The Government has announced it is spending $42 billion stimulating economic activity through cash payments, tax breaks and infrastructure projects, which it says will keep Australia from sliding into recession.
It sounds like a dream come true. Some are refering to it as the 'recession lottery', where almost everybody wins. But is it too good to be true?
If you find the idea of it a little confusing, you're definitely not alone. Find out exactly how Mr Rudd's 'rescue' package will impact you.
Families
$12.7 billion for immediate one-off payments to working Australians, families with school-age children, farmers, single income families and for those undergoing training.
$900 - If you earn up to $80,000
$600 - If you earn between $80,000-90,000
$250 - If you earn between $90,000-100,000
$900 - If you earn up to $150,000 (single-income, two-parent family)
$950 - Low and middle-income families with a school aged child (payout per child)
$950 - Students and apprentices
$950 - Farmers affected by drought
Homes - $10.5 billion
Provide free insulation to 2.7 million homes
Solar hot water rebates
Increase the national stock of public and community housing
20,000 new homes
Schools - $14.7 billion
Invested in school infrastructure and maintenance
$200,000 - Paid to each school to cover repairs
Bringing forward funding for trade training centres
Small Business - $2.7 billion
Small and general business tax breaks
These will provide deductions for equipment purchases before the end of June 2009
Roads - $890 million
Fix regional roads and blackspots
Install railway boom gates
Regional and local government infrastructure
When can you claim your family bonus?
Payouts will be delivered in March and April 2009.
March 2009 The Boom in Gloom
In the words of the old popular song of the 1930s, it is picnic time for the bears in the financial publishing industry right now. But these particular creatures are more of the grizzly than the cuddly variety.
Crowding out the non-fiction bestseller lists on online retailing websites is a virtual biblical flood of books about the financial crisis that, were you to read them end-to-end, you wouldn't be in the mood to do much of anything at all.
Among the titles grouped together on Amazon currently are such light reading as 'Financial Armageddon', 'The Great Depression Ahead', 'Game Over: How You Can Prosper in a Shattered Economy', 'Meltdown', 'Depression Economics' and 'When Giants Fall'.
There is not much to conclude from this spate of literary doom and gloom other than the fact that the market is doing its job, meeting an upsurge in consumer demand for titles that shed light on the global financial crisis.
People justifiably are anxious. They are concerned that what used to work doesn't work any more. And, feeling fatalistic, they buy these books hoping that the catastrophic musings within will give substance to their fears.
Now while there is nothing wrong in being intellectually curious about the financial crisis, there is a danger in seeking practical investment advice from books that merely reflect fears that are already in the market.
The lead-time in publishing books, even with writers that are unusually quick in bashing out a narrative, is usually at least 3-6 months, which means the market has often moved on by the time the book comes out.
And even when the writer's thesis is still relevant, it often merely reflects what is in the price. Almost inevitably, as soon as investors respond to the book by piling into or out of the particular asset class, everything changes.
As an example, think back about 10 years, where there was a mini-publishing boom in books that declared the internet and its associated innovations had rendered the business cycle dead. This was a productivity revolution, we were told. Well, we know how that one ended.
Now, there is a boom in gloom. Every time you walk into an airport bookshop, you find yourself confronted with titles that declare the end of capitalism, the inevitability of another great depression and tips on surviving the economic apocalypse. And that's even before you get to the new Robert Ludlum.
By the way, this critique of 'Financial Armageddon Chic' is not aimed at downplaying the very real issues at the heart of the financial crisis or the many economic questions it raises. But it's worth reflecting on the fact that the reason stock markets have fallen so far is precisely because of these uncertainties. A lot of the bad stuff that keeps you awake at night is already in the price. In other words, the markets have done the worrying for you.
By the time you register what has occurred and seek to act on it, the markets (and the publishing industry) usually have moved onto new stories.
Tax Relief for Small Business
The Rudd Government will take further action to help Australian small businesses to weather the global financial crisis by cutting the quarterly pay-as-you-go (PAYG) instalment payable on 21 January 2009 or 28 February 2009 by 20 per cent.
