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 Financial Happenings Blog 
Tuesday, May 13 2014

The first budget for the new coalition government has as expected provided some significant changes as well as confirming changes that had been widely anticipated.   This summary will look at the following major changes grouped into three main areas – tax planning, retirement planning and government benefit planning.  The full summary can be found at our 2014 Budget - Personal Finance Summary page.

Posted by: Scott Keefer AT 10:43 am   |  Permalink   |  Email
Thursday, October 24 2013

It has been a number of months since we updated the website with Scott Francis' articles published in the Eureka report.  We have now caught up and welcome you to take a look at these pieces - 17 in total.

 

Posted by: Scott Keefer AT 03:54 pm   |  Permalink   |  Email
Wednesday, November 21 2012
Scott Francis in his latest Eureka Report article calls on managed funds to provide after-tax return data to assist investors making accurate comparisons between funds - Tax shroud keeps investors in dark .

A Clear Direction also supports this call and are confident that it would show that the investment approaches applied by the firm stack up even better when using after-tax return data due to the minimal trading and limited distribution of capital gains paid out by our chosen investment managers.

Regards,
Scott



Posted by: AT 06:00 am   |  Permalink   |  Email
Wednesday, May 09 2012

In the present political climate it is easy to get caught up in the debate over whether it is the right time for the government to be moving to a fiscal surplus.  Rather than focus on the politics of the Budget, we think it is best to focus onthe practical implications and look at how changes impact on individual financial planning strategies.

The budget has provided a number of significant changes impacting on financial planning strategies.  These have been outlined in this summary.  The major changes include:

  • Deferral of higher concessional contributions cap for individuals aged 50 and over from 1 July 2012
  • Higher tax on concessional contributions for very high income earners from 1 July 2012
  • Mature age worker tax offset (MAWTO) to be phased out from 1 July 2012
  • Increased Medicare levy low income thresholds from 1 July 2011
  • Means testing of net medical expenses tax offset (NMETO) from 1 July 2012
  • FTB Part A increase
  • Family Tax Benefit (FTB) A eligibility from January 2013
  • Supplementary Allowance
  • Schoolkids Bonus
  • Aged care reform from 1 July 2014
  • Accelerated real estate review from 1 July 2012
  • Reduced payment period of Australian Government Payments for people who are temporarily absent from Australia from 1 January 2013
  • Australian residency requirements for the Age Pension from 1 January 2014
  • Removal of the capital gains tax discount for non-residents
  • Changes to tax rates for non-residents
  • Company Loss Carry Back
  • Small Business Immediate Write-Off Extension
  • Previous proposals shelved
    • Reduction of the corporate tax rate to 28%. The corporate tax rate will remain at 30%.
    • Standard tax deduction of $1,000 for work-related expenses and the cost of managing tax affairs.
    • 50% discount for the first $1,000 of interest income.

The following changes announced since last year’s budget have also been confirmed

  • Confirmation of changes to marginal income tax rates & thresholds
  • The minimum draw down relief for superannuation pension holders will be extended next year with minimums being 75% of the original rules and returning to the normal rates from July 1 2013.
  • Changes to co-contribution arrangements
  • Superannuation guarantee rate to progressively rise from 9% to 12%
  • Maximum age limit for the superannuation guarantee to be abolished
  • Low income superannuation boost
  • Allowances & supplements  to reduce the impact of the introduction of a price on carbon

Each of the above items has been addressed in a little more detail our 2012 Budget - Personal Finance Summary.

The key strategy considerations stemming from these changes include:

  • Those in the workforce who are 50 or older to reconsider salary sacrifice strategies to ensure that concessional contributions in excess of $25,000 are not made and how to be prepare to make the most of increased contribution thresholds come July 2014.
  • Those earning more than $300,000 of income to consider whether superannuation contributions need to be lifted to replace the extra tax payable on concessional contributions.
  • Non-residents to take extra care in the disposal of assets with realisable capital gains.
  • Salary sacrifice strategies to be re-assessed under the new marginal tax threshold levels and rates.
  • Personal superannuation contributions in order to access the government co-contribution need to be re-assessed in light of the changed thresholds and rate.
  • Those turning 70 to consider the benefits of the continued superannuation guarantee contributions.
  • Continued consideration of pension payment draw downs if looking to draw only the minimum allowed.
  • Small business owners to consider the timing of discretionary capital purchases.
If you would like to discuss the implications for your personal situation please do not hesitate to be in contact.

Regards,
Scott

 

Posted by: Scott Keefer AT 12:23 am   |  Permalink   |  Email
Thursday, May 26 2011

The end of the financial year is an ideal time to consider your financial structuring for the year ahead.  However if you have not yet put plans in place for this financial year it is not too late to put them into action.  Here are some strategies to consider and as always, please seek individual financial advice before taking any action.

