NOT to make sure that the members are covered.
If the member is NOT covered, then SOMEONE other than the club has breached a duty of care.....
is it the duty officer on the day, who failed to check the fat tin?
Is it the social secretary, who orders the sausages and gas bottles???
Is it the club president, who failed to run an induction program for all members on the proper procedure in the event of a fat fire???
I would be extremely disappointed if I was a member of a club that decided to hang me out to dry like this. And you know who I would be talking to??? My solicitor. And the conversation would be along the lines of "if the club is not at fault, then SOMEONE is, so lets line that SOMEONE up and get some proper compensation"
perhaps some inquiry from a solicitor as to who the member should be looking to for compensation might change the attitude of an executive if thye get the idea that they are personally on the hook for issues which have been dismissed by the club, and the clubs insurer.
Because some is at fault. It is an unfortunate fact that we live in a highly litigious society, and the days of clubs being exempt from legal obligations to its members are well and truly over.....not to mention the moral obligation of the club in general and the executive in particular to ensure that its members are not placed in danger......
this looks like a disaster could grow from an unfortunate accident.

Linda, if you an executive member of this club, get some legal advice.
If you are the injured party, get some legal advice

moral of the story here is......get some legal advice.

bc
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Q: Hi, I’m a small business owner about to buy a new car. What is the luxury tax threshold and what are the implications from a tax perspective if I’m $5-10k over the threshold?
A: Unless your business sells or imports luxury cars then the only impact for you is the fact that your car's cost has been jacked up to cover this cost.

Where you WILL get affected is in the areas of:

depreciation: you are only allowed to claim depreciation on the value UP TO the luxury car limit. The rest is on you, no tax deduction:(

also no GST on the excess over the luxury car tax limit......poo

and if you are trading through an entity and the car is provided to you as an employee.....you have FBT considerations, but that also applies for non-luxury cars.

I reckon a better value for money purchase is a second hand luxury car. you can buy a forest of walnut and acres of leather for less than $55k..........or buy a horse: there is no such thing as luxury horse tax:)

cheers
BC
answered
Q: Hi

I look after the paperwork for my husband’s business…. He is a sole trader but the business is getting bigger and people have suggested we should structure the business as a company. I would like to ask about the benefits of changing and what accounting and tax issues do we have to consider, thank you?
A: How much time have you got???? hahahaha

here is a snapshot for you:

company:
advantages:
1: asset protection: if the company has debts the company gets sued, not you. This protects your personal assets from business risk
2: company tax rate: 27.5% tax rate for small business entities, which is lower than most peoples' marginal tax rate
disadvantages:
1: cost: higher accouting fees
2: complexity: issues with director loans can cost you heaps to sort out
3: super: any wages paid to you MUST include super as an employee (this is not ALL bad, everyone can use more super)
4: workers comp: the company MUST have a workers comp policy on wages paid to everyone, including the owner

for the vast majority of people tax savings alone are not enough to justify setting up a company. HOWEVER for the vast majority of people the asset protection you get out of using a company is more than enough to justify using a company.

there are lots of other issues that need to be considered too, so you will definitely need help.

get a good accountant to advise you and help you to set the company up if you decide to go that way

good luck
bc
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Q: I’d like to ask a question about property investment in NSW. I live in Sydney but would like to explore areas where there might be some significant growth opportunities in the next 5-10 years?
A: draw a great big circle around Sydney. make sure it goes all the way up to Yamba and all the way down to Merimbula.
then chuck a dart at the circle....if its not in the blue bit rip in.
chances are that there will be significant growth opportunities everywhere:)

Of you can maybe look at areas that all the smart people are saying are future growth centres......
I presume you are talking about residential property?
Also you haven't really nominated a budget, so we can cross a line through Double Bay?

I vote you write down your objectives and narrow down your search criteria before you start exploring the north coast:)

Also bear in mind you might want to consider other things that can and will influence your decision, like family and kids and work and stuff.....and factor this into your master plan.

And remember, property is great, but its not the only way to a comfortable lifestyle. Keep an open mind about how you acheive your investment goals.....

Maybe a chat with a good planner will go a long way to helping you to identify what you want.

good luck
answered
Q: My wife and I have our own separate superannuation. If we set up an SMSF can our individual super be rolled into the one SMSF so we can buy 2 or 3 investment properties?
A: yup. sure can, but SMSF is fraught with traps, so make sure you get yourself a good qualified and experienced accountant to help you out.
The penalties for doing the wrong thing can be EXTREMELY HIGH!!! so do your homework first and find out what your obligations are and what things you MUST do when you are the trustee of a SMSF.
And get a few quotes: some firms want an arm and leg just to set the thing up, and some want to sign you up to an ongoing commitment and entice you with a years accounting and audit free.
Prices vary widely: you can pay $500 to set one up. or you can pay $15000 for the same thing.
Also annual fees will depend on what you are doing, what investments are, the number of transactions etc etc etc. Some SMSF annual fees are as low as $400, some pay $25,000 a year. Everything depends on what you need and what is going on.
At the end of the day you are probably assuming responsibility for the biggest asset you will ever manage. Dont treat it like a hobby. Be VERY careful with what you do with it: your whole retirement depends on you not making mistakes.

good luck
bc
answered
Q: Hi,
I’ve been contracting for the same 3 business for 3 years and averaging around $130,000 a year. Will I need tax returns to obtain a home loan or will letters from the business owner be enough?
A: Hi Jamie, if you have not done your tax returns then you have a problem waiting to happen.

based on $130k profit as a sole trader x 3 years you have a $35 -40k tax bill x 3 coming your way.

The reason this is relevant is that many banks now require you to lodge a declaration that your tax affairs are up to date, and to make things even more complicated, any outstanding debts with the ATO will show up on your credit checks, unless you have them under a payment arrangement.

soooo, the best thing you can do is have a chat with your accountant about getting yourself up to date with the ATO.

good luck
answered
Q: Really important to make sure your home loan aligns with your investment goals. Recent client of ours wanted to focus on paying down debt but was on interest only with an extremely high rate. Simply switching to P&I has saved him $4,394 p.a. Surely lunch is on him next time?
A: that would just about cover lunch I would expect. but if you expect him to drop $4k on lunch every week he might get a bit hard to find.......
answered
Q: A friend suggested I invest my cash savings into my own SMSF to help with the purchase of an investment property? Is this wise and how can I get my cash back?
A: Unless your friend is an expert who is currently actively advising people in super and tax then I would treat his advice the same as anything you hear at the pub/bbq/cribroom/water-cooler.....with a massive dose of skepticism.

The idea is technically feasible, but there are a lots of ifs buts and maybes before you can say its a good idea.

go see a professional. pay for some good advice and be wary of shysters.

good luck
bc
answered
Q: If I purchased an investment property as my first home can I still get the first home buyers grant?
A: Hi Jade, the question of whether or not investing in property is a "good" idea or not is very difficult to get a straight answer on.

Maybe your question should be along the lines of "what can I do to plan for a reasonable quality of life throughout my working life AND also ensure that I am able to maintain a decent quality of life in my retirement"

which takes into account SOOOOOO much more than whether or not to rip into an investment property in the hottest real estate market in the country.

What you need is a "master plan" so that you can align all the things you do with this master plan. For example, it is not tax effective for a retiree with no assessable income to look at a negatively geared investment to get a tax advantage. OR its often impractical for a young person to make large salary sacrifice contributions into super when they really want to purchase or pay off their home.

You also need to consider risk: what happens if you cant work? what happens if your house burns down? What happens to your family if you get skittled by a bus? Lots of things.....

Moral of the story is get yourself in front of a good adviser who can help you to formulate this master plan. it probably wont be cheap, so ask these people FIRST what the costs are, and if they say they wont charge you a cracker, then run a mile!! If you are not paying up front, you WILL be paying behind the line because your advisor will be looking for something that provides him/her with the best commission

good luck
bc
answered
Q: My husband and I are looking to purchase a property with my parents in a discretionary trust we had set up 12 months ago. Are we able to add my parents to an established trust and is it easy to be able to obtain finance under this structure?
A: GDay Martina,

one of the first things you need to look at is what is the history of the already existing trust: ie does it have any skeletons in the closet that would cause you to lose sleep at night?? The last thing you need is a headache that might place the trust assets (ie the house) at risk!!

To be honest, the rule of thumb is that the cost of a trust deed is so low that it is often easier to go and get a new "cleanskin"to guarantee no issues. Even taking into account the stamping costs you are often miles better off

And yes you definately need to talk to someone with expertise in the area. The opportunities for you to shoot yourself in the foot by utilising or setting up a trust unneccessarily or incorrectly abound.....and the costs associated with fixing problems can be extremely high

and lastly, the ATO has been working very hard for a number of years to take a lot of the joy out of dealing with trusts: there is no end of problems associated with ensuring that the trust makes an "effective distribution" of the income of the trust. In a nutshell, the ATO doesnt like the idea that you can stream income to beneficiaries on a low marginal rate of tax, and hence is always on the lookout to ensure that the trust sticks to the letter of the law:.......the upshot here is that the compliance costs associated with a trust are sometimes quite high......

good luck with your venture:)
bc
answered
Q: I am employed full time and paid a salary.

On the weekend, I have been paid for photography services that I have provided. I have received $4000 so far.

How do I need to report this to the ATO? At the end of the financial year add this money to my annual income?

If so, is the tax rate 35%? Can I claim all expenses as tax deductible such as, travel, equipment etc.