Small business is the backbone of our economy, and today’s announcement by the Rudd Government will offer some much-needed relief to around 1.3 million small businesses – many of them doing it tough due to the global financial crisis.
This 20 per cent cut in the February instalment will more accurately reflect small businesses’ average actual profit growth in the current economic environment. It will provide immediate and much-needed cash flow relief to small businesses and encourage small business confidence.
While there is a tolerance in the existing provisions that allows taxpayers to vary instalments down of their own accord, many small businesses are reluctant to do so, especially those with unpredictable income streams. This action by the Government will reduce uncertainty for those small business taxpayers and relieve them of the cost of doing their own calculations.
This 20 per cent reduction will be available to small business entities – generally those with aggregated turnover of $2 million per annum or less.
Details of the PAYG instalment reduction are below.
The cost of the initiative is estimated to be $440 million for 2008-09. This consists of bringing forward the expected lower revenue collection from small businesses in 2009-10 caused by the current economic conditions. However there will be no net cost to the Commonwealth over the full forward estimates period.
Today’s announcement – along with our $10.4 billion Economic Security Strategy to strengthen the economy, boost confidence and support jobs – shows the Rudd Government is determined to act decisively to bolster small business in the face of the global financial crisis.
Who will receive the reduction?
The 20 per cent PAYG instalment reduction applies to ‘small business entities’ as defined in the tax law. In general a ‘small business entity’:
carries on a business; and
satisfies the $2 million aggregated turnover test.
How will it apply?
The 20 per cent reduction applies to the instalment amount shown on the Business Activity Statement (BAS) dispatched by the Australian Taxation Office (ATO) in December 2008 for the quarter ending on 31 December 2008. This instalment amount is due on or before 28 February 2009 (which will be extended to 2 March 2009 as 28 February 2009 falls on a weekend) for most small business taxpayers. For some small business taxpayers (for example, small businesses which elect to report and pay the goods and services tax on a monthly basis), this due date is 21 January 2009. As such, for the quarter ending 31 December 2008, small business entities are only required to pay 80 per cent of the instalment amount shown on the BAS on 21 January 2009 or 2 March 2009.
Small businesses can further vary their instalments based on the reduced amount in accordance with the existing law. This reduction does not apply to taxpayers who calculate their instalments based on the instalment rate notified by the ATO. Their payments will automatically adjust when they apply the given rate to their actual income for the quarter.
Further information
Further information on this reduction can be obtained by contacting the ATO on 132 866.
Government guarantee for all Macquarie retail deposits
Wednesday, 19 November 2008
I am pleased to announce that Macquarie's retail bank deposit products will be covered by the Federal Government guarantee at no additional cost to depositors after 28 November.
This includes the recently announced Macquarie Cash Management Account and Macquarie Bank Term Deposits.
This gives your clients certainty surrounding their cash deposits, while still having access to market competitive interest rates.
Macquarie Cash XL Macquarie will also extend the guarantee to the Cash XL's underlying wholesale deposit at no additional cost to Cash XL investors until further notice.
Macquarie CMT We reiterate our strong intention to ensure that all of the underlying investments of the Macquarie Cash Management Trust continue to be covered by the Government guarantee following 28 November. We are continuing to work with the relevant Government, regulatory and industry bodies to assist them in their review process and will keep you informed of further developments.
Product summary To view a summary of how the Government guarantee applies to the full suite of Macquarie Adviser Services cash products, please click here.
MACQUARIE CMT INVESTMENTS CURRENTLY GOVT GUARANTEED
Guaranteed - All underlying investments in the Macquarie CMT are currently covered by the Government guarantee.
Open - The Macquarie CMT will not freeze investors’ funds to redemptions.
Liquid - The Macquarie CMT remains highly liquid, well diversified among the major Australian banks, and is very secure.
1. Guaranteed Following the Federal Government announcement on Friday 24th October and the clarification issued on Saturday 25th October, we can confirm that up until 28th November all investments in the Macquarie CMT are covered by the Government Guarantee.
