• The place to find the right expertise and make better decisions
  • Find the right expertise

About Me

Brendan Curran

Current Rating: 4.88 / 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: Hi, I would like to ask a question about buying a franchise/licence. The parent company is not calling it a franchise (just a licence) but the agreement looks and feels like a franchise and we have to commit to KPI’s and a 3 year term. If it is just a licence agreement does that mean the parent company is required to pay tax on our behalf or is that our responsibility – thank you?
A: Hi tim,

I think if it walks like a duck and quacks like a duck then its probably a duck.

so if you reckon its a franchise agreement you are probably right.

and the other guys are spot on about getting advice from a good solicitor and a good accountant. not only do you have to get a clear picture of your obligations under this agreement, you need to get advice on what is the best structure to conduct your business.......you can operate the franchise as a sole trader, partnership, trust or company.......and each option has pros and cons.....so I STRONGLY advise you to talk to a good accountant about the business structure (if you have not already done so).......best aim for someone with some letters such as CPA or CA after their name.

and good luck with the franchise.......I hope it goes well for you, but dont make the assumption that the franchise is a big happy family there to support you, because I have seen some absolute disasters arise from a franchise which went sour, and it generally starts with the franchisee not knowing enough about what his obligations were under the franchise agreement.

cheers
bc
answered
Q: Hello,
I work for a not for profit organisation 4 days a week and get a paid fortnightly. I noticed recently there is no mention of super on the payslip, not that I could find. Are not for profits exempt from paying super?
A: Hi Tracey,

NFP will not be exempt from super guarantee: so f your income is over $450/month and you are over 18 then they dont have any choice.

But the payslip my not have the SG information on it.....

Like james said......talk to your payroll people

cheers
answered
Q: Hi,

I have purchased a property in 2010 and used my first home buyers grant. Now, my partner (never had a property under his name) and I are thinking of buying a apartment as an investment property together. What I would like to know is

1. In future, if my partner can afford to buy a property purely only with his name on the title and use as his primary residence, will he be entitled to the first home buyers grant?

2. What happens if both our name with be on the loan just not both name on the title.

Hope someone can help me out!

Regards,
A: Hi,

sorry but the answer is no

https://www.sro.vic.gov.au/first-home-owner

you cannot access the FHOG if your partner has accessed this concession already.

so unfortunately the FHOG is not available to you partner

regards
bc
answered
Q: I have purchased a Mazda CX-7 2010 as a private sale and1 day ago and I have noticed it’s lagging when I accelerate the car. Whenever I stop the car at the lights and when I accelerate to go it lags and feels like it has no power to the car. What are my rights as a buyer? Can I sue the seller for misleading me?
A: I reckon that old saying caveat emptor is going to apply to your situation. Buying privately generally saves you a bit of coin but all the risk is on the buyer.
Perhaps you do have a case in law to argue but i would say the cost of pursuing this legally will far outweigh the cost of fixing the car......
Bc
answered
Q: We want to buy a property in Port Macquarie with a view to relocate and retire in 5 or so years. Can we purchase the property through our SMSF, borrow money and then pay it off when we make the move?
A: Short answer is no

The longer answer is still no with a heap of boring super gibberish attached.

Your biggest headache is whether or not the investment in the house by your super fund is for the SOLE PURPOSE of providing for your retirement.

SOLE PURPOSE is going to be very difficult to prove after your super fund takes a hiding in stamp duty and legals just to sell the property in a very short window of time.

You need to look at the potential cost of getting smacked for being a non complying fund where the sole purpose test has been failed.

It may be that the fund gets to pay tax at 47%...... and maybe you are prepared to take the hit on the rental income to secure that property.......
BUT..
It MAY be that the fund gets smacked with 47% tax on its ASSETS too.

how keen are you on risking losing half of your super on a gamble that the ATO wont pick up on this pesky sole pupose thing?????
answered
Q: Hello, my wife and I have been discussing buying a unit off the plan close to Sydney CBD. The loan have been approved but with the talk about the labour party negative gearing policy is now a good time to buying off the plan or should we look to a place like Newcastle or other regional areas and buying an existing home. Thank you
A: Hi Matthew,
I think you actually are asking two questions:
1: will Labour knock negative gearing on the head?
AND
2: what and where should I buy?

I dont think that Labour will get negative gearing eliminated. And if they do, the Libs will reinstate it as soon as they regain power......which would not be too long after the change to negative gearing legislation gets passed.

as to what and where to buy........thats out of my pay grade:) I think that anything on the east coast of australia is probably going to end up making money, but I do tax advice, not property

cheers
BC
answered
Q: I have just set up my own business and want to ask about super. I’m a sole trader and just starting out so do I have to make super contributions based on the income I earn or can I wait until the business is making more money
A: G'Day Dale,

There is this technical concept referred to as mutuality, which means you cannot employ yourself. So a sole trader is not required to pay super under Super Guarantee legislation.

BUT SUPER IS THE BEST THING EVERRRRRRRRRR!!!!

I cannot stress enough how important it is that you make regular super contributions!!!! There is almost certainly going to be no reason for you to make super contrubtions for TAX reasons........but trust me if you dont make regular super contributions as a sole trader it is highly likely that your retirement plan is going to centre around the Age Pension, and that is not the best outcome after working your backside off for yourself for 30 years.

the thing that I try to impress on people embarking on a career working for themselves is that whilst being your own boss if wonderful, none of your clients will seek you out in your retirement to make sure you are happy and comfortable. You have to be greedy enough to make provision for your retirement whilst you are young. and that means making sure that you dont price super out of the equation when you work for yourself.

And dont kid yourself into thinking that your business is your retirement. Very few businesses are worth much more than the machinery and stock.....and it may not be enough for you to retire on.

hope that this frightens you enough to start thinking about a super plan without scaring you away from being self employed entirely......because working for yourself really IS good......you just need to havea long term plan which includes your retirement

it is almost certainly worth your while to sit down with a CA/CPA and develop a long term business plan. It would be money well spent at this stage of the business:)

good luck
BC
answered
Q: Hi, we have put an offer on a new home and concerned the agent hasn’t passed it through to the owner. Is it ok for us to submit the offer directly to the owner … put in their letterbox?
A: It is my understanding that the agent is legally obliged to pass on EVERY offer within the price range they have told you. No exceptions.

So unless you have submitted a lowball offer in the hope that you get the vendor at a weak moment I rather suspect that the vendor has this and is holding out.

Standard practice is to turn up at the next open house, stay until everyone leaves, and tell the agent that your offer has gone down by $5k. After all, its not really a sellers market right now:)

Ooooorrr.......submit a higher offer.......maybe you are not that far off getting into some serious negotiations

oooooorrrrrr...........talk to the agent. tell him you are serious about the house and ask them how far from the money the offer actually is.....the agent is not on your team, but he/she DOES have to communicate with you.....if he/she can see you are serious, he/she will work to get you close to an offer that the vendor WILL accept......because thats how he/she gets paid:)

good luck
bc
answered
Q: I have been running my online business for 2 years ago and 6 months ago an old business colleague started helping out with advice. I haven’t been able to pay him a full salary but we’ve spoken about having some equity as a reward and ongoing incentive. Some of the advice relates to him having to pay capital gains tax straight away of the value of the shares. Is this correct and what other options are available?
A: Hi Jason,

I think that what you are referring to is an Employee Share Scheme (ESS). There are a mountain or rules and regulations and yes there may be some CGT issues to deal with.

https://www.ato.gov.au/General/Employee-share-schemes/

this will help a bit, but in reality you should probably look to talking to someone who can help you set up the scheme and help you manage the scheme.

