From 1 January 2015 there will be significant changes to the means testing arrangement for superannuation pensions and social security benefits, such as the Age pension and the Commonwealth Seniors Health card.

Tougher means testing will see the valuable ‘deductible amount’ removed from the assessment of super pensions for Age Pension entitlements; resulting in an individual’s entire superannuation pension being assessable under the deeming rules.

Comparing the current deductible system to the proposed deeming system, it will have the greatest effect on those with more modest superannuation balances, where the income test will be the dominant test.

There is respite for current super pension and social security recipients however, with ‘grandfathering’ to apply to the current means tests.

There are risks however if you have change in circumstances or breach the grandfathering rules.

Risky moves include:

Super Pensions

• Not drawing the minimum pension amount from a super pension;
• You pass away and you don’t have a reversionary super pension payable to your spouse;
• You stop a super pension for any reason.

Age Pension

• You exceed the assets test cut-off threshold through an inheritance or by downsizing your family home;
• Your spouse passes away and your are no longer assessed as a couple;
• You exceed the income test cut-off threshold.

Commonwealth Seniors Health Card

• You exceed the future income test limits;
• You go overseas for more than 19 weeks.

Where circumstances see your existing super pension or Government benefit ceased, any new super pension or Government benefit commenced in the future will be assessed under the tougher rules. This will likely result in less Government benefits being paid, or in some cases you may become ineligible altogether.

Before you make changes to your super pensions or you believe you may have a change in circumstances that would impact your old benefits speak to us to ensure that you don’t make a mistake you will regret.

Did you know that if you are an undischarged bankrupt or have been convicted of a crime of dishonesty (e.g. fraud, theft) that you can no longer be the trustee of a self-managed superannuation fund (SMSF)?

The super laws call undischarged bankrupts and those convicted of a crime involving dishonesty “disqualified persons”. These people can’t be SMSF trustees or members. In addition, they can’t appoint a legal personal representative to act for them. They either need to leave the SMSF or convert the fund into a small APRA fund.

Under normal rules, the trustees of a SMSF have to be members of the fund. If the trustee is a company then all the members must be directors of that company. There can be no other members or trustees.

There is a set of rules that apply for specific situations when someone can’t act for themselves. Two other examples of people who can’t act as trustees are children and people who are mentally incapacitated.

Young children can be members of a SMSF, but either their parent or a court-appointed guardian must be installed as the trustee on their behalf.

The super laws provide a small concession with regard to disqualified persons. Those convicted of dishonest crimes can apply to the tax office to have their crime ignored to allow them to continue to be a SMSF trustee. This can only occur if any prison term is less than two years or a small fine has been imposed. The ATO must receive your application within 14 days of a conviction date, however it can extend this in exceptional circumstances.

The bottom line is that SMSF trustees have a responsibility to act responsibly and ethically in their role as trustees. If you play it safe – you should have nothing to worry about.

Speak Up And Sort It Out

Being reluctant to sort through difficulties at work is a very human condition.

Many of us get frustrated or hurt by others at work, but we refuse to speak to that person directly. Assuming you have not given up hope of achieving an easier relationship with this person, here are some tips for speaking up and sorting it out.

The main reason people don’t speak up is that they fear the worst – that the other person will become defensive or make their life at work difficult in some way.

They may well have good reason for believing this. But the problem in the past may have been due to how the issue was raised.

Other times, people don’t speak up because they think, ‘What’s the point? This person is incapable of change’. While this is true of some individuals, my experience has been that the great majority of people we find challenging either know they are imperfect and are open to change or they are not aware of how they are coming across and are open to change.

There are, of course, those who think they are perfect, don’t care about how they are coming across, and are not open to change.

Assuming you have not given up hope of achieving an easier relationship with this person, here are some tips for speaking up and sorting it out.

1. Gain the right mindset

By this I mean finding a way of thinking that helps you to approach the conversation well. It could be simply a ‘Let’s work it out’ mindset. It will also help you to project a more helpful demeanour if you expect the best – that you will work something out that is fair for both of you. Other times, a helpful mindset is simply appreciating what the consequences are for yourself and others at your work if nothing is said. Even when you find a helpful mindset for you, you will still need a bit of courage!

2. Choose a good time and place

Even a very problematic person at work has better days. Alternatively, agree on a good time and place to speak. My recommendation is to get outside of the workplace, if this is possible. When you change the environment, perhaps meeting over coffee, this can often help to change the dynamics.

3. Define the problem in a face-saving way

Typically, problems in workplace relationships are always defined as being due to the other person. Here is where the problem labels come out – bullying, difficult, unreasonable, etc. Such finger-pointing tends to elicit only a defensive response and escalation of the problem. It tends to be more helpful defining the problem as you both are different people, but needing to find a way to work in better with each other. Sometimes, the problem can be defined as both of you being under a lot of stress or simply having had a communication breakdown of some sort. When you can find a definition of the problem that is acceptable to each, this then avoids arguments over whose perspective is correct.

4. Keep the focus on the future

There is a time to focus on the past and that is when one person needs a lot of empathy about how they are feeling. But it is all too easy to get caught in a debate over what did or did not occur. If you are going to speak about the past, at least keep the focus on behaviours rather than labelling the other person. As soon as you are able, move the focus of the conversation to the future – what you will both do in the future to help. If what is being offered seems very one-sided, then you might say ‘Can we both ….?’ or suggest a trade. ‘If I do …, will you …?’.

5. Keep a record

With very problematic relationships and people who are reluctant to do what they say, you might want to agree that what is agreed is written down and you each have a copy. You can say it is to help you both stay on track. Another option is simply to send that person an email of what was agreed. Also keep some private records of the problem behaviours, how you responded, anything that has helped, and for how long there was improvement. Your records may come in handy if you need to gain the advice or support of management.

6. Follow up and reinforce any progress

Rarely is a difficult relationship at work resolved in one conversation. Often the agreement needs to be fine-tuned or recommitted to. If there has been progress, this can at least be reinforced. If there has not been any progress, this is disappointing, but not uncommon. While it might be tempting to return to the status quo of not speaking up or escalating the situation, consider also simply arranging another meeting and going through the same process.

7. Have a backup plan

I often say, ‘Expect the best, but prepare for the worst’. Hopefully, your backup plan will not be needed. But it is there, just in case. Examples of backup plans include:

• If they get defensive, giving them a lot of empathy or finding a better time to talk;
• If they have a history of volatility, meeting with them in a public place that is still appropriate to a private conversation;
• If they are likely to accuse you of bullying, having an agreed person join you at that meeting – perhaps a friendly face from the Human Resources department;
• If there is no change over time, putting up with them, speaking to their manager, taking formal actions, or perhaps finding yourself another workplace!

Consider if any of the above are relevant for your situation. While it is tempting to simply do nothing apart from get increasingly hurt and frustrated, my experience has been that the great majority of strained relationships at work can be worked through. But it takes two things in particular – a willingness to do things differently as well as some courage!

Author Credits

Ken Warren is Australia’s leading speaker on People Management Skills and an expert on Human Behaviour. With his engaging, interactive and positive workshops, Ken has shown thousands how to turn difficult people around and bring out their best. Check out all his FREE resources at www.positivepeoplesolutions.com.au

[Quote]

“The most courageous act is still to think for yourself. Aloud.”

COCO CHANEL

Market News

May seemed to shake the “Sell in May & Go Away” headlines that have dominated the last few years to finish the month flat, but positive, up 3.4 points or 0.06%. This is the first time that May has recorded a positive result since May 2009.

The Australian share market is now trading up 2.56% for the calendar year to date.

Australia did however significantly underperform its global peers with the S&P500 index in the US hitting a succession of new record highs during May to close at 1923.57.

The Banks and Telstra carried the market forward as the search for yield continues to drive these stocks higher. Commonwealth Bank broke through the $80 barrier and continued to rise beyond $82. The best performing sector was Energy which was up 3% due to an increase in the Oil price.

Resource stocks posted the worst results dropping -2.8% during May. The iron ore price slumped from US$105.4 to US$91.80; its lowest level since September 2013.

The Australian dollar again strengthened 0.2% to finish the month at 93.10 US cents.

Interest rates were again left on hold at 2.5% and UBS has stated that this level is “likely to be appropriate for some time”.

End of Financial Year Reminders

Superannuation Contributions

This is a reminder to make your last minute superannuation contributions prior to 30 June 2014.

The 30th June falls on a Monday this year; make sure you organise for your contributions to be made the week before to ensure amounts are captured within the current financial year. The funds are allocated to the year which the superannuation fund actually receives the contribution.

BPAY and Electronic Funds transfers can take 2 business days to process so allow time for this.

The contribution caps for the 2013/2014 financial year are as follows:

Concessional Contributions (Compulsory Employer Contributions & Salary Sacrifice)

• $25,000 for persons aged 58 or under on 30 June 2013
• $35,000 for persons aged 59 or over on 30 June 2013

Non-Concessional Contributions (Personal Contributions)

• $150,000 per annum or a 3 year “Bring Forward” limit of $450,000

Warning – Be careful that you haven’t activated the “Bring Forward provisions” in prior years.

Government Co-Contribution

The Federal Government is giving away money to anyone who earns less than $48,516 (for the 2013/14 financial year) and makes a non-concessional contribution into their superannuation fund.

To be eligible you must earn at least 10% of your income from eligible employment.

If your income is below $33,516 and you contribute $1,000 you will receive a $500 co-contribution payment from the Government. For income levels between $33,516 and $48,516 the amount that you receive reduces. You can calculate your entitlement using the calculator on the ATO website.

Pension Phase

We also remind people drawing a pension that you need to satisfy the minimum pension draw down amount for the 2013/14 before 30 June 2014 otherwise you may find yourself paying tax on the full amount of income and earnings for the fund for the year.

The minimum pension drawdown rates for 2013/14 are as follows:

If you require any last minute planning advice please contact us as soon as possible.

Level One is proud to announce that we will be holding another seminar event on Monday 10th February 2014.

Jonathan Pain will again enlighten us with his presentation – What a Wonderful World.