Thanks
A: mate you need to get yourself an ABN. Suresh is on the money as far as your tax obligations, but remember that you probably have a LOT of deductible items to take into account. The first thing you need to take into account is your photography equipment. Most photographers I know are like junkies with lenses, filters, tripods and bits& pieces......cant say no!! Remember that for Small businesses there are special depreciation rules that allow you to write off assets that cost less than $20k........so your whiz-bang $12,000 Zeiss will come in handy come tax time hehehehe.
get some advice from an accountant about keeping records and KEEP YOUR RECEIPTS!!!!
cheers
Brendan
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Q: If someone worked as part of a real estate agency between 2000-10 selling property on a commission only basis with no OTE's and were required to give the agency manager a personal invoice for the sale, would the manager or agency then be required to pay those individuals super? Given the time lapse could the employee obtain unpaid super? Consider there was no formal employment contact between the parties and agency, yet all worked from one office under single unified company label/brand.
A: Hi again Katie,

this informal subcontractor arrangement was very common 10 years ago, however the ATO has been working its way through these employers and auditing their super guarantee obligations. There are a few tests that allow you to pretty easily determine whether someone is a "deemed worker" or a "subcontractor". They revolve around how the work is invoiced, what the work involves, who is responsible to fix it up, who tells who what to do and how and when, etc etc.

I call it the duck test: if it walks like a duck and quacks like a duck; well the chances are its a duck.
if you look like an employee and act like and employee; well then you are probably an employee.

If you are the person getting paid here, then I would have a chat with your accountant and then talk to the ATO: they love to hear from employees who got stitched up by employers seeking to avoid their obligations

If you are the real estate agent, then you DEFINITELY need to see someone ASAP!! It is likely that you have a big problem that will cost you many thousands of dollars in unpaid SG obligations. It makes no difference whether the issue was intentional or not, if the ATO gets wind of an employer not paying super, they go for the jugular!! and just to rub salt into the wound, if an employer gets picked up for this, none of the super, or the fines are tax deductible!!!

oh, and the next thing the employer can look forward to is a Workers Comp insurance audit: the same duck test applies here, and in my experience the ATO is all too happy to share info with the likes of GIO.

you may get the impression that I tend to side with the employee in this matter: I do. I believe it is reprehensible that an employer can attempt to avoid obligations in respect of the very people that the employer is reliant upon for their income. If you have such little regard for your employees you probably deserve everything that the ATO is going to deliver.

moral of the story is GET GOOD ADVICE!!

good luck
BC
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Q: My partner and I have been discussing buying a new home. We currently live in my home which is worth about $750,000 and the home loan is $310,000. If I didn’t sell my place can we use the equity as a deposit in a new home and does that mean my loan would become an investment loan if we rented it out? The home we are looking is around $1.1M, would there be enough equity in my place to pay a deposit?
A: Hi Mason,

I have clients from Tasmania to Saudi Arabia, so yup. the electronic age makes some aspects of what I do super duper easy:)
regards
BC
answered
Q: If someone worked as part of a real estate agency between 2000-10 selling property on a commission only basis with no OTE's and were required to give the agency manager a personal invoice for the sale, would the manager or agency then be required to pay those individuals super? Given the time lapse could the employee obtain unpaid super? Consider there was no formal employment contact between the parties and agency, yet all worked from one office under single unified company label/brand.
A: Almost certainly.
The ato is all over people who dodge their obligations as an employer.
Talk to an expert in tbis area to find out what needs to happen
Penalties can be severe for the employer!!!!
answered
Q: My partner and I have been discussing buying a new home. We currently live in my home which is worth about $750,000 and the home loan is $310,000. If I didn’t sell my place can we use the equity as a deposit in a new home and does that mean my loan would become an investment loan if we rented it out? The home we are looking is around $1.1M, would there be enough equity in my place to pay a deposit?
A: the test for deductibility is the PURPOSE of the borrowings.
the purpose of your loan is clearly to acquire the house you occupy, hence once the property becomes an income-producing asset, the interest on the mortgage will be deductible

HOWEVER!!!! the purpose of the borrowing can be "diluted" by subsequent borrowings for a different purpose.....

eg if you redrew on your homeloan last year to buy a dirty great big yacht, then that portion of the mortgage is not for a creditable purpose, and hence a portion of the mortgage will then be personal and not deductible.

talk to your accountant about creditable purpose and investment property. Also talk to your accountant about capital gains tax. because once you move out of your now home, your property becomes subject to capital gains tax.....and there are lots of things you need to know!!! The potential tax cost (or tax saving if you do things right) is HUUUUGE!!!!

cheers
bc
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Q: I have an apartment where am living since 4 years , planning to convert that as an investment property and recently I purchased another property whose settlement is likely to be end of this year. If I move to a rental property close to my work place , will I be eligible to get tax benefits on two investment properties
Please advice ??
A: hmmm, so you will OWN two properties, both of which you will be renting out?
And in addition to this you will live in a THIRD rental property close to where you work??

your rental income will be assessable, and your rental expenses will be deductible.

so the NET income will give rise to a tax liability
OR
the NET loss will be applied to your other assessable income (eg wages) as a tax deduction.

so there are no direct "tax benefits" as such. Its just the net effect of the rental loss can provide you with a greater refund in your tax return.

Best thing you can do is talk to a qualified accountant who can help you to set things up so as to provide you the best tax benefit in both the short and long term.

You also have some capital gains tax issues that have not even been touched on here......given this apartment has been yours for a long time and once it becomes a rental property you may incur a capital gains tax liability if you sell it later on.....all the more reason to talk to an expert.

regards
Brendan
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Q: Hello,

My father recently passed and left in his will that his assets go into a Testamentary Trust.

I'd like any advice on how do I establish such a trust and transfer assets (car, home) into it? All I have so far is a tax file number for it.
A: If you have a tax file number I would say that the trust has been established. I believe that your fathers will is the instrument by which the trust was established.......and someone somewhere has applied for and been issued a TFN.

Best to talk to the solicitor who looked after your father's affairs and get guidance from them. A testamentary trust is a relatively simple thing in theory, but in practice it needs a fair bit of attention, so get legal advice before you go organising transfers of assets.

cheers
Brendan
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Q: Hi. I have already bought an investment property from the available funds of offset bank account for a mortgage home where I live now.
To keep new house on investment officially I contacted NAB bank. NAB bank is ready to swap over the property title-papers but advices that I will not be able to take advantage of tax benefits by doing so because govt tax officers check what was the purpose of the home loan originally? Please advice me now how do I take advantage of tax benefits?
A: GDay Sanjiv,

your biggest mistake here is getting tax advice from the bank. Have a chat with someone who understands the tax implications of what you are up to.
Colin is partially on the right track with his comments on "mixed purpose" loans.

the thing to get straight at the outset is the deductibility of interest on a loan is determined by the PURPOSE of the drawings.

If you have a mortgage and you are ahead on your payments (ie made payments in an offset account) then subsequently draw down on this loan for a CREDITABLE PURPOSE, such as purchasing an investment property, then the proportion of interest on the loan that pertains to the CREDITABLE PURPOSE is going to be deductible.

So its a relatively simple calculation: figure out the % of the mortgage that belongs to the investment property and apply this to the total interest and claim this in your tax return.

where it gets complicated is when you make a subsequent drawdown for a different pupose, because this changes the % of the mortgage that belongs to the investment property. Another issue is that you cannot reduce the "non-deductible" portion in preference to the "deductible portion". that is why it is generally a better idea to have TWO facilities: one for the personal portion and another for the investment portion.

Get yourself a bean counter who understands this, and a mortgage broker who also understands this and talk to them about what you can do to maximise your tax benefits. You have already gone out and done all this, but at some point you may wish to refinance, and maybe that is good time to reset things up to maximise your tax benefits for the longer term.

cheers
BC
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Q: Hello,

I am a software developer contractor for $700/day and my partner is not working at the moment. Can I hire her for $200 / day , is that legit ? What are the options (have her own ABN , need to pay super ) ?

Thanks
A: Your income is Personal SErvices Income (PSI).
your tax deductions in respect of PSI are limited to the same sorts of deductions that you would have if you earned a salary.

The ATO is almost certainly going to see straight through a "wage"paid to a spouse. Morevover, it creates a superannuation liability and also a workers comp issue that you need to address.

Also bear in mind that the ATO has a long and illustrious list of IT professionals who have sought to dodge a bit of tax by means fair and foul......so if you put software developer on your tax return you can be confident that your return is getting more than just a little glance at the ATO....so if you are stretching the freindship then the ATO will find out eventually and spank you soundly for it. They know all the tricks so be careful about what you try to get across the line.

So, whilst on the face of things you can easily squirrell some income across to your spouse, its not that simple. Go find yourself a bean counter who understands the PSI regime and how you can best manage tax without dropping yourself in the poo with the ATO...

regards
BC
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Q: Hi, we were looking at renting a boarding room for our son with the licensing agreement being in my husband and my son's name. My husband has signed it but my son hasn't as we aren't sure if we want the room now. We have paid a holding fee, bond, next weeks rent and a licence preparation fee. The real estate agent says that we will have to pay a break licence fee and continue to pay rent until someone else takes the room even though we haven't moved in. Is this correct? Thanks Rhonda
A: https://www.tenants.org.au/factsheet-01-residential-tenancies-act

Hi Rhonda,
I suspect the landlord is on the money, but maybe you have options available to you. Remember the real estate agent is acting for the landlord so wont be looking to help you out here.....have a chat with the tennants advisory service (see attached) maybe they can give you some guidance
good luck
bc
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Q: I use a bookkeeper for my business BAS, and an accountant for my tax. The bookkeeper enters all the business data on an Excel spreadsheet which I give to the accountant with the rest of my information. I've discovered that the bookkeeper has made a major error every year (for 6 years) by entering my receipts incorrectly, so I have paid a lot more tax than I should have. The accountant has had the original documents as well as the spreadsheets. Should he have checked the spreadsheet data??Thanks!
A: Hi Meroula,

I dont want to go on a bookkeeper bashing expedition, but it sounds to me like your bookkeeper has not moved with the times. You almost certainly need to find a better solution.
In terms of what to use, I recommend MYOB over Xero, mainly due to the support that MYOB offers is better......that being said either product works great, and there is LOTS of how-to videos to explain how to do stuff.

I would strongly recommend that you go with whatever product your bean-counter tells you to use, because they can:
a: help you set it up
b: help you stay in control
c: get reports and data out a lot easier (ie CHEAPER) to use at their end

If your accountant is not super keen on the cloud based options, punt him too. Seriously. The time and efficiency gains you and your accountant get out of a cloud based system is mind-blowing.

