Small businesses are the engine room of our economy. They are the home of Australian enterprise and opportunity and are where many big ideas begin. The Federal Government’s 2016 budget announced that it will reduce the tax burden and increase access to concessions for small businesses.

Small business entity turnover threshold

From 1 July 2016, the small business entity turnover threshold increased from $2 million to $10 million. The current $2 million turnover threshold will be retained for access to the small business capital gains tax (CGT) concessions.

Lower Taxes

The Government has further backed small businesses by reducing their tax rate to 27.5%, starting with businesses with a turnover of less than $10 million from 2016-17 income year. The Government will progressively decrease the tax rate for all companies to a flat 25% by 2026-27.

As many small businesses are not companies, the Government will also extend the unincorporated tax discount to unincorporated businesses with annual turnover of less than $5 million and increased the discount to 8% from 1 July last year, up to a maximum value of $1,000. After this initial increase, the discount will be increased in phases to a final rate of 16% in 2026-27.

Over 3 million businesses have accessed either the lower tax rate or higher discounts during 2016-17.

Expanding access to small business tax concessions

By increasing the small business entity turnover threshold to $10 million, the Government will provide over 90,000 businesses with access to a range of small business tax concessions. From July 2016, all small businesses with annual turnover of less than $10 million will have access to:

Instant asset write-off – simplified depreciation rules.

• Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 until 30 June 2017.

Deductions for professional expenses for start-ups

• Small businesses are entitled to certain deductions when starting up (i.e. professional legal and accounting advice and government fees and charges).

Small business restructure rollover

• From July 2016, small businesses can change the legal structure of their business without incurring any income tax liability when active assets are transferred by one entity to another. This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.

Lower taxes and expanded access to tax concessions will mean increased opportunity to grow a small business, employ more Australians and increase wages.

The announced changes present good opportunities for businesses and individuals to save on tax. If you think you may be eligible and want to take advantage of some of the new measures introduced, please contact our office to speak to one of our business consultants.

This article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to get more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

Many small business owners rent their premises and pay rent to a landlord.

However, since 1998 self-managed superannuation funds (SMSF) have been permitted to invest in business real property, and since 2008, they’ve been able to borrow money to do so.

Many small business owners don’t like paying rent, and if they could, would much prefer to buy their business premises and pay it off.

Assets they may have built up in their superannuation accounts can now be used to help fund the purchase of their business property. However, this would need to be structured through a self-managed superannuation fund.

And if you need to borrow funds to purchase the property in your SMSF, the 9.5% compulsory super you pay yourself as an employee together with the rent your business pays your SMSF can help pay it off.

At retirement you’ll have additional options. For example, you could sell your business but your SMSF could retain the business premises, continuing to collect rent from the new business owner. The rent could be tax free provided you’re over age 60.

Alternatively, if you retire after the age of 60 your SMSF could sell the business property free of capital gains tax.

While the strategy holds lots of appeal, there are many issues to consider, particularly in terms of ensuring that the arrangement makes sense and is properly structured. It’s definitely something worth seeking professional advice on.

If you are a small business owner or know someone who is currently renting their business space, contact us today toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office.  We would be delighted to speak with you about self-managed super funds.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Finding it hard to manage your business’s finances? Unsure of how to price your products or services? Don’t know how much you can afford to spend on wages and expenses? Want to gain an accurate value of your business? Sounds like you need a financial model.

All business operators are concerned with the profitability of their business, but it is difficult to gain an accurate grasp of its real financial position purely from monitoring bank balances and receipts. So often is the case that business owners in successful times lose incentive to monitor their financial position. This can come back to haunt management once times start to become gloomy as they ponder “How did this happen?” “What were we doing right before?”. As silly as it sounds, sometimes an Excel spreadsheet can answer all of these questions (and more!).

Financial models are a key element in most major business decisions. A financial model is prepared whenever any organisation is considering project finance, bidding for a project, evaluating acquisition targets, carrying out monthly financial planning and budgeting, conducting capital structure studies, or just to monitor the business’s profitability.  Accurate financial models are also a staple requirement if you are trying to source financing from investors or lending entities.