The announcement stated that up until November 28th all deposits and wholesale funding will be guaranteed without charge and that, in the lead up to that time, the Cash Management Trust sector will be part of an additional review to look at how the Government will apply the guarantee moving forward.
Macquarie continues to work towards having the underlying investments of the Macquarie CMT covered by the Australian Government’s 2008 Deposit and Wholesale Funding Guarantees on an ongoing basis, and we are continuing to work with the relevant Government, regulatory and industry bodies to assist them in this review.
2. Open The Macquarie CMT will not be frozen to redemptions. Investors in the CMT have complete access to their funds and their transactional activities are continuing as normal.
3. Liquid The Macquarie CMT is committed to ensuring its clients can access their cash at all times. To ensure this, the CMT is invested into banks, securities and deposits that provide a very high level of liquidity.
About the Macquarie CMT The Macquarie CMT is a very secure investment and is structured to consistently deliver security, diversification and liquidity.
Established in 1980, the CMT has held its AAAm rating from Standard & Poor’s (S&P) - the highest credit rating available to a cash management trust - for over 20 years. The AAAm rating indicates that the CMT provides an extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit, market, and/or liquidity risks.
The CMT can only invest in government securities or bank securities and deposits rated as A1 or A1+ by S&P. In addition, the CMT can only invest up to 25% in A1 rated bank securities and deposits.
The S&P AAAm criteria for cash management trusts require that the trust demonstrates prudent diversification among well-rated organisations. This way, your money is not just invested in a range of banks; it’s invested in a range of high quality banks.
The CMT is already invested solely in Australian ADIs that are eligible for the Government Guarantee.
It is a market leader in cash funds management and is today the largest retail managed fund in Australia. Its highly transactional functionality allows you to:
consolidate cash
better control income and expenditure
reduce account fees
take up investment opportunities as they arise
automate settlement of share trades
consolidate reporting
Click here for a pdf version of this information you can share with your clients. If you have any further questions, please contact your Business Development Manager. As always, we will keep you informed as new information comes to hand.
Regards
Neil Roderick Executive Director Head of Macquarie Adviser Services
October 17, 2008
Op-Ed Contributor
Buy American. I Am.
By WARREN E. BUFFETT
Omaha
THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.
Why?
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.
A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.
Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”
I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
The last week was memorable for many reasons, not least the fact that it was the worst week in history for the US markets. The S & P 500 and Dow both lost 18% during this fateful week with the Dow plummeting through three psychological barriers in that time, the 10,000, the 9000 and then 8,000 barrier, a level not seen since the 90s. It was only the end of last month that the Dow was above 11,000 (Sept 29 to be exact) with the Dow having fallen more than 36% during 2008.
One trader put it very succinctly when he said at the end of the worst day on the stock market for twenty years "This is worse than a divorce. I've lost half my net worth and I still have a wife".
To put this into context, it was a week that saw almost US$5 trillion (yes 5 thousand billion) wiped of the values of the worlds stock markets.
The meltdown has been called the Crash of 2008 with some comparing it with 1987. The fall this week was less than that 21 years ago, but some traders were saying it was worse, "At least then it was a short, sharp, shock on one day. This has been relentless all week!"
The UK Government unveiled ?500 billion rescue plan to help their banks and over the week-end partially nationalized three of them and in the process has allowed the merger of two of the big four (imaging the National and Westpac having to merge as an example) and the US is looking to revise its rescue plan along the lines of the UK model. The G7 and EU have suddenly shown solidarity and pledge to coordinate efforts.
The crisis has spread way beyond its origins in the US financial system. with concerns for example about General Motors, whose shares tumbled 31% to their lowest since 1950 on worries that it might go bankrupt (yes GM!).
Such events prompted the following headline, "Financial crisis: Countries at risk of bankruptcy from Pakistan to Baltics" with the copy explaining that a string of countries face the risk of "going bust" as financial panic swept Asia, Eastern Europe, and Latin America. The only times in the last century that we've seen year on year declines like these was in the 1930s and the 1970s.