And this will cost you. The expertise and experience necessary here is not going to be found down at the local ITP shop. If you dont have one already, find yourself a CA or CPA with some experience in this area, and be prepared to pay for advice. It probably wont be cheap, but if a ESS is going to be a good strategy to help you grow your business and retain the best team to get the most out of it, then the cost of the advice is going to look like chicken feed compared to the benefits you get from a properly executed plan.

good luck
bc
answered
Q: Hi,
I have a SMSF and finding it difficult to maintain it time wise. Is it possible to unwind and what do I need to do?
Thanks
A: Hi jonah,

'"unwind" is not quite the correct terminology. but in short you have the following options:
1: take the super as a lump sum if you are old enough to receive it tax free
2: roll it into another complying super fund.
3: sort things out so that the administrative burden is not all on you and keep your SMSF

There is a LOT of detail and all sorts of ifs buts and maybes to figure out what is your best option. Get yourself in contact with a CA or CPA that isnt going to try to peddle something you dont want. Then figure out what your option are and the COSTS associated with those options.

THEN make a decision about what you should do.

the worst part of having a SMSF is setting it up and figuring out how to manage it. And you have stumped up a significant amount of cash to get the fund set up and get your super rolled into the SMSF. If you decide to roll it out, this money is wasted.

The ongoing cost of running a SMSF is (in general) a LOT less than many industry and commercial funds charge......so rolling funds out is almost certainly going to cost you more per annum.

The ongoing management of your fund can be made relatively simple. It all boils down to what you are trying to acheive and HOW you are trying to acheive it.

For example, if you want to run a share trading enterprise in your fund, then you are up for a mountain of work. If your fund is going to be a passive investor in (say) property, the mountain of paperwork gets reduced a LOT. If you want to invest in (say) a trade weighted index fund, then the paperwork becomes VERY managable.

It is really up to what you want to do, and how much input you want to have.......my gut feeling is that you have a significant amount of interest in your own retirement, because not many people set up a SMSF on a whim......so if you can figure out a way to manage things in a simpler way, perhaps a SMSF is not such a bad option for you.

find someone to talk to you about what you do and what you have and what you want and then you will be in a better position to make a good (AND INFORMED) decision

I am happy to chat by telephone if you want.
good luck
bc
answered
Q: Hi, we are putting our business on the market and want to ask if a buyer gets any benefits from the carried forward loses from our first 2 years setting up the business. Thanks?
A: Hi mark.

It depends.

IF you traded using a company.....and IF that company hasnt applied the losses to assessable income in a subsequent profit making year.. .....and IF the purchaser is buying the company off you (rather than buying the "business" off the company).........then,yeah, probably.

BUT

in 20 years i have seen only ONE time that the trading company get sold rather than the business.......

I think you need to get in front on a good bean counter to doscuss this as well as all sorts of other issues such as capital gains and small business concessions there... .

Cheers

Bc
answered
Q: I’m in my last year at Uni and have a job starting in February next year in I.T.
For the last 6 months I have been doing freelance work and have earned around $30k. I want to keep doing this work when I start the job but as my starting salary is $85k will that mean I will need to set up a company and register for GST for the freelance work?
A: no.

you can trade as a sole trader no matter how much the business income is.
your gross income from the enterprise is going to be $30k, so its way below the GST threshold of $75k......so no need to register for GST either

whether you should set up a company is a much more complicated question than just how much the business turns over: you need to talk to an accountant about business risk, and a whole heap of other things......

so find a CA or CPA who can help you out. it will probably cost you a bit, but you will be heaps better off after you get the right advice from the guys that know what they are talking about.

and who knows......accountants neeed IT gurus.....you might pick up a client along the way:)

good luck
BC
answered
Q: As the importance of company culture is widely recognised for not only financial success, but also staff retention, job satisfaction, and productivity within the business, I’m wondering, what strategies have others found effective in building and promoting a positive and high-spirited team culture?
A: Richard branson is a ding bat of the first water.......but he values his team more than his clients.
Be like that
My old boss was more than happy to hurl an employee under the bus when something went wrong and a client was not happy.
Dont be like that!!!!!

I have always strived to back my staff 100%......and i ALWAYS take the heat when something isnt right.... and then we ALL sit down and fix whatever the problem was.......
Look after your team and they will look after your clients and happy clients dont leave
answered
Q: Hi all,

First time user.

My income is three times that of my wife. We also have kids. We are looking at an investment property and were wondering does it matter who we put our investment property under and who collects the income?

We were also looking at possibly putting the investment property and our principle place of residence in a trust. What would be the benefits of a trust?

I appreciate your help with the above.
A: Hi MR
Lots and lots and LOTS of ifs buts and maybes here
In general the tax benefits of retaining your home in yours and or your wifes names outweigh any other consideration

Mostly

Land tax will make your desire to own property in a trust expensive.......

And if your incom is 3 times that of your wife.....it doesnt tell us what either of your incomes actually might be..... 50k.......500k.......5m??????

Any discussion about planning for your future will need to include your super too.....

In short......find a good CA or CPA and start with some basic advice on what you currently do and what your current position is and then see what you want to do and where you want to be in retirement.

It might cost you a couple of grey nurses to talk about things but it will help you clarify what your questions should be......then you can work on the answers

Good luck
Bc
answered
Q: Hi, we are about to engage a builder for renovations and the quote has come in at $600,000. The builder is buying the materials on our behalf and we assume paying GST on the costs so if we breakdown the quotes should we then be paying further GST based on the builders overall quote?
A: I would have thought the quote is the quote........and i would presume the gst paid by the builder would also get claimed back by the builder in his BAS.....so net cost to builder =$0

......but perhaps the simple thing to do is ask the builder to clarify this point
Cheers
Bc
answered
Q: Hi - I have been contracting for 4 years and just been using a business name and ABN. My income is now consistently $12-13,000 a month and wondering whether it’s time to set it up under a company – what would be the benefits to do so?
A: Hi mel.
PERSONAL SERVICES INCOME.
This will limit any tax advantage of having a company or trust.
And on the subject of trusts.... ..the ATO has taken a LOT of the fun out of having a discretionary trust......
So the best thing you can do is sit down with someone and talk about options.
Good luck
Bc
answered
Q: Hi
2 years ago we started a new business and spent about $300,000 so far. It’s not working out as well as we hoped and now thinking about closing it down and getting a job – the question we have is about the losses we have in business… can they be offset against the future income when we find employment?
A: Hello Sam,

sorry to hear things are not working out for you mate.

Knowing when to pull the pin on a non-performing business is very important. It seems that you have already made that decision so I wont bang on about this.

But the losses are significant and you need to ensure that you can utilise them if possible.

so as a rule, if your business was sole trader or partnership then the losses are yours and carry forward to be applied against future assessable income

If you traded through a company or trust, then the losses are trapped in that entity and you cannot apply then against your future wages income. IF the company or trust gets income it will be able to apply those losses, so you should think about whether or not you might be able to utilize those losses somehow, because those losses never expire....at some point you might find yourself in a positiion to use them.

