Looking to kick start the 2013/14 financial year?  In the lead up to the new tax season, we’ve pulled together some proactive tax strategies that will help you ensure you’re paying the correct amount of tax, whilst getting positive tax outcomes and staying in the good books of the Australian Taxation Office. Whether you’re an individual or business, we’ve got some tips that will help you ensure your money is working as hard for you, as you do for it.

Tax Tips for Business

• Keep your records in good order to reduce compliance fees from your accountant and ensure you’re accessing reliable data.  If you’re doing your own bookkeeping, there’s no beating cloud-based, user-friendly accounting software giant Xero.  Their flexible, flat-rate packages help you maintain your books, produce real-time reporting, enable timely and accurate decision making and let you pre-empt any issues that may arise with Australian Taxation Office’s (ATO) data-matching enquiries.

• Ensure that your business structure is correct from the get go and see that structural considerations guide your ongoing business decisions.  Seek out trusted professional advice regarding the structural arrangement that is right for your business – it could save you thousands and may affect your access to certain tax concession.
  • Consider, for example, the differences in the Capital Gains Tax (CGT) rollover relief provisions for companies and trusts. A sole trader who wishes to incorporate and transfer their business assets to a company faces no capital gains tax on the transaction. Conversely, no such relief from CGT would be possible if the same sole trader were to transfer their assets to a trust structure.

• A basic tax planning tip is to utilise/leverage the tax free thresholds of low-income earning family members over the age of 18.
  • Trust structures are ideal for distributing income in a tax-effective way, however, not all businesses should operate through a trust and compliance risk has increased significantly for trustees.
  • Alternatively, you may wish to review your investments and debt facilities with a trusted financial planner. Are they held in the correct name? Could they be structured differently to produce better tax outcomes?

• For businesses with depreciable assets, from the 2012/2013 year onwards you can claim an immediate 100% deduction for capital assets that cost less than $6,500. For motor vehicles, the immediate deduction is $5,000 plus 15% of the balance in the first year.

• Speak to your accountant about ATO benchmarking. If you are operating outside the normal revenue, expense and profit benchmarks for you industry, ask yourself why. It makes you more likely to be the target of a costly audit and, from a management perspective, it is a basic external measure of performance/commerciality.

Tax Tips for Individuals & Employees

• Consider purchasing private health insurance to avoid the 1% Medicare levy surcharge in 2012/13. This applies to individuals whose taxable income is > $84,000 or families with a combined taxable income > $168,000.

• If you have high assessable income and otherwise minimal deductions, an excellent way to claim back Pay As You Go Withholding Tax paid throughout the year is by investing in negatively geared assets. The high interest repayments on such investments will drastically reduce your tax liability. The key is to pick the right underlying asset, one whose return on investment and capital growth exceeds the cost of the tax-deductible debt, thereby enhancing your overall wealth.

• If you own a rental property, invest in a professional depreciation report.  The report costs around $700 and is fully tax deductible. It almost always pays for itself in the first year with the deductions it generates and will be a source of added value year after year.

Tax Tips for Your Super

There are a range of tax incentives when it comes to contributing to superannuation. So, if you can spare the cash in the short term or you are at, or close to, retirement age you may wish to consider the following:

• Making a personal superannuation contribution if you are a high-earning, primarily self-employed individual. As long as 90% or more of your income is from self-employment, you are able to deduct personal super contributions against your other assessable income. The contribution you make will be taxed in the superfund at 15%.  Note: This strategy will only be successful if your marginal tax rate is greater than the superannuation tax rate on concessional contributions, currently a flat 15%.

• Salary sacrificing into your superannuation fund. If you are an employee in a high tax bracket this option is a very attractive tax strategy if it is available to you. As in the previous point, this measure is a simple way to reduce your effective tax rate while increasing your retirement savings.  Note: To avoid being hit with excess concessional contributions tax, make sure your employer Superannuation Guarantee (SG) payments do not push you outside the $25,000 cap. Be particularly wary about the timing of the June SG payment and the possibility of ending up with 13 SG payments in one year, instead of 12. Note that case law has made it clear that the onus is on the employee to ensure contribution caps are not breached, even in the case of genuine mistakes. Speak to your employer to avoid such uncertainties or errors.