You will find that you will be doing 95% of what you used to pay your bookkeeper and accountant to do, and then the services you ACTUALLY need become tax management and wealth creation advice, not bookkeeping and talking about last years tax return after the event when its too late to do anything about it!!!
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Q: I use a bookkeeper for my business BAS, and an accountant for my tax. The bookkeeper enters all the business data on an Excel spreadsheet which I give to the accountant with the rest of my information. I've discovered that the bookkeeper has made a major error every year (for 6 years) by entering my receipts incorrectly, so I have paid a lot more tax than I should have. The accountant has had the original documents as well as the spreadsheets. Should he have checked the spreadsheet data??Thanks!
A: that all depends if you discussed the possibility of the bookkeeper making a mess of it. I know I am talking from your bean-counters side of the fence, but if you want your accountant to check every transaction in an excel spreadsheet the accounting costs would be astronomical.
It also depends on whether you gave your accountant ALL the supporting documents ans receipts and asked him/her to review the spreadsheet.....again very expensive at bean counter hourly rates.

In the vast majority of cases the accountant has to apply a liberal dose of practicality to his role and has to assume that between the bookkeeper and the business owner someone is checking stuff BEFORE it gets to the accountant.
There is a LOT of stuff that your accountant should check, for example whether your accounting data matches up to the BAS' lodged. In this case it would have because the accounting data (excel) clearly did match up to the BAS......hence no alarm bells and no phone calls from your bean-counter.

I have to say that the biggest problem you have is your spreadsheet. it is nothing more than a BIIIG electronic list of numbers, and as a tool to manage and advise, I put Excel in the same catagory as a corn flakes packet of receipts.... pretty much useless but marginally better than nothing at all.
Do yourself a massive favour and get onto MYOB Essentials, or Xero. Talk to you accountant about what you can rectify with amended tax returns and BAS'....and be prepared to be disappointed here, because the period of time that you CAN amend is 4 years, so you wont be able to fix it all.

And find a better bookkeeper. better still: use MYOB Essentials and do it yourself....then you will know it is right:)

cheers

BC
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Q: I am about to enrol in a TAFE course. On my enrolment form I have been charged one amount but on the list of charges it adds up to another amount. I am being charged a discretionary fee but this fee doesn't appear on the fee breakdown at the end of the form. I am still being charged for this. Is this legal.?
A: Hi anna-marie

best thing you can do is ask them for clarification and a clear breakdown of your fees:)

cheers
BC
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Q: Hi,
My Wife and I have a 75k mortgage. we have an equity loan facility that is split from this mortgage of 400k.
we would like to invest in some shares using funds from equity loan.
We would like to set it up so my wife is buying the shares as she has recently delivered our baby and won’t be returning to work for around 5 years.
Can she negative gear the interest against dividend income from the equity loan keeping in mind it’s in both our names?
A: Hi mate, I have an office on the Central coast too!!! google us up: BPC Accounting Chartered Accountants. 02 4399 1833 or hit the "contact expert" thing below and I will get back to you:)

happy to chat

regards

Brendan
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Q: I’m 28 and would really like to understand more about superannuation and building for the future. Am I better off just going along with my employers super or finding a financial planner to help. What questions should I be asking a planner, thanks?
A: QUESTION 1: what qualifications do you have?
QUESTION 2: what experience do you have?
QUESTION 3: what commissions/remuneration to you receive?
QUESTION 4: what will you charge me????

At the age of 28, I am guessing you may not have enough in super for a lot of advisors to get excited about you....many are paid a trailing commission based on the size of your member balance.

That being said, it is NEVER too early to start planning for your own retirement!!!! the more you can poke into super at a younger age, the more it can grow in a tax-advantaged environment, and ultimately the more you will have in your retirement!!

There is a mountain of territory for you to cover: super, insurance, how to pay off your own home, investing in super v investing outside super, managing tax, estate planning, the list goes on.

Get yourself in front of someone who knows what they are on about that will charge you a fee for service (and hence will not be influenced by big commissions) and understands not only investing, super, but income tax and can help you put together a master plan to work on over the next 20-30 years.

congratulations on asking the question so young!!!! That tells me you are already thinking about retirement, which means you WILL probably have enough to retire on. Many leave the question too late, and as a result they dont.

regards

Brendan
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Q: Hi, my name is Roger Francis and I am currently a self employed Handy man with a good income per week of around $2400 including being maintenance person for many organisations and with regular employment.
I ran a cafe which went bust and still hold the lease which is amassing rent at $7000 per month for which I am 3 months in arrears.
I need advice on how to go about applying for a home loan to cover this and future rent and to buy a house at the same time?
A: Hi Roger, here are some comments that I have thought of:
1: Get yourself set up on a proper accounting package, it will reduce your bookkeeping time by an enormous amount. I recommend MYOB Essentials to most clients, but Xero and Quickbooks all do the same thing. they are dirt cheap compared to the cost of an accountant to do your financials and tax.
2: if your landlord has been notified that you wish to terminate the lease I think you will find that they are obligated to make a proper effort to replace you. ie if you know that they will get someone else to take over the lease then you are not necessarily locked in for the entire term of the lease.

It seems reasonable to conclude that no bank will touch you with a bargepole whilst you have a $7000/month obligation to service. Also self-employed people with a short trading history is going to make finance even harder.

It is clear you need to get advice on the cafe lease. Talk to a commerial lawyer about your options.

good luck
Brendan
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Q: Hi,
My Wife and I have a 75k mortgage. we have an equity loan facility that is split from this mortgage of 400k.
we would like to invest in some shares using funds from equity loan.
We would like to set it up so my wife is buying the shares as she has recently delivered our baby and won’t be returning to work for around 5 years.
Can she negative gear the interest against dividend income from the equity loan keeping in mind it’s in both our names?
A: Hello Peter,

have you considered that your wife will have no tax benefit from the negative gearing whilst she is not working?

The flip side to that is that should she make any gains or profit on sale of shares you wont have to share the tax burden at your (presumably) higher marginal tax rate.

Are you planning on a passive investment portfolio, or an active share trading business?? This will have tax consequences on what you do....

What happens in 5 years?? the shares will STILL be in her name so the income will STILL stream to her.....

Is there an opportunity to hold these investments in some sort of structure that allows for the income and gains to be streamed to whoever will have the lowest tax rate??? (yes you can)

I would say you need to get a whole heap of advice on the pros and cons of doing what you are doing how you plan to do it, THEN rip into the share market like a crazy thing:)

get yourself in front of a PROPERLY QUALIFIED AND EXPERIENCED accountant who can advise you on tax and help you to plan this venture out over 20-30 years to ensure you dont shoot yourself in the foot by accident in a decade or so. DONT go to someone who purports to be an expert in something without some REAL qualifications and experience.

regards
Brendan
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Q: I am running the business my father founded and wanted to ask about protecting the family should his health deteriorates. Dad is 74 and reluctant to formally hand over control but we want to put things in place to ensure everyone is happy. What is the best way we can achieve this?
A: Get a good accountant who can help you with succession planning, and do it sooner than later!!!
everyone involved in this business will be better off with a plan in place that ensure you all know what is going to happen and what time-bombs you have ticking away that will need to be dealt with.
The advice will depend on what you and your father have in place now, what you WANT to take place and what you need to do to ensure the maximum benefit for all involved.
good luck
BC
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Q: Hi.

My partner and I bought our first property 5 months ago. Now I need to relocate interstate for a 2 year assignment. I am looking at renting it or selling it. What is the best way to go about it?

Thanks
Jason
A: Hi Jason,

renting is not going to be a problem from a TAX perspective....you just need to report the income and claim the deductions. Also you have a 6 year window after you move out of your property when you can move back in again without creating a capital gains tax issue later on.
BUT
your bank might have an issue with a loan issued on the basis of an owner-occupier which all of a sudden turns into an investment property. Probs needs looking at.

cheers
bc
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Q: We are thinking of purchasing a property with cabins to rent out nightly. We will live in the main property. Will the mortgage interest be tax deductible as we are running a rental business?
A: Hi Wesley,

In answer to your question of the actual deductibility of the loan, the answer is that if the loan has DUAL purposes, then the loan will be PARTIALLY deductible.
The portion of the property that is your primary residence will not be used to generate income and hence this proportion of a loan will not be for an income-producing purpose and hence any interest on this portion of the loan will not be deductible
The portion of the loan which is for the income-producing part of the asset will clearly be for a creditable purpose, and hence the interest on this portion of the loan will be deductible.
Find a mortgage broker who can explain Hart's Case to you so that they clearly know what the income tax implications are, then talk to them about getting two loans: one on the primary residence portion and one on the income producing portion. That way you will very easily be able to identify and claim the correct amounts for tax purposes.

good luck
bc
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Q: : I am in a Strata of 6 villas. We have a council of owner of 5 members. The law requests a minimum of 3 members. To fill the 3 positions? Do we have to elect a chairman, a secretary and a treasurer? The existing chairman believes she is the only one elected and can delicate tasks of secretary and treasurer to different members at any time as she field fit. Is that according to law?
A: http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes/The_owners_corporation/Strata_committee.page?