Best thing to do is get in front of a good accountant and figure what you CAN and CANNOT do from here.

good luck
BC
answered
Q: Our business uses Xero accounting and about to set up another business with an investor. As the financial reports will be different is there a way around having to set up another Xero account, could we just use the one?
A: Todd is spot on here, the cost of an additional Xero file will look like chicken feed compared to the bill from your accountant who will have to extract data for each entity at tax time.

cheers
bc
answered
Q: Hello, my wife and I are in our late 60’s and have 600,000 in our self-managed superfund. We have 2 kids in their 30’s who are struggling to buy a home we would like to ask if it was possible for us to distribute the funds a gift so they could buy their first home?
A: Hi Peter,

the short answer is almost certainly yes.......but as James has said, its complicated and there are boxes that need to be ticked off to ensure you dont cruel yourself with tax on a lump sum withdrawal, or end up living on weetbix and catfood down the track whilst your kids live it up in their fancy new homes:):)

If you have a SMSF then you must already have an accountant. If your bean counter cannot explain the ins and outs of this in about 15 minutes then I suggest you go shopping around for someone who can.

there will be a bucketload of paperwork to ensure your fund complies with the legislation, but your question is pretty common, so the solution shouldnt cause your accountant any real headaches:)

cheers
bc
answered
Q: I’m 46 and been in sales and business development for 20 years. I have had an idea in my mind for many years and would love the freedom of running my own business but the fear factor and financial commitments have always held me back. I’d like to ask other people’s opinion on how they took the first step, how hard they found it – the good and bad, thanks?
A: Hi Peter,

https://www.youtube.com/watch?v=VAdlkunflRs

this will be you in 40 years mate, along with the rest of us entrepreneurial types!!!!!

but in all seriousness, if you have that genetic flaw that tells you to work longer hours for less pay than many, and kiss goodbye family time or sick leave, then more power to you!!!!! Because it really is people like you that can make a massive leap from what you should get and what you COULD get.

But the biggest word of advice I can give you is be aware. And the best way you can do this is to be informed and educated yourself about what you are doing and why you are doing it. If you dont know why you are doing something, find out. Then figure out a better way to do it.

my most successful client challenges me constantly. He is aware of every aspect of his business. EVERY aspect.

there is nothing he cant tell you about every peice of equipment he owns, why he needs it and how long before its going to be replaced.
He knows every staff members family names
he knows how to do the payroll, drive the truck, negotiate the contract, change the tyres, make the coffee, lock up and set the alarm, because he has done it all and has no problems pulling his weight, but he also knows that his time is better spent doing certain things.....

He NEVER asks a question unless he already has a pretty good idea himself of what the answer is. Which means I have to be on my game every time he calls. He knows exactly what is going on in his business, he respects his employees, and he doesnt waste anything, let alone something as scarce as his own time.

and he has just sold a business that he started from zero about 16 years ago for around $10m.

so be like that bloke.

good luck

bc
answered
Q: Purchased my first investment property in St Kilda and looking for an agent to manage the property. Any recommendations and what should their fee be?
A: same as all the other agents in St Kilda? 6-7%????
I would focus on level of service and ability to act when your tenant has issues. A shitty agent can sour a perfectly happy tenant, and a sour tenant is not something you want ever let alone in your first investment property

for example, if you screw your agent down to 5% on a $600/week property, you are talking maybe $15/week. If $15/week is going to drop you to the bottom of the property managers "to do list" its not a good investment.

Imagine how happy your tenant is going to be when the leaky tap drips for a month before a plumber finally arrives.....
the plumber cops a spray from the tenant , who has had no sleep.....
and the plumber files this address away in the "shitty tenant-AVOID AT ALL COSTS" list......
the plumber gives the property manager a spray because of the verbal he copped from the tenant....
so the next time something needs doing......no-one is highly motivated to do anything for you at all.

Now this is an example of property management "Fawlty Towers" style.......but if you are going to try to screw your agent down on price, you might find you lock yourself out of the players who perhaps conduct themselves more professionally than some......

have fun with it. I hope you dont end up with a plumber from Barcelona:)!!!!!
bc
answered
Q: Hi

Just wanting to work out my concessional contributions for the financial year ending 30 June 2019.

I do not want to exceed the $25k Cap.

Do I calculate my Salary Sacrifice and Employer Contributions from 1 July 2018 to 30 June 2019, or by the actual amounts that were deposited into my Account. I know there is a timing difference as it is generally deposited by the 21st day of the month after its been earned/sacrificed.

Many thanks in advance.
David
A: Hi david,

late response here, but the general statement that the determining factor is the date that the fund actually RECEIVES the cash is probably true.......but the technically correct answer is that the thing which determines whether or not the contributions counts towards the members concessional cap is the date the contribution is allocated to a member account.

And a super fund trustee has 28 days to decide what to do with the cash once it is received:
1: accept the contribution and allocate it to a member account
2: accept the contribution but allocate it a contributions reserve
3: refuse the contribution and refund it.

If the fund goes with option 2, the member doesn't actually receive the allocation until later on, when the trustee gets around to it.

soooo lets try a practical example of what happens:

1: David receives $24500 in employer concessional contributions between 1/7/17 - 1/6/18
2: all these contributions get allocated to his member account,
3: they all count towards his contribution cap of $25k
4: david makes another concessional contribution on 15 June 18 of $25000
5: now if this is allocated to a contribution reserve until AFTER 30 June, then it DOESNT count towards his contribution cap
6: but it is still a concessional contribution, and is still deductible to the contributor.

In practice the fund will almost ALWAYS allocate the contribution to the member account on the day it is received, so it might look like I am splitting hairs here....

but this is a strategy that has been employed many times by people to achieve a specific result, in special circumstances:
eg
if someone makes a large capital gain and wishes to maximise tax deductions in one year
if someone wishes to bump up their super balance so that they can enter into a specific plan which requires extra cash held in super

the devil here is in the detail, and this is a pretty technical area, which requires a high level of planning......and it always revolves around people with SMSF, because they need complete control over what happens at the fund level.

SO, remember to get advice BEFORE you do anything, and make sure that everyone knows what the master plan is.

And also bear in mind that you can now make a PERSONAL deductible contribution. It doesn't have to come from your employer......this is significant, because it might give you the ability to wait until mid June to decide how much you need to put into super, and if your employer cannot act quickly or precisely enough for you, then you can make the required contribution and claim the tax deduction in your own tax return.

regards
BC
answered
Q: Currently looking at a couple of commercial properties as an investment and want to know if the contracts have to say if the sale price is inclusive or exclusive of GST ..... do we also have to register for GST?
A: Hi ben,

firstly YES the contract need to state whether or not the sale includes GST or is GST free.

secondly you need to make up your mind if you want to be registered for GST, or perhaps whether you must be registered for GST.

For most people, the temptation of getting 1/11th of your investment back is a very good motivator for making sure that you ARE in fact eligible to claim this back, or able to complete the sale as a GST-free going concern.

Soooo, get yourself in front of a good adviser who can walk you through the pros and cons......the cost of the advice will be a drop in the ocean compared to the potential cost to you if you get this wrong at the start.

regards
BC
answered
Q: My family just inherited a large sum of money and i know we don't pay tax in the inheritance but if we invest in managed funds do we pay tax on the returns we get?
A: Hi Joseph,
a "large sum of money" can bring with it some large tax headaches!!! It is very important that you spend some time in figuring out exactly what you are receiving (eg death benefit lump sum from a super fund has different tax consequences than the cash left in Aunty Ethyls sock drawer)
then you need to decide what to do with it.
get in front of a good bean counter and a good planner to figure out what is what and what you need to do. If you are not the executor of the estate then I suggest you talk to the executor about what you have received and what tax implications there might be.....

cheers

BC
answered
Q: Who is going to win Caulfield cup?
A: Best Solution
Homesman
The Cliffsofmoher
Duretto
The Taj Mahal

you heard it here first;)

cheers
bc
answered
Q: Hi!
My youngest sister has been Granted Letters of Administration for my dad’s estate. His house is the only asset left to distribute. It’s equally owned amongst 4 siblings. 3 of us have cleaned and emptied it, ready to sell. One of my siblings is a meth addict and has since moved in to the house, without our consent. Looking for recommendations on how to go forward. We need to sell and we need to get them out to do that. I don’t know where we stand legally as we’re all equal beneficiaries. Can we force them out if they refuse to leave?
A: Patrick is on the money here.......it would seem you dont have any real option other than to get a solicitor involved

Im pretty sure that the police will not be able to provide you any assistance at all......