• If you are 55-60 years old and still working, you may wish to consider setting up a Transition to Retirement Income Stream (TRIS) pension. This will reduce the proportion of earnings in your superfund that are subject to tax, and, depending on your pension composition, will enable you to withdraw some tax free amounts from superannuation. Speak to an advisor about how the combination of TRIS and salary sacrifice strategies can provide tax relief and supplement your pre-retirement lifestyle.

Want More Information?

Wondering what to do next?  We always recommend speaking with a trusted financial adviser to determine if advice is right for you.  In addition to helping you identify the options that are best suited to your unique needs, a skilled accountant will also stay abreast of legislative changes, be on the lookout for new ways to improve your overarching financial situation and provide access to an extended network of like-minded professionals.

Written by Amini Ali, Accountant

B.Commerce, Accounting & Finance (Melb)

Amini Ali joined the Kearney Group in January 2012.  She is a strategic thinker with an interest in developing long-term client reliationships, compliance & tax planning.

The post Money Matters – All the latest from the Kearney Group appeared first on Infolio.

The opening sentence to this story goes like this:

“When I was a child, an unusual piece of lore, reported often by my father, came to be absorbed by me as an unshakeable empirical truth. “A real estate agent” the dictum went, “can only be trusted as far as he can be kicked”

The story basically tell’s the tale of how Catherine’s daughter was looking for a rental property and a couple of things occurred:

o Property 1 – nice female estate agent shows her daughter around a property they were very keen to secure, however they were unsuccessful. Catherine states that the house was in fact already leased and that the agent had no intention on telling her daughter this, because all she wanted to do was keep the place open for inspections so the agent could draw prospective tenants towards other less desirable properties.
o Property 2 – apparently the agent was dressed in an expensive suit and owned a “pimp style” BMW “was admiring himself in his tinted drug lord windows, in between glancing, through $600 sunglasses, at his state of the art mobile phone”
o Property 3 – we don’t hear much about this one because her daughter subsequently leased it so one would assume things didn’t go too badly, however apparently there are issues with the electrical wiring at the property and now her daughter is back home while its being rectified.

Let me point out some of the holes in the above if you haven’t already seen them yourself.

How does Catherine know that house 1 was already leased at the time of inspection? Did the agency actually tell her this? Is there anything wrong with the agent trying to lease her other properties – I mean that is their job! How does Catherine know that the properties were less desirable than the one her daughter initially inspected?

With regard to house 2 – this just sounds like a nasty, bitchy thing to point out – who cares if the agent drives a nice car, wears a nice suit and has an expensive phone – Catherine what type of phone does your daughter have? That appears to be the only thing Catherine could complain about, we dont hear anything about the house so I suppose one needs to clutch at straws.

Finally Catherine makes the statement that the 120 year electrical wiring in the house Catherine’s daughter finally rented “gave up the ghost” “But the agent, my daughter assures me, is onto it. She and her friends should only be sleeping on their respective parents lounge-room couches for “at most two, possible three weeks” while she finds them a competent, and hopefully available, sparky.

Catherine – this just doesn’t sound right to me – first of all if the issue with the wiring couldn’t be resolved in a day or so then its highly likely that your daughter and her friends are being offered a rent free period whilst they are unable to occupy the home, if this isn’t the case then you are not stupid, you would know your daughter has rights, in fact it’s on the Internet and listed in the “renting rights and duties” booklet agents are legally required to hand over to new tenants at the start of a lease. Finally – the agent will have a reputable electrician on their books who will be readily available however if you have ever done any work at your own property then you would be well aware that people don’t just click their fingers to make things happen immediately. No matter if a home is rented or owned maintenance will come up.

As an industry we have all worked really hard to be reputable, trustworthy and reliable, and to be honest your article really just seems like someone who had nothing better to write about, perhaps you had writers block? As an industry we do continual professional development, as a member of the REIV all our staff has to obtain CPD points each year and at Infolio we personally train our staff weekly and monthly to ensure we are offering our tenants and landlords the best service. Only last week one of our tenants gave us authority to take over the management of their own investment property – perhaps we aren’t all rogues. What so disappointing about this article is that it’s clearly without depth yet the average person might read it and actually believe some of the stigma you are trying to attach to real estate agents – being a journalist it does seem like the pot calling the kettle black but I won’t go into that today….

Yours sincerely – offended Real Estate Agent.

The post “Property Values – 2 generations on” appeared first on Infolio.

The post Tenancy and vacancy rates appeared first on Infolio.

