Leenane Templeton – Newcastle Business Accountants, Business Advisors & Financial Planners

Author: Harlan Marriott

  • How will downsizer contributions work for SMSFs?

    How will downsizer contributions work for SMSFs?

    To reduce pressure on housing affordability, downsizer contributions provide an incentive for super fund members aged 65 years or older to sell a main residence. The Treasury Laws Amendment (Reducing Pressure On Housing Affordability Measures No. 1) Act 2017 (Cth) which introduces downsizer contributions received royal assent on 13 December 2017.

    Downsizer contributions comes into effect on 1 July 2018 and members intending to make downsizer contributions can enter into a contract of sale from this date. In preparation of this we should consider two key questions:

    1. How do downsizer contributions work?
    2. What are some tips and traps for SMSFs in utilising downsizer contributions?

    How do downsizer contributions work?

    There are four broad steps that need to be taken if a member would like to be eligible to make downsizer contributions.

    Step 1: Eligibility

    The first step the member needs to take is to confirm that their contributions will be eligible downsizer contributions. Broadly, an eligible downsizer contribution is where:
    1.  the contribution is made to a complying super fund by a member aged 65 years or older;

    2.  the amount is equal to all or part of the capital proceeds received from the disposal of an ownership interest in a dwelling that qualifies as a main residence in Australia, under the downsizer provisions;

    3.  the member or the member’s spouse had an interest in the main residence before the disposal;

    4.  the interest in the main residence was held by:
    (a) the member;
    (b) the member’s spouse;
    (c) the member’s former spouse;
    (d) a trustee of the estate of the member’s deceased spouse;

    during the 10 years prior to the disposal; and

    5.  The member has not previously made downsizer contributions in relation to an earlier disposal of a main residence.

    Note that a caravan, houseboat or other mobile home does not qualify as a main residence for these purposes.

    The member should determine whether they are eligible to make downsizer contributions and whether their main residence satisfies the above criteria prior to the disposal of the main residence.

    Step 2: Contributions

    Upon the sale of a main residence a member can make up to a maximum of $300,000 in contributions to their super fund. Further, there is no age limit or gainful employment test that needs to be satisfied (however many SMSF deeds will preclude such contributions and an SMSF deed update is likely to be required). These contributions are not counted towards the relevant member’s contributions caps or total superannuation balance in the financial year a downsizer contribution is made.

    Once the member sells their main residence, they are required to make downsizer contributions to their super fund within 90 days after the day the ownership changed (typically 90 days from settlement). An approved form should be completed and given to the trustee of the super fund detailing the amount that is to be attributed to downsizer contributions. While multiple downsizer contributions in respect of the sale of the same residence can be made, the total amount of downsizer contributions made by each member cannot exceed $300,000. This total amount includes the amount of all downsizer contributions a member makes in respect of all of their superannuation funds.

    It is important to note that the $300,000 downsizer contribution cap is for only one member, therefore this would potentially allow for additional contributions of $600,000 for a couple (ie, 2 x $300,000).

    Given this 90 day timeframe, a member cannot make downsizer contributions if settlement is, for instance, on vendor terms that go beyond 90 days unless they have been granted an extension from the ATO.

    Step 3: Reporting and Verification

    Upon the super fund’s receipt of the downsizer contribution form the super fund must inform the ATO during the super fund’s annual reporting. The ATO will then run verification checks on the amount and may contact the member for further information.

    If the ATO has verified that the member has made eligible downsizer contributions, no further action is taken.

    However, if the contribution does not qualify as a downsizer contribution the ATO notifies the superannuation provider. The amount will then either be allocated as a non-concessional contribution — if permitted by superannuation law and may result in the member exceeding their cap — or refunded to the member.

    What are some tips and traps for SMSFs and their members?

    (a) SMSF Deed Provisions

    As the downsizer contribution is a new type of contribution, the SMSF’s deed should have express wording that allows members to make these contributions to the fund, especially as a member over 65 years may not be gainfully employed and in many cases a member may be in excess of 75 years (and to date contributions cannot generally be made for such members under reg 7.04 of the Superannuation Industry (Supervision) Regulations 1994 (Cth)). Additionally the SMSF deed should provide appropriate mechanisms in resolving what happens when a downsizer contribution is deemed ineligible by the ATO. As a matter of reporting, the SMSF will need to receive approved downsizer contribution forms from the SMSF and report those contributions to the ATO.

