Changes in Land Tax and a Free Gift from the NSW Government

Posted On: Tuesday, December 12th, 2017  In: Blog

 

Land Tax

If you own land in NSW with an unimproved capital value greater than $549,000, at midnight on 31 December you will have to pay land tax.

This equals about 2 to 3 average home units but there is no threshold for a family trust.

“Foreign” persons do not get the threshold and have to pay an extra 2%. An Australian citizen is not a “foreign” person.

If you reside in Australia for more than 200 days in the preceding year then you are also not a “foreign” person.

 

A Free Gift from the NSW Government

This is actually a Small Business Grant for businesses that do not pay payroll tax.

You will get $2,000 for new jobs that are created up to 30 June 2019.

There is also a $6,000 Payroll Tax Jobs Action rebate for those that pay payroll tax.

The problem with these grants is that the cost in your time getting them almost eats away at any grant received.

 

 

Tulip Mania and Cryptocurrencies

Posted On: Tuesday, December 12th, 2017  In: Blog

This “was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.

It is generally considered the first recorded speculative bubble” Source Wikipedia.

If you are thinking about the massive gains in the value of bitcoin or other cryptocurrencies, we suggest that you need to do some reading in economic history about the great Tulip crash.

We humans tend to ignore history and seem to make the same mistakes over and over again.

 

 

 

No More Stamp Duty on Insurance!*

Posted On: Tuesday, December 12th, 2017  In: Blog

*This statement is not exactly true as this only applies to small businesses in NSW.

It starts from 1 January 2018. The definition of small business is the “CGT small business entity” which is one with an aggregated turnover of less than $2 million.

Beware of the word aggregated as this is a complex definition and if you have a few entities in your group then the definition needs to be studied very carefully.

If you are well under the $2 million then you can just give our brokers that information and we tick the correct box.

However if you are near this limit then you need to study your structure. Businesses at this level tend to add other entities to their structures so advice is needed.

 

 

Capital Gains Tax Gets Ugly

Posted On: Tuesday, December 12th, 2017  In: Blog

CGT started on the 18th September 1985. Any asset (a very wide definition) acquired after that date is subject to tax on the capital gain when disposed of. After 32 years we are now seeing some interesting things happening.

One client purchased a factory for $1 million and sold it for $5 million. Capital gain $4 million. If it is in an individual or trust name then you get a 50% discount and thus $2 million is added to your taxable income. The top tax rate starts at $180,000. If we assume that your other income is already at that level then the tax on the $2 million is at 47% or $940,000. Ouch! As long as you have no borrowings to repay you still walk away with $4.06 million.

In another case we had a property purchased again for $1 million and valued at $7 million. Capital Gain $6 million. After 50% discount $3 million and the tax is $1.41 million leaving $5.59 million after tax. However they owed $3 million on the property and thus only walk away with $2.59 million.

These types of commercial property are earning up to 5%. By selling the property you forgo income of $47,000 and $70,500 per annum. Or you can look at it another way. You are earning the same amount from funds borrowed from the government at zero interest. Not a bad deal. No wonder people become reluctant sellers.

And what happens when you die? If the property goes to your beneficiaries, usually your children, this is not considered a “disposal” and thus no CGT is payable at that time. However your children will pay the CGT when they sell the property based on your original cost base.

We informed one of our clients that his home was not exempt from CGT as the principal place of residence exemption was lost by having it owned by his company. We suggested it might be wise to solve the issue now. After giving it considerable thought he came back to us and said the CGT was not his problem. It was his children’s problem and they will have to deal with it, which they did at a later time.

 

 

Do You Know Your Tax Return Deadlines?

Posted On: Tuesday, December 12th, 2017  In: Blog

Lodgement Dates

We generally prepare accounts and tax returns in the order that we receive the work from clients. Some clients have specific deadlines like travel agents, holders of an AFSL and large proprietary companies.

Most individuals, small companies and super funds have a due date of 15 May for lodgement of tax returns for the previous 30 June.

This gives us plenty of time to do a year’s work. However it is not possible to have work that is brought in to us on the 14th, ready on the 15th for lodgement.

We give ourselves two months for most company and super fund accounts. Thus we need your work in by the 15 March to meet this deadline.

