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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

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

Not all debts are the same. Even if the interest rate is.

Not all debt is the same. Even if the interest rate is. One of the main differentiators between debt is whether or not you can claim a deduction for the interest. If interest is not deductible, then the interest rate paid is much higher than you might think. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with an example:…  Read more

Preparing your finances for the New Year

I know what you’re saying; “We have barely got through Christmas and now your talking about the New Year”!  If you are like me, it only felt like a few weeks ago that we were ringing in 2017 and now it is nearly done.  In all seriousness, managing your finances should be a year round responsibility however the New Year is the perfect time to review, evaluate and reset.  In…  Read more

100% off everything!

Here is an idea for you. There is no such thing as a discount. There is just the price. As we head into Christmas, many people will be lured into retailers with the promise of discounts or price reductions. Many people can’t resist the potential for a bargain – a sign promising 30% off is simply impossible to ignore! Often, these people are giving in to a cognitive bias called anchoring.…  Read more

More on mental accounting

Last week, we introduced the concept of mental accounting. We want to continue the theme this week as part of our ‘behavioural economics month.’ Mental accounting can be seen every day with little expenditures like gift vouchers. However, sometimes people apply mental accounting to much bigger parts of their financial management. And that is where it can get expensive. To recap, mental accounting is a common mistake people make with…  Read more

The best gift voucher in the world

Christmas is coming and you probably know someone who is really hard to buy a present for. You might be tempted to buy them a gift voucher. Can we suggest you think again? Unfortunately, gift vouchers are generally a really bad idea. We know, we know – we sound like the Grinch. But let us explain. You’ve probably heard of the Nobel Prize. This year’s peace prize was awarded to…  Read more

Thinking about the First Home Super Saver Scheme?

In our final article this month on managing family wealth, we look at the First Home Super Saver Scheme.  This is relatively new with the scheme having been announced in the last Federal Budget and legislation only recently being enacted. We have put together a quick fact sheet on the topic which you can access here.  Whether it is you, a child, grandchild or a friend that could benefit, please…  Read more

How do you pass wealth to the next generation?

This is a topic that everybody will eventually think about.  Whether it is the transfer of modest savings to children through to more significant amounts of money, the issues that are faced are generally similar. We have put together an eBook that looks at the topic of passing wealth to the next generation which you can access here.  We would love to receive your feedback on this.  Read more

Teaching kids how to manage money

A couple of weeks ago, we shared with you some thoughts on how you can help older children into a property.  We must have struck a chord with a few of you as we received a number of calls to chat further. This week, we thought it would be a good idea to look at the very young members of your family.  The topic of teaching kids about money is…  Read more

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