With TV, radio and print media giving us a heartbeat by heartbeat account of what is happening in the world, information overload is a real problem. Jonathan aims to provide a digest of what is happening worldwide and how Australia is placed therein.

Jonathan will discuss the economic outlook for 2014, factors affecting the economy and different asset types, and what we can expect going forward.

This presentation is designed for investors and will provide you with a deeper understanding of how international activities and trends impact our domestic economy, markets and our future.

If you you would like to reserve your place, please contact us ASAP to avoid disappointment.

Venue: Novotel Northbeach, Wollongong

Date: Monday 10th February 2014

Time: 6:00 pm to 7:30 pm

RSVP: By Friday 7th February 2014

Contact: Danae Lacey on 4227 6744 or

Parking: Secure undercover parking can be entered via Bourke Street.

Note: Light refreshments will be served at the venue.

You are welcome to bring along any family, friends and colleagues you feel may benefit from and enjoy this evening. Please ensure you RSVP for any additional people as places are limited.

We look forward to seeing you.

What Strength Are You Building?

Executives are talking about the need to ‘build strength’ – strength as it pertains to their business, their teams and themselves as leaders.

What does ‘strength’ really mean?

To many people, strength means mental toughness, team cohesiveness, business resilience. Strength can also mean sensitivity, vulnerability and willingness to admit mistakes.

In strategic planning sessions, people tend to have cursory conversations about strengths. They make a quick list and move on to other issues. But strengths form the foundation for your business. They deserve more of your time and attention.

Many people and businesses take their strengths for granted. They don’t really acknowledge them.

Open discussion with your team about key strengths that you can leverage better as a team.

Ask questions like:

• What do we do exceptionally well?
• What do others notice or acknowledge that we do well?
• What seems to come naturally to us?

Of course, you can also ask these questions in a personal context?

• What do I do exceptionally well?
• What do others notice about me that I do well?
• What seems to come naturally to me?

Determine what might be possible if you were operating from a place of your real strengths.

When locating a weak area in physical therapy, much importance is placed on strengthening the muscles around the injured area. In the same way, it’s tempting to put a focus on the problem area (or problem person) on a team. But you’ll see better results if you challenge the entire team to improve performance. It’s an opportunity for everyone to get stronger.

As top performers achieve even better results, they will raise the bar for others on the team. One weak player can threaten the results for the whole team, so everyone needs to step up. It’s not fair to let another team member (or yourself) compensate for the weakness of someone else.

Another lesson to learn in physical therapy is when you use other muscles too much to compensate for weakness in others. It’s painful!

As you begin your new strengthening routine, you’ll need these essential elements to help you build almost any kind of strength: mental, emotional, physical, team, organisation.

Purpose

Understand why you want to build strength. What’s the purpose? What will you or your business gain?

Picture

What will the picture look like when you or your team is stronger? Describe that vision.

Repetition

You’ll likely have to practice some exercises over and over. You can’t build strength overnight. Repetition will reinforce new habits.

Rest

Give yourself or your team a break when you need it. You’ll actually gain more energy in the long run.

Learn more about or revisit your strengths. There are great tools in the marketplace to help you learn more about your personal, team and organisational strengths.

Don’t forget your vitamins. They come in the form of supportive people, creative ideas and useful resources to help you grow. Seek them out.

Building strength isn’t always easy. It can be painful. But we often develop our greatest strength in the midst of the most painful experiences.

As Napoleon Hill said, “Strength and growth come only through continuous effort and struggle”.

You have more strength than you realise. Find or develop your greatest sources of strength to help you thrive in business and life.

Author Credits

Gayle Lantz, President of WorkMatters, has helped hundreds of companies and organisations just like yours improve performance and drive real results. She is also author of ‘Take the Bull by the Horns: The Busy Leader’s Action Guide to Growing Your Business…and Yourself’. Information about the book can be found at: http://workmatters.com/books.

[Quote]

“Someone is sitting in the shade today because someone planted a tree a long time ago.”

WARREN BUFFETT

The Australian Taxation Office (ATO) has released the superannuation contribution thresholds which will apply in respect of the 2014/2015 financial year. Please find below a summary of these changes:

• The concessional contribution cap will increase from $25,000 to $30,000;
• The special concessional contribution cap for persons aged over 60 remains at $35,000 but will also apply to anyone aged 49 or more on 30 June 2013;
• The non-concessional contribution cap will increase from $150,000 to $180,000;
• The ‘bring forward’ of the non-concessional contribution cap will increase from $450,000 to $540,000.

This is a media release by the SMSF Professionals’ Association of Australia (SPAA), dated 13th January 2014.

The growth in SMSF borrowings has grown steadily over the five years to 30 June 2012, according to the latest Australian Taxation Office (ATO) figures.

Graeme Colley, Director, Technical and Professional Standards, of the SMSF Professionals’ Association of Australia (SPAA), says although the ATO figures show there has been a solid growth in borrowings over this period, there is no suggestion it is either “exponential or irresponsible”.

“What has to be understood is that although SMSF borrowings increased from 1.1% a year in 2008 to 3.7% in 2012, this percentage still only amounts to 3.7% of the total SMSF asset pool of more than $500 billion. This hardly suggests that trustees are borrowing without giving it due consideration. [In dollar terms, the average amount borrowed was $122,000 in 2008 compared with $357,000 in 2012.]

“SPAA’s understanding of the current situation is that borrowing has not increased significantly since 2012 and remains a very small proportion of the total value of loans made by banks and other financial institutions.

“The lending criteria placed on superannuation funds that borrow for limited recourse borrowing arrangements is more stringent than loans taken out by individuals for residential property and commercial property – a fact often overlooked.”

Colley says it’s also interesting to note that 90% of borrowing takes place in the accumulation phase rather than pension phase. “This is the time when cash flows of funds from investments and contributions are positive and generate income to service any outstanding debt.

“Remember, too, these borrowings, which have strict limitations placed on them, are not just for property assets but can be used for any asset class permitted under the superannuation legislation.

“From SPAA’s perspective this is further evidence that SMSF borrowings are, in the main, being done in a responsible way and that trustees are seeking professional advice before taking on debt.”

Market News

April proved to be a strong month with the Australian Share market (ASX/200) increasing 94.3 points or 1.75% to close the month at 5,489.10.The Australian share market is now trading up 2.56% for the calendar year to date.

Defensive stocks generally outperformed cyclical stocks during April with REIT’s (Listed Property) the strongest sector up 5.7% for the month. Utilities jumped 4.1%, Energy 3.5% and Consumer Staples up 3.1%.

Global equity markets generally rose throughout April with the exception of Japan, China & Russia. European markets were the strongest performer.

US markets continue to hit new highs in the face of more weak economic data and the Fed announcing further tapering to its QE program. Technology stocks slumped with technology giant Twitter’s stock now trading at its lowest price since its IPO six months ago.

The Australian dollar strengthened 0.2% to finish the month at 92.90 US cents.

UBS targets an ASX200 level of 5,700 by year-end 2014 (current level 5,489). Macquarie recently updated their Christmas 2014 ASX200 target to 5,998.

Spotlight on Macquarie Group

Macquarie Group released their full year results on Friday for the 12 month period ended 31st March 2014 with profits surging by $1.27 billion or 49%. The result sees a return to billion-dollar-plus profits and is the highest profit reported by Macquarie Group since 2008.

Macquarie also stated that they expect earnings in the year ahead to be broadly in line with the just-ended fiscal year.

Chief executive Nicholas Moore stated that all of the company’s divisions had benefited from the improvement in global markets. “Global market conditions continued to improve in FY14, contributing to a significant increase in Macquarie Group’s operating income and profit, with all of Macquarie operating groups delivering increased net profit contributions,” he said.

Mr Moore said most of the bank’s profit had come from its offshore operations, which also benefited from a lower Australian dollar.

Improved market conditions helped each of the bank’s businesses lift earnings for the year, with the capital-markets division, including currency and commodities operations, delivering sharply higher profit.

Operations in the Americas became Macquarie’s biggest income contributor for the first time as international operations accounted for 68 per cent of total income for the year.

Macquarie Group has been a participant in commodities for around 15 years. Since the GFC Macquarie has significantly expanded these activities, especially energy trading in the US. Over the last few months the US has experienced an extremely cold winter. Prolonged periods of frigid temperatures led to periods of high energy demand and resulted in spikes in energy prices. Macquarie and other energy traders were able to take advantage of this volatility and generate significant revenues. UBS estimates that Macquarie generated around $300m in revenues above usual or budget levels during these extreme US winter months.

Macquarie also announced it would pay a final dividend of $1.60-a-share for a full-year payment of $2.60, up 30% on the year before.

This was an article written by Michael Bennet and published in The Australian on 9 May 2014.

AUSTRALIA’S major banks are on track to post record annual profits of almost $30 billion, after near record low bad debts powered the big four to strong earnings in the first six months.

Rounding out the big four’s results season yesterday, NAB increased cash profit 8.5 per to $3.15bn compared with the same period last year. The result followed Westpac’s 8 per cent rise to $3.77bn and ANZ’s 11 per cent gain to $3.5bn. Commonwealth Bank, the only major with a December 31 year, grew earnings 14 per cent to $4.3bn.

The results put the banks on track for record annual profits of at least $29.5bn. While the major banks point to the billions they pay in tax and to shareholders, the financial system inquiry probing competition and regulation lurks in the background.

“They’re strong results, aren’t they,” ME Bank chief Jamie ­McPhee said to The Australian.

He has joined the smaller regional banks in calling on the inquiry to “level the playing field” by changing rules requiring smaller banks to hold more capital against mortgages and ending the majors’ alleged funding gains from being “too big to fail”.

“At the end of the day, what does strong profits and growth indicate? Good healthy margins,” Mr McPhee said.

While still about 30-40 basis points higher than the regional banks, the big four’s margins are coming under pressure from rising competition and record low interest rates. According to KPMG, the major banks’ net interest margins declined 5 basis points compared with the previous half-year period.

PwC Australia’s financial services leader, Hugh Harley, said margins were likely to erode further amid competition for lending and deposits and “subdued appetite” for new loans.