BC
answered
Q: Just wanting advice on how to positive gear we have an estate and wanted to buy something of lesser value than the estate which there is no monies owed to the house would we need to get a loan or is the equity in the house used
Thankyou in advance
A: Hi Vanessa,

There are simply too many variables here to do your question justice!!! Tax law, trust law, land tax, etc etc etc etc.......it is not possible for anyone to give you an answer worth reading without first getting a bucketload of details on how, when, who, what, why, where......which is where a decent bean counter with experience in estates is going to be a must for you.

As I often say, as a rule of thumb get someone with CA or CPA after their names......it sounds elitist, but many other accounting designations are nothing more than memberships, without any real qualifications and training behind them.....

training, qualifications and experience are the things that you need here.....and ALSO an ability to communicate with you......do some homework before you fork out your hard-earned money on some advice, and be prepared to ask a LOT of questions......because if the adviser has not got the ability to break it down for you in terms that you CAN understand, the chances are they really dont know what they are banging on about.

good luck
BC
answered
Q: Can you help me with an official job description from a reputable source, of a Commercial Leasing Real Estate Agent?
A: Hi john,

not sure what you are actually after here mate......can you explain this a bit more so someone with the nouse can give you some advice? Are you looking for a commercial real estate agent or writing a job description for one???
cheers
BC
answered
Q: About to complete our first development of 4 units and so far have sold three and thinking of keeping one. Our question is do we have to pay CGT on the unit we keep… how does it work?
A: Hi Leo,

Everything lies in the detail. But in general you are only liable for CGT on disposal. It depends on what you mean by "keeping one".......what you need to have a clear picture of is what your CURRENT structure is that is doing the development (are you doing this through a trust or off your own bat?) and who is ultimately going to hold the property.

Other issues that might also need to be sorted out include the GST ramifications of what you are doing, and perhaps even the possibility that the ATO might determine that you are in the business of "developing property" and hence the sales are not CGT events at all.....and the proceeds are simply ordinary income from the business of property developing.

Sooooo, if you dont already have one, I strong suggest you get in front of a GOOD accountant. You need to have all your answers sorted before the ATO starts asking questions!!!

I suggest someone with the letters CA or CPA after their names......and perhaps your best way to find one is through conversations with friends, family and colleagues who have had similar issues (ie property development) previously.

good luck
BC
answered
Q: Attending my first auction tomorrow as loan approval came through yesterday. Does anyone have any words of advice or tips on bidding?
A: If a fly lands on your nose whilst the auctioneer is saying "going twice" the you need to resist the temptation to shoo it away........when I was about 12 I bought a chisel plow at a clearing sale doing just that!!

I think all the smart people would actually tell you to stick to your budget and dont get caught up in the adrenaline and hype. The world is full of people who paid over their budget because the temptation to "run" someone is too high.

good luck
bc
answered
Q: Hi
I work full time as digital marketer and do some freelance work after hours. My work salary is $78,000 so do I need an ABN and register for GST for my own work?
A: Hi jamie.

everything they said......PLUS this:

DONT go cheap and nasty on the record-keeping!!! You know how computers work, but dont feed yourself some line that you can do a spreadsheet in Excel for nothing, and that will be just as good as Xero/QuickBooks/MYOB.

Its NOT!

an excel spreadsheet is worse than useless for my purposes as an accountant.....unless I prepared it and I entered every single number and I checked the formulas and I am 100% confident that what is in it is legit.

otherwise its the electronic equivalent of a shopping bag full of torn and faded receipts.

Quickbooks can be had for $17/month. get that. or Xero. Or MYOB. Get something, but for pitys sake dont go with one of those "free"packages like Invoice2go. Free = shit.

And DO see someone about record-keeping and making sure you maximise your deductions whilst ALSO minimising risk of an audit:)

have fun!!!!

BC
answered
Q: hi ..I work as a shop assistant in a clothing store and we are told we have to wear the clothes from the shop. We do get the clothes at a discount …can I claim the cost as a tax deduction
A: Todd is on the money!! And dont think that the ATO wont be interested in auditing you.....there is a massive increase in audit activity by the ATO...and they are not wasting any of their audit budget on the big end of town.

The ATO has clearly got their eyes on wage earners......it is the tax equivalent of beating up the fat kid at school. wage earners have 3 attributes which make them perfect for an ATO audit:
1: they cant afford the $3000/hour barrister to defend them
2: they generally dont know enough about the rules to do it themselves
3: they generally are not great at keeping records

so, please get advice about what you can and CANNOT do. and KEEP records!!!!!!

almost everyone is missing out on deductions they should be claiming so a chat with an expert WILL benefit you. And is itself a tax deduction :)

cheers
BC
answered
Q: Does the governments fuel tax rebates include small owner operators?
I have just started a small furniture delivery business and getting conflicting information from two different accountants… what are the rules?
A: www.ato.gov.au/Business/Fuel-schemes/Fuel-tax-credits---business/

this will help you to figure out what you can and cant claim.

Small operators are still eligible. Small trucks are not.

so if your truck has a GVM of less than 4.5 tonnes your goose is cooked I am afraid.......but as long as you drive a bigger truck then you should be eligible.....so long as you are registered for GST.

cheers
BC
answered
Q: Hello,
I’m 48 and a late starter to superannuation and I have been thinking about salary sacrificing into my superannuation account.? Is it a good idea and is there a limit to how much I can salary package?
A: Hi Pamela,

Is it a good idea? Almost certainly yes, but you probably need to talk to someone about YOUR situation and what you are doing and why and how....etc

Your concessional contributions cap is $25,000 this is the amount that can be contributed into super tax-effectively WITHOUT creating an excess contributions tax headache.....and it includes:
1: employer super guarantee contributions
2: employer salary sacrifice contributions
3: personal concessional contributions

It would be wise to sit down with someone to discuss your situation......because whilst super is the BTO (Best Thing Out!!!) you need to have confidence that what you are doing is in your best interests....and that depends on all sorts of other factors.

find someone who charges you for advice.....because then you will hopefully end up with someone who is motivated to give you the best strategy for YOU, rather than the strategy that pays him the most in commission.

talk to your friends, and ASK a LOT of questions......and ask the adviser to put you in contact with some of his (her) clients for a recommendation.

good luck
BC
answered
Q: When are all property, infrastructure, lend lease and ist property quarterly dividends due by date of that period quarter and how many do you receive each quarter at hostplus.?
A: Hi Steven,

It might be that the dates when the distributions are paid to Hostplus and the dates the income is distributed to you are not the same. They have to factor in fees and other costs, and attribute the income to its members which means it will probably take time for someone in Hostplus to figure it all out before paying it to your member account.

Is that what you are driving at????

regards
Brendan
answered
Q: Hi everyone, I have a question about my Super, I am 61, Lately I have been watching my super with AMP,( with them for many years) and it appears that half of my return goes in Fees and Charges? is this normal? by my calculations, and my hours being cut down, I think I will end up with less than I have now. Do I need to find another fund ?
A: HI Vickie,

AMP have traditionally been happy to charge their clients like wounded bulls......and for the majority of people unfortunately the costs are either ignored or the client remains blissfully unaware of the cost until something gives them a reason to look at their super....like impending retirement......

so you need to get some advice.....not only on your super but on developing a master plan for your retirement. this includes super but super is only part of the picture.

find someone who can discuss super, tax, insurance, asset management, downsizing, estate planning and a whole heap of stuff.......many advisors will do a bit of the whole picture but most wont be able to do everything for you.....and maybe you will end up dealing with a number of people to fill in all the blanks.....but at your age you need a plan to manage things moving towards and throughout your retirement. And the sooner you get this sorted the better.

And bear in mind that you WILL have to pay for this advice. And you should be happy to do so.

Because advisers who dont charge you for advice must be getting paid by someone......which means they are making money on commissions.......and you always look after who pays you.....so if the adviser can get a better commission from somewhere they might be motivated to steer you in a direction that might not be in YOUR best interests......