When i relay my experiences to people i start by saying that” you get what you pay for”.. .. as a start up business you often don’t have the budget or the reputation to lure the people you perceive as being ideal for your working environment but that’s when you put in place a strategy to deal with the growth stages, they will continue to happen along the way so you may as well get working on them early.    In hindsight we should have waited that bit longer, worked through the growth periods until the finances were a little fuller rather than hire someone not quite up to scratch.  I wrote a blog some time ago called “hire slow and fire fast” and that philosophy remains at Infolio.   You know in your heart of hearts if the person you have employed has what it takes, if they aren’t showing promise or the right attitude from the outset then you can’t train that.

At Infolio we have attempted so many different things to try and obtain and retain the right people; we have worked hard at creating a good environment but ultimately the people you employ create the culture so you need to get it right.  Last year we had a mix of people that wasn’t quite right and despite our best efforts it didn’t work and we could see things crumbling, when there is a bad seed no other influences will change what damage can be created… We did things like sending the property managers & admin staff to Aurora Day spa, Long lunches at fancy restaurants, giving all staff their birthday off work etc – none of this helped the culture.   The right people make the culture.

To get that right mix we have employed an interviewing strategy which is commonly used in government – its structured & measurable, we interview the preferred candidate twice and sometimes three times.   Once employed we run through a detailed induction & we set out clear goals & kpi’s so each individual understands what the expectations are, finally – we lead by example.   Work is for business but it’s even better if you like the people in your environment and you can collectively celebrate the wins along the way – it’s this simple mix that seems to be working for us.

So let’s now move to the heading of this little tale and again a trusted mentor gave me this tid bit of advice and its one of the best i have had to date.   As employers it’s our responsibility to train our staff in the manner that meets with the company satisfaction, if your employee has the right attitude then the training part should be relatively easy, if you have the systems and procedures in place your employees won’t feel lost, they will feel secure and start to learn the Infolio way of doing things… as mentioned above – you can’t train for attitude.

The post Hire for attitude and train for staff appeared first on Infolio.

What I found really interesting about this article was that of the 7 main board members of this group only 2 were licensed real estate agents; most of their backgrounds were in finance, mortgage broking, finance broking, economist or personal investor and here they were saying that basically all buyers agents amongst others, should be governed by PIPA. I found this particularly interesting because I am a buyers agents, I am a licensed agent, i am the office in effective control, I am a member of the REIV, my company is a member of the REIV and I along with all of my employees are all registered with the Business Licensing Authority – all of these bodies directly relate to the professional conduct in which we (buyers agents, estate agents & property managers) operate.

There are 2 main factors to consider here… buying property for clients and buying investment grade property for clients. When we are engaged as a buyers advocate to purchase a family home for a particular client our main job is to act as the purchasers representative, to level the playing field between the agent and the purchaser, our other aim is to help our client find property that best matches their criteria and minimise the amount of time our clients’ need to spend looking on their own. Most often when it comes to buying a home there is no element of investment of advice, we find property that matches the clients criteria then we negotiate the best deal possible on their behalf, this task fully falls under the Estate Agents act and is governed by the BLA and if you are reputable you will also be governed by the REIV.

So now we come to investment buying. We are not like many of our competitors who like to be jack of all trades… We have an investment model that we use when purchasing investment properties for our clients, this model is transparent, driven by historical data but by no means do we offer guarantees that it will be the key to financial success, what we do is stick to buying property that we feel will perform well over time we then leave the strategy of financing and financial planning up to the experts in their field and refer our valued clients onto people who specialise in that field.

What I am finding difficult to understand is why PIPA want Buyers Agents to be governed by their group when generally buyers agents don’t offer ‘investment’ advice, they offer property advice which already adheres to the strict codes developed within the industry, that’s why you need to be a sub agent or licensed agent to act as a buyer’s agent – what this looks like to me is a bunch of mortgage brokers & financial planners creating a code to try and make them “appear” to be part of the property industry when they are not – they have not sold property, they have not managed property, they have often not bought property but have decided that they now will as it creates a lucrative arm to their businesses. There may very well may be a place for a group like this to work with those in the industry that do offer financial planning property advice, however the average buyers agent is there to offer advice on buying and buying alone much like a seller offers advice on selling and as mentioned this is already well covered within the real estate industry.