Analysts are also concerned that the banks’ combined bad debt charges of $1.8bn — helped by record low interest rates and less spending — cannot go much lower. Westpac’s bad debt charge of 38 basis points of non-housing loans was the lowest since 2000.

But the half-year results also indicated stressed and overdue accounts were rising, with 90 day-plus delinquencies rising 7 per cent over the previous period.

“While asset quality ratios show continued improvement for the majors, going forward they will need to remain vigilant as their credit risk management of 90 day-plus delinquencies start to climb and, in particular, interest rates begin to rise,” said Andrew Dickinson, KPMG’s Asia-Pacific head of banking.

ANZ chief executive Mike Smith said good loans got written in bad times, suggesting the “benign” outlook for bad debts could remain.

In turn, the biggest focus for the banks was when would customers’ slowly growing confidence result in higher demand.

This is a media release from the SMSF Professionals’ Association Australia (SPAA) published on Tuesday, 21 January 2014.

SPAA has warned investors about using the “free” establishment services offered up in the marketplace, as often exorbitant ongoing fees are charged as well as investors being signed up to lock in contracts for ongoing services.

When you establish a self-managed superannuation fund (SMSF) with Level One you are never locked into a contract and all fees are disclosed to you before you proceed.

The main benefits of a SMSF are control, transparency and flexibility and at Level One we will always afford you these benefits. We offer a portfolio management service to all of our SMSF clients, however if at any time you do not wish for your portfolio to be managed by Level One you are free to manage this yourself or utilise the services of another professional adviser.

We pride ourselves in providing our clients with the highest level of professional service and strive to maintain open and honest communication with our clients.

We believe SPAA’s warning here is a timely reminder that “there is no such thing as a free lunch”.

Potential self managed super fund trustees should think carefully before accepting offers of free establishment services, says Graeme Colley, Director, Technical and Professional Standards of the SMSF Professionals’ Association of Australia (SPAA).

Colley says that the concept of a free establishment service is not wrong per se, but people need to fully understand what’s involved. “That old saying, there’s no such thing as a free lunch, comes readily to mind.”

He says there are several issues to consider about such offers. “It may be linked to an SMSF borrowing or may be used as a ‘catch’ for a more expensive on-going services that locks you in.

“Although establishing the SMSF may be free, the ongoing costs may be higher than what is available elsewhere in the market. Remember, too, some of these ongoing services may be available on a user pays system.

“The ongoing services may limit the type of investments into which the fund can invest such as a small range of shares, cash and fixed interest. Alternatively, are you signing up for a package, some of which you do not want or will ever use?”

Colley says it’s critical before entering into any administrative arrangement for clients to do their research and compare the type of services that are offered as well as the costs with other service providers in the market.

“They also need to consider the extent of the service, flexibility and depth of what is being provided as well as comparing the overall cost of administering the fund, and not just the cost of setting it up,” he says.

Market Review

The final quarter of the 2013 calendar year was again positive for the ASX/200 which increased 133.3 points or 2.55% from October to December. October 28^th saw the ASX/200 reach its highest level in over 5 years with the index reaching 5,457.3. The quarter proved to be a volatile one with the market re-testing the 5,000 point level (although not quite reaching it) during mid-December, only to bounce back and close at 5,352.2 on December 31^st2013.

For 2013 we saw the ASX/200 increase from 4,648.9 to 5,353.2 an increase of 704.3 points or 15.15% which is a very healthy return! We point out that the market is still trading 22.11% lower than the high from 1^st November 2007 of 6,873.20.

During the month of December Telco’s were the best performing section gaining 4.3%. Energy was also strong posting gains of 3.3% for the month. Listed Property was the worst performing sector for December down 1.3%. Financial stocks were also negative 1%.

On 18^th December US Fed Chairman Ben Bernanke announced that tapering would begin given positive economic data coming out of the US. Stock markets rallied strongly on the news. The Fed also indicated that it was biased toward keeping the Fed funds rate near zero for longer than it had previously promised.

Economic Update

The RBA left interest rates on hold at 2.5%. Further rate cuts are now looking unlikely as the Australian dollar continues to fall (the AUD$ finished the 2013 year at $0.892 a drop of 1.9%. It should be noted that interest rates are at 40 year lows and mortgage holders need to consider if it is appropriate to fix rates over the coming months.

The RBA Board minutes provided new insight to their perception of Australian and global economic conditions. The members of the Board have agreed to retain a mild easing bias, stating their intention is “not to close off the possibility of reducing (rates) further should that be appropriate to support sustainable growth in economic activity, consistent with the inflation target.”

Governor Stevens appeared before the House of Representatives Economics Standing Committee on 18 December. His opening statement indicated that below trend GDP growth of 2% to 3% per annum is the most likely outcome for 2014.

A significant worsening in our fiscal position was reported in the Australian Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) released on 17^th December. The Australian budget deficit for 2013/14 is now estimated at $A47 billion, 3% of GDP, substantially higher than the budget-time estimate (by the previous government) of $A18 billion or 1.1% of GDP. Remember Wayne Swan was still predicting an $A1 billion surplus for 2012/2013 banc in December 2012. Hence the final result is a staggering $A48 billion variation.

Reports continue to indicate that our economic growth has continued to slow. GDP rose by a slightly lower-than-expected 0.6% over the quarter. This took the annual economic growth rate down marginally to 2.3% for the year.

The consumer confidence index showed a decline of 5.3 points (-4.8%) from a near three year high of 110.3 points in November to a five month low of 105.0 points in December.

Employment increased by 21,000 jobs in November, but the unemployment rate rose by 0.1% points to 5.8%.

2013 In Review

Australia had a relatively poor year in 2013 with growth slowing, unemployment rising and sentiment being subdued. Both business and consumer confidence were held back by political concerns including a nine-month election campaign. The Reserve Bank cut the cash rate to a new record low of 2.5% but made it plain that it now wants to see further monetary stimulus come from the exchange rate rather than the cash rate.

2013 proved to be a better year for equities than for bonds, although not all equity markets performed well. The S&P 500 Price index posted a near 30% gain for the year, double the ASX 200’s still respectable 15%, and well ahead of emerging markets -5%. Bonds delivered far less impressive returns, although a hedged exposure to global high yield bonds still produced a 10% return. The other big moves for the year were gold’s 28% decline and the much awaited retracement of the $A. Gold fell as investors reassessed their concerns about global inflation and the impact of the Taper in the US.

The unwinding of the resources boom and a stubbornly high Australian dollar contributed to softening economic activity throughout the year. In turn, the labour market deteriorated and the unemployment rate rose towards 6%. The Reserve Bank responded by cutting the cash rate. The $A did eventually start to fall and finished the year at US$0.89.
The housing market responded to record low interest rates with households and investors pushing prices up in the second half the year. Significant gains were recorded in some parts of the major capital cities leading commentators to warn of an impending bubble in house prices. However, as in the US, there are signs that rising dwelling prices are a necessary part of the process of encouraging construction activity, especially in the apartment sector.

The relative performance of the major sectors in the equity market reflected developments in the underlying economy. Financials dominated once again, contributing around 60% of the market’s total gain. Materials underperformed, especially in the first half of the year on concerns about global growth and the end of the resources boom. General Motor’s decision to cease production in Australia by 2017 exemplified the challenges facing the manufacturing sector.

Best & Worse Performing Sectors of 2013

2013 was a good year for most equities, but not gold or the Australian Dollar!

Financial stocks dominated the Australian equity market rally again in 2013

Looking ahead

What does all this mean for financial markets and potential opportunities for investors? We think the following points are important to bear in mind:

• Interest rates around the world will remain low throughout 2014;
• The Reserve Bank is unlikely to cut interest rates again;
• Low inflation, improving growth, low interest rates and on-going central bank support is generally a favorable environment for growth assets compared with defensive assets;
• Investors have started rotating out of the defensive bond allocations built up after the GFC and back into equities and there seems scope for this rotation to continue;
• Yields on government bonds are likely to rise further in 2014, driven by better economic growth and the Taper; however a disruptive sell-off in bonds is not expected;
• The demand for yield is likely to continue as low cash rates persist. This means that already expensive high yield assets are likely to become even more overvalued before they eventually sell off; if there is any risk of a bubble in financial markets caused by QE we think it is in high yield and low quality credit rather than equities;
• Developed large cap equity markets are no longer cheap but neither are they alarmingly expensive. These markets could well have another good year in 2014, though not as good as 2013;
• The US and European equity markets may outperform Japan in 2014; the Topix returned over 50% in 2013 but faces a tougher 2014;
• The vulnerable emerging markets are likely to struggle further in 2014 as the US dollar appreciates with the Taper. Good country selection will be essential to successful emerging markets investing in the coming year;
• The Australian equity market has ground to catch up on the international equity markets after underperforming in 2013; this will require clear signs of economic improvement. The same applies to domestic small caps versus large caps;
• The Australian dollar is likely to fall further in 2014 towards the US$0.80 – $0.85 range;
• Gold may continue to struggle as the Taper proceeds, the US dollar appreciates and inflation remains under control;
• Increased volatility within and between asset classes may provide a better environment for good active management in 2014, including selected absolute return strategies.

Market News

The Australian Share Market performed negatively for the first month of 2014, losing 162.2 points or 3.03%.

January saw global equity markets post their biggest fall since August, with the culprit being a flight out of emerging markets. The switch saw emerging equity markets and their currencies suffer heavy losses. The trigger appeared to be weak data out of China as well as jitters over its shadow banking system.

The US Fed also continued to taper its purchases of Treasury and mortgage-backed securities, reducing the monthly purchase rate by another $10 billion to $65 billion. Janet Yellen officially took over the leadership of the US Federal Reserve from Ben Bernanke yesterday. Janet is the first woman to lead the Fed in its 100 years. She faces a delicate task: Unwinding the Fed’s extraordinary economic stimulus without spooking investors or slowing a still-subpar economy.

Within the Australian market most sectors posted small negative returns for the month of January. The exception being the defensive sectors of Utilities (+0.9%), REITs (+0.5%) and Healthcare (+0.3%). Financials (ex REIT’s) were the worst performing sector losing 4.7% over January.