So how long did it take for the markets to reach their bottoms then?
Before the Great Depression, the market peaked in September 1929. In inflation-adjusted prices, it took three years, until June 1932, for the market to stop dropping and start rising again.
Before the bear market of the 1970s, the S.&P. 500 peaked in December 1968. In inflation-adjusted prices, it took six years, until December 1974, for the market to bottom out.
After the tech bubble's burst, the S.&P. 500 saw a peak in October 2007, 1 year ago believe it or not.
The New York Times considered how long it would take the market to recover to its pre crash peak. After the Great Depression, it took 29 years, until 1958, for the market to reach its pre-Depression, inflation-adjusted peak. After the 1970s recession, it took 24 years, until 1992, for the market to make a full "recovery" by the same measure. That suggests we may have some time to go to reach the inflation adjusted peak once again.
Having said that, many will simply look at the nominal number for their definition of recovery, which means the Dow has to get above 14,279 again (reached in October 2007).
But, as I mentioned last week, there are no clear signs or announcements saying "here is the bottom, buy now". Anyone who read my series on Dollar Cost Averaging in the ATC Monthly Digest will know that falling markets are ideal for this type of strategy. When markets turn around, that constant investment pays of in a big way.
A number of seasoned investors are suggesting that perhaps we have reached that point, arguing that the sell-off has gone much too far and stocks are poised to rally. Indeed, by many measures stocks are as cheap as they have been in the last 25 years.
Anyone who has studied Behavioural Finance will understand that the market plunge in the last week was not driven by rational analysis. It is highly likely that a great portion of that collapse was caused by sheer panic, aided and abetted by forced selling from hedge funds having to meet margin calls.
According to finance professor David Stowell, in years to come this will be perceived as having been a great value-buying opportunity, "Two and three years from now, it will seem very smart" he says.
Martin Whitman, who manages the $6 billion Third Avenue Value fund, argues that as long as economies worldwide avoid an outright depression, stocks are amazingly cheap adding that "This is the opportunity of a lifetime with the most important securities being given away".
The problem is not with the markets, but with the investors. Many often sell on the way down and/or at the bottom and then don't buy again until the market has risen well above where they sold. It is a classic strategy that tends to be repeated over and over.
As I have said before, in any other market place, when prices are slashed like this, it is called a sale and people view it as a great time to buy. Hopefully the new found optimism will last, at least until the next time (and there WILL be a next time, but hopefully not for a while).
Finally, I shall not be posting articles for a few weeks as I have to make a trip to the UK to visit ailing relatives. Hopefully by the time I come back, markets will have returned to some semblance of normality.
Copyright All Things Considered 2008: This publication is copyright. Subject to the conditions prescribed under the Copyright Act, no part of it may, in any form, or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) by reproduced or transmitted without permission. Inquiries should be addressed to the authors
September 2008
In Other News . . .
Jim Parker, Regional Director DFA Australia Limited
No, not the news on the carnage in the global financial markets but the headlines related to the real economy, the one where most of us live and work.
Here are just a few recent headlines from major media publications:
In fretting over the admittedly severe strains in the financial sector these past weeks, it's easy to lose sight of the fact that people and businesses around the world continue to work productively every day, making goods and delivering services to meet the needs of a global economy.
Most of us still go to work each day and kids still go to school. We all need to eat, clothe ourselves, house our families, look after our health and get from one place to another. Once we've covered the essentials, we may also find time to entertain ourselves, taking holidays, dining out, listening to music, reading books, watching movies and going to see our favourite sports.
Those multiple needs are met by a variety of businesses which manufacture the goods and services that meet the demands of consumers, other businesses and governments. And those businesses employ people. One of the roles of financial markets is to quickly funnel the necessary capital for these activities from lenders to borrowers.
This is not to downplay the recent momentous events in the investment banking industry and major consequences felt in financial markets. But it is wise to make a distinction between the financial economy and the real economy—between Wall Street and Main Street.