Dept of Fair Trading NSW has this info on its website. In NSW the committee decides who holds the vairous office positions, so I presume that the WA Dept of Fair trading has a similar set of rules

I would contact the dept of fair trading if I were you.

good luck

Brendan
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Q: We are a Strata of 6 villas. We have a council of owner and a Strata manager. We are applying for a tax file number. Do we have to have a ABN number?
We collect Strata fees and have a sinking fund of $5000. We will be below taxable income
A: There is a concept in tax law called "mutuality" which means that you cannot earn assessable income from yourself. Any funds earnt or paid to the Strata from members of the strata is subject to this concept. So in short the Strata wont have any assessable income unless its from an unrelated party...eg hire of assets or interest on bank account or something like that.
do a search on a tax ruling called TR 2015/3. this will help you a bit but because its written in ATO-ese its not necessarily the easiest document to read.
good luck
BC
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Q: Hi, We are struggling financially with credit cards & other debts. We can manage comfortably with Mortgage repayments it's all the other debts which are crippling us. I have seen when searching online that you can keep your home & car if you declare bankruptcy? Is this possible?
A: Hi guys. reading between the lines I can only presume you are in between a rock and a hard place right now JJJ. I hope it works out for you and your family, please make sure you get some advice from people who know what they are doing. If I had to limit myself to one piece of advice it would be stay away from those predators who advertise solutions and stitch you up to Part IX or Part X arrangements which end up costing you more than bankruptcy would.

good luck
BC
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Q: Hi, We are struggling financially with credit cards & other debts. We can manage comfortably with Mortgage repayments it's all the other debts which are crippling us. I have seen when searching online that you can keep your home & car if you declare bankruptcy? Is this possible?
A: NO!

in bankruptcy you lose everything except for personal effects, your tools of trade and a car up to the value of about $7600. Everything else gets handed to the trustee to handle. You also have to make income contributions of 50% of your income (after tax) of approximately $55,000.
It last for 3 years. It is also on your record for a long time, and makes potential lenders very nervous.
I have seen people use it as a get out of jail option as they perceive it as having no consequences, but it does have some lasting consequences.
And whatever you do DONT sign up to one of of those late night debt consolidation businesses!!!! What they sign you up to (Part IX or Part X debt agreements) are even worse than bankruptcy. Those firms are the lowest form of legalised predator who prey on the weak and desperate people who can least afford to get expert advice.
most good insolvency firms offer some level of support and consultation to individuals who are in debt and cant seem to break out. Go to AT LEAST TWO!!! get some advice about your options and SIGN NOTHING UNTIL YOU KNOW WHAT YOU ARE SIGNING.
Insolvency and bankruptcy practitioners are for the most part there to help. They get no joy from sending people down the drain, and wherever possible they will try to help you get out the situation you are in.

moral of the story is get advice, make it as good as you can make it and act on it. But dont sign up to something you dont understand.

good luck

Brendan
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Q: Im 62 and have $3k left on my mortgage on which i pay the minimum and have $20k in advanced payments.
Would it be beneficial to access some of the $20K to put into my super fund?
A: Hi Barbara,

a tax saving is not the only reason to make a super contribution. I would find myself a good financial planner who is ALSO an accountant or at least part of an accounting firm that can give you advice on the whole picture....tax, super, retirement planning, estate planning, ect etc etc. You really cannot look at making some extra super contributions without looking into the effect this might have on other things.....it is likely to cost you a bit, but you will then have a much better game plan for your retirement to work with.
good luck with it
Brendan
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Q: Identify and describe the Accounting Standard that governs the presentation of financial statements?
A: Is this your Financial Accounting 101 assignment hahaha?????

this should help: http://www.aasb.gov.au/Pronouncements/Current-standards.aspx

have fun with it. You will find that the answer is probably a lot more complicated than you anticipated.

regards

Brendan
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Q: If a company goes bankrupt does it impact the director/owner credit history as well or just the company as it is an entity itself ?
A: Hi Louise,

firstly a company doesnt declare bankruptcy as such. The directors or creditorscan apply for a Liquidator to be appointed.

The Liquidator does an investigation into the affairs of the company and reports to the creditors (and owners) of the company whether or not he thinks the company is a dead duck or not. Then if he decides its not viable the creditors get paid out a % of their debts, and the company gets deregistered eventually

Whilst this does not impact DIRECTLY on the directors credit history, it is on record. And banks dont like it. SO if you are a director of a company in liquidation, be prepared to be knocked back on finance applications unless you have a REALLY REALLY good story to tell the bank as to why this wont affect your capacity to service debts in the future.

cheers
Brendan
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Q: Hi, my kids mother left them a house in her will and made her brother the executor. The will was to have house sold and divided between the 2 kids at age 21. Her bother transferred house into his name (8 years ago) and my son lived in the house since. They have now sold the house but we need to find if cgt is payable?
A: Hello Paul

Get a solicitor who understands CGT and get some advice. there are potentially all sorts of headaches arising from this: I think that CGT is only one problem....

regards
Brendan
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Q: I have a mobile home that i am looking to sell, it is situated in a nice caravan park with lake side. I am confused by taxes . Some say I wont have to pay tax and others say I will have to pay as it is likely I will sell for over $300000.
Does anyone have knowledge in this area?
A: You might have a capital gains tax problem, or maybe you dont. It depends on what it is that you are selling, what you have done with in the past, when you acquired it, how much you paid for it, and million other factors

Best thing you can do is find a decent CA and talk to them about it BEFORE you sell, because if you have a CGT problem you need to figure out how to minimise this BEFORE you sell.

good luck
Brendan
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Q: Hello. I am working on a 2018/19 draft budget for my Marketing team at a new company. I’ve been give a report, which shows these columns
1) 2016/17 Total Actuals...
2) YTD Actuals...
3) Current Budget...
4) 2018/19 Draft Budget... and
5) 2018/19 Variation.

I’m a bit confused as to what each colum means especially 1), 2) and 3).

Can someone help explain. Thx?
A: I presume you are talking about a Draft Budget Profit & Loss, or maybe a Draft Budget Cash Flow, or something like this.. but its got to be a draft budget "something"

only the treasurer deals in a Draft Budget.....if you know what I mean:)

so, assuming you have a P&L budget then the columns will mean:
1) the actual amounts received and spent in the 2016-17 financial year
2) the actual amounts received and spent SO FAR during 2017-18 financial year
3) the BUDGETED amounts of income and expenditure for the whole 2017-18 financial year
4) the BUDGETED amounts of income and expenditure for the 2018-19 financial year
5) variation is the difference between two of the columns: most likely the difference between 2 and 3. but you can measure the variance between any two columns depending on what you want to measure......
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Q: Hi,
I am looking to start up a Babysitting business where I hire employees also. I have already registered my business name and have an ABN, is there any thing else I need to do or register??
Thank you
A: Lets not forget Super!! you need to register for Super Stream, and make sure you pay the right amounts of super for your employees on time.
regards
Brendan
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Q: I am 65 and retired. I’m looking at renting out my property and buying into a retirement accommodation. Would I have to pay any tax from the rental income.
Cheers. RM?
A: Hi Ros,

yes you will: however you also will able to claim your expenses in relation to deriving this income: eg rates, insurance, repairs, depreciation etc etc.

You will also potentially be up for some capital gains tax when (or if) you sell your home. Its a complex area so you need to make sure you keep very good records on when the house became a rental property.

Track yourself down a good accountant, CA or CPA and get them to go through it all with you. Its a minefeild especially if you have Age Pension or DVA payments to take into account

good luck

BC
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Q: Hi, I am employed by a trading platform in USA, money will be getting transferred to my account to purchase iTunes cards and traded for bitcoin. I will be getting a monthly wage. My question is, will I only need to pay tax on my wage of $3500 per month ? OR will I get slammed paying tax on the massive amount of money this company are putting into my account to purchase the iTunes cards for them?
A: you will get slammed.
your assessable income will include payment "in kind" as well as the traditional wages.
regards

Brendan
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Q: We invested a small sum of our Super ($30,000) in units in a property investment company, which did well until a change in management. Last year apparently our units were sold on to a new company, which forwarded a statement showing our holdings now to be zero. Our emails show no notification of any transfer plan, and no option to opt-out and withdraw remaining funds. Also there is no final payment made to our bank account, as claimed. Can we do anything about this, and if so who do we approach?
A: Hi Patricia,

I think perhaps that James is right and your investment is probably gone. If a liquidator has been appointed then you should have received lots of correspondence from the liquidator advising you what is going on. If this hasnt taken place then you really do need to start asking questions, starting with whoever has written to you to say your investment isnt worth anything.
good luck
bc
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Q: We are considering whether to buy an established house, or a new home and land package. What are the risks involved when buying a home and land package? Any tips for doing this?
A: watch out of an advisor who is all bells and whistles that wants to fly you up to Queensland to sign up immediately: quite often this person can be getting a kickback from the land sale, the mortgage broker, the builder and everyone in between. There are a LOT of shonky operators out there, so some healthy skepticism wont do you any harm. Ask a LOT of questions, there is no such thing as a dumb question when you are fixing to spend over $500k
good luck
Brendan
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Q: I am approaching retirement (60 yrs old ) and would like to relocate on retirement. Is it an option to sell my home now (240,000 mortgage, house worth 350,000 ) invest the profit in my super and draw on retirement to purchase a home in the relocation choice ?
A: Yes you can do this, but it probably doesnt achieve much. You could just as easily park the $100k in a bank account if you are looking short term to access the funds.

and yes you need to get advice that covers everything you need to look at: super, tax etc etc

good luck

BC
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Q: I am aware that super funds can be accessed early, however if the lump sum is moved to your self-managed super fun, does it get taxed? or if you are to withdraw your super due to 'x,y or z" reason would it be taxed?
Thank you.
A: the answer is "it depends"
for most people who access super before 55 they get taxed on it
for SOME people over 55 they can sometimes access lump sums without paying tax
for MOST people over 60 they can access super tax free after they retire.

Find a GOOD adviser and a GOOD accountant: they will hopefulyy work together with you to provide the best advice for you.

it is complex, and for that reason you need to get expert advice

good luck
bc
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Q: I am about to sell a property which will be able to pay off its loan, my current residence loan and one investment property, is it best to keep a mortgage on an investment property to be able to claim the tax or would it be better to have the investment fully paid off and keep the rent as PAYG income?
A: Hi Kaz,

I ALWAYS advise clients that actively looking to create a tax deduction is a really bad idea. Let me give you an example:

If you pay tax at (say) 30%, then for every $1000 of tax deductible expense you have you get $300 back: wonderful!!!!!
$300 back in your pocket: yippee!!!!!
but the other $700 is gone, never to return!!!

lets compare that with not having a $1000 tax deduction: no claim means no tax benefit, and you pay an EXTRA $300 to the ATO: BOOOOOO!!!!!
but you get to keep the other $700!!!!!

you can see that the person with the tax deduction has $300 after spending his $1000, but the person with no tax deduction has $700 left.

who is better off do you reckon??????