If you are looking for a buyer’s agent you want someone who can negotiate harder than you, who is well connected in the property industry and as such opens up opportunities to view properties with ease or that are un-advertised. You want someone who has been around long enough that they have witnessed market trends and understands different suburbs and what they offer & who’s attracted to them, you want someone who walks the walk and understand property and the people within the industry…. You shouldn’t be selecting a buyer’s agent because they offer to show you how you can purchase 5 properties in 4 years in suburbs you have never heard of. You want a buyer’s agent who can illustrate to you their results on how they have bought property for a fair price, saving their clients personal time, and increasing the value with strong capital growth, has a great tenant or has bought you a family home which you would otherwise never have seen because it wasn’t advertised to the wider market…. That’s what you look for in a property advisor. So what i say to you is be careful as to who is spruking their wares, what is their experience in actual property & negotiation as that is where the true value will be found when you put someone on your team to offer you advice on property.

The post Property advisors or Property investment advisors – what’s the difference? appeared first on Infolio.

Basically 2.6% means there is more property than there are tenants, so landlord and property managers need to be creative and pragmatic in their approach to best to attract and retain good quality tenants.   When vacancy rates are at this level we commonly see people applying for properties then subsequently withdrawing, we often have applicants negotiating on rent or making their application for tenancy subject to some condition, i.e. instillation of an air conditioner, permission to retain a pet and so on.

What can landlords do to protect their interests?

For those with a pending vacancy I recommend the following:

• commence advertising as soon as your tenant gives notice to vacate
• obtain permission from the tenant to immediately start showing the property to prospects
• provide incentives to existing tenant to keep the property is good order for inspections
• arrive at inspections early to open blinds, turn on lights and create an inviting atmosphere
• If the property does not present well then you shouldn’t be showing it to prospects.
• use professional photos and creative, accurate property descriptions to draw interest to your property – you need to stand out amongst all the others available

If the property is vacant you should always consider the following:

• professional internal clean, including windows
• re-paint if required
• new-carpet if required
• updated window furnishings
• tidy the garden and add some colour – first impressions are fundamental to attracting the right people
• if you don’t have heating, cooling & a dishwasher you need to seriously consider one – these are common requests and all new properties now come with them!

If you have tenants in place i recommend you do the following:

• start re-negotiating new lease terms 3 months before the existing contract expires
• always look to keep the rents at market value but if you are looking at a vacancy because of a small increase in rent calculate the cost before perusing that option
• if you feel the rent should go up you could offer an incentive in lieu of this, a new dishwasher perhaps?

All properties will lease at a price but if you want to minimise vacancy you need to be aware about what the competition is offering and stand out from the crowd.

It doesn’t all need to be bad news, this is when the good property managers will stand out form the rest, this is a time when cheap service will rear its head…Strategy, listening to the market feedback and maintaining your property to a high standard are paramount, work to retain a good tenant!

The post Vacancy rates at 3%, what does this mean for landlord’s? appeared first on Infolio.

DONT – request that the leasing agent meet you after 7pm when you finish work to sign the leases because you are too busy during work hours

DO – come to your appointment on time

DONT – assume we sit in the office all day waiting for your arrival

DO – request maintenance in writing

DONT – demand immediate attention or “you will organise you own trades person” for a non urgent matter

DO – allow our tradespeople access

DONT – complain about delays when you won’t let them in

DO – give the trade’s person permission to access the property with a key

DONT – expect the tradesperson to meet you at 7pm when you have finished work & had your dinner

DO – advise us if you wish to sign a new lease

DONT – abuse us if the landlord doesn’t want to give you one

DO – replace the battery in your smoke detector

DONT – leave the battery on the kitchen bench hoping it will find its way into the device

DO – report water leaks

DONT – tell us the mould and mildew didn’t bother you but know you have a moss farm & snails on your wall that needs attention

DO – open your bathroom window when in the shower

DONT – request the landlord wipe down the condensation from your bathroom walls after you have had your shower

DO – request Foxtel if you want it

DONT – tell us that failure to connect Foxtel is our problem because “you are paying good rent”

DO – pay your rent on time

DONT – tell us you forgot

DO – report any maintenance that requires attention

DONT – report 16 globes require replacement from when you moved in 4 months ago – um, really, you lived in darkness for 4 months?

DO – water your garden

DONT – expect that it will happen by itself

The post Tenant Do’s and Don’t s! appeared first on Infolio.