What the world has witnessed these past months is a massive unwinding of leverage and an associated repricing of risk as a lengthy era of extremely cheap credit, ever rising asset prices and bountiful liquidity came to an end.
This has had messy implications for non-deposit taking financial institutions, who invested in highly risky, highly complex and highly leveraged financial assets without sufficient capital to support their losses.
The market economy is now delivering its harsh judgement on those practices, with the pain felt most acutely by the staff and shareholders in those now failed, slimmed down or restructured institutions.
This carnage may be just the latest manifestation of what the noted Austrian economist Joseph Schumpeter called the "creative destruction" of capitalism7, an evolutionary process in which the system, like an organic entity, is continually rebuilding itself from within.
In the meantime, through their interventions, policymakers are seeking to ensure that markets continue to provide their most important functions, as an efficient means of allocating capital to businesses and governments, transferring risk and financing international trade.
By providing liquidity and easing official interest rates where necessary, central banks also are taking action to ensure the inevitable spill over of financial market events to the real economy is kept to a minimum.
Regardless of what happens with Lehman Brothers in the US or HBOS in the UK or Babcock & Brown in Australia, businesses that make things and employ people still need access to capital, consumers still need to put roofs over their heads, governments still need to fund essential services and countries still need to trade with each other.
These activities are continuing, despite the ructions on Wall Street, and their comparative health is reflected in the headlines above.
The ordinary investor has a role to play in this real economy by supplying the capital that underpins those day-to-day activities. And in return for taking that risk, the investor can expect to receive a reward. Over short periods, those rewards may disappear, as we are seeing at the moment.
The fact is volatility is part and parcel of investing and you should expect the occasional setback, particularly after a long period of very strong returns. But if you keep your focus on the long term and remain broadly diversified in your portfolio, short-term swings in sentiment become less significant.
Speculation is one thing, but the real economy needs real investors.
7'Capitalism, Socialism and Democracy', Joseph A. Schumpeter, 1942
August 2008
The Confidence Trick
Jim Parker, Regional Director, DFA Australia Limited
Australians are in a real funk. The sentiment surveys keep telling us so. So what does an investor do with this information? Presumably, it means the economy and markets are turning down—or maybe not.
It seems nearly every day that the media is reporting some survey or another showing confidence levels among consumers, small business owners, industry leaders, executives and professionals at historic lows.
Westpac, for instance, recently reported1 that consumer sentiment had reached its lowest levels in 16 years in July, a consequence we were told of rising oil prices, higher interest rates and a sagging share market.
National Australia Bank, meanwhile, secured a media splash2 with news that its own survey had found business confidence sinking to levels last seen in 1991, in part because of the sagging spirits of consumers.
The survey promoters are keen to give the impression that these are leading indicators of economic and market events. And the media, always looking for a dramatic headline, can be relied upon to play along.
The problem is there is little evidence that surveys of consumer and business confidence say much of anything about the future. If anything, they tend to reflect what was happening at the time they were taken.
A few years ago, researchers at the Reserve Bank of Australia carried out a detailed analysis3 of economic variables—gross domestic product, employment, company profits and household spending—in an attempt to establish a link with sentiment prevailing in the months beforehand.
The researchers found that reported levels of consumer confidence were linked more closely to past data than the future path of the economy. In other words, they tend to be lagging, rather than leading, indicators.
"There is reason to suspect that respondents' forecasts offer little more information about the future path of the economy than a weighted average of lagged economic variables," the authors concluded. "That is, confidence surveys don't appear to tell us much that we didn't already know."
This is rather similar to the way financial markets operate. All new information, whether it is an economic indicator or a company announcement or a major geopolitical event, tends to get built into prices very quickly.
If anything, the speed of this process of assimilation has increased over the years, due to modern communications technology, the globalisation of information flows and the competitive nature of the media and the markets.
For the media, that means it can be very easy to confuse cause and effect when reporting market and economic news. Lousy sentiment doesn't necessarily tell us the market is going to fall. It just tells it has fallen.
What happens next may not be in the price at all. The future is like that.