The Australian dollar continued to weaken against most major currencies on falling commodity prices, and fell to its lowest level against the US dollar since mid-2010.

Forecast wise, UBS targets an ASX200 level of 5700 by year-end 2014 (current level 5190). This represents a total return potential capital return of 9.8%. UBS also expect the A$ to be around US$0.85 by year-end 2014.

Interest Rates

The RBA held the cash rate unchanged at 2.50% at February’s board meeting, as widely expected.

The RBA effectively moved to a ‘neutral’ bias, after previously having somewhat of an ‘easing’ bias (with their December minutes ‘not closing off the possibility of further reduction in rates’).

The RBA’s position on the Australian Dollar has changed from:

“still uncomfortably high”, and a “lower level… is likely to be needed to achieve balanced growth in the economy”

And is now stated as:

“the exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy”; and “beyond the short term, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate.” While the AUDUSD bounced 1% post these comments, it remains near a 3½-year low.

The key data since the RBA’s last meeting was Q4 CPI, which “was higher than expected” However, the RBA expects inflation to be “still consistent with the 2–3 per cent target over the next two years ……if domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time.”

The RBA also significantly changed their closing policy outlook and effectively included a type of ‘forward guidance’, adding “on present indications, the most prudent course is likely to be a period of stability in interest rates.”

In the US we expect the Fed will continue to taper – despite some softer recent data – seeing the AUDUSD ease to (a ‘more comfortable’) $0.85. Further, domestic data shows ongoing improvement (business conditions & non-residential building application). But, with a still soft labour market, and today’s RBA ‘forward looking guidance’, we see rates on hold in 2014.

Market News

After a poor start to the year in January (down over 3%) the Australian Share Market has bounced back strongly; jumping 214.80 points to close at 5,404.80 which was a gain of 4.14%. The ASX/200 is now trading up 52.60 points or 0.98% for the calendar year to date.

Global equity markets started the month nervously; weakening after a worse than expected manufacturing survey from the US. Most economic data released through the month from the US (and elsewhere) tended to be weaker than expected. Global equity markets brushed this off and posted strong gains during the month. With the exception of Japan, most major markets posted gains and all major sectors posted gains.

On the local front reporting season dominated the local market.

The Consumer Discretionary sector was the strongest performing sector for the month of February posting gains of 6.0%. The energy sector was also strong, jumping 5.9% and Utilities posted gains of 5.8%.

The telecommunications sector was the worst performing sector, increasing only 1.4% for February.

The Australian dollar strengthened 1.8% to finish the month at $0.893. Gold also rose about 7% in February, helped by weaker global economic data and rising tensions in Ukraine.

UBS targets an ASX200 level of 5,700 by year-end 2014 (current level 5,386). This represents a total return potential capital return of 5.8%. UBS also expect the A$ to be around US$0.85 by year-end 2014.

Reporting Season

Interim reporting season dominated the local markets for February and has now wrapped up.

Overall the profit season results were positive and we are starting to see small earnings upgrades for the overall market. The big rebound in earning has been for the big miners.

We’re also seeing companies increasing their dividends with CBA, Telstra and Rio Tinto all increasing their dividend.

The big iron ore miners BHP, Rio Tinto & Fortescue all boasted healthy margin lifts. Within the industrials sector, profit margin improvement was delivered by Boral, Resmed, Telstra, Downer EDI and CSL. Cost cutting has again been a dominate theme through the reporting season.

The banks were typically solid (ANZ & CBA posted strong results) though the market appeared to favour value (ANZ) over quality (CBA). NAB was marginally disappointing (soft revenue).

The housing sector has on average performed well with signs of improving activity boasting interest in the sector.

Given the solid February reporting season we see relatively minimal risk to full year estimates for 15% earnings per share growth (EPS) for the financial year 2014 (8.7% EPS excluding resources). Key swing factors for earnings estimates within Australia will be the Australian Dollar, the local economy (better or worse) and the iron ore price.

New Age Pension rates and Income and Asset Test thresholds took effect from 20^th March 2014. Current rates and thresholds are set out in the tables below:

Asset Test Thresholds

Income Test Thresholds

Commonwealth Seniors Healthcare Card (available to persons over age 65)

The Commonwealth Seniors Health Card is subject to an adjusted taxable income test. There is no assets test. To be eligible you need to have an annual adjusted taxable income of less than:

• $50,000 (singles)
• $80,000 (couples, combined), or
• $100,000 (couples, combined, separated by illness)

The Australian Taxation Office (ATO) has announced that it will be giving Australian taxpayers the opportunity to declare monies they have invested offshore under an amnesty program, namely Project DO IT (Disclose Offshore Income Today).

Under the amnesty, disclosures made prior to 19 December 2014 will be treated favourably by the ATO.

The program, initiated by Commissioner of Taxation Chris Jordan, will temporarily reduce the penalties for taxpayers that hand over information regarding their hidden accounts over the past four years. This in essence means that taxpayers will receive a reduced tax shortfall penalty and protection from criminal charges.

This will in effect be the ‘last chance’ for tax evaders to make peace with the ATO as, after greater information sharing powers come into force, the Commissioner has promised the penalties will be worse for people when, not if, they are caught out.

“Now, as governments around the world step up their data sharing and harness powerful technology to find tax cheats, the concept of the tax haven is actually dying,” Mr Jordan said. “It’s just a matter of time before you’ll be caught out”.

Advantages for Taxpayers

This initiative only re-examines those tax years where the time limit for amending assessments has not yet expired (generally four years), as opposed to the unlimited time available to the ATO for reassessment if they suspect fraud or evasion. This means that the ATO will only assess additional tax on those years, and cannot go back any further. Taxpayers who take part in the initiative can also take advantage of the following benefits:

• A small tax shortfall penalty of 10% plus interest (which otherwise can be as high as 90% if the ATO detects a shortfall first);
• No shortfall penalty for additional income of $20,000 or less in a tax year;
• The ATO will not conduct criminal investigations for fraud or evasion or voluntarily refer a taxpayer to other law enforcement agencies; and
• The ATO will give assurances of the tax effects of winding up any offshore structures or transferring offshore assets to Australian entities.

Factors to Consider

Before deciding to take part in this initiative, taxpayers should be aware that:

• If the ATO detects you before you make a disclosure, the initiative will not apply;
• If you provide false or misleading information in any disclosure, the Commissioner of Taxation may not be bound by the terms of this initiative;
• If you wish to dispute any tax, penalties or interest imposed as the result of a disclosure, the assurances given by the ATO under this initiative will not apply;
• The initiative operates as a “single package” suggesting that the terms are not flexible and must be accepted as provided by the ATO;
• The ATO does not grant amnesty from investigation by other law enforcement agencies or prosecution by the Commonwealth Director of Public Prosecutions; and
• There are no exemptions for reporting obligations under the Anti-Money Laundering and Counter Terrorism Financing Act 2006 where offshore assets are being transferred or repatriated under this initiative.

What do Taxpayers Have to do?

Taxpayers are required to fill in a “disclosure statement” form, found on the ATO website and submit this along with any other information sought by the ATO before 19 December 2014.

Further information can be found on the ATO website here.

Most employees in NSW who work for the same employer for ten consecutive years are entitled to two months paid long service leave.

The building and construction industry has its own portable long service scheme that pays benefits to eligible building and construction workers for their service to the industry, rather than their service to one employer. Self-employed workers who perform building and construction work in NSW are eligible to join the scheme.

A self-employed worker for the scheme purposes is a worker who does not receive a PAYG payment Summary Individual Non-business i.e. a group certificate from an employer. These workers include:

• Subcontractors;
• Sole traders;
• Partners in a partnership;
• Workers who receive a distribution or a dividend from a trust.

You have to be working “on the tools” to be eligible. Self-employed supervisors, managers, clerical/administrative employees, and members of partnerships who are not actually performing building and construction work are not eligible to register or record service.

The scheme is operated by the Long Service Corporation; a NSW Government agency.

There are no fees or charges to belong the scheme as the scheme is funded by a levy paid by property developers and owners, based on the cost of the building work they are undertaking.

If you are a self-employed worker in the Building and Construction industry and want to know more about the scheme or details on how to register, this information can be found by visiting the Long Service Corporation website www.longservice.nsw.gov.au.

Alternatively you can contact us and we can provide you with advice and assistance.

We have previously written about the pitfalls and risks of purchasing property in SMSFs and we continue to warn our clients of those. However we should also write about the advantages of this investment strategy as well.

Buy your business premises and rent it back

Probably the greatest perk to buying property in your SMSF is available to business owners. The strategy here is to have your SMSF purchase your business premises and then rent it back to you.

You must ensure that the sale price is at market prices though; hence you can’t exchange the property for less than what a non-related party would pay.

In addition to the above, where the property owned by your SMSF is the property from which you run your own business, superannuation rules require your business to pay a commercial rate of rent to the fund – providing you with a way to accelerate your superannuation savings.

The rent that your business pays into your SMSF will be tax deductible to your business, but more importantly for superannuation purposes, it will not be treated as a superannuation contribution.

Because you are limited as to the amount you can contribute into your SMSF each year, the ability to make tax deductible rent payments into your superannuation fund – without this rent counting towards these limits – enables you to build your retirement benefits quicker and tax efficiently.

Concessional tax on rental income

Where you hold an investment property in your own name, tax will broadly be payable based on your personal rate of tax, which could be as high as 46.5%. Similarly, if you were to hold an investment property through a company, the tax rate is 30%.

Due to the concessional tax rate that applies to superannuation investment earnings, rent received by your SMSF will be taxed at a maximum rate of 15%. And, because certain expenses related to the ownership of the property such as land rates, property maintenance etc will generally be tax deductible to the fund – the effective tax rate may come down even further.

Concessional tax on future capital gains

Special superannuation tax rates also apply to any capital gain made as a result of an increase in the property’s value. As a result, depending on when you decide to sell the property, any capital gain your fund makes on the sale of the property may be completely tax-free.

