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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

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

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

Tax & the Sharing Economy

The traditional business model has changed significantly in a very short period of time with many now operating in the online or “sharing” economy.  Whilst the channel for the delivery of outcomes may have changed, it does not necessarily mean an alteration to the tax implications of the business. If your business has moved into the sharing economy, make sure you avoid the big stick of the tax office.  The…  Read more

Helping your kids and grandkids into a property

It is well known that property affordability, particularly for the younger generation (25 – 34 year olds) has become a major challenge.  This topic has increasingly become a part of conversation with clients over the past twelve months so figured it would be a good idea to share some of our thoughts and possible solutions on this issue. Read more  Read more

Property market update

Property is a hot topic so for all of you that keenly follow the property market, whether as an investor, developer or simply as an owner-occupier, here is our update on the property market.   Read more  Read more

Making the most of negative gearing

Negative gearing is a common strategy adopted by persons wishing to build their long term wealth in a tax effective manner.  In recent years, negative gearing has become more prevalent through the advent of record low interest rates and in some parts of the country, increasing values of property. Whilst it can be an excellent wealth building tool, it does have restrictions and risks if not used properly.  In our…  Read more

Positive Gearing. What is it, how does it happen and do you want it anyway

You have probably heard the term ‘positive gearing.’ It is a similar concept to negative gearing, which is certainly in the news a lot these days. We use the term ‘gearing’ whenever debt is used to fully or partly finance an investment. If you have $90,000 of your own and borrow $10,000 to buy an investment asset worth $100,000, you have ‘geared’ the investment. Similarly, if you borrow $100,000 to…  Read more

Tax Matters – August 2017

 Topics covered in this issue: CGT strategies for your holiday home ATO targeting work-related expenses Using the $20,000 instant asset write-off Managing your GST liability   Read more  Read more

Is there GST payable on sale of my property?

When selling a property registered for GST, the margin scheme can be used as an alternative way to work out the GST payable on a concessional basis. Where the scheme is applied, GST is paid for one-eleventh of the sale price.  The margin scheme calculates GST on the increase in value since 1 July 2000 if the property was acquired before 1 July 2000; or the difference between the purchase…  Read more

Getting your BAS right

Some small businesses make simple mistakes; others just don’t provide the right information.  Make sure your business is not caught out by completing your Business Activity Statement correctly. Here are five easy lodgment tips to help businesses save time and get their business activity statement right the first time round; Lodge all your outstanding activity statements.  The tax office cannot process refunds until all of a business’s lodgments are up…  Read more

Bad debts with a silver tax lining

It is an unfortunate fact of business life that sometimes you will not be paid in full for work you have done.  The silver lining is that there are some tax break that can come along with a bad debt. The first thing you have to do is make sure that the debt can be officially considered as bad for tax purposes.  This means you cannot have “forgiven” the debt,…  Read more

Succession Planning

  It is inevitable that a business owner will eventually leave their business.  Whether they sell, retire or leave due to health reasons, it is important to be prepared for when that day eventually arrives. Creating a succession plan is a simple and common sense approach to ensure continuity in a family business.  Succession plans enable smooth transitions and decrease the likelihood of disruptions.  Early succession planning can maximise a…  Read more

Work related expenses under the microscope

Don’t get caught out by the ATO when lodging your work-related expense claim this financial year. Unusually high work-related expense claims from any industry or occupation are on the ATO’s hit list this year.  The tax office has stated that it will be paying particular attention to claims that have already been reimbursed by employers or made for private purposes such as travel from home to work. Taking such a…  Read more

Family Trusts for wealth creation

While the ATO continues to crackdown on tax minimisation strategies, quite a few legal pathways to paying less tax while preserving wealth for retirement or estate planning purposes still exist. Family trusts have significant tax saving abilities that make them an attractive tool for wealth creation.  Family trusts are discretionary trusts that set up to hold a family’s assets or run a family business.  They are commonly used by families…  Read more

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