Financial Planning Tip
Superannuation
- Superannuation cannot be accessed until you are retirement age therefore the superannuation you are contributing (or your employer is contributing for you) will be invested for a long time. Make sure you take an interest in your super and make decisions that are right for you. Chances are your super could be invested in more growth oriented options and working harder for you over the long term.
- Government Co-Contribution. This is a scheme whereby if you make an extra contribution to your super, the government will make a contribution for you also and boost your super. The Government will pay up to $500 into your superannuation account depending on your income and the amount you have contributed. Your contribution needs to be from your after tax income and not your employer contributions or contributions for which you have claimed a tax deduction (if you are self employed).
- Using the Government Co-Contribution If you feel you cannot afford life or income protection insurances, you could obtain these through your superannuation fund. You may be able to access a higher level of insurance than you thought affordable by making a personal contribution into your super and using the personal superannuation contribution and the government co-contribution to pay your insurance premiums.
- Binding Death Nominations Did you know that where your superannuation benefits go if you die is not covered by a will? To ensure your benefits are directed in the right way if you die, you need to tell your superannuation fund. There are formal ways of doing this and the surest way to direct your benefits is to complete a binding death benefit nomination. Ask your superannuation fund for the necessary form.
Financial Planning Tip
Budgeting and Investing
- In order to build wealth, young adults need effective money management and that means a budget. A budget doesn’t mean just going without; it means knowing where your money goes, knowing your spending limits and setting your goals. Track your expenses against your income. Know your bottom line. You can then reduce debts, have money to invest and maintain your lifestyle. There are many online calculators to help you budget. Check out the range of financial calculators at the government’s consumer website www.fido.gov.au
- It’s easy to invest. With a small initial investment (minimum of $1,000) you can invest into managed funds and add to the investment regularly with as little as $50 per week. Set up a regular direct debit from your bank account and just forget. If a 21 year old starts an investment plan with $5,000 and then adds $50 a week for the next 10 years, they could accumulate more than $45,000 by the time they are 31.
- What is the best use of your tax refund or baby bonus. Why not consider investing these lump sums via an interest bearing deposit, managed funds or savings plan. You can invest now for your baby’s future.
- Gearing your investment. If you are in regular employment, are prepared to invest for the long term and are comfortable with debt, a margin loan may be a way to boost your savings. A margin loan or gearing allows you to start out small, and then borrow to invest in quality managed funds and listed shares to grow your wealth faster.
Backing up Computer Data
Is your computer data backup process good enough to safe guard your financial data in the event your:-
- Computer is stolen;
- Computer hard drive ceases to work;
- Business premises are destroyed by fire and your computer and all on-site backups are destroyed;
- Etc.
Do you ever check whether your computer backups can be restored and used?
Backing up data regularly and storing regular backup copies off site is recommended.
What would it mean to your business if your computer files were unrecoverable?
Loss of financial information can seriously damage the financial viability of a business. We recommend you should speak to your computer consultant and confirm your backup policy and procedures are appropriate; and that the backups you are creating can be used to recover lost data.
6 Top tips to buying your first home
Buying your first property is both exciting and daunting. Here are some tips from people who have been through the journey.
- Know the true cost of property – Knowing the maximum you are willing to spend on a house or apartment is one thing, understanding the true cost of the property is another. Make sure you take into account stamp duty, mortgage insurance, loan application fees and legal costs.
- Take advantage of government incentives – Check out the varying State Government incentives, including the First Home Owner Grant and stamp duty concessions.
- Get your cashflow under control – Set yourself a savings goal and then a budget that will get you there. Make sure before you borrow that you have demonstrated (if only to yourself) the discipline to make the mortgage payments.
- Select a home loan that is right for you – don’t just select the lowest interest rate; think about the right mix of variable and fixed rate loan, flexibility with your loan period and whether you need a redraw facility.
- Consider your personal insurance needs – Depending on your circumstances its important adequate Life, TPD, Income Protection and Trauma insurance is held to cover Mortgage payments if unforseen health circumstances occur.
- Get advice from a trusted financial advisor to guide you through the process and keep you accountable to your goals.
September BASs and IASs – Instalment Amount Option
Primary producers need to make an annual election to pay their GST and PAYG instalment if they wish to pay by the instalment amount option.
The instalment amount option allows for GST and PAYG instalments to be paid as follows:
- $nil payable in September and December quarters
- ¾ of the notional amount payable in the March quarter
- ¼ of the notional amount payable in the June quarter
Usually the instalment amount election must be made in respect to your September activity statements. In the past some clients have assumed that because the instalment amount is $nil for the quarter they do not need to complete, sign and lodge their September activity statements.
Warning – Failure to make the instalment amount election by correctly completing and lodging your September business activity statement and/or your income activity statement will result in you defaulting to reporting actual GST quarterly for BASs and instalment rate option for IASs.
If you require assistance in making the correct election in respect to your September BAS and/or IAS please contact us.
Victorian Young Farmers Duty Exemption
‘Young farmers’ buying their first farmland property will be able to obtain a full stamp duty exemption on purchases worth up to $300,000. For the purchase of a single parcel of farmland valued between $300,000 and $400,000 a duty concession will also be available.
The exemption is aimed at encouraging young people to enter and stay in the industry.
Eligibility criteria
To be eligible for the exemption or concession, applicants must satisfy the following eligibility criteria.
- The purchaser must be a ‘young farmer’ or a ‘young farmer business entity’.
- The purchased property is an estate in fee simple in farmland (and not, for example, a leasehold interest). The land must also be used, or intended to be used, primarily for the business of primary production.
- The ‘young farmer’ must be under 35 years of age at the contract date. If the purchaser is a ‘young farmer business entity’, the young farmer in respect of that entity must be under 35 years of age.
- Neither the young farmer nor the young farmer’s partner can have a disqualifying interest. If the transferee is a young farmer business entity, neither that entity or the young farmer or the young farmer’s partner in respect of that entity can have a disqualifying interest.
This requirement broadly relates to the requirement that the young farmer must be acquiring his or her first farmland property.
- On the transfer of a single parcel of farmland, its value cannot exceed $400,000. If one or more parcels of farmland are transferred, at least one of those transfers cannot exceed $300,000.
- Within 5 years of the transaction, the purchaser (‘young farmer’ or ‘young farmer business entity’) must be normally engaged in a substantially full-time capacity in the business of primary production of the type carried on the farmland.
For further information on all requirements to qualify for this stamp duty exemption, please contact us.
