BUSINESS STRUCTURES AND TYPES
INTEREST RATES: BORROWERS, SAVERS AND INVESTORS (RETIREES)
When deciding on a structure for your business, choose the one that best suits your business needs, keeping in mind that there are advantages and disadvantages for each structure.
It's important to investigate each option carefully, as choosing your business structure is an important decision.
Your business structure can determine:
• the licenses you require
• how much tax you pay
• whether you're considered an employee, or the owner of the business
• your potential personal liability
• how much control you have over the business
• ongoing costs and volume of paper work for your business.
You can change your business structure throughout the life of your business. As your business grows and expands, you may decide to change your business structure, or to restructure your business. We will help you understand your own particular circumstances and the specific advantages and disadvantageous to each business structure.
DRAWING ON SUPER TO BUY YOUR FIRST HOME
In September, the Reserve Bank of Australia (RBA) Board decided to leave the cash rate unchanged at the historic low of 1.0%. A key excerpt from the statement by The RBA Governor, Philip Lowe, on the recent monetary policy decision is provided below. “It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.” Interestingly, from a historical perspective, from 1990 to 2019, the cash rate has been as high as 17.5% and as low as 1.0%. However, the average over this timeframe has been roughly 5.1%.
13 SMART QUESTIONS EVERYONE SHOULD ASK THEIR FINANCIAL ADVISER
Saving for your first home? In a market where owning your home is increasingly out of reach for many, the First Home Super Saver (FHSS) scheme offers some practical hope. Here we look at how it works.
Where super was once locked away until retirement, you can now actively use its tax concessions to save up to $30,000 towards your first home, and then access your savings when you’re ready to buy. But this scheme is not for the faint-hearted, with lots of steps to climb before you get to your new front door.
SMSFs: ATO TO CHECK ON INVESTMENT STRATEGY COMPLIANCE
Everyone needs a little help with some aspect of a financial plan. Whether it’s investing, tax planning, estate planning, debt management, or a myriad of other topics, money can be complicated. Asking for help from a professional financial advisor when you need it is certainly a better option than making a costly mistake that you don’t realize is a mistake until it’s too late to do anything about it.
Still, it’s important to go in eyes-wide-open to any engagement with a financial advisor. These 13 smart questions should be a part of what you ask anyone you’re giving access to your money in order to assure you know exactly what you’re getting in exchange for what you’re paying for those services.
SUPER "OPT OUT" CHOICE FOR HIGH EARNERS
Over 17,000 SMSFs that are heavily invested in one asset class will soon receive a “please explain” from the ATO to check whether they can justify their diversification risk. Diversification is just one of five key matters that all SMSF trustees must regularly review as part of their legally required investment strategy. Know the essential requirements and ensure your fund’s strategy is up to scratch.
You’ve probably heard of the requirement to have an “investment strategy” for your SMSF, but do you really know what’s required?
Making an investment strategy is not only a formal legal requirement, but also a useful prompt for SMSF trustees to define their own retirement goals, carefully consider their investments and seek advice if needed. And having a well-reasoned investment strategy will always work in your favour in an ATO audit situation.
AUGUST MONTHLY COMMENTARY
If you’re a high income-earner with multiple employers, you may be aware of potential traps with compulsory super contributions that can lead to some hefty and unfair penalty taxes – and until now there’s been little anyone can do to avoid the problem. Fortunately, proposed new laws will give high income-earners the opportunity to take proactive steps to overcome any penalties.
Are you a medical professional or company director hired by multiple organisations who make compulsory super guarantee (SG) contributions on your behalf? Or perhaps you’re simply a high-income professional with an extra employment arrangement on the side, like a university teaching gig or consulting arrangement? If you have more than one “employer” for super purposes, you may benefit from changes to how the SG is administered for high income-earners.
RETIREMENT AND CHANGES TO THE AGE PENSION DEEMING RATES
The labour market showed strength in July following the RBA’s June rate cut, with an increase in 41.1k jobs over the month. The unemployment rate held at 5.2% in July and the participation rate edged up 0.1% to a July record of 66.1%. Although wages grew at a slightly stronger-than-expected rate of 0.6% in the June quarter, the annual growth rate remained flat at 2.3%. Dwelling prices in August delivered further signs of stabilisation for the housing market.
RENTAL PROPERTY DEDUCTIONS: WHAT CAN I CLAIM?
Financial wellbeing is defined as when you are able to meet expenses and have some money left over, are in control of your finances, and feeling financially secure, now and in the future.
Some of the main factors that can influence your financial wellbeing are as follows: 1. financial capability (your financial knowledge, attitudes, decisions, and behaviours), 2. financial inclusion (your access to appropriate and affordable financial services and products), 3. social capital (your social network that can provide support in times of financial stress),
4. economic resources (your savings, investments, insurances, emergency funds, cashflow and debt management, and income).
Rental property deductions have many rules, and the ATO is on the lookout for incorrect claims. Some expenses can be deducted immediately, while others will need to be claimed over time. Stay on top of the rules and avoid ATO headaches this tax time.
Did you know that a random audit by the ATO last year revealed nine out of ten rental property owners made a mistake with their rental deductions? In this first of a two-part series, we share some tips on what you can and can’t claim.
This series assumes you own a 100% rental property (with no private use) that is rented out, or genuinely available to rent, at commercial rates. You’ll generally only be able to claim a portion of your expenses if …