Rochdale Accounting & Financial Services :: Accountants, Tax, Taxation, Audit, Business, Cashflow, Superannuation

Take control of your super

2012-02-02T00:00:00+11:00

The popularity of Self Managed Superannuation Funds (SMSFs) is not surprising given the current economic uncertainty. In uncertain times, people want more control over their superannuation and a SMSF offers this control.

Over the past five years, SMSFs have grown to be the largest segment of superannuation in Australia with about 600 new Funds established every week. This growing popularity is also due to the availability of some exciting strategies that are both tax efficient and can assist in creating wealth.

The three strategies currently generating the most interest are:

Transfer of Business Real Property to a SMSF

Generally, SMSFs are prohibited from acquiring assets from related parties - such as fund members, their family, and partners as well as related companies and trusts. However in certain circumstances, property defined as Business Real Property (typically business premises), may be transferred into a SMSF.

NSW Stamp Duty concession allows a member to transfer property to a SMSF for a nominal duty of $50 where certain conditions are met. This can save tens of thousands of dollars in stamp duty.

Combined, these two strategies can allow property owners to restructure their business, family or retirement affairs, taking advantage of the valuable tax concessions within the superannuation environment. As SMSF Specialists, we can help you navigate the various government rules and regulations associated with these transfers.

Borrowing within a SMSF

Are you aware that a SMSF can borrow money under certain circumstances? While SMSFs are generally not allowed to borrow, there are several exceptions including the use of Limited Recourse Borrowing Arrangements to purchase shares or property.

This type of investment borrowing is more complicated than borrowing within your own name and needs careful consideration before implementing but the long-term benefits can be significant.

Transition to Retirement

If you are aged 55 and over and have not considered a Transition to Retirement Pension you may be missing out on some significant taxation savings.

The 'Transition to Retirement' rules allow people aged 55 or over who are still working, to access a portion of their superannuation in the form of a pension.

These pension payments provide additional income that may carry a tax offset or even be tax-free. The additional pension income may enable you to salary sacrifice; and salary sacrificing a portion of your before-tax earnings to superannuation results in reduced income tax. A SMSF simplifies this strategy by paying a pension and receiving contributions all within the same superannuation fund.

For more information about making an SMSF work for you, contact David or I at Rochdale Accounting and Financial Services on 6620 0300

What's New in SMSFs Free Seminar

To help you navigate your way through the complexity of SMSFs, David Shume and I will present a seminar at Summerland House, Alstonville on Thursday 23^rd February from 5.45pm. The seminar will benefit anyone with a SMSF or considering starting a SMSF. Places are limited so please book early. Register your place for this free seminar now.

Nick Rose and David Shume from Rochdale Accounting & Financial Services are SMSF Specialist Advisors accredited through the leading industry body, the Self Managed Super Fund Professionals' Association of Australia (SPAA).

Rochdale Accounting & Financial Services Pty Ltd is a corporate authorised representative of Capstone Financial Planning Pty Ltd AFSL 223135. The information contained in this article is of a factual nature only and is not intended to constitute financial advice.

A plan would be a good start

2011-10-26T00:00:00+11:00

Negotiations in Europe continue. European Leaders tell us a solution is just around the corner, but that has been the case for nearly two years. This time, the market is relatively optimistic, but it appears that full details of a solution may again be delayed for another week or two.

The market is looking for a solution. The definition of solution is a means of solving a problem or dealing with a difficult situation. It is unlikely that the EU Leaders' solution will solve all of the problems, but the solution will certainly need to be a detailed blueprint to deal with the current difficult situation.

The solution needs to be a plan covering three main issues:

1. What to do about Greece (cut its debt);

2. What to do about Europe's banks (recapitalise), and

3. How to operate the European Financial Stability Fund (to prevent further runs on other European bond markets, specifically Italy's).

Twenty-one months seems a long time to come up with a plan. We have heard endless reports of German Chancellor Angela Merkel and French President Nicolas Sarkozy meeting to discuss how to resolve the crisis, but there are 27 countries that have to agree, not just two.

Another problem is politics. The Prime Minister of Luxembourg, Jean-Claude Juncker summed up the situation when he said: "We all know what to do but we don't know how to get re-elected once we have done it."