To summarise:

• If you sell the property while still in the “accumulation” phase, the fund will generally pay CGT of up to 10% on any growth in the property value assuming that the property has been owned for at least 12 months).
• On the other hand, if you decide to sell the property after you have transferred it into the “pension” phase, within your SMSF, any capital gain will be exempt from tax altogether!

Increased purchasing power

Your savings outside the superannuation environment – or even your individual savings within superannuation – may not be sufficient to invest in direct property. Combining your capital with the other members of your SMSF, though, may give you the purchasing power you need to invest.

Other benefits

Depending on your personal circumstances, there could also be other benefits from holding property within your SMSF.

For example, superannuation assets are generally protected from creditors in bankruptcy situations. So, in the unfortunate event that you fall on difficult times, holding property within your SMSF may provide you with some added protection.

Further, if you are a small business owner, superannuation assets are not included when determining your eligibility for the generous small business CGT concessions that apply when you sell your business or retire. By planning ahead, you can ensure that you better qualify for these concessions.

If you would like to know more about purchasing property in your SMSF please contact us.

This was an article written by Meg Heffron, a long term industry participant and a member of the Cooper Review panel, on 18 September 2014.

Prescribing minimum balances or setting tests for trustees will never be appropriate for SMSFs and the government should stay well away from that.

I started my SMSF 20 years ago with about $30,000 when I left my first job. It had four stocks, two of which immediately dropped in value. The remaining two stayed roughly the same during the next four years before I added to the capital when I left my second job. (By then, I’d learned my lesson – I got advice and have done so ever since).

So why did someone who knew nothing about SMSFs, had limited interest in investment markets and – most importantly – had such a small balance make the decision to start a self-managed fund?

While the common response today seems to be to take a cheap shot at accountants and blame them for all those funds with small balances, that was certainly not the case for me. I researched the options and made a conscious decision to start one despite the fact that it clearly wasn’t the cheapest or safest approach at the time.

Why?

What prompted me to start mine is probably similar to the drivers for many others with small balances. I started my working life at the beginning of the compulsory super regime. If the government was going to force me to save in superannuation, I was jolly well going to control it. While managing my own super wasn’t right at the top of my bucket list at the time, my attitude was “start as you mean to go on”. I figured I would make my mistakes early and ensure I was well equipped to make the best use out of my SMSF by the time it had a decent amount of money in it.

I also knew that moving into an SMSF down the track would be expensive. If I waited too long, there would be capital gains tax and potentially other costs to move my money when the time came. Or if I continued with my atrocious stock picking record I would have capital losses that I wouldn’t be able to take with me. Would those future benefits outweigh the costs of running my SMSF with such a small balance in the interim? Possibly not, but it was a risk I was willing to take.

And finally, I wasn’t really sure what support I was going to want long term. Would I want a financial adviser? If I changed my mind and moved advisers, would that mean a change in fund all over again? While I’d not really thought of the phrase “platform for life” back then, it’s what I knew I wanted.

Over time I discovered all sorts of add-on benefits to having an SMSF. When contribution splitting was first introduced, I was into it straight away. My husband will reach preservation age 10 years earlier than I will; it seemed like a no-brainer to start skewing our super to his account. Almost by chance I discovered that the fund to which I’d previously belonged wasn’t ready to offer it yet. I’d left a small balance there to keep my insurance but I was glad I had an alternative home for my contributions.

It took me years to creep above $100,000, at which point it finally became cost-effective.

So to all those critical of trustees with small balances and dubious about those who may have advised them, remember that a fund with a small balance is sometimes a transitory state. It’s also a very sane response to a legislative environment in which someone with $30,000 today will be forced to grow their superannuation for the next 40 years.

It’s why prescribing minimum balances or setting tests for trustees will never be appropriate for SMSFs and the government should stay well away from that.

New Age Pension rates and Income and Asset Test thresholds took effect from 20th September 2014. Current rates and thresholds are set out in the tables below:

Asset Test Thresholds

Income Test Thresholds

Commonwealth Seniors Healthcare Card (available to persons over age 65)

The Commonwealth Seniors Health Card is subject to an adjusted taxable income test. There is no assets test. To be eligible you need to have an annual adjusted taxable income of less than:

• $51,500 (singles)
• $82,400 (couples, combined), or
• $103,000 (couples, combined, separated by illness)

There are a number of CGT concessions available to small businesses that have incurred a capital gain from an active asset.

It is permissible to claim as many of the concessions as you are entitled to until your CGT liability has been reduced to zero. The available exemptions are:

The 15 year exemption

If your business has held the asset for over 15 years and you are aged over 55 or are permanently incapacitated, then you will not attract a CGT charge when you dispose of the active asset.

The 50% active asset reduction

The capital gain on an active asset can be reduced by 50% and can be used in conjunction with the 50% discount available for assets that have been held for over 12 months.

Retirement exemption

If you are over 55, or direct the capital gain directly into your superannuation, then you can claim CGT exemption on active assets. There is a $500 000 lifetime limit on this exemption.

Small business rollover

The small business rollover allows you to defer part or all of your CGT liability until a later year if you have purchased a replacement asset or have incurred costs making improvements to an existing asset.

According to the ATO, there are some recurring mistakes that small businesses make when applying the eligibility tests for these concessions. Two mistakes that have been identified as particularly common are:

Miscalculating maximum net asset value

To be eligible for the small business CGT concessions mentioned above, a number of conditions must be met. One of these is that immediately prior to the CGT event the net value of the entity’s CGT assets cannot exceed $6 million.

The net value of CGT assets is calculated as the total market value of its assets less any liabilities relating to those assets. Liabilities may include provisions such as tax liability and long service leave.

The most common errors relating to calculating the net asset total are failing to include assets owned by connected entities and affiliates, valuing the assets retrospectively instead of at market value and not including the value of the asset being sold in the calculation.

Using the settlement date

A CGT event is typically considered to occur on the date that the contract is entered into, not the date of settlement.

The ATO has found that it is a regular mistake that occurs when business owners record CGT events. Incorrectly recording the settlement date instead of the contract date can lead to complications including the asset not being considered as active for the relevant time frame and incorrectly applying the 15 year exemption.

CGT losses and gains should be included in the financial year that the contract was signed.

Quite a lot of people have been dismayed by the Government’s recent announcement to increase the Age Pension age to 70 for people born after 1965. Some also believe it’s only a matter of time before the access to superannuation age is lifted as well.

If you are adamant not to change your retirement plans, and those plans did not include working until age 70, you will need to think outside the (superannuation) box.

A basic strategy to achieve this would be to implement a plan to generate a cash ‘buffer’ in order to supplement your income from your intended retirement age until age 70. This could be 5-10 years.

After such time you have exhausted your cash reserve, you then tap into your superannuation savings and any social security benefits you may be entitled to, to support you throughout the remainder of your retirement.

Sound simple? Well it may well be straightforward enough but the traps here are twofold: taxation and temptation.

Income generated from investments held outside superannuation are taxed at your marginal tax rate, which could be as high as 46.5%; hence you will need to account for this. It is also wise to assess the tax effective non-superannuation structures available to you, in an aim to reduce your tax payable.

Having a sizeable sum of savings not locked behind the walls of superannuation can also be a temptation. However, you will need to resist the urge to splash out on an overseas holiday you would not ordinarily take using your ‘early retirement funds’.

The same rules apply to accumulating wealth outside of superannuation as it does for your superannuation savings: the more you put away early, the greater the potential for a larger capital base.

If you wish to know more about the options for saving for your early retirement contact us.

This was an alert received from SCAMwatch recently that we believe you should be aware of.

SCAMwatch and the Australian Taxation Office (ATO) are urging consumers and small businesses to be aware of scammers taking advantage of the busy nature of tax time to target you.

Scammers pretending to be from the ATO will typically approach you by phone or email and spin a range of tall tales to trick you into handing over your personal details or money. A common tax time scam involves scammers claiming that you have overpaid your tax and are entitled to a refund, but that you have to pay a tax or administration fee upfront in order for the money to be released. Another tax scam is based on the ruse that you owe money due to a miscalculation from the previous financial year. Scammers also continue to pedal the classic phishing scam where they ‘fish’ for your details by asking you to verify your details.

Scammers use a number of tools to slip under your radar you at tax time – from impersonating an ATO representative, to creating official looking emails and email addresses, to creating sleek and professional-looking websites that mirror the ATO site. They have even been known to create web portals that appear to be hosted on the ATO site, which are designed to trick you into providing your personal details.

Beware – scammers may even recite some personal information about you to trick you into thinking they’re the real deal. These days, it’s easy for scammers to get a hold of personal information from social media and other networking forums.

Your personal details, including your Tax File Number, credit card or bank details are valuable and should never be provided to a stranger. If you hand over your personal information to a scammer, they can use it to commit identity theft and steal your money. You should also be very wary of any requests to send money via money transfer – it’s nearly impossible to recover money sent this way.

The ATO advises that from time to time it will send taxpayers emails, SMS messages or official social media updates alerting them to new services. However, the ATO will never request personal or financial information by SMS or email.

If you receive a call or email out of the blue from someone claiming to represent the ATO and that you are entitled to, or owe money – just hang up or press delete. You can check whether they’re the real deal by calling the ATO on its official contact number: 13 28 69.

How these scams work

Here are some common tax time scams to be aware of:

• Tax refund scams – these scams typically involve the scammer telling you that you have overpaid your tax and are now entitled to a tax refund. In order to receive the refund, the scammer claims that you will first need to pay an ‘administration’ or ‘transfer’ fee via money transfer. They may also ask for your financial details, claiming that this is for the purpose of transferring the money to you.
• Tax owed scams – scammers will claim that you have underpaid your tax and are now required to repay the tax debt immediately. They may request your credit card details or ask you to pay the outstanding amount via a money transfer. They may also ask you to purchase a pre-paid debit card, such as a ‘Load and Go’ card from your local post office, and then send them the card details so that they can access the money.
• Phishing emails – scammers will often try to steal your identity or money by sending you an email that pretends to be from a trusted entity such as the ATO. The scammer will ‘fish’ for your personal details by trying to get you to fill in a form, or click on a link that will allow them to infect your computer with viruses and malware.