So discuss fees and commission and remuneration with the advisor up front!!!

good luck
BC
answered
Q: We operate a transport business and have been using ABM accounting software for many years. Finding it very manually reliant and our accountant had said their moving all their clients across to Xero but we would like to get some opinions on how they find Xero , MYOB, Quickbooks or others – thank you
A: By the way, if you search around the world wide web you CAN find FREE software........FOR GODS SAKE DONT USE IT!!! Free = Garbage.
It might let you do online quotes and invoicing, and might give you some pretty graphs, but my experience is that there is not a single free accounting package that is worth using. The ones I have been exposed to provide virtually none of the benefits of the packages I mentioned earlier, and when we get a job on one of the free platforms, we inevitably end up referring back to bank statements and receipts to get the work done, which costs the client (ie YOU) a BOMB!!!.
Save money up front.....and cop it in the neck from your accountant when he/she has to sort out the info into something sensible.
answered
Q: Hello
I recently became an Australian citizen and have a full time employment in I.T software. If I do some freelancing work for overseas companies do I have to pay tax on the money I get paid
A: Hi guys, there is a difference between Australian RESIDENT and Australian CITIZEN for tax purposes........

and for TAX purposes, it is residency that determines how you are taxed. If you are NOT an Australian resident then you will be taxed on your Australian sourced income only.

now the million dollar question for you is "what is the source of my income from IT services provided to an overseas company"??

If your freelancing work involves you staying up late and dialling into your clients server from your lounge-room, then there is a pretty strong argument that the income is generated in Australia, and will be assessable as Australian income.

If your freelancing work involves you jumping on a plane and shooting off to Germany and you earn your money there, then its probably not Australian income........but then if you are an Australian resident you are going to pay tax on it regardless....

then you will probably have to look at claiming tax credits for tax paid on that income in the foreign country.....and double tax agreements and whatnot.......

so the BEST thing you can do is talk to your accountant BEFORE you start, and get advice on what your tax obligations are......it gets complicated pretty quickly and you can very easily shoot yourself in the foot if you are not careful:)

good luck
answered
Q: We operate a transport business and have been using ABM accounting software for many years. Finding it very manually reliant and our accountant had said their moving all their clients across to Xero but we would like to get some opinions on how they find Xero , MYOB, Quickbooks or others – thank you
A: Hi Penny,

we have experience with a wide variety of online accounting packages......and to be honest they all pretty much do the same thing:
- online access from anywhere
- bank transactions automatically loaded into software (BIIIG time saver!!)
- can automatically allocate transactions based on amount, payee, narration (HUUUUGE time saver!!!)
- payroll functions
- super streaming
- track subbie payments (this will eventually become a mandatory reporting chore for everyone)
real time reporting for banks.
GST reporting
budgeting (VERY USEFUL TOOL)
etc
etc

the time you can potentially save with the online packages will BLOW YOUR MIND!!! AFTER you learn how to use it!!! This is the issue that people get stuck on.....the potential benefits you can get from having up to date and accurate figures 24/7 without the need to beg your accountant to punch out a quick set of figures are huuuuge......but you really and truly need to factor in the time it will take you to get proficient with the software.....so the software providers in house (FREE) support services become VERY important in this decision.....

MYOB has traditionally been the market leader with online stuff.....and their support services have traditionally been better than some of the others.....but they will try to steer you towards their FAQ's and "how to" videos......which in reality are pretty decent

XERO looks funkier, and lots of people love it, and its a bit cheaper than MYOB......but you wont want to hold your breath waiting for them to call you back......support is pretty much email and "how to" video streaming.....but still a good package

QUICKBOOKS has not been a big player in AUsitralia, despite being one of the largest software providers in the US (intuit owns Quickbooks I think).....and they are pushing really hard to get a foot in the door in Oz......their prices are ridiculously cheap ATM, and I have found support services recently to be very fast and effective.....and they do still have the traditional FAQ's and "how tos".......

the thing is you probably want to talk to your bean counter about what they prefer......because if your accountant likes XERO, and you use Quickbooks, you protentially have a headache.....especially if your accountant really HATES Quickbooks......

but it all boils down to deciding which one is going to be the best for YOU.....because you are the one doing the data processing late at night when the kids are asleep......so have a look at them all......they all have free trial periods, but that is just a velvet noose.....because once you start with one of them you are unlikely to dump one to try another.....

good luck

BC
answered
Q: Hi All,

I hope you're all winning!

I have a tax question for the accountants here.

If someone has held a company for over 12 months and is now selling the business, will they be up for full CGT? Or do they get a similar concession to a real estate asset?

The business has been held by 2 directors and shareholders and will each have an equal share of the proceeds from the sale.

Cheers,
Frank
A: hi guys,

the company MAY be entitled to Small Business Entity CGT Concessions......so its really really REALLY important to ensure that the person preparing the accounts understands what is going on and what concessions are available.....so talk to a qualified and experienced CPA or CA who can help you

cheers
BC
answered
Q: Hi,
I have just moved from being an employee to a contractor – same role with greater flexibility. My question is what percentage of my income should I put aside for tax and is there anything else I need to consider, thanks?
A: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/practice-management/employee-versus-contractor-factsheet.pdf?la=en

this factsheet put our by CPA is a good start.

I have a really good saying that was given to me by a very clever barrister once...." if it walks like a duck and quacks like a duck, then chances are its probably a duck."

you have gone from being an employee on the payroll, to a contractor. The ATO will take one look at this and thing two things:
1: your employer is looking to dodge super and workers comp
AND
2: you are looking to claim a whole heap of expenses that you probably shouldnt.

soooooo be very very careful about what you do in your own tax return. And make sure that your employer is actually fulfilling his obligations re super and workers comp!!!

and talk to your accountant about what you can and cant do and what you SHOULD and SHOULDNT do!!!!

good luck
BC
answered
Q: Hi,

I am currently transitioning jobs and I have been asked if I would prefer PAYG or to be paid as a Sole Trader.

Can you please tell me if I am financially better to PAYG or be a Sole trader?

Rate per day I will be earning is $550 including super.

Any advise would be greatly appreciated!
A: Hi Jade,

I have found that in every case where an employer wants to report an employee as a "subcontractor" the real reason has nothing to do with making things "convenient" or "flexible" for you.

Its because the employer wants to avoid paying workers comp and super. And it saves them the trouble and inconvenience os paying your PAYG W every three months.

So as a subbie, you will get a dirty great big tax bill at the end of the year: as a rough guide bank on around 25% of your gross income: so $80k total income will get you a $20k bill next July.

And you wont be covered if you get injured

And you wont be getting any super

And you have no rights as an employee: so you can get punted at any time for no reason

Oh, yeah no sick leave, and no holidays.

All in all its a crap deal dressed up as something its not.

Sometimes you have no choice. Sometimes the only work going around is as a subcontractor and sometimes you have to take a shitty deal rather than no deal.

But if you DO have a choice make sure you take into account all the things you might be missing out on.

cheers

BC
answered
Q: I would please like to know the best type of home loan for a couple, where one partner has children from a previous marriage, especially if the partner without the children is putting in the deposit. Is it best to set up "Tenants in Common" or "Joint Tenancy".

Question 2.
Could you also give me the advantages of "Tennants in Common" and the disadvantages of "Joint tenancy" (and if there are any advantages in Joint tenancy?)