We do not mind if you bring it to us slightly later but as long as you will pay the fine with a smile. New super funds have to be in by 28 February.

 

 

Insurance Update – Emerging Risk of Cyber Insurance

Posted On: Monday, December 4th, 2017  In: Blog

Emerging Risk of Cyber Insurance

Since its inception, insurance has always served to manage risk. In the 17th century, a fire could destroy a shop front, records, and an entire business. Fire insurance served as a means of managing this risk both financially and actively, as insurers owned fire brigades.

In the 21st century, cyber risk can equally destroy a business by destroying its records and its reputation.

Beyond providing insurance, the standards and guidelines developed by the industry have the potential to define best practices and act as pseudo-regulations. Organisations need a means to manage cyber risk outside of their risk appetite; the insurance industry can fulfil this need.

The insurance industry identifies emerging areas of concern and successfully navigate these trends when designing suitable insurance products that enable adequate protection.
Utilising our enhanced risk identification and management functionality enables us to better offer protection against this emerging threat.

Our Insurance Brokers currently work with several underwriters who offer Cyber Insurance Products to ensure we remain ahead of this evolving threat and are able to offer the best protection possible to our clients.

Why Use Peter Vickers Insurance Brokers?

Our brokers are trained professionals that provide expert advice to help you make better insurance decisions for you and your business. We have the experience and specialist knowledge to help you find the appropriate cover, that’s the right fit for your needs.

Our brokers have in-depth knowledge of the insurance market and can negotiate and customise policies on your behalf. By comparing your available options – we’re empowering you to make informed decisions. We also explain any fees charged for services provided upfront, so you can always know what you have to pay. It’s also worth remembering that the time a broker can save you in researching the right cover is time you get back to put into your own business.

Our brokers are part of the largest combined general insurance broker network in Australia and New Zealand – Steadfast. We have a powerful voice in the industry, which means;

  • You’ll gain access to over 150 national and international insurers, so we can find you cover, no matter how unique your business is
  • Our brokers offer exclusive and tailored products, providing greater protection and better value for your business
  • Our brokers can escalate your claim at the highest level with insurers to get you back in business faster
  • Our innovative tools enable us to quickly compare insurance options to assess what’s right for you.

Importantly, our brokers work for our clients: not the insurance companies, so you can feel confident they have your best interests at heart.

Our brokers are ready to partner with you to find the right solution for your business.

 

Lindfield Superannuation Fund Returns FY 2017 & Member Website Announcement

Posted On: Monday, December 4th, 2017  In: Blog

Lindfield Superannuation Fund Returns for Financial Year 2017

Our funds aim to invest, 70% in Australian equity, 25% in Fixed Interest and 5% in cash.

With Brexit and the Trump election behind us, the share market has bounced back and as property becomes too expensive along with RBA tightening rules on lending, we expect further flows to the share market. Financial Year 2017 has been a good year for the stock market and this is reflective in our returns.

For the year ended 30 June 2017 the funds have returned the following after fees and taxes, please note however that present returns are not an indicator of future fund performance:
Lindfield Accumulation 9.14%
Lindfield Pension 8.38%

Member Website log in Announcement

We are pleased to advise that the online portal to access your statements and member details is ready for your use.

Lindfield Superannuation Member Portal login procedure:
1. Go to www.gpml.com.au/investment-logins
2. Member portal / Lindfield Super
3. Select to activate your member portal account
4. You will need your e-mail address, mobile number or Lindfield Super member number
5. Once these are provided a message containing your password will be sent to your e-mail.
6. Use this password along with your member number to Login

You can now have instant access to your statement online and check your account at any time.

Please do not hesitate to contact Heather Leung if you require assistance.

SMSF Event-Based Reporting

Posted On: Monday, December 4th, 2017  In: Blog

The bureaucrats have lost it again. With the new $1.6 million pension cap the public servants want to know about any changes to pensions where the balance of a member is greater than $1 million.

They have partly back tracked and stated that the reports only need to be done quarterly. They initially wanted it done each time an event occurred.

None of this effects the collection of tax which is the prime function of the Australian Taxation Office.

We will add this to our suite of services to our clients with an SMSF.