Protect yourself

• If you receive an email or phone call out of the blue from ‘the ATO’ claiming that you are entitled to a refund, that you owe money or asking you to confirm, update or disclose confidential details like your tax file number, press ‘delete’ or just hang up. Verify the caller or sender by contacting the ATO on its official contact number: 13 28 69.
• The ATO advises that you should be very careful with whom you share your Tax File Number (TFN). Never put your Tax File Number (TFN) on your resume – only give it to your employer after you have started your job. Never share your TFN, myGov or bank account details on social media. You should also change your passwords if you have shared them with anyone, including family and friends.
• Don’t open any attachments or click on any links in, or reply to, suspicious emails – they may take you to a bogus website or contain a malicious virus.
• Always keep your computer security up to date with anti-virus and anti-spyware software and a good firewall. Only buy computer and anti-virus software from a reputable source.
• If you think you have provided your account details to a scammer, contact your bank or financial institution immediately.

Report

If you receive a call from someone claiming to represent the ATO and are concerned about providing your personal information over the phone, you should ask for the caller’s name, end the call and then phone them back using the ATO’s official contact number: 13 28 69.

You can forward suspect scams to or call the ATO during business hours on 1800 060 062 to discuss a suspected scam.

You can report scams to the ACCC via the SCAMwatch report a scam page or by calling 1300 795 995. You should also spread the word to your friends and family to protect them.

Market Review

The final quarter for the 2013 / 2014 financial year was flat with the ASX/200 closing at 5,395.70 on 30 June 2014. The ASX/200 finished the previous quarter (31/03/2014) at 5,394.80 which is a gain of only 0.9 points. Similarly the ASX/200 started the calendar year at 5,352.20, so calendar year to date the market is up 43.5 points or 0.81%.

But it’s not all bad news with the first half of the financial year very strong (up 549.60 points or 11.44%) bringing the 2013/14 return of the ASX/200 to 593.10 points or 12.35% which is a great result and a continuation on from last financial years’ double digit returns.

Stock News

Telstra

Telstra is understood to have spent between $40 million and $60 million to buy into SNP Security’s back-to-base alarm and security camera business.

The deal will see Telstra and SNP, which is Australia’s third-largest security company, form a new subsidiary called TelstraSNP Monitoring that will provide customers with monitored security.

Telstra said it was also investigating the possibility of giving customers the ability to watch their pets at home via video cameras.

“The market for back-to-base alarms in Australia is potentially very large because a lot of businesses use them but only to a smaller degree than we think is possible,” he said. “There’s phenomenal growth in video technology and the ability to do analytics on video plus a whole range of other monitoring and telemetry”.

Woodside

Woodside Petroleum, after Shell announced it would decrease its shareholding by 19% of the total Woodside shares on issue, has taken a multi-billion-dollar bet to insulate itself from the increased volatility in rapidly evolving global liquefied natural gas (LNG) markets and remake its strategy after a series of abandoned investments, becoming the first Australian company to buy LNG out of Texas.

Woodside will pay more than $400 million a year for at least 20 years to secure 850,000 tonnes of LNG from Cheniere Energy’s Corpus Christi plant in Texas as part of a strong push to beef up its LNG marketing and trading arm.

Experts said the deal would allow Woodside to bring greater flexibility to its negotiations with LNG customers at a time when new sources of gas supplies are challenging the LNG industry’s long-held pricing dynamics.

2013/2014 Year In Review

For the 2013 / 14 financial year the five biggest banks, BHP Billiton and Telstra led the market. QBE Insurance Group, Coca-Cola Amatil and GrainCorp were the heaviest laggards.

The Australian dollar finished 2% higher after tracking in a band between a high of US97.08¢ in October and a low of US86.84¢ in January.

Below is a graph that highlights the key events of fiscal 2014, alongside the mark they made on the S&P/ASX 200 index.

Recovering from the GFC?

The Australian Stock market is still trading significantly below the highs of November 2007 before the GFC occurred. This is surprising when compared to other overseas indexes which are trading at record highs well in excess of pre GFC days. The table below highlights that our market has the Australian ASX200 still 24% below the November 2007 market peak, whereas the US S&P500 index is now 21% above its pre-GFC October 2007 peak:

Economic Update

The Reserve Bank of Australia again kept the cash rate on hold at 2.5%. We believe we are well into a period of stability where interest rates are concerned and cannot foresee rate increases in the near-term.

Our dollar is still stronger than expected, with the majority opinion being that it is overvalued. Most economists and the banks are tipping that we will see a steady fall until year-end and further decline in 2015. The RBA is determined to see the dollar fall to improve economic conditions now that the mining investment boom has faded.

Unemployment fell 0.2% over the quarter to come in at 5.8%. The figures indicate that employers, on average, are more prepared to commit to full-time work arrangements as 22,200 full-time jobs were created but 27,000 part-time jobs were lost.

Job vacancies have increased 2.1%; however people are still concerned about long term employment prospects and the impact of the most recent budget. This can be seen in the consumer confidence index which shows a fall from 99.5 points at the end of last quarter to 93.2 or down 6.33%.

Australia’s GDP rose 1.1% for the quarter, seeing growth of 3.5% for the year – good results so far! The RBA expects our GDP growth to be slow but steady over the coming months and into 2015 and 2016, illustrated in the table below:

Property Highlights

Property prices have ended the financial year on a high with the latest figures revealing a 10.1% increase over the last 12 months on average across the nation.

The RP Data-Rismark June Hedonic Home Value Index results revealed that values increased another 1.4% in June. Sydney and Melbourne led the charge and Adelaide and Darwin were the only capital cities to experience a drop in values over the month of June.

We expect the housing market to remain strong. As interest rates remain at record lows, this will see house prices continue to move higher, although at a slower pace going forward.

The official figures released by the Australian Bureau of Statistics detailing residential property price growth is detailed below.

May 2014 dwelling approvals

Over the 12 months to May 2014, there were 191,088 total dwelling approvals, 107,291 of which were for houses and 83,799 which were for units. The annual number of dwelling approvals is at their highest level since there were 192,614 dwelling approvals over the 12 months to December 1994. It does however need to be noted that the rebound in dwelling approvals is strong and much needed after years of insufficient supply being built.

Total dwelling approvals in May were 14.3% higher than a year ago with house approvals 14.0% higher and unit approvals 14.5% higher.

Focusing on the capital cities, it is encouraging that there has been a significant rise in dwelling approvals across these areas where supply issues are generally most dire. The annual number of capital city house approvals as at May 2014 was 19.6% higher than over the corresponding 12 month period in 2013. Capital city house approvals are at their highest level since the 12 months to February 2011 when 69,524 houses were approved. Capital city unit approvals are 23.4% higher than they were a year earlier and are only slightly lower than their record high level of 73,835 unit approvals over the 12 months to March 2014.

Across individual capital cities the annual number of dwelling approvals is higher across each city except for Darwin. The greatest annual lift in dwelling approvals has been recorded in Brisbane and Sydney.

The May dwelling approvals data showed an encouraging rebound following three consecutive monthly falls. Keep in mind that RBA Governor Glenn Stevens wants to see higher construction levels over the next few years and that will be the real challenge. If consumer sentiment continues to languish and if and when home value growth slows there will be much less certainty around the viability of new residential developments. Maintaining high levels of new residential approvals (and construction) over the next few years will be no easy feat to achieve.

Capital City Auction Numbers (week ended 29^th June 2014)

A preliminary weighted average clearance rate of 68.1% was recorded across capital cities compared to 65.4% on the previous week and 66.9% this time last week.

Based on the auctions conducted in the first six months of this year volumes have risen by an incredible 38% since 2013. More people are selling homes by auction and this is a sign of a market that is performing well and delivering results for sellers and buyers.

There are 2,169 auctions scheduled across Australia this week across 1,137 different suburbs or towns. In capital cities there are 1,769 auctions expected compared to 1,572 to the same period last year.

To put this into perspective, Sydney’s auction rates saw a low of around 48% (4 week average) in January 2012 and peaked at 82% (4 week average) in March 2014. At Sydney’s current 4 week average rate of around 75%, we are around 7% below the peak and around 27% above the 5 year low.

The overall national auction market is displaying a very consistent performance right now with stable clearance rates.

The below table illustrates the variation in auction clearance rates across our major cities over the past 5 years. As you can see, the weighted average clearance rate at present is around double what it was in January 2012.

Too Many Interruptions? It’s Your Own Fault

After you read every people management, time management, and leadership book available, one of the most useful pieces of advice is to avoid interruptions, while still being available to your team when they need you.

In brief, you use some sort of signal that you don’t want to be interrupted – closing your office door, putting an object on top of your monitor, or turning your chair at a certain angle.

The world won’t stop for you

Thinking of arriving at the office early to offset your overload and have some clear time to think?

Now, with social media, smartphones, BYOD, and globally dispersed teams, you might have no quiet time at all. We live in an ‘always on’ world, where it seems impossible to get any peace and quiet.

The good news is: It’s not impossible.

After all, you could switch off all your devices, stay inside, and only go out when you want to – but that’s not practical.

What is practical is to set up your own rules about how, when and where you are willing to be interrupted.

Five broad guidelines to help you set your personal parameters:

1. Set goals

Start each week by setting the important goals for the week, and start each day by setting the important goals for the day (or do this the night before, if that works better for you). If you get interrupted by something, consider its urgency and stick to your goal creating whenever possible.

2. Interrupt yourself

When you’re working, work! Use something like the Pomodoro Technique to work in short bursts, and then switch off with a short break.

Take short breaks during your work, but treat these as breaks between work tasks, so it’s very clear when you’re working and when you’re taking a break. Otherwise it’s difficult to focus on work when you should be working, and it can be difficult to keep your mind off work at other times.

3. Switch off

Some of the interruptions you get are entirely under your own control, and are easy to eliminate – for example:

• Facebook notifications on your phone (turn off notifications)
• Emails from social networks (turn them off; they are usually stored online anyway)
• Email newsletters you no longer read (unsubscribe)
• Notifications from phone apps (disable notifications or uninstall the app)

4. Pick and choose

Not everybody in your network should have equal access to you. So decide who gets priority access, and create a system to coordinate it.