Many thanks
A: Hi claire,

the best answer for you is "its complicated!!!"

there is no single answer that is best for you. The best setup for you depends on a multitude of factors:
- each persons objectives
- is this the "forever home"??
- is it likely to become income-producing at some point?
- what do you want to do with your share when you pass away?
- what does your partner what to do with his share when he passes away?
- how old are the children?
- what is your expectation regarding your share of any joint assets in the event that one or the other or both of you pass away suddenly
- what is going to happen with the children in the event that your new partner passes away and leaves the kids with you? or the children go to someone else??

best thing you can do is get in front of someone who can advise you on a range of things. BOTH of you. So you are all on the same page with what is going on what the issues are and how to address things sensibly.

good luck
bc
answered
Q: I have a automotive question. I live in Victoria and one machanic said to me that my car oil needs to be flushed and put new oil in. I have a 2010 Mazda CX-7. How much would that cost?
A: Hi AnneMarie,

It would be sensible to get a second price for an oil change, but trust me when I tell you the oil change is gonna be a lot less expensive than a new engine.......because if you dont change your oil thats what you are looking at.

PS I did not learn this from the Institute of Chartered Accountants in Australian and New Zealand hahahahahaha!!!


cheers

BC
answered
Q: Hi, I have a young family and want to go back to work and thinking of starting my own mortgage broker business. Previously I had 8 years in lending with one of the major banks and wondering if I should just go out of my own or join a franchise type model. I’d really like to get the thoughts of others in the industry and to also ask what else I should be considering, thank you
A: Hi Melanie

I am almost certain to tread on a few toes here, but for the life of me I cannot see any benefit in stumping up a heap of cash for a franchise.

If you already have the qualifications skills and experience in mortgage broking, why do you need a franchisor to hold your hand???

If you need support for your back office, surely there are solutions out there that dont carve out a huge percentage of your turnover??

I am sure there are plenty of brokers out there who can help you with practical real world advice, good luck!!!

Just my two bobs worth.......

bc
answered
Q: I was just reading an article from a broker about rates dropping and thought:
What's the lowest Low Doc rate these days?
A: Dropping???? I thought they are all heading in the other direction now that the Big Four have decided to multiply their fines by a factor of 15 and recover this in 12 months from increased rates under the assumption that
1: everyone will accept their lame story about the cost of money from o/s and no one really notices anyway, because after all its only a couple of basis points and
2: everyone will get wound up for a day or so, and then get comfortable with the new rates and forget to do anything.

but it would be good to know what the best rate going is?

bc
answered
Q: I was reading in the Financial Review that I could potentially rent out my SMSF investment property to a family member as long as it is done at a commercial rate. I much prefer to rent to someone I know. Is this true?
A: HI again guys.......great case example Wayne!!!!!.........I would be very surprised if the ATO doesnt appeal this decision.....the last thing the ATO will want to see is a fleet of SMSF renting out houses to Aunty Ethel....
....and even if they appeal and lose the case, this wont alter the ATO's interpretation of the law.....because that individual case is VERY specific in its details......
My point here is that you can have all the fine details and case law in the world to back you up, and the ATO will make your life a misery anyway if they think you are having a lend of them........sometimes it has more to do with minimising the risk of an ATO audit than it has to do with the correct application of the legislation
cheers
BC
answered
Q: I was reading in the Financial Review that I could potentially rent out my SMSF investment property to a family member as long as it is done at a commercial rate. I much prefer to rent to someone I know. Is this true?
A: Well........."technically" you can..........but you will be opening a Pandora's Box of poo and tipping it all on your own head.

https://smsmagazine.com.au/columns/avoiding-in-house-asset-complications/

if you really really want to know, start with this article......then get yourself a copy of the SIS Act 1993, and become VERY familiar with Part 8 of the Act......because Part 8 is the section of the SIS Act that will explain that after you rent out your SMSF home to a family member (on commercial terms), the fund will:

a) lose its complying super fund status and pay tax at 47%
AND
b) be forced to sell the house

I am being VERY tongue in cheek here Adam. if you follow the letter of the law, you CAN do the thing mentioned in the Fin Review, but the adverse consequences will want you to find the journalist who wrote that article and cut off his toes with a set of bolt-cutters.

Super legislation is crazy complicated, so you need to have confidence that you are across it, OR have an advisor who is......and trust me there are PLENTY who arent!!! I have seen some dead set clangers when auditing SMSF........

So talk to your advisor about this......and question them.....their job is to explain it to you in a manner that you can understand. If all you get is gibberish then it means that your adviser doesnt understand it well enough to explain it to you, or they DO understand it, but are incapable of communicating......either way you are up the creek in a barbed wire canoe with no paddle........

good luck,

BC
answered
Q: If we build a granny flat out the back of our home (primary residence) could we claim the rent on our tax or would we have to apply for a sub division and have the flat on a separate title?
A: Hi Eddy,

yes you can (and should) declare the rent as income and claim the outgoings as deductions. Remember that you will have to apportion the outgoings on a reasonable basis, otherwise the ATO will get snakey with you for having a lend of them.

For example, a portion of the rates will be deductible, because a portion of the property will be used for a "creditable purpose"......to generate assessable income.....but is NOT 100% of the rates clearly because you live in part of the property.

same goes for interest on the mortgage and other things that are based on jointlt spent or used items.

Repairs specific to the granny flat will be 100% deductible.

You may consider getting separate meters for gas and electricity: it will make life easier to allocate who pays what and also make life easier at tax time too.

Now for the bad news: if you use a portion of your home to generate assessable income, then the ATO will want to take a slice of the action when you sell the home later on and make a capital gain:

for most people the home is exempt from Capital Gains Tax.

however if you use some of your home to generate income (rent) then a portion of the home becomes subject to CGT.....which is never a great feeling, but thats just how it is.....

Best thing you can do is sit down with a qualified accountant and go through it with them....find out all the things you CAN do and all the things you CANT do.....then you will be able to assess for yourself whether a granny flat is a good idea or not.

good luck
BC
answered
Q: I am looking for investors who might be looking for a change from the same old same old avenues. My company is mining Crypto Currencies and we have an opportunity for investor's to get involved. We are an Australian company registered with ASIC. And our Investment offer's returns equal to 20-40% per annum. Currently running at 27%.
Where can i find people who might be interested in having a look at what we offer ?
I call hundreds of Australian's a week and many have not even heard of this industry.
here is a brief introduction to what we do ...

What is Bitcoin Mining ... How it works.

Mining Bitcoin is a bit like a bank taking fee's when you use an ATM.

Around the world approximately 250 thousand times a day there are transactions made between two parties , buying and selling Bitcoin. Everytime one of those transactions happens , it needs to be verified as true and correct.

This verification is done by very powerful computers that solve algorithm's that each transaction create's. The first computer to solve the algorithm gets paid a fee in Bitcoin. This is how Bitcoin is minted. After the first computer solves the algorithm then multiple other computers also check to see if the transaction is true and correct before the transaction is deemed successful. However only the first computer gets paid.

This is called Proof of Work.

The investment opportunity , would be a great conversation !
A: This mining thing is beyond my comprehension, because it doesnt actually come out of the ground, but since the term mining IS something I have some experience in, I will try to frame my questions around the mining analagy:

what is the estimated size of the resource?
what is the cost of production?
what are the markets for the product?
What are the taxation consequences of mining bitcoin
what is the risk of business failure from competition
how volatile is the market

I gather that the whole blockchain cryptocurrency concept is complicated and there is a lot of technical expertise that is required to fully understand all the ins and outs of the industry......but there is a lot of technical guff that nobody knows or cares about in the iron ore industry, but people are still happy to invest in BHP. How can laypeople get informed about cryptocurrency to the extent that they need to...as investors in the industry....to assess the merits of this as compared to other investments that they might use???

cheers
BC
answered
Q: Im interested in bitcoin starting it up soon but i want to know the tax's involved. As far as i e heard there is no tax on the coin itself in australia but something about capital gains? please explain
A: Hi Geoffrey,
not necessarily convinced that Bitcoin is the best thing going......I still dont know what it is and how it works, and what the risks are. happy to talk anytime.
cheers
BC
answered
Q: I am looking for investors who might be looking for a change from the same old same old avenues. My company is mining Crypto Currencies and we have an opportunity for investor's to get involved. We are an Australian company registered with ASIC. And our Investment offer's returns equal to 20-40% per annum. Currently running at 27%.
Where can i find people who might be interested in having a look at what we offer ?
I call hundreds of Australian's a week and many have not even heard of this industry.
here is a brief introduction to what we do ...