    (b) Age Pension

    Additionally, members should note that disposing of their main residence and contributing downsizer contributions to their super fund may adversely impact on their Centrelink entitlements. Broadly, the age pension provided by Centrelink is assessed against, among other things, an assets test. A person’s family home is generally not included in the assets test, however superannuation savings are included once a member reaches pension age. This means that if a member disposes of their main residence and make a downsizer contribution, the member may either be:

    1. subject to reduced age pension payments; or
    2. no longer eligible to receive any age pension payments altogether.
    3. Further adverse impact on other government entitlements may also follow as a result of the greater level of superannuation assets. This aspect will significantly reduce the attractiveness of the downsizer provisions for many who would otherwise be interested in the scheme.
    (c) Proceeds and Borrowings

    It is important to note that the downsizer contributions cap is the lesser of $300,000 or the sum of the capital proceeds. Any debt outstanding on a mortgage over the relevant property is not considered for the purpose of determining the capital proceeds.
    For example, John bought his main residence 12 years ago for $1 million. He then sells for $1.25 million when his outstanding borrowings are $1 million.
    John received capital proceeds of $1.25 million. Thus, John can make downsizer contributions up to $300,000.
    Members should also be aware that downsizer contributions are not deductible.

    * * *

    This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.
    Article written by Christian Pakpahan, Lawyer and Daniel Butler, Director DBA Lawyers

    For more information about SMSFs speak with the Leenane Templeton SMSF team.

  • Are your holidays on credit card debt?

    Are your holidays on credit card debt?

    For the past few weeks my partner and I have been enjoying the planning of our annual holiday. We both work long hours but always make sure we get away for at least two straight weeks to a place where there is no mobile phone or email access. Those destinations are becoming scarcer but we don’t feel like it’s a holiday if we’re still contactable.

    Another golden rule we always follow is we have to be able to pay for the entire holiday upfront. The only aspects that go on plastic are daily expenses while we’re away. But we’ve budgeted for these as well and put an appropriate amount onto our credit cards before we leave. That way we know everything is paid for and we don’t return to a debt that will ruin all the happy memories of our time away.

    Obviously not everyone is as disciplined and a lot of people spend up big using their credit cards to pay for holidays. If that applies to you, here are some tips to help you save for your next big break without relying on debt.

    Start with a plan. Write or type up a budget. Automatically allocate some money from each pay to a separate account and don’t touch it. It will quietly build while you plan for your holiday

    Hide it before you spend it. If you already have credit card debt, schedule an automatic deduction from your cash account direct to your credit card every pay day. In both of these tips, if the money isn’t there, you can’t spend it.

    Sell something. Do you have unused gym equipment, a bicycle you never ride, or even clothes you’ve hardly worn? Have a big clean out and stage a garage sale, or sell it online. Reduce your card balance or top up your holiday account with the proceeds.

    Use windfalls. Are you due a bonus or tax refund? See yourself on the holiday of a lifetime. You know where it’s going!

    Spend less. Careful spending doesn’t need to impact on your lifestyle. Try these ideas:

    • Entertain at home rather than at restaurants or pubs.
    • Lay-by birthday and Christmas gifts during the store sales.
    • Check out upmarket clothes recycling stores; they often have designer clothes at bargain prices. No-one will ever know.

    Ask for help. Sometimes it’s difficult to get back on top of debt by yourself. I have plenty of other great suggestions that can help but if you would like to share your experiences and ideas for our readers, we’d love to hear from you. Just add your suggestions below and we can all help each other.

    I can’t tell you how great it feels to be on holiday knowing that I won’t return to debt. The freedom this gives you makes the holiday even more enjoyable. Try it then send us your holiday snaps!

    Need a financial plan?  Call our financial advisors to book an appointment.

  • Who is your relative for SMSF purposes and why is this relevant?

    Who is your relative for SMSF purposes and why is this relevant?

    It is important to understand who is an individual’s relative for superannuation law purposes as the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SISA’) imposes certain boundaries on an SMSF’s activities in relation to an individual’s relative or related party.  There are two definitions of the term relative in the SISA. Oddly, in some circumstances, an individual’s relative may not be their relative under the SISA! This article considers the two definitions of relative in the SISA and the main circumstances where these definitions are relevant.

    Definition under s 10 of the SISA 

    Broadly, s 10(1) of the SISA states that the term relative of an individual means:

    • a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the individual or of his or her spouse;
    • a spouse of the individual or of any other individual referred to above.