For example, you might choose to only give out your mobile number to family and friends; and everybody else gets the office number. Or you could set up a different ring tone for your immediate family, and ignore all other calls when you’re busy. Or use a special email address for all your newsletter subscriptions, and set up a rule to automatically file them in a ‘Reading’ folder.

5. Get it right next time

It’s useful to pause after every interruption and ask yourself, “How could I prevent this from happening again?” Sometimes you might decide you don’t want to prevent it, because it really is important. But you’ll find plenty of opportunities to avoid future interruptions – for example:

• Delegate more to your team
• Document something better, so they don’t need to ask you again
• Use checklists, templates and forms for common tasks, so things don’t get overlooked
• Hire, outsource or contract staff to handle things you shouldn’t be handling
• Stop being so reactive to everything

How can you use this?

Don’t expect the rest of the world to sit back and wait for you. If you don’t create your own systems to channel the chaos, you’ll continue to be frustrated, stressed, and overwhelmed.

So take charge. Your life, your rules.

Author Credits

Gihan Perera is an Internet coach who works with professional speakers, trainers, coaches consultants, thought leaders, change agents and entrepreneurs, helping them leverage their expertise, individually and in groups, on and off the Internet. Visit www.gihanperera.com

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“Beware the barrenness of a busy life.”

SOCRATES

GST sounds like a simple enough concept: businesses are required to pay 10% tax on most of the good and services they sell in Australia and include this amount in the sale price, thus passing the tax onto the consumer.

However, in reality GST is an incredibly complex series of compliance requirements, especially for small business owners. One of the more confusing parts of GST compliance is knowing whether or not your business should be registered for GST. We have compiled this guide to help small businesses understand whether or not they should be registered for GST.

Who is required to register for GST?

Some businesses have to be registered for GST. If your GST turnover is over $75 000, or you provide taxi travel in exchange for payment, then you must be registered for GST.

GST turnover is calculated by deducting GST from your gross business income for the twelve month period leading up to the current month, or the same calculation applied to your projected earnings for the next twelve month period starting in the current month. If your turnover is edging towards this threshold, you should be checking each month because once you have exceeded it you must register within 21 days.

Voluntarily registering for GST

Some business register for GST voluntarily.

One reason for this may be that they are anticipating reaching the $75 000 threshold. Another reason is that if you are registered for GST you can claim GST credits on purchases that you have made for your business.

Therefore, if your business primarily sells to other businesses who are registered for GST, then the additional cost in your sale prices will not actually have a significant impact on total sales, and you will be able to claim credits on GST you would have had to pay regardless.

Cancelling your GST registration

If your GST turnover drops below $75 000, it may seem like a good idea to cancel your GST registration to save on paperwork.

However, this can mean that you actually end up owing the ATO retrospective GST on high-value assets that you have purchased in the ten-year period prior to cancelling the registration.

If you are cancelling your GST registration due to a drop in revenue then you will need to include a portion of the GST you claimed on these assets and repay it to the ATO in your final BAS.

Calculating these amounts is very complicated, and there are different amounts of GST payable on different assets, dependent on the value of the asset and how long it was held. It is advisable to seek professional advice if you are considering cancelling your GST registration.

Market Review

The first quarter for the 2014 / 2015 financial year was negative with the ASX/200 closing at 5,292.80 on 30 September 2014. The ASX/200 finished the previous quarter (30/06/2014) at 5,395.70 which is a loss of 102.90 points or -1.91%.

Whilst July was very positive for the ASX/200 (up 4.23%) August was flat (up 0.04%) and September saw the Australian share market record its worst month in more than two years (down 5.92%). The drop was sparked by a heavy sell-off in the big four banks and the mining sector. September 2014 was the biggest monthly loss for the ASX 200 since it dropped 7.3% in May 2012.

The Australian share market is now trading below the level at which it started in 2014. The dramatic falls in the value of the dollar and iron ore have combined to pull the Australian Share Market down.

The Australian dollar dropped nearly 7% to end the month around US87.5¢, or below the key psychological threshold of US90¢.

The iron ore price sunk to a new five-year low on 29th September closing the session at $US77.70 a tonne, down 1.1% from its previous close of $US78.60 and its lowest level since September 2009. September saw the iron ore price drop 11.5% from $US87 a tonne on September 1. The iron ore price is now down about 43% for 2014.

The increasing expectation that the United States Federal Reserve will start lifting interest rates in 2015 saw foreign investors taking money from the local market. This saw yield stocks (in particular the banking sector) and the Australian dollar fall. The government’s Financial Services Inquiry also provided uncertainty for the banking sector which basically created a perfect storm.

All of the Big 4 banks are now down more than 10% from their recent peaks. September was the worst month for bank stocks since May last year, when the US Federal Reserve first revealed its intentions to tapering its $US80 billion per month stimulus program.

But it’s not all bad news.

For months we’ve been hearing that a correction is overdue and here it is. For the long term investor now is the time to drip money in to the market.

At 30th September 2014 the yields for the Big 4 banks were as follows:

In comparison the average 6 month term deposit rate is 3.30%. Obviously there is more risk involved in investing in shares than there is in term deposits however the income reward is significant and hence yield stocks will still be sought after investments.

The falling iron ore price is not affecting the big miner’s expansion plans. Rio Tinto is set to push ahead with a new mine expansion at its flagship Pilbara iron ore division. Rio has sought permission from federal regulators in recent days to build a new brownfields mine next to its Yandicoogina iron ore mine in the Pilbara. Named the Yandicoogina Pocket and Billiard South mine, the project is expected to last for 16 years and produce about 70 million tonnes per year during that period. The proposed mine would begin production in 2017 if approved.

The move comes amid a supply glut in iron ore markets, after several years of rapid expansion by Rio, BHP Billiton, Fortescue Metals Group and Brazilian mining giant Vale.

BHP’s marketing president Mike Henry has said that “what is unfolding in the iron ore sector was exactly as the major miner had predicted. It’s less about the demand side drivers than it is about supply side drivers. Over the past year you have seen a lot of new low cost supply come to market and as that happens, as production does a better job of keeping up with demand, we are seeing prices revert back to more normal levels.

Japanese trading house Mitsui is also firmly backing the expansion of high quality iron ore and coal projects in Australia despite the negativity sweeping the industry. Mitsui Australia chairman and chief executive officer Yasuhi Takahashi has also flagged excess supply as the reason for the fall in commodity prices and not the waning in demand. They expected prices to rebound from this low point in the cycle.

Economic Update

The cash rate has again remained steady at 2.5% with The Reserve Bank of Australia once again implying a long term period of stability in interest rates.

Since the first of September the Australian dollar has fallen from US93.29¢ to as low as US86.84¢. That is close to 7% for the month. The Singapore dollar, Canadian dollar, Swiss franc, European euro, British pound, South African rand, Malaysian ringgit, Chinese yuan, Japanese yen and Thai baht have all strengthened against the Aussie for September to date, with only the New Zealand dollar and Brazilian real weakening.

Whilst Australian exporters are jumping for joy, end of year holiday makers are looking on in dismay. Unless of course you are jumping the ditch or fancy a South American sojourn.

Over the quarter Australia’s GDP rose 0.5%, beating market expectations and driven by consumption and private investment amid weakening exports.

Compared with the second quarter of 2013, our economy advanced 3.1% in the April to June period of 2014. Mining (1.2% points), financial and insurance services (0.6% points) and construction (0.5% points) were the largest contributors to total trend of growth. Professional, scientific and technical services (-0.3% points) and transport, postal and housing (-0.2% points) were the largest detractors in trend terms.

Unemployment across the quarter was a little volatile, surprising some economists; with July increasing to 6.4%, August falling to 6.1% and September closing out at 6.1%. The Australian Bureau of Statistics suggests that the labour market remains weak and unemployment is likely to remain around or above 6% for months to come.

The unemployment index has been a closely monitored macroeconomic indicator over the past year for many Australians as confidence across household sectors is impacted by job security and availability.

The volatility in the unemployment rate can be explained somewhat as we have seen the largest surge in part-time employment arrangements since the mid-1980s during August. The increase was so large that the Australian Bureau of Statistics extensively checked their figures before releasing its result. The main drivers behind this shift are our ageing population and acceptance of more flexible working arrangements. More mature workers are reducing their employment hours, rather than just ceasing work altogether in the lead up to retirement. Similarly, the workforce is becoming more adaptable and accepted of job sharing which is proving an increase in the utilisation of persons aged 25 and over.

The changes in full-time and part-time rates are illustrated below:

Property Market Update

The first six months of 2014 have shown a mixed performance across Australia’s capital city housing markets. According to the RP Data–Rismark Home Value Index, values across the combined capital cities have increased by a cumulative 3.3% over the first half of the year. The first quarter was substantially stronger than the second quarter, with values up 6.5% over the three months ending March 2014 compared with a 0.2% fall over the June quarter.

Based on data for the most recent quarter it appears that capital gains across the housing market are slowing down following two years of growth. The market started its growth phase back in 2012 and over the past two years we have seen a cumulative capital gain of 15.5% across the nation.

To date, the most substantial growth conditions have been recorded across the Sydney housing market where dwelling values have moved 23.1% higher since June 2012 and 5.5% higher over the first half of 2014. Sydney’s long-term growth cycle has been relatively weak, with dwelling values rising by just 3.4% per annum over the past decade.

Housing affordability in Sydney remains an issue, with the median house price now around the $800,000 mark.

The second highest capital gain over the first half of 2014 was recorded in Hobart, where dwelling values have moved 4.2% higher. The rise in values across Australia’s most affordable capital city come after a substantial correction; even with the recent capital gain, Hobart dwelling values remain 8.3% below their previous 2009 peak.

Melbourne’s housing market has recorded the third highest capital gain over the first half of 2014, with dwelling values up 2.9%. The six-monthly rate of growth is a substantial slowdown from the frothy conditions of 2009 and 2010 where the rolling six-monthly rate of capital gain peaked at 12.2% in November 2009. Melbourne’s long-term growth cycle has been much stronger than Sydney’s with dwelling values rising by 5.8% year-on-year over the past decade. Such strong value gains at a time when rental rates aren’t rising anywhere near the same pace has compressed rental yields substantially where houses are returning a typical gross yield of just 3.4% and units are providing a slightly higher 4.3% yield.