They are useful tools that allow business options and risks to be evaluated in a cost-effective manner against a range of assumptions, identify optimal solutions in evaluating financial returns and understand the impact of resource constraints to make the most effective business decisions. A truly effective financial model is one that dynamically updates as the economic and business climate changes.

Our Consulting team has extensive experience in developing financial models which draw from historical performance and management’s expectations for the future. Once a tailored financial model has been created, sensitivity tests are run to generate accurate forecasts and budgets to allow management to determine how they should operate in the future. From here, we can provide recommendations on other business functions.

Businesses from agriculture, engineering, finance, heavy machinery and retail industries have approached us to construct conservative financial models that enable business owners to “hope for the best, but plan for the worst”. In 2016 we had the pleasure of constructing a dynamic model for a grain and oilseed farm in NSW. The original need for the model was to gain a value of the enterprise for the purpose negotiations and restructuring. However, as new problems were encountered, such as restricted access to financing, falling crop prices and even flooding, management quickly realised the true power of a financial model: it’s a tool that provides insight into how to develop clear contingency plans. Similarly, a sports store facing a severe cash flow crisis was able to trade their way out and re-finance through using our no-nonsense approach and financial modelling.

If you or anyone you know owns a business that needs to review their financials to take their business to the next level or faces increasing uncertainty, then now is the time to deal with it. Contact us today, toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office to have a free initial consultation.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

When a couple presents for financial planning advice, one of the first things I’ll ask them to do for me is a risk profile questionnaire.

This is a multiple choice questionnaire designed to get a gauge of an individual’s attitude to risk. That is, how do they feel and react with movements, sometimes large movements, in the value of their investments. The answers to the questionnaire generate a score, and with this score we can, in broad terms, attribute to the individual a higher or lower tolerance for risk.

There’s no ‘right’ or ‘wrong’ in completing this questionnaire. A low or a high score isn’t good or bad, better or worse. However, it is a vital input when we come to prepare our investment recommendations.

And, it’s very important that each member of a couple completes their own questionnaire. Why? Because if there is a difference in how each member of a couple think and feel about risk, we’d want to identify this, discuss it and agree on the risk we’re prepared to accept in respect of what are, after all, investments that they have a common interest in (even though the assets themselves may be held in different names).

What might happen if we don’t consider each member of couple’s individual risk profile?

Say one member of a couple may have a high tolerance for risk. We might call them a ‘growth’ investor, comfortable with a higher level of exposure to growth assets like shares and property. The other member may have a lower tolerance for risk. We might call them a ‘conservative’ investor, more comfortable with a higher level of exposure to defensive assets like fixed interest.

Ignoring their differences on risk, and simply investing on the basis of ‘growth’ is likely to create all sorts of problems in the future. For example, say after 6 months the growth portfolio, which was constructed taking into account only the ‘growth’ investor’s preferences, drops 20%. The ‘growth’ investor won’t like it. However, he or she may be reasonably comfortable with the situation knowing perhaps that it’s a longer term investment in quality investments and is likely to recover in due course.

Their spouse, on the other hand, may well be fraught with concern and anxiety.

Having each of them complete their own risk profile questionnaire would have provided an opportunity at the beginning of the process to identify their differences on this point; discuss them and agree on an investment approach that met and managed both their expectations. It’s important to agree on risk.

Are you interested in a free initial consultation with one of our friendly advisers to know if your investments are invested for the right amount of risk? Contact us today, one of our friendly advisers would be delighted to speak with you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Can I give my kids some money?

I hear this question quite often from my clients.  There are several answers to the question.  Underlying it all is the normal parental need to be able to assist our family while they are juggling the usual expenses of home and children, from an income that doesn’t always stretch quite as far as they would like.

The first part of the question is – can I afford it, and your answer to that may be that you think you can.

The next part of the question is – are there consequences for me?