1'Consumer Outlook Dims', Sydney Morning Herald, July 9, 2008
2'Confidence at 17-Year Low', Sydney Morning Herald, July 28, 2008
3Ivan Roberts and John Simon, 'What Do Sentiment Surveys Measure?', research discussion papers, Reserve Bank of Australia, Sept 2001
Get Ready for the End of the Year
Don't miss the boat, there are many things you can do before the end of the financial year that can help save tax and grow your money.
Reduce your Tax Through Super
People who derive less than 10% of their income from employment may claim a 100% tax deduction on their super contributions. To qualify, your assessable income and reportable fringe benefits from employment must be less than 10% of your total assessable income and reportable fringe benefits for that year. A tax deduction is available until age 75, but from age 65 you must be gainfully employed for at last 40 hours in a 30 consecutive day period so be eligible to contribute to super.
While a 100% tax deduction is available, contributions in excess of the concessional contributions cap will be taxed at an effective rate of 46.5% Your financial adviser can give you information about the caps and whether this strategy is right for your situation.
Spouse Contributions
A tax offset of up to $540 is available for a spouse contributions of $3000, where the recipient spouse's assessable income, plus reportable fringe benefits, does not exceed $10,8900. The offset reduces by $1 for each $1 above $10,800 cutting out at $13,800. The good news is there is no 'work test' required for either the contributing spouse or recipient spouse, unless the recipient spouse is aged 65 or more but less than age 70.
Sacrifice to Get Ahead
Salary sacrifice is one of the simplest ways to grow your super tax effectively. It involves contributing to your super in pre-tax dollars and is organised through your employer. As always, there are a few rules - you must be an employee under age 75 and there are caps in place that you must take care not to exceed.
Government Co Contribution
The government co contribution scheme was introduced to assist people boost their retirement savings. Essentially the government rewards people who make additional contributions to their super fund in the lead up to retirement. The government will contribute $1.50 each dollar contributed, up to a maximum co contribution of $1,500 for employees whose assessable income, plus reportable fringe benefits, does not exceed $28,980. The maximum co contribution reduces above this threshold to the point where no co contribution is payable above $58,980
Pay Your Life Insurance Premiums Through Super
It makes good financial sense to package life insurance within super. Where premiums for life insurance are being funded through super contributions, the cost of insurance cover is lower for self-employed and unsupported persons, employees making salary sacrifice contributions and those making eligible spouse contributions. There may also be the opportunity to ensure you have salary continuance insurance in place as super is a very efficient way of funding this cover.
Minimise Capital Gains Tax
If you are eligible to make personal concessional super contributions, then you can also reduce your tax liability on capital gains realised during the year. When transferring assets into your super fund (such as listed securities), you may incur a CGT liability. By being smart about the way you contribute to your super, you could potentially claim a tax deduction to minimise or even eliminate this liability.
Do you know how to crystallise losses to offset capital gains? Where you have a potential tax liability on capital gains from selling an asset during the year, such as shares or a rental property, it may be appropriate to sell another asset to make a loss. however, there are some strict rules around this, for example, don't sell and immediately buy back the same asset and the ATO does not view this favourably and will disregard the disposal of the asset in the first place. We can help youput in place a strategy that's right for you.
Fancy a Night on the Town?
Parkside InvestorPlus, the financial planning arm of the Parkside Financial Group relies on word of mouth and referrals from it's happy clients and strategic partners. We believe that the endorsement of our existing clients is the best way to generate new business. We're on the path of growth and since our equity partnership with ipac now have even more research, technical advice and resources at our disposal to build a truly remarkable financial planning advisory business.
Because we want our clients to be our advocates and our best advertisement . . . we reward those who refer like-minded people to us for advice by not only assuring them that we'll take good care of their friends, relatives and colleagues, just as we did for them . . .but with a 'thank you' mystery event at the end of each year.
If you think you know someone who might benefit fromour help just as you have, please don't keep us a secret and who knows . . . you might be in the running for an exclusive invitation to our Mystery Client event at the end of the year.