To put this theory into your situation, ask yourself do I want to have a tax deduction or not??? If all other issues are ignored then you will probably say no bugger the tax deduction, I would rather keep my $700.

We dont live in utopia, and no decision can be taken in isolation of all others, because there are consequences of paying the loan down: firstly that money to do this could be used somewhere else.....which is where a good advisor comes in really handy: find yourself someone who can advise on investing and the opportunity costs (and risks) of various scenarios.........but make sure that they understand the TAX IMPLICATIONS too......and dont go looking for a tax deduction for the pure joy of having a tax deduction.

Good luck

BC
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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: tulips.

bitcoin is the new tulip bulb crash of 1637. Look it up.

Bitcoin is supposed to be an "alternative" currency, right???? The ONLY value any currency has is the confidence held in the economy using that currency, its central bank and the regulations to support it......

So if you have some "alternative" currency that has no backing of any economy, or central bank, or government or any intrinsic value of any description, you are having a punt.

go with No 4 at Randwick, race 6. At least you can eat a horse if it doesnt win any races. bitcoin is not even a thing!!!

cheers

Brendan
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Q: I started an electrical business a few months ago that is going well. In need of a new car but unsure of which way to go about getting it. As a new business is leasing a car the way to go? Or fronting up the cash and buying outright? Also brand new or used?
Thanks in advance
A: New v Used: depends on what you prefer. my personal opinion is that when you buy a new car it loses $10k in value on day one. For that reason I have always bought used.....but its up to your preference really

Lease v buy:
a: If you LEASE a car, 100% of each payment is tax deductible and you claim GST on each payment. you dont own the car until its paid off so you dont claim depreciation

b: If you CHATTEL MORTGAGE a car, you claim 100% of the GST on the car immediately, and the payments include an interest component (deductible) and a capital component (non deductible). You also will claim depreciation on the car because you own it immediately

c: if you pay cash for the car, you get to claim the depreciation, but you have no interest to claim. You also claim the GST immediately.

I generally advise to go with a chattel mortgage because you get the GST back quicker than a lease, but if you have the cash then you might be better off to save yourself the interest cost and buy it outright......

cheers
BC
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Q: Six years ago, I took out a residential property investment loan over two like properties, one of which is my residence, the other rented. Three years ago, I ended the tenancy of the rental property, and swapped properties ie rented my original residence. Up to that point , my loan interest was deductible. When I swapped homes I have been advised I cannot claim any of the home loan interest, only maintenance costs. I think this is incorrect advice as the loan is non-specific? Thank you!
A: Hi Peter.

the thing that will determine whether or not the interest is deductible is the PURPOSE of the loan in the first place.

from what I am reading, you have a SINGLE facility, over TWO properties. One is rented and the other is not.

clearly the PURPOSE of the borrowing is twofold: 50% for property A and 50% for property B. (or 60/40, or something depending on cost)

when property A becomes your rental property, then the income is assessable, and the expenses including interest is deductible.

so if you move from A to B, or from B to A, then the interest that pertains to the property which has become your rental property will be deductible.

The whole thing would have been a LOT neater and cleaner had you been advised to get a split facility that clearly shows what portion of what loan belongs to what property.

You have got some complicated CGT issues now arising from moving from one house to the other, and I STRONGLY advise you find yourself a CA or CPA who knows what they are talking about. Dont go to one of those shonk artists who profess to be experts after a 3 day course.

the answer is definitely NOT to sell up and buy another one!!!! why load yourself up with CGT, agents fees, legals and stamp duty on the new property???? The only reason to sell should be so that you can realise the gain for another purpose, such as retirement or a new investment. If you sell one house to immediately buy a similar house in the same area, then you have just loaded up on costs and tax for no net gain!!!!

And lastly, never ever ever EVER ask the ATO for advice about tax. the ATO is not there to provide you with advice, and they dont WRITE the legislation, so you will only get their interpretation of what they think it is. And they are wrong more often than you think.

Get yourself a QUALIFIED and EXPERIENCED accountant who can guide you through the investment property maze you are in.
cheers
Brendan
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Q: Can I use superannuation to purchase farm property?
A: the short answer is yes.

the longer answer is yes, but.......

and the but bit is where your accountant starts banging on about "sole purpose" and "arms length" and things get confusing.

your best bet is to get in front of someone who understands both super and farming and has the experience and qualifications to handle the job. It can be done but you need to get your ducks in a row, and the potential consequences of cutting corners and saving a few dollars on advice can be huuuuge.

I am sure that you will have no trouble locating someone closer than me who will fit the bill with the super and farming issues.

regards

Brendan
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Q: We're looking for a good financial advisor to help sort our finances so it works best for us as we move into retirement. My husband is 60yrs (semi retired) and I'm 55yrs (working). We own our own home, have 4 investment properties (2 in NSW and 2 in SA) plus another property overseas. We have $650,000 in a savings acc earning minimum return and we need this to be properly invested. I have $160k super in a industry fund plus we have our own SMSF with $35k. Any recommendations?
A: Hello tracey,
you are financial planners dream come true!!!! Make sure you are super happy with the advice and the ADVISOR before you sign up to anything. I am sure the bank where your cash is tied up has been on your case trying to get you signed up with a statement of advice and all sorts of other stuff, sometimes planning advice offered by banks has not taken into account much more than an immediate investment strategy

You will be well advised to consider your whole situation, taking into account investment, retirement, income tax and other issues.

You also have a heap of other issues in addition to your immediate investment question: retirement planning, estate planning, even wills probably need looking at. The fact that you have a fleet of investment properties tells me that you have a massive capital gains tax headache waiting to hit you, so you need to plan on how to manage this and minimise the taxation headaches whilst allowing for the best and most flexible retirement strategy that allows you to enjoy your retirement.
happy to talk tax any time, bpc@bpcaccounting.com.au or 02 4399 1833.

regards

Brendan
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Q: My husband is self employed and looking at buying a new vehicle for work. Our accountant was saying that if he pays less than $20k for the van it will lower his taxable income. Didn't quite understand what he meant. Can you please explain or clarify a bit more so we can make an informed decision moving forward? Thanks for your time. Sarah
A: G'Day Sarah.

1: the new van will be tax deductible if it costs less than $20k. This will reduce the taxable income by $20k. the tax saving will depend on your husbands actual income, but lets assume he makes profit of $100k AFTER claiming $20k for the new van. His marginal tax rate is going to be 39%, so the tax saving on the purchase of the van is going to be $7800 (ie 39% of $20k)

2. IF you ESTIMATE that his income is going to be lower than the previous year, AND the PAYG Instalments he has already made will result in a refund at tax time, then go ahead and vary the PAYG Instalment. It is after all your money:)

BUT............................

If you get the varied instalment amount wrong, and your husband ends up with a tax bill at tax time, then he will get slugged with interest on the outstanding amount.

Your accountant should be able to explain this to you without resorting to "accountantese" that makes it sound like gibberish. If he cannot explain it to you then I suspect he doesnt understand it himself, and you need to find a new accountant:)

hope this helps

BC
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Q: Hi - I am a permanent resident in Australia and I live and work in Melbourne. I pay around $2,000 every months towards a land purchase mortgage. Please advise if that is a tax deductible expense?
A: Hi Sahar,

holding costs for investments are generally deductible:
eg rates, insurance, body corporate, pest control, INTEREST on mortgages.

so in your case it would appear that you have a mortgage on a piece of land, no building on it and no rental income. Many people would presume that since you dont have any income you cannot claim any expenses. This is not true. The asset is clearly going to be subject to CGT when you sell it, and holding costs for any investment asset are deductible.

sooooo, the INTEREST portion of your mortgage payments will be deductible. If the mortgage is interest-only then bobs your uncle!!! If it is P&I then only the interest portion will be deductible. You should be able to see what the interest portion is on your statements, otherwise your bank will be able to inform you.

Just remember that any disposal of the land will trigger Capital Gains Tax, and you will need to know what the cost base is: which includes, the purchase price, legals, stamp duty, and lots of other things, so KEEP YOUR RECORDS!!!!

good luck
bc
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Q: I’m interested to get people views on structuring an investment plan for 2018. What’s the view on the mix between shares, property, managed funds and perhaps derivates – should one or two be a higher priority than the others?
A: ask 10 different people: get 10 different answers.

I think the most common answer is "it depends". No two people have the same circumstances, so I am tipping you wont get too many straight answers here.

If you have a financial planner: ask him/her. Then take that advice and compare it to advice from someone else. you will probably have to pay for this advice. In fact if you dont pay for it, that would indicate very little time has been spent on providing it, and its probably not worth anything.

The more informed you are the better chance you have of making informed decisions. But you will probably still end up making some wrong decisions, because no one is perfect, and everyone gets a few things wrong....

good luck:)

bc
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Q: Hi, we are looking at investing in a property. The opportunity is for us to buy a property (valued at mid $600,000). The owner will finance us, with no deposit, to buy, at $550,000 at interest only for 2/3 years. Then we can refinance with the bank to continue. Our situation is that we will not be considered for bank finance until our credit rating has dissolved. So this is why we are considering this. Who is the best person to talk to for advise on this?
A: Find a smart mortgage broker and a decent accountant who will work together to get your issues sorted. Your problem is NOT getting finance from a BANK, but finding the right lender to deal with. This is where a GOOD mortgage broker comes in, becuase if he is worth his salt, he will know that in some cases the finance needs to go through a number of stages before a top4 bank will lend to people with some credit history issues.
give me a ring Narelle, I know just the guy for you.

regards

Brendan
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Q: I want to invest some of my self-managed super funds into two starts ups? Do I have to set up another smsf to do so, anything else I need to be aware of?
A: If you want to invest in two start-ups, I presume that they are unrelated, and so will be separate assets, so on the face of things, should pose no problem.
BUT
dont do it!!! despite the fact that there is no legal reason not to do this in a SMSF, there is a can of whoop-ass waiting for you if you do. There are issues such as control, part 8 associates, in-house assets, sole purpose tests, audit valuation of the assets which could affect transfer balance caps, pension consequences, etc etc etc.