There may be – for instance if you receive a Centrelink age pension there is a limit as to how much you can gift to your children.  The current limit is $10,000 per year up to a maximum of $30,000 over a three year period.

If you are a fully self-funded retiree the consequence could be that your ability to maintain your own lifestyle in retirement is compromised, so it is a question that needs careful thought.  It is recommended that you seek advice from your advisor.

Is giving cash the best way to help?

It is debatable as to whether straight out cash gifts are really the best way to help – you can’t direct where the cash is spent, and it may not be put to its best use.  What if we paid an essential expense instead?  Examples might be to contribute to the grandchildren’s school fees or to pay the life insurance premium for your son or daughter?

Paying a life/TPD (total and permanent disablement) insurance premium for an adult child may mean the difference between them being properly insured, or having little or no life or TPD insurance.  This not only protects your child and his/her family, but it protects you too, as you may be called upon for support should your child become ill or disabled.

I would like to start an investment for my child/grandchild.

This is also an excellent way to give your family a helping hand as it is a long-term solution that will provide some passive income and capital growth in the future.

A small investment in the Capricorn Diversified Investment Fund, with distributions set to be reinvested, is one way you can achieve this, and it is even better if you add extra contributions from time to time.  By the time the newest grandchild is old enough to attend university or wants to buy a car for example, there will be a tidy little nest egg they can draw from.  You can view details of the Fund here or contact us for information and assistance.

Want to learn more about helping out your children/ grandchildren? For your free initial consultation with one of our friendly advisers, contact us today! One of our advisers would be delighted to assist you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Did you know?

Heart disease in children is the leading cause of death, accounting for more than 30% of childhood deaths?  Or that 200 children under the age of 14 are diagnosed with leukemia each year, with treatment taking approximately 2 years?

What would happen if this was your child, or grandchild? Would you have adequate funds available to cover costs of hospital and treatment? Would you or your partner be able to stop work indefinitely to care for your sick child? Unfortunately for most people there would not be sufficient funds simply ‘lying around’ to eliminate the financial stress of coping with a sick child.

Thankfully, there is great news, a low cost solution that will ensure dollars are available to you when needed most – Child Trauma Protection.

Trauma Protection is designed to pay a lump sum amount in the event of a specified illness or event, for example, cancer, stroke or heart attack. It is now possible to not only ensure your health, but the health of your children.

In the event your child suffers a major illness or dies, you will receive a lump sum payment (as determined by you) to ease the financial burden and help allow for:

• Parents to stop work and take care of the child full-time
• Funding for medical treatment & hospital costs
• Funding to provide for ongoing care or other objectives (e.g. family holiday)
• How much does peace-of-mind cost?

Child Protection must be taken out in combination with trauma protection for an adult, the cost is approximately $150 per annum. Once the child is age 18, they are eligible to convert the policy to an adult policy without any health assessment.

Are you interested in gaining a better understand of protecting your children? Do you want make sure you have the right insurance to protect all of your family members? For your free initial consultation with one of our friendly advisers, contact us today! One of our advisers would be delighted to assist you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Financial scams are not uncommon in Australia. You may think that this will not happen to you or your family, but it could.

Scams come in all shapes and sizes from investment schemes, inheritance scams, betting and sports investment schemes to dating and romance scams.

Recently, a client was phoned by someone claiming to be from the Australian Tax Office who advised they were following up amounts owing for previous tax years. For the client, there was some credibility for this as previous tax returns were outstanding. Once the caller realised they had an ‘’in’’ they were incredibly persistent and even threatening to the point that they persuaded the client to go and purchase iTunes cards to pay the supposed debt. They obtained the numbers of these cards over the phone and were quick to cash them in.

The client became suspicious when they rang for more money, and she then rang us. We advised that it was a scam, and to be sure she should phone the tax office, who confirmed they had not called.

Not giving up, they phoned again and this time advised they were from Centrelink and provided a contact number to call in Canberra for verification. On talking to us, she rang the general number for Centrelink (not the number the caller provided) who again confirmed that they had not called.

