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Parents as co-purchasers of property

These days, more and more young people require parental support to purchase a first home. There are different ways in which parents can give this kind of support. One way is to become a co-purchaser with their adult child. Becoming a copurchaser allows the parent to be more involved in the purchase of the property. This can provide a number of advantages, such as reducing the amount that needs to…  Read more

Grandparents and school fees

Many grandparents take great pride in contributing to their grandchildren’s school fees. Indeed, some estimates suggest that at least 60% of private school students have their fees at least partly paid by their grandparents. Whenever money is saved for a specific purpose, such as paying school fees, care needs to be taken not to make the mistake of ‘mental accounting.’ Also known as the ‘two-pocket theory,’ mental accounting describes people’s…  Read more

The Government is giving away free money!

There is such a thing as free money. From the government. But there are some strings attached! You may not be aware that the Federal Government runs a program called a ‘co-contribution scheme.’ The scheme rewards people for making non-concessional contributions to their super funds. Rewards are only available to people on relatively low incomes, who traditionally are discouraged from making extra contributions into super. That is, of course, the…  Read more

A parent’s job is never done

Life insurance. It is one of those things that we never want to think about. But we must. Life insurance provides us with money in the event that we can’t earn our own income due to illness, injury or death. Obviously, in that last case, the money goes to our loved ones – which is why we say that a parent’s job is never done, even if we are. In August 2017,…  Read more

There is such a thing as a happy loser!

Imagine yourself at the races. You study the field, choose your horse and then place your bet. And then you hope that your horse runs stone cold last! “Slow down, Wynxie! Let someone else finish first today.” Sound crazy? Well, if you’re betting on horses, it is. But there are other kinds of ‘bet’ where this is exactly what you want to happen. You want to come last. You want…  Read more

Is managing your own super for you?

The concept of self managed superannuation is not new; there are many of these funds that have existed for over 30 years.  Today, there are over 1 million Australian’s managing their own superannuation.  The majority sight the reasons for managing their own superannuation as being  flexibility, control and cost. Like any financial decision, managing your own superannuation needs appropriate research to be undertaken, time to be allocated and knowledge to…  Read more

More on the 2018 Budget & what it means for you…

The Federal Budget was handed down last Tuesday, May 8, 2018. While the measures announced in the budget are yet to be passed by Parliament, we can generally assume that most of the announcements will become reality. From an individual perspective – especially if you do not grow illegal tobacco or participate in the black economy – this year’s budget was actually a bit of a nonevent. For those clients…  Read more

The Federal Budget – Canberra’s Academy Awards Night!

Ah. The second Tuesday in May. The most exciting day of the year for all accountants! This year’s federal budget contains mostly good news for our clients – as you would expect given that an election is anticipated before the next budget comes around. This is not the time for Treasurers to make life harder. ScoMo wants to be everyone’s best mate! Next week, we will provide a detailed analysis…  Read more

Could you still pay the bills if you couldn’t go to work?

Income protection insurance is essential for anyone who would suffer financially if they could not earn income from working. This includes single people whose own lifestyle depends on their income, as well as people who have financial dependants, such as parents. The concept of income protection insurance is simple. You purchase a policy and if you become unable to work due to illness or injury, the insurer will pay you…  Read more

Personal super contributions – let’s hear it for the Tax Office!!

As of 2017, almost all tax-payers can make a private, personal contribution into their superannuation fund and then claim the contribution as a personal deduction when they do their tax return. You can contribute any amount provided that your total concessional contributions are not more than $25,000 in a particular year. Remember, the compulsory 9.5% superannuation guarantee contributions that your employer must make is included within this $25,000 limit. So,…  Read more

What kind of investment return is better?

You might have heard the terms ‘income return’ and ‘capital return.’ These are the two different ways to make money on an investment. Income return is the return you receive while you continue to hold an investment. In the sharemarket, the income return comes as dividends. In the property market, the income return comes as rent. If you have a term deposit or make a loan to somebody, the income…  Read more

Exchange Traded Funds – what’s the hype?

An exchange traded fund (ETF) is a managed investment fund that can be bought or sold on a stock exchange. In many ways, ETF combines favourable elements of a managed fund with favourable elements of the listed investment company. But an ETF is not the same as either a managed fund or a listed investment company. Many people argue that an ETF combines the best of both of these forms…  Read more

Positive gearing into property

Positive gearing is the opposite of negative gearing. It is jargon for borrowing to buy an investment where the expected assessable income is more than the expected deductible interest cost (and other costs), with a resultant increase in assessable income. In the context of housing prices, this means buying on a rental yield of at least 5% or more. This is a very unusual phenomenon. Most residential property will not…  Read more

Negative Gearing and Shares

Negative gearing occurs where the income from a ‘geared’ asset is less than the interest and other holding costs, creating a loss while the asset is held. A ‘geared’ asset is one that is at least partly financed using debt. Investors can usually offset the loss from negative gearing against other income for tax purposes. This creates a tax benefit, in the form of less tax being paid than otherwise,…  Read more

How to create good habits in business

If you’re like most small business owners, there are never enough hours in the day to complete every task on your list. Often you’re faced with prioritizing what you need to do right now – deal with a customer, meet a deadline, attend an event – and the things you know you should do for the ongoing growth of your business. Scheduling time to attend to these business activities on…  Read more

How to turn your hobby into a business

Thinking about turning your passion into a paying gig? These steps will help you avoid some common mistakes as you set out to earn an income from your favorite pastime. Do you have what it takes? Unless you’ve run a business before, it’s easy to get carried away with the idea of how perfect it will be to get paid for doing what you love. Reality check: the stress of…  Read more

There is such a thing as a happy loser!

Imagine yourself at the races. You study the field, choose your horse and then place your bet. And then you hope that your horse run stone cold last! Sound crazy? Well, if you’re betting on horses, it is. But there are other kinds of ‘bet’ where this is exactly what you want to happen. Those bets are also known as ‘life insurance.’ Some people call life insurance a ‘grudge purchase.’…  Read more

Repaying deductible debt? Here’s a better idea.

Here’s something you might not expect to hear a financial planner say: maybe repaying your debt is the last thing you should do. We should explain. Not all debt is equal. Financial planners divide debt into two broad types: deductible and non-deductible. As these names suggest, deductible debt lets you claim a tax deduction for the interest that you pay. Non-deductible debt does not. This means that you have to pay the…  Read more

Opportunity Cost

We will start this blog with a question. When you spend money, how often do you ask yourself what you won’t be buying as a result of your spend? After all, you can only spend a dollar once. Whenever you buy something, that means there is something else that you cannot buy. Financial advisers call this the ‘opportunity cost.’ Instead of expressing the price of something in simple dollar terms, the price…  Read more

What makes debt deductible?

Financial planners divide debt into two types: deductible debt and non-deductible debt. Deductible debt lets the borrower claim a tax deduction for the interest incurred on the debt. Non-deductible debt does not. Whether interest is deductible or not can have a massive impact on how expensive that debt actually is. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with…  Read more

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