It is seriously a minefield and you seriously need to be all over the SIS rules and regs to contemplate this. (And to be honest, if you were all over the SIS rules and regs, you wouldnt be here).

I have a SMSF, I am a registered SMSF auditor and Chartered Accountant, and I would not do this in a pink fit!
You are begging the ATO to audit your fund each and every year. You are also going to pay for your SMSF auditor's kids school fees every year.....because as a SMSF auditor I would refuse the job. Which means that the only auditors willing to take this sort of work charge like wounded bulls!!

LENDING to a company (unrelated) is a different story though: you CAN do this, and as long as you can dempnstrate you have considered the risks and tick all the boxes with the auditor, then you should not have too many headaches......

good luck
bc
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Q: Hi, we are still catching up with our BAS payments from October and worried about the next payment in February. It is possible to get finance to help in case we need it?
A: I tell me clients that the ATO is your first choice short term lender who cannot say no!! (thats a bit cheeky, but the point is dont borrow money to pay a tax debt unless you have no choice)

they DO charge interest, and its not cheap......but if you have a decent reason they will often remit the interest.
also remember that for an individual, GIC charged by the ATO is deductible. Interest on a loan to pay your tax is not!!

your biggest challenge is to NEVER EVER EVER EVER lodge a BAS late!!!! The ATO will work with you if you have cashflow issues, but late lodgement = fines. and if you have a history of lodging late they probably wont want to talk to you about a payment plan.

https://www.ato.gov.au/General/Paying-the-ATO/Help-with-paying/

its all in here. anything under $100k can be done over the phone in most cases.
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Q: Does the computation for diminishing value depreciation shown in http://www.ird.govt.nz/tool-for-business/examples/example-diminishing-value.html
apply to Australia?
A: Base value × (days held/365) × (200%/asset’s effective life)

this is the method as prescribed by the ATO. the example you have seems to follow the same accounting principal. the gibberish about 200% / effective life is there to give you the depreciation rate:

eg
effective life for a laptop computer per ATO = 3 yrs

200% / 3 years = 66.67% depreciation rate.

you can self-assess the effective life if you want but its easier to use the ATO effective life tables.

have fun with it!!!

bc
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Q: I have just started my education in Australia, I am living with my wife, and should cover most of our cost by ourselves, I have saving in my country, and I want to transfer my saving to an account in one Australian bank. Could you please guide me whether this amount will be included tax or not?
A: Short answer is no
Long answer is still no, with a really boring explanation. I can trim it down to this:

If you earn INCOME, and you are an australian RESIDENT then you pay tax on it
You dont pay tax on SAVINGS, even if it comes from an overseas source.

If you transfer amounts over $10,000 the anti money laundering provisions mean that ASIO, and Fed Police might want to look at you, but so long as you arent a nut job you should be right.

hope you have a wow of a time in Tassie!!!
bc
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Q: Just started our own business and wondering which accounting solution other business owners prefer to use Xero or MYOB?
A: Xero and MYOB do virtually the same thing, and prices are very similar too. the days of MYOB being incomprehensible to anyone without a masters degree in accounting and technology are gone.
Support is your X-factor. If you have an accountant that prefers Xero, use Xero. Just bear in mind the amount of support provided by Xero is more along the lines of look up their "knowledge base" online and watch their "how to" videos. Which is fine. MYOB has a larger support team, but they will still try to point you towards their online library so you find out your own answers
But if you need actual people to actually show you how to do things, ask your accountant.
for my money, MYOB is the better value for money:)
cheers
bc
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Q: I’ve been on the aged pension for 2 years. I have my own company I’ve lent $20k to over many years but want to close/wind up the company. If I prepare a Deed of Debt Forgiveness for the $20k between me as the lender and my company as the borrower, what are the tax implications (if any) for me and the company? Also would this affect my aged pension entitlements? (I’m paid under Centrelink’s “assets test” not “income test”)
A: If the company has losses to be applied to the debt forgiveness then no one has to pay any tax, and everything is sweet. However if the company ends up paying $6000 tax on the $20k that is not a great result.
So what can you do if you want to wind up your company but you ALSO dont want to pay any tax on debt forgiveness????
I presume the company has no assets or cash in the bank to pay you the $20k?
SO you have tipped $20k into your own company ages ago and all the money is gone?
What about if you take $20k worth of share capital as consideration for your loan??
Company no longer owes you any money, and has no income to report.
if the company has less than $1000 in assets you can simply deregister it
if there are more than $1000 in assets you need to do a members voluntary winding up......not a cheap exercise, so you need to get the assets out of the company THEN shut it down.

the problem you have is that you need good advice from someone who knows what they are talking about, and many tax agents dont know their arse from their elbow when it comes to comapny law and winding up. Find a qualified and experienced guy to help you out. The last thing you need is Centrelink coming along and assessing you on $20k of deemed income because someone did something to wind your company up without considering all the implications.
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Q: My 19yo daughters lease agreement date ended approx four weeks ago. She has continued to pay rent from that date, but has now signed a new lease on another property with a different real estate. Her old real estate agent says that she must give 21 days notice before she vacates even though there is no current lease agreement. She can not afford to pay two separate lots of rent on two properties. The lease is up. Why can't she just hand the keys in and move out??????
A: rental tennacy act. look it up. the agent is right. it sucks but its the law. depending on how the relationship is and what the likelihood is of finding another tennant perhaps she can negotiate a deal, where the landlord is not out of pocket.

remember the reals estate agent is working for the landlord, not your daughter. Also put yourself in the owners shoes: they want to ensure that they maintain the income stream too.

https://www.tenants.org.au/factsheet-09-you-want-to-leave

regards
brendan
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Q: Hi, I believe the rental property I just sold was an active asset given it was rented temporarily at the time of sale and I managed the property, is this reasonable?
A: or Tinkler........
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Q: Hi, I believe the rental property I just sold was an active asset given it was rented temporarily at the time of sale and I managed the property, is this reasonable?
A: Hi robert, yeah...nahh. If you sold it then the CGT issue is happening this financial year. Bear in mind there are a few aces up your sleeve still:
1: you CAN choose to apply the Principal place of residence exemption for up to 6 years after you move out.
2: you can do whatever you need to do in order to reduce your other income THIS year:
eg salary sacrifice into superr
eg dont get paid (dont laugh!) I mean defer wages for a month or two if your employer will play the game
eg make other tax deductible payments

A note for you about tip #1: you can only apply the PPR exemption to ONE house at a time, so if you moved out of house A and bought a new home, then you need to choose which house you are going to apply the PPR exemption on.....most people choose to pay less tax TODAY because they may not ever sell house B. If you need to discuss this further let me know and we can discuss over the phone.
cheers
bc
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Q: Hi, I believe the rental property I just sold was an active asset given it was rented temporarily at the time of sale and I managed the property, is this reasonable?
A: no mate, unless you are running a business of managing a large number of properties you are never going to get that across the line.
I presume what you are looking to do is apply the general discount of 50% then apply an active asset discount of a further 50%, then if you are over 55 you could apply the retirement exemption and walk away with nil capital gains tax.
I like your thinking but its never going to fly. The ATO is all over that game and they dont like it when people try it on.
I note that you state that the property was rented temporarily at the time of sale......does this mean it was not a rental property for the whole time you owned it???
regards
Brendan
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Q: Have worked for the same company for 11 years and I’ve just let my super to be managed through work. The returns have been getting are around 7 to 8% per annum, Is this considered a good return?
A: If you could lock in 7% for the next 30 years would you be happy with it? Or would you be looking over the fence at the guy getting 16% and thinking "7% is shit"
Trouble with high returns is that they ALWAYS come with risk. the 16% guy might have negative returns the next year...

what you have I think is actually two questions:
1: where do I want my super to go?
and then:
2: what is my long term strategy for retirement?

Q1 is pretty easy: find the fund that lets you do the most things at the least cost
Q2 is very difficult to get a simple answer on: there are a gazillion things to consider.

If you haven't had a chat with someone who can help you with this, now is a good time to start. I would not start with the free advisers in your current super fund, they have a clear vested interest in retaining your membership. Find someone independent, who charges you a fee for service, the less commissions are on the table the more likely your advice is going to be unbiased.

cheers
bc
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Q: Hi, I’ve been reading a lot Bitcoin trying to get an understanding of how it works but it’s still a mystery. Can I ask how others understand it, why is there so much talk about it, is it a fad or is it real and the future? Thanks
A: Look up the Great Tulip Bulb Crash of 1634.
Bitcoin is Tulip Bulbs waiting to happen.
Anyone who invests in currency that has no backing anywhere from any government might as well be putting it all on N06 in Race 4 at Randwick.
Seriously: If you cannot see the risk in investing in something that has gone up a gazillion percent in 12 months, doesn't DO anything, doesn't EARN anything, and is only going up in value because of public hysteria over the value of Bitcoin; well then rip in. I hope you do well. But know the risks.

read this:

https://www.cnbc.com/2017/07/20/bitcoin-bubble-dwarfs-tulip-mania-from-400-years-ago-elliott-wave.html
bc
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Q: Hi I have been trying to change accountants from a Melbourne firm to a Sunshine Coast Firm the new Accountants have sent a ethical Letter to the old accountants to release documents and tax records but an outstanding bill of my ex wifes hasn't been paid and they wont release any information or even respond to my emails and phone calls by business and tax returns are being held up by this. Can you please advise what I can do ?
A: Hi Chris,

the right of lien is a contentious issue. From the old firms perspective I can see their issue: they just want to get paid, and short of taking someone to court they can only withhold documents. It is not a great way to end a professional relationship, as it generally leaves a sour taste in everyones mouth.
there are a few questions that you should consider:
1: was your ex-wife your wife when this outstanding invoice was raised: ie can they legally hold YOU responsible for the liability?
2: how big is the bill? it may be simpler to just cop the cost in the neck, because its probably cheaper to do this than get your new bean-counter to reconstruct things.