If you ever have a phone call from someone claiming to collect money from a government agency, please be aware of this scam. A government agency will not collect money over the phone and are unlikely to make contact by phone unless responding to a call. They will also not use urgency tactics for payment.

If in doubt call the agency back on a general number, or call your adviser and if they are unavailable talk to another adviser. Scams can also be checked at scamwatch.gov.au and acorn.gov.au.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.

What is HECS-HELP?

Australian citizens studying in Commonwealth supported places are eligible to apply for assistance to fund the student contribution amount for each unit in which they are enrolled.  This assistance is in the form of a HECS-HELP loan.  There is no real interest charged on the loan but the debt will be indexed each year in line with the Consumer Price Index.  The adjustment is made on 1 June each year and applies to any part of the debt that has been unpaid for 11 months or more. Eligible students can use a HECS-HELP loan for the whole amount of their student contribution.

I’ve finished studying – how much do I owe?

The Australian Taxation Office manages all HELP debts and this information can be viewed online through the myGov website once a myGov account has been created.  You can also call the ATO to find out the details and you will need to quote your TFN to access the information.

Paying back my loan

Even if you are still studying, you will need to begin repaying a HELP debt as soon as your income, as reported on your income tax return, is above the compulsory repayment threshold.  This amount is adjusted annually and for the 2016/17 financial year, the amount is $54,869 and above.  Repayments are made through the taxation system at a percentage of your annual income.  The percentage increases as your income increases.  For example, someone earning between $54,869 and $61,119 will repay the loan at the rate of 4% per annum, while someone earning in excess of $101,900 will repay 8% of their annual income.

Voluntary repayments can be made at any time and for any amount, and before 31^st December 2016, there is a bonus of 5% for doing so.  This means that if you repay $500 by a voluntary payment, an additional credit of $25 is applied to your loan.

What if I can’t afford repayments?

You can apply to the ATO to have your payments deferred if you believe that your compulsory repayments would cause serious financial hardship.  In making this application, you will need to substantiate your claim by providing a detailed statement of income and expenditure.  It is possible to appeal should your application be unsuccessful.

Do I have to repay the loan and what happens to the debt if I die?

There are certain special circumstances that may result in cancellation of a debt for a particular unit if the unit has not been completed. You need to apply to have the special circumstances taken into account.  In the case of death, any compulsory repayment relating to the period up to the person’s death must be paid from the estate, but the remainder of the accumulated debt is cancelled.

Are you interested in gaining a better understanding of your HECS-HELP debt? Do you want to put a plan in place to make sure the loan is paid off as soon as possible? Contact us today for your free initial consultation, one of our advisers would be delighted to assist you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.

There have been a lot of questions from clients lately about why they need all the different types of personal risk insurance; Life, Total & Permanent Disability (TPD), Trauma and Income Protection.  Each insurance covers something different and it is important to understand how all of these insurances work together.  Below I’ve detailed a brief summary about the different types of insurance and how they work together.

Life

Life insurance is pretty straightforward.  A lump sum amount will be paid out in the event of death or terminal illness.  The purpose of life cover is to pay down any debts, provide an income to your surviving spouse or children, contribute to future education expenses if you have children, and assist with funeral expenses.

Total & Permanent Disability

Total and Permanent Disablement (TPD) is payable in the event you become totally and permanently incapacitated due to sickness or injury, and it is unlikely that you will ever be able to return to work.  Again, this cover will provide a lump sum to reduce or extinguish debts, and provide an income to you and your family.  It may also help with home and car modifications following your disability and can assist with ongoing medical bills.

Trauma

Trauma cover also pays a lump sum should you be diagnosed with a serious medical condition, or if you suffer from an event covered under the contract. Trauma insurance covers a wide range of conditions such as Heart attack, Heart surgery, Cancer, Stroke and other neurological conditions, organ failure and various blood disorders.  Benefits can assist with the costs of specialist treatment and medication which are not covered via Medicare or private health cover.  Trauma protection can help with every day costs of living, and offer support financially should you or your partner need to take time off work to assist in recovery.