 

 

 

Borrowers Beware

Posted On: Wednesday, June 28th, 2017  In: Blog

The government is trying to make house prices affordable. Prices are affected by supply and demand. What the government is trying to do is decrease demand. It has instructed its APRA, the Australian Prudential Regulation Authority, to tell the banks to make it hard for people to borrow money from the banks and so there will be less people able to borrow to buy property and thus the price will fall.

Like all intervention in a free market this strategy will fail. What happens is that borrowers will approach non-bank fringe lenders. I came across such a sad case recently.

This couple, in order to prop up their business needed extra finance. They ran up their 4 credit cards to the maximum limit. This costs over 20% interest per year but at least the repayments are at a minimum.

Then they went to another lender. They were very obliging and gave them the money extremely quickly. The problem was that it had to be repaid weekly over the next year. The repayments were thus extremely large. When I calculated the interest it turned out to be over 30% per annum.

They also own a home so they went to another lender to get more money. Again very quick and efficient service and the loan was interest free! The lender valued the home at 1.2 mil and then lent them 500K. Instead of paying interest they took 62% ownership leaving the couple with an ownership of 38%.

The lender immediately stated that the house was worth $1.7 m. This gives the lender an immediate gain of $552K. However the house has now gone up to $2m but the couple only get $760K of this and the lender’s portion goes from $500K to $1.24m in two years

One way of getting out of credit card debt is to restructure your home loan to pay off the cards, make the home loan interest only or make the loan repayable over 30 years. (They’re in their mid-seventies. This did not worry the banks previously) This reduces both the interest rate and the repayments.

So what was suggested? A son was taking over the business so one idea is that he refinances his home. A customer was two months outside their trading terms so some polite but persistent telephone calls are required. Part of their business is cash (credit card and PayPal) rather than credit and with a higher profit margin, so it was suggested that they put maximum effort into growing that part of the business. The alternative is to sell their home and buy a bed sitter.

The lesson of this fable is never entering into a financial transaction without getting proper financial advice.

Tips to help increase the safety and security of your home

Posted On: Thursday, June 1st, 2017  In: Blog

ALARMS – Burglars tend to avoid homes with security systems. Use window stickers and make sure that these are visible from every approach to your home, not just the front entrance and experienced burglars know the difference between a fake alarm and a real one.

DEADLOCKS Fit keyed locks to your windows and double key deadlock to doors. This means thieves have to enter and leave the same way making it hard for them to take big items such as TVs or desktop computers. Sliding doors should have bolts and tough screens to prevent slashing.

CLOSE WINDOWS & DOORS   – The most common way for burglars to enter a home is through an open window or door so make it a habit to lock doors and windows as it can take only seconds for a thief to run in and grab something of value while you are out or in another part of the house.

SECURE GATES & FENCES -Gates and side fences can be easy opportunities for burglars to scale. Make it harder for them by locking gates and building them extra high for added difficulty.  If a side fence or gate is in poor repair replace it with something sturdier so that it can’t be knocked down.

DON’T HIDE KEYS – Don’t hide your keys. We all know about the spare key under the fake rock, under the mat, in the meter box or the key buried in the pot plant right next plant next to the door.  Burglars know about these hiding places so don’t do it, it’s not worth the risk.

TRAVEL & HOLIDAYS   When you are away, your home is a prime unoccupied target for thieves. Therefore, try to make it look like you are home. Use timers on your lighting and get a neighbour or family member to collect your mail and take out your bins and put them away again. Don’t spread the news on social media that you are away and resist the temptation to post photographs until you are back home.

SENSOR LIGHTS Sensor lights are a great and inexpensive preventative
measure. Put them around corners and at the front and back of your home where thieves might think they can slip through.  Also, trim large trees and hedges away from windows or entry points as these can be used as camouflage.

PREVENT & PREPARE – Preventing burglaries is the key to securing your home. However, it is important to prepare for the worst case scenario. Engrave electrical items, keep valuables in a hidden safe, keep your cash in a bank and ensure you have a comprehensive insurance policy in case you can’t stop the thieves.

SAFE HOME HEATING – Last winter we published our view, opinions and tips for effective safe heating. If you would like a copy of that article just email us at enquiries@pvib.com.au

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