Brisbane’s housing market has recorded the fourth highest rate of capital gain so far this year with dwelling values moving 2.3% higher. Brisbane’s housing market has been a relatively soft performer since the end of 2007 with the rate of capital gain substantially underperforming the capital city average over the past two growth cycles. The weak performance has seen a substantial valuation gap open up between Brisbane and the other major capital cities. Additionally, rental yields are much healthier than what is being recorded in Melbourne and Sydney, with houses returning an average gross yield of 4.5% and units providing a higher 5.4% gross yield.

Darwin dwelling values have risen by 1.9% over the first half of the year, the fourth highest gain across the capital city markets. Over the long term, the Darwin housing market has provided the highest annual rate of capital gain, with values rising, on average, by 8.4% per annum over the past decade. Despite the strong long-term capital gains, Darwin rental yields remain the highest of any capital city at 6.1% gross for houses and 5.9% gross for units.

Canberra’s housing market has slowed substantially over the second half of 2013 and first half of 2014. Dwelling values were 1.5% higher over first half of 2014 and rental markets have started to track backwards.

Adelaide dwelling values have been virtually flat over the 2014 year to date, up by just 0.8%.

Perth’s housing market moved through the peak of its growth phase late last year, with dwelling values moving 0.1% lower over the first half of 2014. Despite the recent slowdown, the Perth market has seen one of the strongest cumulative rates of capital gain over the current cycle, with dwelling values up 15.2% since bottoming out in late 2011.

RP Data’s view is that the rate of capital gain will continue to taper over the second half of 2014. Perth and Canberra have already moved through the peak of their growth cycle, while Melbourne and Sydney are also likely to have recently moved through the peak of their cycle. The capital city markets to watch are likely to be Brisbane and Hobart where growth conditions have been comparatively sedate, rental yields are much healthier and affordability hurdles are less of an issue.

Interestingly market gains have been significantly driven by a lack of supply and foreign buyers. The foreign buyers are getting a lot of attention in the press but nationally we still have a shortage of approximately 100,000 dwellings for people to live in. Of this number New South Wales makes up over 50%. Hence the growth in the Sydney and surrounding markets.

Source RP Data

Breast Cancer is the most commonly diagnosed cancer for women in Australia. One in eight women will be diagnosed with the disease by the age of 85;¹ and in 2014 alone, around seven women will die every day as a result.²

October is Breast Cancer Awareness month in Australia, and presents the perfect opportunity to raise awareness of this significant health issue and of the importance of having adequate insurance cover. Trauma Cover provides cover for individual events including breast cancer, and pays a lump sum regardless of whether you are prevented from working or not. It can provide invaluable financial support, security, and importantly options for treatment, care and recovery.

Please contact us to arrange a quote.

¹ Cancer Australia: Report to the Nation 2012

² www.bcna.org.au

We all know the downside of the day after the Christmas party: the clean-up, hangovers and possibly a few karaoke regrets.

Unfortunately, Christmas parties can also attract Fringe Benefits Tax (FBT), meaning that business owners may end up with an unexpected FBT bill after the event.

The ATO allows businesses a leeway of $300 per employee for Christmas parties. This means that if your party works out at less than $300 per employee you should be able to avoid a Christmas party FBT bill.

There is also one FBT loophole that is particularly useful for employers looking to reward people at Christmas time: the $300 limit for fringe benefits applies to each benefit provided, not the cumulative value of all benefits.

Therefore, if you were to throw a party that cost $299 per employee and also give each employee a Christmas gift worth $299, you could avoid paying FBT.

If you’re keen to avoid FBT, holding the party on company premises during work hours will mean that food and drink is FBT free (provided that only employees attend). Also, if legitimate clients are in attendance at the event there will be no FBT.

The FBT calculation method described above is known as the ‘actual value method’. There are also two other methods that you may use to calculate FBT for entertainment (including Christmas parties): the ‘50/50’ split and the ‘12 week register’ method.

Using the 50/50 method, half of the total value of food, drink and entertainment provided to employees, associates and third parties is taxable.

Using the 12 week register method, a company must keep details of the proportion of food, drink and entertainment costs that were provided to employees and their associates and the FBT will be calculated accordingly. The 12 week period must be kept for a representative period (not an unusually quiet social period).

Whatever your company Christmas plans are, a little forward-thinking now can save you a lot come next end of financial year.

Ways to Avoid Burnout

Burnout is a big issue facing many people today, caused by an inability to maintain a sense of balance in life. Use these ideas to help you to avoid burnout and achieve more balance.

I have personally experienced burnout – and I was to blame. So I can speak from personal experience when I say that the price we pay is too high.

Frankly, it is almost impossible to have total balance in your life. There are always too many demands, issues, problems, needs, goals and people to deal with. It is possible however, to have enough balance to reduce the stress in your life while enjoying many of the gifts life has to offer.

At any given time we can be out of balance if we are not careful. For example, if you have just started a new business or career, if you have just had your first child or you are in a new relationship. During these times, you will most likely devote more time and energy to these activities, while ignoring some of the other important areas of your life.

However, problems are created if we stay out of balance in one or more area of our life for too long. What are some of the reasons why people get out of balance?

A lack of clear long-term goals

Some people literally don’t know where they are going or where they intend to arrive. If you don’t know exactly where you are going, how would you know if you have arrived yet or not?

The inability to say no

Some people take on too much. They say yes to everyone. “Of course I can have it done by tomorrow”, “No problem, leave it with me”.

Trying to please everyone

This is often a version of the previous one. I’ve worked out that by trying to please everyone we can burn ourselves out, and be no good for anyone – especially those we love and care about.

A lack of concentration and focus

If you’ve ever watched a lion stalking its prey in the wild, they do not chase the herd of Antelope, they focus on one beast only, and concentrate on achieving that one goal – lunch! So it is with us as goal-seeking human beings. We are happiest when we have a goal and a focus.

Emotional immaturity

Sometimes we let things upset us that really shouldn’t. Instead of taking a mature emotional attitude of “responding”, we “react” – often without thinking, burning up energy, getting upset and perhaps upsetting other people too, when we would have been better off thinking first and then responding in a more appropriate manner. Often more easily said than done, but a habit worth developing.

Unrealistic goals

Believe me, I am one for setting goals and creating plans for achieving them. I teach it and I do it. But setting unrealistic goals can lead very quickly to burnout. It’s sometimes said there is no such thing as un-realistic goals, only un-realistic time frames. There is some wisdom in that too. Trying to achieve a goal too quickly can lead to burnout.

A lack of self-respect

I am guilty of treating myself in ways that I would never have allowed others to do, expecting that I can work excessive hours without a break. How about you?

A lack of planning

You’d be surprised how many business people and salespeople I know that get up in the morning and just let the day happen to them. They wonder why they feel stressed, out of control and lurch from one crisis to another. I personally like to plan the night before and then let my unconscious mind further develop the plan as I sleep. I also sleep better knowing what I am doing the next day – and with my often busy schedule – what time to get up.

Poor time management and organisation skills

Trying to fit too much into a day will stress you and everyone around you. Taking the time to get organised and plan the use of your time each day is essential – and I also mean scheduling in time with your family and loved ones and time just for yourself. Like all skills, time management and organisation skills can be learnt.

Author Credits

Wayne Berry CSP is CEO of Top Gun Business Academy and well-recognised speaker on Sales, Sales Management and Negotiating. He has a video blog where you can view 3-4 minute video tips at http://www.salesblog.com.au and subscribe. For further information Phone: +61 3 9521 0500 or visit www.wayneberry.com.au

[Quote]

“Every strike brings me closer to the next home run.”

BABE RUTH

One of the most exciting things about starting a self-managed superannuation fund (SMSF) is the possibility of buying property.

Property that you purchase in your SMSF can be transferred to you once you reach retirement age or retained in the SMSF where any income it generates will remain tax-free.

There are a lot of advantages to owning property in your SMSF. However, investing your super in property may not necessarily be the right choice for everyone and there are many things to consider before you make this important decision.

Here are a few things to look at if you are interested in purchasing a property in your SMSF:

Taking on debt in your SMSF

Changes to regulations that have allowed SMSFs to borrow funds in order to purchase property have seen many people take up this exciting opportunity. However, having debt in your SMSF is a potentially risky position to be in, and you should think carefully about whether or not it is the right decision for you.

You will also need to think about whether or not you will take a loan out from a bank or financial institution or a related party. If you do take out a loan from a related party, you need to be scrupulous in ensuring that the loan is on commercial terms as there can be some heavy financial penalties associated with non-compliance.

Is the property aligned with your investment strategy?

You need to think carefully about whether or not purchasing a property is in line with your investment strategy. Many people think about property as being one of the safest investments that they can make.

However, if investing in the property is going to mean that too much of your cash is tied up in a single asset it may not be beneficial. If you are concerned about this, a possible alternative is to invest in a cheaper property.

Does the property need any work?

The income generating potential of any property can be significantly affected by renovations (or lack thereof). However, there are some tricky compliance issues surrounding renovations and improvements to properties owned by an SMSF.

For example, if you have borrowed to purchase the property, you are unable to make any significant improvements using borrowed funds. You must also be mindful of some strict regulations surrounding working on the property yourself. Anyone thinking about renovating a property owned by an SMSF should discuss their situation with an accountant to ensure that these improvements will be a viable option.

Do you have the funds to purchase outright?

SMSF trustees who are considering investing in property need to think carefully about whether or not they should borrow in order to make a bigger purchase. In some instances, particularly where the cash flow to the SMSF is limited, it may be advisable to limit the debt as much as possible. However, it may also be a more prudent option to borrow in order to acquire a property that will have the potential to generate higher income.

What will happen if a member passes away?

Dealing with a property owned by an SMSF can be complicated when a member passes away. For example, if a member passes away and their beneficiaries need to be paid out it may be necessary to sell the property. There can also be some complications if different members are reaching pension phase at varying intervals.