It is important to note that some people who suffer from a trauma event return to work before they can claim on their Income Protection policy.  Due to advances in medical technology, and less invasive treatment for many of the diseases covered via a Trauma policy, there is also a reduced likelihood of becoming totally disabled and a much higher survival rate.

Income Protection

Income Protection (IP) covers you for partial or total disability based on a waiting period and a benefit period.  If you suffer an injury or illness that leaves you unable to work for longer than your waiting period, you will be eligible to claim on your policy.  Income Protection typically provides a monthly payment whilst you are unable to work.  Your claim will continue until you are able to return to work, or you have reached the end of your benefit period.  It is important you know what your waiting and benefit periods are. The maximum entitlement for IP insurance is 75% of your taxable income, and you may also be able to cover ongoing superannuation contributions under some contracts.

As always, if you have queries or concerns about your insurance you should speak with your friendly adviser. We are here to help.

Are you interested in getting your current insurance reviewed or wanting to get the right cover for you and your family? Contact us today for your free initial consultation, one of our friendly advisers would be delighted to speak with you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.

Picture this. You’ve recently retired, and you’re reasonably confident you’ll have enough savings to fund the comfortable lifestyle you’d always hoped for.

Then you receive a phone call with some bad news – your daughter has been diagnosed with a serious health condition, cancer. More than half of all death in Australia is due to cancer.

With the bills piling up, and your daughter set to be out of the workforce for an indefinite period, you invite her to move back into the family home. You ask whether she has life insurance to help finance her ongoing living needs, only to find out she’d never gotten around to it.

It’s a natural instinct for a parent to do whatever it takes to help their children when they need you. And luckily for the baby boomer generation, and your children, many of you have the financial resources to help out.

But what if ‘helping out’ meant you had to stay in the workforce longer, or cut back on your retirement lifestyle to help fund your child’s mortgage, medical expenses or living costs?

Or what if you had to provide for your grandchildren? What would that mean for your own financial situation – both now and in the future?

These scenarios may sound extreme, but consider the following statistics:

• One in five families will be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work.
• Two-thirds of families with kids at home couldn’t meet their expenses beyond 12 months of the main breadwinner having passed away.
• 95% of families do not have adequate levels of insurance.

Do your children have it covered?

Generations X and Y are comfortable with the idea of using debt to achieve their goals. And to get into the housing market, they often have to take on considerable mortgages, which can take a decent bite out of their income.

Of course, all of this is sustainable when they’re working full-time. But if your children don’t have adequate protection for their income, their debts, and their dependents, they could be vulnerable to serious illness or injury. Their own families (if they have one) can also be considerably exposed if they die. Raising children is expensive. It estimated to cost $537,000 to raise two children from birth to age 21. This does not allow for private education.

When you consider the maximum disability support pension available from Centrelink is only $877 per fortnight ($22,802 p.a.), an extended period out of the workforce could leave a big hole in their budget. That’s if they’re eligible for any government assistance at all. Qualification is based on the extent of their physical condition and is means-tested.

Talking to your children about life insurance

Many adult children will discuss their major financial decisions with their parents. Major events like getting married, buying a house, or even changing jobs are good opportunities to talk to your children about life insurance.

One of the good things about taking out life insurance from a younger age is that premiums are often very affordable.

For example, a 30-year-old female clerical worker can take out $500,000 life insurance (with Total and Permanent Disability cover), plus $4,000 a month income protection, for around $3 a day (Source: TAL Life Limited ABN 70 050 109 450 AFSL 237848).

This cover will provide some financial relief in the event of serious sickness or injury. It will also make available a lump sum on death that may be used to pay off debts, medical bills or help the family meet ongoing living costs.

The best way to help your children get the right level of protection for themselves (and you!) is to encourage them to discuss their life insurance circumstances with a financial adviser or specialist risk adviser.

Are you interested in getting your life insurance reviewed or do you need to talk to someone about what life insurance is right for you? Contact us today for your free initial consultation, one of our friendly advisers would be delighted to speak with you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.