When a comprehensive plan is finally announced it is likely that the market will respond positively and a rally will follow. Whilst that rally may be real, it will be worth considering that the rally will be on the announcement of a plan to deal with a very difficult situation. The solution will not be an immediate fix.

Once the immediate crisis in Europe passes, the real, long-term solution will be economic (GDP) growth. A country's debt is typically measured against its GDP, therefore, if a country's GDP declines its debt relative to GDP increases. In contrast, if a country's GDP grows, its debt becomes less of a problem.

Because the debt of some European countries (primarily Portugal, Italy, Greece and Spain) has now become unaffordable, these countries are being forced to implement austerity measures (spending cuts and increased taxes). Achieving GDP growth in this environment will be difficult; therefore it is likely that the solution in Europe will be protracted.

In summary, once European leaders announce a plan, if the market believes that the plan will effectively contain the debt crisis, that is, prevent the problem from worsening and spreading, share markets should rally. Even if the rally is significant, investors need to be mindful that any such rally will not mean the problems are completely over and volatility will remain. As always, investors need to ensure their portfolios are appropriately allocated to take into account the ever-changing investment environment and, importantly, are appropriate to their needs.

Regards
Nick Rose

Rochdale Accounting & Financial Services Pty Ltd is a corporate authorised representative (303378) of Capstone Financial Planning Pty Ltd AFSL 223135.
For more information on Capstone Financial Planning refer to their website www.capstonefp.com.au, call 1300 306 900, fax (03) 8622 0799 or email info@capstonefp.com.au.

Information contained in this site is of a general nature only. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this site.

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Is your Investment in Property Safe as Houses?

2011-09-21T00:00:00+10:00

Is your Investment in Property Safe as Houses?

I just Googled "Australian Property Market". The search yielded 3,920,000 results. I could not review them all, so I had a look at a few of the links that the Google algorithm determined to be most relevant.

From this bit of casual research, I make the following observations:

According to ABS, the number of people borrowing to buy property has declined significantly;
Various news sites state that the number of properties selling has declined significantly;
According to NAB, house prices fell in all states in the June quarter;
Steve Keen maintains his 40% decline in property prices prediction;
Australian property was described as a "bubble", a "time bomb", an "accident waiting to happen" and many more phrases indicating that house prices were too high and going lower.

None of this surprised me, but what did surprise me was that I did not see even one suggestion that maybe property prices will improve in the short term. Not one optimist! So, with all the negative views I thought I would look for some more in depth research (beyond the first couple of pages of the Google search).

One detailed bit of research was Stairway to Heaven or close to the precipice? This is a paper prepared by MLC (owned by National Australia Bank) and it asks the questions: Is the Australian housing market significantly overvalued? Are Australian house prices likely to fall? and Residential property as an investment? (I guess the ? at the end makes it a question).

If the above questions are of interest to you, I recommend that you read the full article, but here is my summary of the article and the answers to the questions above:

Australian housing does appear to be significantly overvalued - affordability is the biggest issue;
It seems highly likely that housing prices will fall in Australia, however a number of factors should prevent the same catastrophic declines observed in the US. This paper suggests a decline of 10 to 15% on average over the next 1 to 2 years with significant variations from region to region;
Housing makes up 60 to 65% of gross household wealth in Australia. With Australian housing likely to deliver only modest returns for the next 5 to 10 years as prices stagnate, the exposure to housing appears excessive.

Sorry if this was not the optimistic news you were looking for. I will try to find something positive for next time.

Regards

Nick Rose

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Hello and welcome.

2011-08-30T00:00:00+10:00

I've created this blog for my clients and anyone else who is interested, so if you find this interesting or useful please pass it along to others.

The blog's purpose is to provide access to information and ideas that may be of benefit to you in your pursuit of Financial Freedom. I intend to post articles that I have access to, and links to some financial sites that you may not be aware of, that provide useful resources for you and your family.

My blog will remain a work in progress, so if you want more information on a particular subject please email me at nicksblog@rochdalehouse.com.au and I'll try and get the information to you and update the blog.

Of course, nothing beats being face to face and asking questions directly so you can always call my office at 02 6620 0300 or email me to book a meeting.