What is Bitcoin Mining ... How it works.

Mining Bitcoin is a bit like a bank taking fee's when you use an ATM.

Around the world approximately 250 thousand times a day there are transactions made between two parties , buying and selling Bitcoin. Everytime one of those transactions happens , it needs to be verified as true and correct.

This verification is done by very powerful computers that solve algorithm's that each transaction create's. The first computer to solve the algorithm gets paid a fee in Bitcoin. This is how Bitcoin is minted. After the first computer solves the algorithm then multiple other computers also check to see if the transaction is true and correct before the transaction is deemed successful. However only the first computer gets paid.

This is called Proof of Work.

The investment opportunity , would be a great conversation !
A: Hi Geoffrey,

I know that there is a market for cryptocurrencies, but for the life of me I cannot understand where the value lies. the currency itself is not regulated, nor is it backed by the guarantee of a government or a reserve bank. I have never seen anyone advertise to sell a product or service in Bitcoin, so I dont actually know what I can buy with my bitcoins.

But somehow there seems to be a demand for the cryptocurrency. I suppose its much like demand for diamonds, or gold: you cant eat it, you cant spend it, but you can trade it......is that a reasonable analogy???

My (very) limited reading on the subject tells me that there are a finite number of algorithms that can be calculated with current computing technology, so we are talking about a finite resource.....which you are mining. Where does the cost of production exceed its market value???

Another thing that I dont understand is the 250,000 transactions trading in Bitcoin.......people are buying bitcoin and selling bitcoin and the process of verification means that someone else gets paid in bitcoin: who pays this fee?? the bitcoin buyer or the bitcoin seller???? is the act of solving the algorithm the thing that creates a bitcoin? how do you know that the bitcoin even exists....and where does it live??? and how can I sell my bitcoins to someone else????

The more I think about it the more confused I get.......

So can you break it down for dumbos like me, and explain what one is, and how one can hold onto a bitcoin, and maybe this will help everyone to understand better what they are and how people can benefit from them.

cheers
BC
answered
Q: Hello, on a commercial property loan of $330k from a tier 1 lender we are borrowing about $120,000 through our SMSF. Are such fees usually requested by the broker, the broker wants to charge $1,000 upfront? ? Is this standard industry practice for non resi loans or a matter of which broker can get away with these fees from the borrower?
A: I have seen a number of SMSF loans in the past couple of years and never seen an up front payment. what is the commission structure? Is he likely to rebate this back to your fund somehow out of his commission??????

Maybe you should shop your business around, because the broker will getting the commission on the lending and also the trail.....so there is every chance of you finding someone out there who will do the loan for you without an up front payment.

good luck

BC
answered
Q: Hi, I have recently become the Executor of my dad’s estate. Through his current accountant, I have been recommended to see a Financial Planner as the whole estate is in ASX listed shares. I am worried about getting bad advice. What are some of the questions I should be asking the adviser to know if they are any good?
A: Hi Sam,

agree with everything said here. One thing to keep in mind as the executor: your fathers estate can run for a period of time and still be taxed at normal rates.....which means it gets the $18200 tax free threshold etc......this is important in deciding WHEN the estate should dispose of the shares....there can sometimes be a significant tax advantage if the shares are retained in the estate.....for a short period......then the estate will have to distribute the income to the beneficiary (you) or transfer the estate assets to the beneficiary (you)
sooooo.......make sure your accountant is across those issues too.

good luck
BC
answered
Q: Hi there

Got some great responses last time I posted here so hoping for a similar result!

I am a beneficiary of a deceased estate split into 3. We recently put the property up on Airbnb for some rental income whilst we wait for the property to be sold.

We did some work to the property readying it for lease such as painting walls, purchase of linen, crockery etc.

1) Can these expenses be claimed? Obviously it's work done prior to being leased but integral to be able to do so. Or does any receipt need to show that the date of purchase was AFTER the commencement date of lease?

For our tax returns, we will be splitting income/expenses between the 3. The property had no TV or Vacuum and so one party paid for these items out of their own personal money as they will take these items as soon as the property sells.

2) Will their be any red flags if one party claims higher expenses despite splitting income by 3?

Looking at it now, I guess if the answer to question 1 is 'NO' then question 2 is probably void as these items were obviously purchased before our first tenant.

Thanks so much for assistance. Great community of help!

Steph
A: Hi Steph,

Scott is on the money: there is too much going on here to give you a straight answer.....and there are too many what ifs

Firstly has the estate been finalised, or is the property still held in the estate?? This itself is critical, because if the property is owned still by the estate then it is the estate that needs to report the income and claim any expenses......

SEcondly the work done on the house is likely to be capital in nature.....each case is different so you need to look at what was done, on an item by item basis......but if you did a lot of small things that doensnt necessarily make them individually "repairs".....so off to the accountant with this one:)

Thirdly: if one party incurs a higher cost than the rest, and you guys have agreed that everyone can catch and kill your own deductions, then I would say that there is no reason why one persons deductions must be the same as anothers. BUT bear in mind this is affected by who actually owns the property.....because if the property is held by the estate then none of you has any assessable income to offset with allowable deductions......another good reason to track down a decent bean counter.

My last comment is the literature put out by the ATO: the ATO does not write the law. It doesnt decide how the tax system works. It interprets the legislation and administers the taxation system. PArt of what they do is provide guidance to taxpayers on how to apply the law.....based in the ATO interpretation of the legislation.

What this means is that the ATO will put their "spin" on a given issue. And trust me that the ATO "spin" os quite often a LONG way from how the law can be interpreted by some people.

Sooooo, by all means have a look at the ATO for their guidance, because it is important to know how the ATO will react to a certain issue. Then talk to a CA or CPA who knows what they are on about. Then make up your own mind about what you want to report in your tax return....its the SELF ASSESSMENT SYSTEM......which means it is really up to you to decide how to report your income.

good luck, I hope you find a good CA/CPA who can assist you with your AirBNB.

cheers
answered
Q: I’m on disability support pension. I want to start working if I can. But my disability is infinite, and will progress to become an in ability to work. What is the maximum I can earn, before it starts affecting my Pension. I do not want my pension to be affected at all.
A: https://www.humanservices.gov.au/individuals/enablers/income-test-pensions/30406

Hi Sip.

the income test varies for single or couple, but as a rough guide, 172/fortnight before your pension starts being reduced.....and it gets reduced at 50c pre dollar of earnings over $172.

Which in my view is a massive DISINCENTIVE for someone to go back to work......because your "effective" tax rate is going to be no less than 19% + 50% = 69% or perhaps 32.5% + 50% = 82.5%. who would go back to work if you get to keep 17.5cents in every extra dollar you earn?????.

The link at the top of the page is to the Centrelink website, which is actually quite easy to navigate. Hope it helps mate, please feel free to contact me direct if you think I can be of any further assistance.

regards
BC
answered
Q: Home Loan News

Westpac Bank has announced an increase of 0.14% to all their variable home loan rates for new and existing customers

The rate increase will take effect on 19 September 2018.
A: Hmmmmm, in the middle of the Royal Commission, no less!!!
Call me a cynic, but given that a google search shows interim cash surplus of over $4billion dollars, and 100% of NSW and most of Qld in the worst drought in recorded history, maybe taking the foot off the throat of their victi....errr CUSTOMERS is going to result in a better public view of what they do and how they roll......

by the way, in increase of 0.14% on a home loan rate of 4.5% is actually a 3.3% increase in revenue......more than CPI which is expected to be around 2%.....whats the bet that this is NOT the only rate increase we will see in the next 12 months????