So what are some methods commonly used when an acceptable offer is received:

• Highest & Best – this gives all the agents in the office who have an interested party on a property an opportunity to get their buyer to submit their highest & best offer above the acceptable price.  This is clear and fair.  Basically you submit your best offer and whoever comes in highest or with the most favourable terms will secure the sale.
• In house auction – this is where all interested parties are called into the real estate agents boardroom for a clean, transparent auction.   This is a method commonly used in the Million Plus market.
• Last right of refusal – this is where the person who submitted the acceptable offer in the first instance has last right after all other offers are submitted.
• Phone auction – this is where the agent goes back and forth between (normally 2) parties much like an auction but with anonymity, this is not transparent and not commonly used.

The key is to find out what the agents procedure is before submitting your offer because once you do the wheels are then set in motion and your offer may be entirely different, more tactical if you are aware of what’s to follow.

You should ask the following questions of your agent:

• What is your company procedure should an acceptable offer come in?
• Will i get last right of refusal

Don’t forget that the agent is employed by the vendor to obtain “the highest & best offer” each agent within the company that you are dealing with gets paid commission for a sale, and a sale only occurs if they win – there are tactic’s involved and you should be wise to them so you can put your best foot forward.

The post Tips for submitting offers & understanding the agents prior offer procedures appeared first on Infolio.

These are very good questions and we believe there are some key ingredients to purchasing a property that will continue to grow and perform well even when the economy might be tight.

Location:

select a position that has good infrastructure, trams & trains. Be within walking distance to strip shopping, parks & schools. This type of infrastructure won’t be relocating; therefore there should always be s demand for accommodation near to these things.

The Street:

ideally you want to be located in a quiet residential street, stay away from main roads, railway lines at the rear of your property or thoroughfares. Look for a cozy tree lined location where possible.

Parking:

Tenants and owner occupiers want to be able to park a car off street, it doesn’t necessarily need to be under cover, that’s a bonus but at least 1 car space should be on the list.

Outdoor space:

This is a must, a courtyard or balcony, even a Juliette balcony will do. We have found more often than not there is a difficulty in leasing properties that do not offer outdoor space, so if it’s difficult to lease it will become difficult to sell down the track. Today’s tenant or home owner wants a space to take in some fresh air, enjoy a bbq or to have a pet.

The outlook:

Where possible try to have a nice outlook, overlooking trees or roof tops is lovely but a commission housing block is not – this will detract for both a tenant and an occupier.

The floor plan: This is an interesting one because what suits one person may not suit another, what I can say is that overwhelmingly most people like to have a more spacious open feel to their living than that of separate rooms, that being said the formal dining or separate dining is coming back. The idea it so look for a property that offers some scope to improve or open up if and when time calls for it.

Sunshine:

People love natural light. If you are looking at a ground floor apartment consider where the sun rises and sets, will there be any natural light in the living areas? If you are first floor the same applies however be careful of west facing sun as it may might it unbearable throughout summer and effect the longevity of your tenancies. Of course if you are located in an area like Elwood which is full of plane trees and art deco’s – sunshine can be hard to reach your window, in particular pockets whilst sun is always welcome people will make an exception where location in kind.

Hopefully the above will prove a healthy foundation for your property search and see you profiting from your decisions down the track.

The post Plan for profit! appeared first on Infolio.

So why is property of this caliber sold so secretly?  The main reason would be to tactfully maintain the privacy of the individual stakeholders.   Often-times these people are in the media, high up on company boards, high court judges, media moguls or simply born into families with a long history of wealth.

If above $2 million constitutes the top end then what is the million dollar market?   Well I would have thought it’s the upper middle end and it’s a very, very competitive market.   This is where the double income and 1 child is moving, they want an un-renovated but liveable home in inner Melbourne, particularly along the south eastern corridor where they can rear their family, be close to an array of quality private schools but can still make it into the cbd for work within a 20 minute trip.   These families will eventually renovate but most likely move out shortly thereafter when they find out they have number 2 on the way, they will sell a renovated or partially renovated home and start looking in the $1.5-$2m mark depending on how much growth they see from their previous residence.  It’s this very scenario that has pushed the competition and moved the interest for young families into a price range that was once considered only for the super rich, if you think about this it really does change how and who we consider to be the wealthy, and it does appear to have created a gap between the wealthy and the poor.   If however the above is to be agreed with it also illustrates that regardless of the starting price these inner urban areas will always see growth, regardless of what peaks and troughs are seen in world economics, there is only so much land and so much development that will be allowed for so you either own property within the triangle or not, and if not it may come a time when you can’t, it will become financially impossible.

The post When a million dollars doesn’t get you much appeared first on Infolio.