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Why is Capital Gains Tax the “Happy Tax”?

Topic: Investment, Reflection, Tax Planning What would you think if we told you that there is a special type of tax that people are always happy to pay? Would you think we had dropped the ball? You shouldn’t. Read on… Capital gains tax is a special type of tax that you only pay when you sell an asset for more than you bought it for. So, capital gains tax is a…  Read more

Long term thinking leads to serenity

It’s now almost serene. The chaos and instability has gone. It’s very predictable. Anyone (one does not have to be an expert) can safely say that it is probable, but not certain, that a balanced portfolio will return somewhere between 4 % and 8% a year in any given ten-year period. There are no negative ten-year periods. As we saw above, there were plenty of negative years, and even more…  Read more

Franking credits – why they are so important

For many years, company profits were taxed twice in Australia. The first time was in the hands of the company when they were derived. The second was in the hands of the shareholders when and if they were paid out as dividends. There was no ‘imputation’ of tax already paid by the company on those profits when they were paid out to the shareholders. This meant there were very high…  Read more

Dollar cost averaging – what is it?

One of the key risks in markets like the share market is timing risk. Prices at which equities are bought and sold change regularly, as any glance at the 52-week high and 52-week low columns in share tables will attest. Have a look at the share prices for Santos over the 12 months of 2015 (thanks, Google): As can be seen, the price of the same asset – in this case…  Read more

Having trouble saving? Here’s an easy way to do it

Need some help saving? Try not thinking about it. Many people make the mistake of spending first and saving last. The problem is that there is no limit on the number of things that we could spend our money on. Spending first and saving last becomes spending everything and saving nothing. Happily, there are a number of simple solutions. One of the simplest solutions is to establish an online saver…  Read more

$35 is $35!

We came across some intriguing research recently. People were presented with a hypothetical situation in which they could buy an item for $100 at a local store, or the same item for $65 at a store some distance away. Basically, the people could choose the inconvenience of travelling to save $35. Most people chose to travel to save the money. The same people were then presented with another scenario. They…  Read more

Splitting super contributions

You may have heard the term ‘contribution splitting.’ It is a term that is often used when a couple get divorced – and they split all of their assets, including their super. But ‘super splitting’ is also available to couples who remain together. A member of certain super funds is permitted to split some of their contributions between themselves and their spouse. They do this by transferring the contributions they…  Read more

Could you live on $2 a day?

When he first moved to the United States, budding entrepreneur Elon Musk set himself a challenge. The year was 1990 and he was 17 years old. He wanted to see if he could live on one dollar a day. His logic was that if he could live on such a small amount, then he could afford to dedicate his time to building businesses rather than earning money simply to get…  Read more

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

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