  • Making a personal contribution of up to $1,000 into super to receive the government co-contributions.
  • Making non-concessional contributions into super to get these assets into a tax friendly environment

a.     This can include an in specie transfer of assets if you use a fund that allows this

  • Making a concessional contribution into super to reduce tax payable on income and get assets into a tax-friendly environment
  • Making a contribution into your spouse’s super fund if they are a low income earner and by doing so receiving a tax offset whilst also getting assets into a tax friendly environment
  • Bringing forward any relevant tax deductions
To find out more details please take a look at our page - End of Financial Year Strategies to Consider
Posted by: AT 05:14 am   |  Permalink   |  Email
Thursday, May 19 2011
The end of financial year sees many of us looking at our taxable income to see how we can legitimately reduce the tax burden.  There are a number of approaches recommended with some being totally acceptable where appropriate to your individual circumstances.  The following ideas are common:

- salary sacrificing into super to reduce taxable income including capital gains
- prepaying investment loan interest payments
- making a superannuation contribution for a low income spouse

Another strategy that was more common before the GFC was to invest in agribusiness schemes which were provided friendly tax arrangements.  Unfortunately many of these turned out to be poor investments and even though you could save some tax going in you lost a lot more through the failure or poor performance of the investment.

This is a key reminder for all of us that when searching for tax breaks it is crucial to weigh up the underlying investment first and then if this stacks up the tax break provides a bonus.


Unfortunately there are also promoters of a range of schemes that have gained the attention of the Australian Tax Office.  The ATO have produced a handy guide - Understanding tax-effective investments - to assist tax payers determine whether a proposed approach will be allowed by the ATO.  There are 16 categories mentioned including mortgage management plans, early access to super, scholarship trusts and a range of strategies around the use of trusts privately and in business.

The key message from the guide is to
carefully check the credentials of the provider of the advice and seek independent guidance.  The ATO suggests the alarm bells should be going off with arrangements that:
  • Offer zero risk guarantees
  • Do not have a prospectus or product disclosure statement
  • Refer you to a specific adviser or expert
  • Ask you to maintain secrecy to protect the arrangement from rival firms and discourage you from getting independent advice.
At this time of the year it is easy to rush into an arrangement that sounds brilliant and will relieve the tax burden in months ahead.  If you stumble into an inappropriate scheme the penalties are great not least of which is having the attention of the ATO squarely focused on you.  A circumstance that I am sure most of us would prefer not to have.

Regards,
Scott

Posted by: AT 09:34 pm   |  Permalink   |  Email
Wednesday, June 16 2010
Scott Francis in his latest Eureka Report article highlights ten tax mistakes to be avoided:

1: Making tax considerations drive your investment strategy
2: Parking money in managed funds
3: Attempting a “wash sale”
4: Deductions that don’t match your personal situation
5: Putting too much in super
6: Putting too little in super
7: Squandering tax cuts
8: Failing to claim for charitable donations
9: Not claiming the $1000 tax exemption for employee share programs
10: Failing to get organised

To look further into these ten items please take a look at Scott's article - 10 costly tax mistakes
Posted by: AT 07:03 pm   |  Permalink   |  Email
Monday, May 17 2010
Scott Francis' latest contribution to Alan Kohler's Eureka Report provides an investor's perspective of the budget.  In his article Scott focuses on the following issues:
  • Making the most of the income tax cuts
  • Reductions in tax payable on interest income
  • Further restrictions on the government co-contribution
  • Clarity for SMSFs on instalment warrants
  • The benefit to investors from a reduction in company tax rates
  • Future increases to contributions going into superannuation

To read all of Scott's thoughts please refer to his article - Time to tweak the portfolio
Posted by: AT 05:43 am   |  Permalink   |  Email
Tuesday, May 11 2010

We have just emailed out our summary of the 2010 Budget as it relates to  personal finances and financial planning strategies.

This year's budget has provided a number of significant changes impacting on financial planning strategies.  These have been outlined in this summary.  The major changes include:

 

-          Confirmation of income tax changes from July 1st 2010 increasing the effective tax free threshold from $15,000 to $16,000 for those earning $30,000 or less, the bottom of the 30% marginal tax rate threshold increasing from $35,000 to $37,000 and the current 38% marginal tax rate being reduced to 37%.

 

-          A 50% discount commencing July 1st, 2011 on the tax payable on the first $1,000 of interest income generated by bank, credit union and building society accounts along with income from bonds, debentures and annuity products.

 

-          A $500 standard deduction for work related expenses starting 2012-13, increasing to $1,000 for 2013-14 to simplify tax returns and lead to tax savings for many individuals.

 

-          Superannuation guarantee contributions to rise from the current 9% to 12% by July 2019.

 

-          A $500 superannuation tax rebate, commencing July 1st, 2012, of the contributions tax for those with incomes of up to $37,000.

 

-          The superannuation guarantee age limit to rise from 70 to 75 starting July 1st 2013.

 

-          A reduction in the company tax rate from 30% to 29% in 2013-14 and 28% in 2014-15.

 

-          The company tax rate reductions to be brought forward for small businesses with the rate of 28% applicable from 2012-13.

 

-          Small businesses to be able to immediately write off asset purchases of less than $5,000 compared to the current limit of $1,000.

 

-          A permanent extension from 1st July 2012 of the eligibility for those over 50 to receive $50,000 of concessional contributions into super p.a. as long as superannuation balances do not exceed $500,000.

 

-          The Net Medical Expenses Tax Offset to increase from $1,500 to $2,000



To take a look at the full summary please click on the following link - 2010 Budget - Personal Finance Summary

Regards,
Scott Keefer


This Summary has been prepared as a brief summary of the 2010 Federal Budget as it impacts on personal finances.  It is a publication of A Clear Direction Financial Planning.  It contains general financial information.  Readers should check this information with a professional financial adviser before acting on any of the material contained in this document.

Posted by: AT 10:00 am   |  Permalink   |  Email
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