Unless the invoice is huge my advice is pay the bill, get the documents and move on.

regards
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Q: I use my car for work and looking to buy a new car, around $40k. I have $10,000 in savings and would like to ask if I should use the money for a deposit or look to get a loan as part of a salary sacrifice. Is this a good idea and are there any tax implication or benefits, thank you?
A: I think that your question is "should I go with a Novated Lease or buy my own car"??
and the answer to this is "it depends"
you WILL save on tax with a novated lease.......BUT your payments under a novated lease include a deemed amount to compensate your employer for the Fringe Benefits Tax that your employer is going to deal with because it is now providing you a car at its expense.

FBT actually is extremely effective at transferring the tax burden from the individual driving the car to the employer....and there is very little you can do to dodge this cost, because the novated lease company will tell you how much TAX you are saving, but remain deadly silent on any Employee Contribution.....which you are paying.

What I would do is compare the costs of doing it all yourself out of your take-home wage, and see how much income you have left to live on, then compare this with how much you have to live on under a Novated Lease.

my bet is that you wont be much worse or better off under either scenario.

UNLESS you want to buy a second hand car, which for the most part are not available under a novated lease........the big saving for you here is the loss in value that a brand new car has in its first month has been absorbed by someone else. Hence you initial cost to purchase a car is a LOT lower.......

but thats my personal preference: I have never bought a new car and doubt I ever will. They are a sinkhole for money and are nothing other than a means of getting from point A to point B. I buy a second hand car and drive it until it is dead.
But if you like the smell of a new car, then you wont be any worse off with a Novated Lease......but you wont be any better off either:)

cheers

Brendan
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Q: I have $175,000 in super and due to retire in 8 years. What’s the best way for me to grow my super?
A: I have seen people who make the decision to chase big returns late in their working life because they have had a look with retirement around the corner and figured out that there isnt enough in super to maintain the desired lifestyle.
Trouble is that the people who dont have enough in super are quite often the ones who can least afford to take a hit on high-risk, high-return investment strategies.
Some of the results of chasing big returns are too depressing to mention....
Its never too late to do something, but risk is a huge factor when you dont have time to recover from another GFC.....

Find an adviser who will take into account your WHOLE position: not just super, and think about putting together a plan that takes into account everything that needs to be considered for your retirement. Super is only ONE facet of this.
good luck

One thing that everyone needs to file away is that it is NEVER too early to consider how you are going to fund your retirement!!! If you start at 25, then you have an extra 30 years to get your house in order than if you start at 55. Thats 30 years of compound interest people. it cant help but make an enormous difference to your lifestyle.

cheers
Brendan
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Q: Needing advice for a starting out business renting a chair. Tax advice etc would be great?
A: hairdresser?
best advice you can get initially is KEEP YOUR RECEIPTS!!!!
then use an online accounting package like MYOB Essentials or Xero. they all do the same thing and will save you heaps of time and $$$$ when you are doing your tax
if you are thinking that you will turn over more than $75k per annum, register for GST.
And look into income protection insurance: if you are self-employed and cant work, things get very unpleasant very quickly
lastly find yourself a good bean counter that doesnt mind giving advice to small businesses.....they do exist, but the fancy-schmancy end of town with their wood-panelling and fancy big offices are likely to cost more. Look for someone with experience and qualifications, but not necessarily the big firm.
good luck
bc
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Q: Hi. Im paul. 38, employed full time as supervisor for 9 months, average weekly income of 1200 aprox, currently bankrupt and require dept consolidation and funds to purchase a car. Ive always been good at earning but never good at financial planning and never seem to be able to pull ahead. Any advice or direction would greatly be appreciated. I have outstanding depts of 15000, no security. Can u please help me to finally use my secure income to fix my bad decisions of the past?
A: As an undischarged bankrupt you are allowed to own a car worth up to $7600. Anything over that will create headaches for you with your trustee.

Another issue is the contribution you may need to make to the estate if your earnings are higher than the threshold (something like $56k AFTER tax).......so its going to be difficult to manage all this.

If you are bankrupt then why do you need debt consolidation? They should all be written off, unless you have managed to rack up some more debt since declaring bankruptcy.

You DO need to get things sorted out, and this is probably going to cause you some pain, as it seems you need to make some big changes to the way you do things.

This is going to sound harsh Paul, but I would say you have two options:
1: find a financial planner who will become your minister for finance to help you manage your affairs
2: make some tough decisions about what you want out of life and set some goals and work towards them

Any advice you DO get needs to be from someone with experience in dealing with bankruptcy issues, because this changes lots of things in managing your finances....

Having no knowledge of your personal circumstances I know that my assumptions could easily be WAY off target, so apologies for treading on toes if I have upset you mate. Hope the advice helps.
bc
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Q: We just purchased a property in Western Australia on 5 acres. The property has a house and a shed on it.

We're intending on fencing the area around the house (around 1000 square meters) and renting the house and this portion of the land to tenants.

The remainder of the property will not be lived on, but we don't want to allow the tenants access.

How does this affect what we can claim as expenses for tax purposes. ie loan interest on the property?
A: The property (all of it) will be subject to capital gains tax. You will need to apportion the interest between the rental portion of the property and the rest of the property.
the interest on the rental portion will go into your rental property schedule and is clearly deductible
the vacant portion is possibly different, there are two options:
1 you can claim "holding costs" as a tax deduction each year, OR
2: you can add the holding costs to the cost base if they are not claimed as a tax dedcution elsewhere....this will reduce the capital gain when you sell it.

moral of the story is KEEP ALL THE DOCUMENTS!!!!

its always a lot harder to reconstruct this stuff than it is to keep the actual information. So keep everything. Rates, interest, fencing, clearing, every thing.

cheers

BC
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Q: I work in a job where I travel a lot of for. I use my own personal car and record all my kilometres travelled for work purposes. My employer pays me for kilometers travelled but it's not all taxable so I dont get taxed on all money earned each fortnight.
For example I may earn $1300 gross for a fortnight, I should be taxed $138 but I'm only taxed $90. Come the end of financial year will I end up with a tax debt, or can I claim all of the kilometres at tax time? Thanks
A: Glenmorangie I find best for reading ATO documents: numbs the pain:)
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Q: I am thinking of changing jobs. I have 300hrs annual/long service. Will i pay more tax if i take a lump sum or am i better asking for time off with pay and then resign? Thank you
A: Lump sum payments of leave balances are taxed differently to normal wages. For example if you earn $1500/week and are paid weekly your PAYG W will be something like $350. if you take 300 hours EXTRA in one week, that would equate to an additional $10,000 in one week, and normal tax table calculations are based on you earning the SAME amount each week.
so you would end up paying around $5000 in PAYG W!!!

So, what happens is that your payroll department has to do a complicated calculation that takes into account your average earnings and applies a different (lower) rate of tax to this payment. Trust me it will still hurt like hell, but you wont be crying at tax time when you dont get a huge tax bill either.

And what Scott says about ETP's is right too. they are taxed differently again, but it needs to be a genuine redundancy.

Also bear in mind that depending on who your employer is and how big they are, you may have to discuss how the unused leave is paid out. There are many small businesses out there that would really struggle to take a $10,000 hit when an employee leaves, it may not be what you want, but sometimes the employer needs to pay the leave out over a period of time....

good luck
Brendan
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Q: I work in a job where I travel a lot of for. I use my own personal car and record all my kilometres travelled for work purposes. My employer pays me for kilometers travelled but it's not all taxable so I dont get taxed on all money earned each fortnight.
For example I may earn $1300 gross for a fortnight, I should be taxed $138 but I'm only taxed $90. Come the end of financial year will I end up with a tax debt, or can I claim all of the kilometres at tax time? Thanks
A: Just a little extra info here for you Sheree: the ATO has a document called PS LA 2005/7, which sets out the circumstances under which you MIGHT be able to get away with claiming things based on bank statements as evidence (eg if you have lost the receipts)......google the document and enjoy some light reading, hahaha

BUT BE WARNED!!!! the ATO giveth, and the ATO taketh away!!!

this document seems to indicate that you can punch out your bank and credit card statements, rip in with a highlighter and claim everything. Not necessarily so. The BEST document you can have is an ACTUAL LEGIBLE RECEIPT. They might allow some claims for some things based on a bank statement, but take it from me: they dont like it, and you will have your hands full getting the ATO to accept large claims based on bank statements alone if you get an audit!

good luck!!
Brendan
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Q: We had a old company with credit card balance of $25000 then we opened a new company on august 2017 with new myob file.

For some reason i made mistake, instead of paying the old card from old bank account and entering in old myob file, i paid it from the new bank account which is for new myob file and new company.

My boss doesnt know this yet because he did not want anything with old company to go in new myob. how do i fix this without raising red flag?
A: Mate, go and tell your boss you made a mistake and then tell him how you are going to fix it:
1: transfer money from old company bank account to new company bank account
2: the deposit from the old company bank account will cancel out the withdrawal from the new company bank account
3: everything is then exactly how it needs to be.