Australian banks are the soul-less profit machines we have created, and because they are a power unto themselves we have no control over them. They act with impunity. They have zero regard for the law, because the law doesn't hold the individuals accountable for the corporate greed, and lack of compassion displayed by all banks. CEO's are rewarded for share prices and dividends, not growing family businesses, and developing industries. And until something fundamental changes in the banking industry we are going to be stuck with what we have created.

Brendo
answered
Q: I have always thought I was good at budgeting - turns out I might not be!! I need help with free financial counseling, someone looking at our budget, finding ways to save, pay the debt off faster or possibly Debt Consolidation? I don't think the latter would be an option though...and I just don't know how to tweak it anymore... I have attempted to contact a free Financial counseling service in WA with no luck yet...Any suggestions?
A: Hi Stef,

being very light on detail I dont know whether you are looking for help to get some savings happening, or you are in a position that you dont have enough money for the basic essentials to survive

I found a dozen different free services in and around your area, so if none of those are any use to you, then I suspect what you need is something more than some advice on how to make your income stretch far enough to pay the rent and groceries?????

I know that some financial planners offer a service to track and report on household expenditure.....but this is far from free, and in my opinion only useful for people who need to be told that they are spending too much on chai latte if they want to go to Spain next winter.

And I dont know where you fit into the spectrum of people who need advice Stef.

I would start with the free counselling services in Perth and get them to recommend other service providers if what they can give you doesnt suit your needs.

And remember, once you get past the free services offered to people in genuine need of counselling and advice, you do actually have to pay for advice......

good luck

bc
answered
Q: My husband should be treated as an employee , he is employed as a subcontractor , he is carpenter . His boss has not paid into super or PAYG. So he not paid tax this year. He works full time and on an hourly rate , uses his own car and tools for the job- he invoices his boss weekly and provides an ABN . What should he do.
A: Hi Kate,

the building game is awash with people who dont like paying super, or workers comp, or PAYG W either for that matter.
You hubbys boss will almost certinaly get slugged with super and workers comp if he gets looked at by ATO and workers comp, however I beleive the PAYG W is going to very difficult to get around.

If your hubby has given the boss invoices, even if the invoices just say "40 hours at $50/hour"or something like that, then the boss has paid him that amount.....then for TAX purposes his income is business income and he will be taxed on it accordingly......which means that you guys are getting a tax bill no matter what happens.

best thing you CAN do is get in front of a GOOD tax agent who can help you minimise the pain of paying tax on busines income.

you also need to make decisions about whether you hate your hubbys boss enough to dob him in for avoiding super and workers comp.....which he clearly is....and deserves everything he gets. But that is often a problem because as soon as he get wind that you have dobbed him in you will probably find yourself looking for another gig as a builder......

and dont forget that its your retirement nest egg he is NOT paying into......and when he has retired to Hobart and living the life of Reilly he wont lay awake at night wondering if you guys have enough to retire on. this is something else you should discuss with your accountant.

Soooo get yourself a GOOD QUALIFIED Accountant who is CPA or CA qualified and knows what he is talking about with super and workers comp....and business returns.

And also talk to him/her about what BUSINESS STRUCTURE is best suited to you specific circumstances.......maybe sole trader is not the best option for you either.....

good luck
BC
blog post
SCAM ALERT!!!! DONT GET FOOLED!!!
Today I found out a client of mine has been stung by a very well planned and executed scam.  Lets call this guy Billy.
Yesterday Billy received a phone call from someone who said they were f ...
answered
Q: I have an abn and just registered for GST, how long can I expect to wait before it shows up on my abn search?
A: The ATO has a "standard service period" of 56 days.

this means that if you call them to find out what is going on before the 56 days is up, they will say "we have a standard service period of 56 days. Please call us after 56 days"

then, after you have waited 56 days, and you call them up, they will say "we have a standard service period of 56 days. We will escalate this matter for you. The standard service period for escalated matters is 56 days. Please call us after 56 days"

true story. this has happened to me on a number of occasions.

In practice though, unless you are a terrorist money-laundering type you should see this in a few days....maybe a week at the outside:)

cheers
BC
answered
Q: What is the best Hostplus super option to choose for someone nearly 60?
A: Hi Steven,

the answer is "it depends"

and the number of variables that may or may not affect the decision is HUUUUGE.

so you need to talk to an expert who knows the rules and can give you the advice that best suits your individual situation.

Now, Hostplus will possibly be able to offer you advice, however I have seen some extremely stange advice come out of industry funds......and I suspect that its because the people providing the advice dont actually know as much as they think they do.

sooooooo:
step 1: get advice from HostPlus
step 2: take this advice to someone independent and get it reviewed
step 3: make decisions

good luck
bc
answered
Q: Hello there!

I am 19 years old and looking to buy 2x 40 ft shipping containers and converting them into a home nicely set up, I've done the research and the profit can be there with the right planning and budget, but I am currently not earning enough to save $20,000 in the next year due to rent and other day to day expenses also I cant get a loan with any banks as a parking ticket was being sent to the wrong adress and I didn't know about it for over a month! Which affected my credit score quite badly. So my question is does anyone know where I can find private investors or something along that line to help with the costs of my project I have seen a financial advisor and have professionally drawn up plans that suggest a $25,000 profit in 2 months work! Thankyou really need advice.
A: Hi Jackson,
I am guessing you already have the land upon which you are going to build the Shipping container house? I have seen some container homes and some look great, and some look like...well...a couple of shipping containers welded together. SO not knowing your budget I cant say how you plan on pulling this off for $20k, but Lets assume you have got your sums right, and you have the market picked too, because a plan that says $25k profit is no good to you when you cannot find a buyer and the bank is breathing down your neck:)

Go see a mortgage broker. There will definately be someone out there willing to lend you something. If not a bank or a building society, there are third tier lenders like Liberty who might take an interest. Then you have private equity style lenders like Archery Capital who lend for property.......

But remember that the further away from the big 4 banks you get, the higher the interest rate and the shorter the repayment terms, and the harder it gets to make the payments if you are on a tight budget. Which is where your budget needs to be 100% on the money, because it only takes a little boo boo to make life extremely uncomfortable.

Im sure there is a mortgage broker out there who can help you out:), but make sure you have ALL the information for them, and present it in a way that they can use to sell your project to a potential lender. And remember that you might end up with a "commercial" lending product rather than a "residential" lending product, which means you may have none of the rules and regulations that protect people from being punted out of their homes if things go south. Ask the broker to explain the difference in the rules so you know what you are signing up for......because not all loans are created equal!!!!

good luck
BC
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
blog post
HESTA ONLINE HELP
I had a client today who needed some help to send a rollover form to HESTA and didn’t know where to send it. So they asked me to find out for them. I went to their website and had a conversa ...
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????
answered
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
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: 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!!!
answered
Q: We are going to an auction on Saturday and the agent and conveyancer have differing views on us using a deposit bond to buy the property. Is it ok to use a deposit bond at an auction?
A: http://www.afr.com/personal-finance/10000-property-buyers-caught-in-deposit-power-collapse-20180306-h0x460

I have a number of clients caught up in this disaster. Cost to each of them in thousands. ONE client has not been able to renegotiate another bond.

so if a deposit bond is the best way forward then rip in. But dont let anyone tell you they are risk-free. Deposit Power was by no means a tiddler in the deposit bond "pool".

so with all due respect to Albert, the first question maybe should be "how does one of these things work and what are the risks involved?"

good luck
bc
answered
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
answered
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!!!
answered
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
answered
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
answered
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 ...
answered
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
answered
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!!!!!
answered
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...........
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
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: 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
answered
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
answered
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
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: 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
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: 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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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!!!
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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
answered
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

Followers