If you attempt to cover this up and your boss finds out you are playing ducks and drakes with the business bank accounts, you will look a LOT sillier than if you stick your hand up and say "oops my bad" as soon as you become aware of the error.

good luck with it, I hope your boss understands that people are human and mistakes do happen
brendan
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Q: I work in a job where I travel a lot of for. I use my own personal car and record all my kilometres travelled for work purposes. My employer pays me for kilometers travelled but it's not all taxable so I dont get taxed on all money earned each fortnight.
For example I may earn $1300 gross for a fortnight, I should be taxed $138 but I'm only taxed $90. Come the end of financial year will I end up with a tax debt, or can I claim all of the kilometres at tax time? Thanks
A: yup

ALL receipts.

if you cannot substantiate ALL the claims then the ATO is able to deny the claim....either the part that you cant find receipts for or the WHOLE claim.

so if you want to claim using the log book method you need to do your homework and keep ALL your receipts.

remember also that you will also be able to claim depreciation and finance costs on your car under the log book method.....or at least you will be able to claim the % of the expenses that are work-related.
regards
Brendan
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Q: I want to put my house in my children's name
What is the best way to do this.?
A: Hello Sylvia.
you may want to get some tax advice in advance for yourself and your children. This home is probably exempt from capital gains tax unless you have run a business from it, or earned rental income at some point. If you transfer the house to your children you may incur capital gains tax.
Also you may find that you could be handing a future capital gains tax headache to your children.......that could be avoided with some careful planning.
I strongly recommend that you get some advice on this before you race out and sign transfer documents.
good luck
Brendan
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Q: I work in a job where I travel a lot of for. I use my own personal car and record all my kilometres travelled for work purposes. My employer pays me for kilometers travelled but it's not all taxable so I dont get taxed on all money earned each fortnight.
For example I may earn $1300 gross for a fortnight, I should be taxed $138 but I'm only taxed $90. Come the end of financial year will I end up with a tax debt, or can I claim all of the kilometres at tax time? Thanks
A: Hi sheree,

if you have been paid an ASSESSABLE car allowance, then you can (and should) claim the deductions that correlate to the income. your options for this are:
c/km method: claim a reasonable estimated amount of work-related travelling up to 5000km at $0.66/cm

log book method: keep a log book, record everything and keep ALL your receipts. there is plenty of advice (even from the ATO) online, but you MUST comply with ALL the rules, so you have to be very sure you have all the info and documents that the ATO will require. The deduction is potentially very high, so the ATO is very much aware that people will want to have a crack at claiming large amounts without all the documents to support it.

so proceed with caution!!!

or get some advice from someone who knows what they are talking about. You will probably find that the accounting fees will be offset by a larger refund in your return.

regards
brendan
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Q: Breaking News

Australian Prime Minister announces there will be a Royal Commission into the Financial Services Industry

Mr Turnbull says Australia's financial system is admirable but there have been instances of poor practice.

Consumers must be protected, Mr Turnbull says, and the financial services sector must remain stable.

Do you agree with the Government's decision?
A: A Royal Commission will cost a mountain of cash, but it will be money well spent if the findings and recommendations are sensible and add to the value of the services provided across the board to clients. And I doubt very much that this will take place.

Let me provide an example of something that is neither sensible nor adds value. On 1 July 2016 some moron decided that Chartered Accountants (who need to study for around 8 years to get their designation) are not sufficiently qualified to provide advice to their clients on matters pertaining to superannuation, such as whether to commence or commute a pension, open a SMSF etc.

This meant that for a whole bunch of stakeholders the person probably best placed to provide advice across a range of inter-connected matters, such as tax, retirement, asset-protection, estate-planning, retirement planning and the like was not able to advise on one key element of this broad issue.

That means that in many cases, the client will go to their CA or CPA for MOST of their advice, because they understand the "whole picture" and are able to view strategies holistically, so as to advise on the effects across many areas.
Then the client will have to go to a potentially unrelated financial planner, who may or may not have any expertise in the wider areas addressed by the CA. This advice may or may not take into account the other factors or flow-on effects of a particular strategy.

If the client is fortunate, the planner and the accountant will work together and collaborate to provide the best outcome for the client. This is by no means guaranteed, because accountants and planners do not always agree, or are nervous about sharing information, or a frightened of losing the relationship.

So the net result in many cases is:
a) not optimal for the client, and
b) more expensive
net result: no increase in the benefit provided to the client, however almost guaranteed to cost more.

So, forgive me if I seem cynical here, but I doubt that any Royal Commission will result in an improvement of the situation, unless the terms of reference take into account the need to provide to the client the most sensible outcome.
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Q: I am wondering how tax works with deceased estates. In particular taxing super annuation balances and insurance. My Dad died this year and my family and I have been given the option of transferring the money to us directly or to transfer it to the estate, as we haven’t yet sold his house and it’s in trust. We’ve been told that if we transfer the balance of super annuation and insurance we will be charged up to 17% and up to 37% respectively for the money. Just wondering which way we’re better?
A: This is why you need to talk to an expert Sarah. On the face of things I cant see any CGT applying to super death benefits paid out of a fund......or any tax other than death benefits tax if your father was retired.
Get yourself in front of a CA or CPA with runs on the board with estates, super and income tax......and I presume it wont be super cheap...but the potential costs (or potential savings) could far outweigh the accounting fees.

good luck
bc
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Q: I am wondering how tax works with deceased estates. In particular taxing super annuation balances and insurance. My Dad died this year and my family and I have been given the option of transferring the money to us directly or to transfer it to the estate, as we haven’t yet sold his house and it’s in trust. We’ve been told that if we transfer the balance of super annuation and insurance we will be charged up to 17% and up to 37% respectively for the money. Just wondering which way we’re better?
A: Hello Sarah,
this is a VERY complicated area of superannuation and tax legislation. The answer to this may well be exactly what Glenn has told you, but you need to get in front of a taxation and super expert as soon as you can to see what options are really available to you.
the most common arrangement with death benefits is that they go to the spouse tax free, but I presume your mother has already passed away. It boils down to what the superfund MUST do with the proceeds, or what discretion it MIGHT have in paying the benefits to family members. There MIGHT be scope for benefits to be paid out of the fund tax-free......but you will need to talk to an expert in BOTH tax and super to get the right answers......even then those answers may not be the ones you are hoping for.
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Q: Met with my financial adviser on Tuesday and he tells me my superannuation increased by 7.2% over the past 12 months. I’m a little concerned as I thought the market had performed better than that .... is 7.2% at the lower end?
A: put it back on your planner Ben. ask him why your fund performance is so shitty when every man and his dog is getting double digit returns.
maybe its after you have pulled out pension payments and lump sums.
maybe all these other funds are not really reporting returns on the same basis as yours (eg 20% return might be GROSS return before all the fees charges tax and whatnot)

the big thing is to be sure that your planner is working as hard as he can for YOU! and make sure you are comparing apples with apples when looking at returns advertised by other funds

Your current planner should be HIGHLY motivated to ensure that you stay his client. If he doesnt seem that excited to provide you answers then shop your business around, but be careful of big statements regarding huge investment returns......
good luck
Brendan
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Q: A friend of mine he been at court three times for disqualify drive license, now he had an accident and was reported for driving without care and attention, now he have a court to go again, what would happen if he don’t attend the court and instead move to different states??
A: this has been ignored by everyone for over a day.....so I will offer my thoughts: not attending court is possibly the silliest thing your friend can do. Moving to a different state wont help you because all the different state police forces collaborate to bring you back to court where he will face the original charge plus a heap of other ones. Maybe the best thing your friend can do is stop driving without a licence.
might not be what your mate wants to hear, but driving without a licence is begging for trouble.
your friend needs a lawyer asap.
good luck
brendan
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Q: we rented a property for 3 1/2 years,
so we vacated on the 23/10 since then we had a final report saying not clean enough and the ventaton blinds broken, it has since been recleaned and they still say blinds broken
in the time we rented not one 3 month rental inspection was anything ever said about the blinds, now they say they are getting quotes for them to be fixed, they weren't happy with the first quote and are getting another and its supposedly yo help us
where do we stand?
A: there is something in the rental tennancy act that refers to reasonable wear and tear. If the blinds are broken because they were old when you moved in and were on the way out anyway then you probably have a leg to stand on.
If however they are broken because you had a wild party then I suspect you are going to lose some of your bond money.
look up reasonable wear and tear online, talk to maybe the department of fair trading and have a chat with a solicitor.

either way it looks like you are going to be spending some money on something....either a solicitor or a new set of blinds.....unless you can sort something out with the agent before everyone gets upset.

good luck
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Q: I have just received a land tax bill for my primary place of residence, I purchased the property a little over 12 months ago. I know I'm not liable for this as it is my primary residence which I can easily prove, but why would the OSR have assumed it is an investment property? Would it be something incorrect with the settlement documentation? From the time of purchase our intention has always been to reside at this property.
A: do you own the property personally or is it held in a trust?

Brendan
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Q: How long does it take to register a company for GST in Australia? Does it get registered with the ATO within 24hrs or does one have to wait weeks for it?

Thanks for your help
A: Setting up ABN and GST and whatnot is pretty straightforward to do yourself online, apart from a few curly questions that the wizard throws at you. I generally tell people that they CAN do it themselves, but the vast majority are happy to pay someone with experience to do it. After all, we do 50-100 GST and ABN applications a year.....so we have seen every curly question going around:)
good luck
Brendan
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Q: Hi, I recently have started my own business, and I run out of an appointment book. Receive cash and eftpos transactions. When it comes to tax time, how do I show my earnings? Do I deposit the cash into a seperate account into my bank? Or is it ok to deposit and transfer into my house deposit savings account and description it as Business earnings?
A: What happens to the cash and EFT deposits is your business .........once you receive the money. The issue is making sure that you correctly record ALL the income and ALL the expenses in a way that your bean counter can rely on when preparing your tax return.
there are a multitude of online accounting package providers who offer cloud-based packages aimed directly at small businesses like yours. Look at the likes of MYOB Essentials, Xero and Reckon....they all pretty much do the same thing and all pretty much cost similar amounts.
And what Andrew has said about keeping the business stuff in a "business account" is spot on!!! it will make your life a LOT easier if you have one bank account to go through.
cheers
Brendan
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Q: Hi, I'm a locum Optometrist who does itinerant work (for different companies in different locations when they need me). I've just recently purchased a new car. Currently, in the process of setting up loan structure as i am financing to maximise the benefits as a travelling optometrist. Someone has mentioned to agree to a 'lease contract' so as to tax ddeduct the whole amount of the vehicle? This is opposed to actually owning the vehicle at the end by paying it off? Thoughts?
A: I would think that you would be filling out the individual application section. you nominate that the car is predominantly for business use.