     

    Main circumstances where the definition in s 10 of the SISA is relevant  

    We consider three main circumstances where the definition under s 10 of the SISA is relevant. These are:

    1. Section 65(1) of the SISA contains a general prohibition on the trustee of an SMSF lending money of the SMSF or giving any other financial assistance using the resources of the SMSF to a member of the SMSF or a relative of the member of the SMSF.
    2. Section 66(1) of the SISA contains a general prohibition on the trustee of an SMSF acquiring an asset from a related party of the SMSF.
    3. The in-house asset rules in pt 8 of the SISA broadly defines an in-house asset to be an asset of the fund that is a loan to, or an investment in, a related party of the fund, an investment in a related trust of the fund, or an asset of the fund subject to a lease or lease arrangement between a trustee of the fund and a related party of the fund.

    We illustrate the first circumstance below.

    EXAMPLE

    Thomas is the sole member of the Thomas SMSF. The trustee of the Thomas SMSF is Thomas SMSF Pty Ltd and Thomas is the sole director. Thomas’s brother, Albert, is in financial difficulty and asks Thomas to lend him some money. Thomas knows that the Thomas SMSF has the necessary amount of cash to lend to Thomas.

    However, s 65(1) prohibits the trustee of the Thomas SMSF from lending money or giving any other financial assistance using the resources of the Thomas SMSF to a relative of a member of the Thomas SMSF. None of the exceptions in s 65 apply. According to the definition of relative in s 10 of the SISA, Albert is a relative of Thomas as he is the brother of Thomas. Therefore, the trustee of the Thomas SMSF must not lend money or provide financial assistance using the resources of the Thomas SMSF to Albert.

    If Thomas has enough cash in his personal bank account, he could consider lending money to Albert in his personal capacity.

    As can be seen from the first circumstance, s 65(1) (the no financial assistance rule) makes a direct reference to the term relative. For the second and third circumstance (prohibition on acquiring assets from related parties and in-house asset rules), there is no direct reference to the term relative. However, the term relative is connected because of the definition of related party.

    Section 10(1) of the SISA states that related party, of a superannuation fund, means any of the following:

    (a)  a member of the fund;

    (b)  a standard employer‑sponsor of the fund;

    (c)  a Part 8 associate of an entity referred to in paragraph (a) or (b).

     

    Section 70B of the SISA contains the definition of a pt 8 associate of individuals. It states:

    For the purposes of this Part, each of the following is a Part 8 associate of an individual (the primary entity), whether or not the primary entity is in the capacity of trustee:

    (a)  a relative of the primary entity;

    …

    Tracing through these extracted provisions, a relative (as defined in s 10 of the SISA) of an individual is also a related party of an individual.

    The following example illustrates the relevance of the term relative in the context of working out whether an individual is a related party.

    EXAMPLE

    Thomas is the sole member of the Thomas SMSF. The trustee of the Thomas SMSF is Thomas SMSF Pty Ltd and Thomas is the sole director. Thomas is seeking to use his SMSF to purchase a residential property. Thomas’s aunt, Jennifer, has recently placed her residential property in Sydney on the market. Thomas’s first cousin, Peter, has also recently placed his residential property in Melbourne on the market. Thomas is considering purchasing either Jennifer’s property or Peter’s property.

    Section 66(1) states that the trustee of the Thomas SMSF must not intentionally acquire an asset from a related party of the SMSF. None of the exceptions in s 66 apply. For example, neither property is business real property.

    Applying the definition of relative in s 10 of the SISA, Jennifer is a relative of Thomas as she is the aunt of Thomas. Accordingly, she is also a pt 8 associate of Thomas (as per s 70B of the SISA). She is also a related party of the Thomas SMSF (as per s 10(1) of the SISA). Therefore, the trustee of the Thomas SMSF must not acquire Jennifer’s property.

    The definition of relative in s 10 of the SISA does not include a cousin. Accordingly, Peter is not a pt 8 associate of Thomas and he is not a related party of the Thomas SMSF. Accordingly, the trustee of the Thomas SMSF can likely choose to acquire Peter’s property at market value and on arm’s length terms.

    This example shows that in certain circumstances someone who is an individual’s relative in the usual sense of the word may not be their relative for superannuation law purposes.

    It is interesting to note that the definition in s 10(1) is not exhaustive. Broadly, the definition does not include, in relation to an individual:

    • their great-grandparents, great-aunts, great-uncles or any earlier generation
    • their cousins (such as first cousins and second cousins) and lineal descendants of cousins;
    • the lineal descendants of their nephews;
    • the lineal descendants of their nieces; and
    • former spouses.

     

    Definition under s 17A of the SISA 

    The meaning of the term SMSF is defined in s 17A of the SISA. Broadly, s 17A(1) of the SISA states that the term relative, in relation to an individual means:

    • a parent, child, grandparent, grandchild, sibling, aunt, uncle, great‑aunt, great‑uncle, niece, nephew, first cousin or second cousin of the individual or of his or her spouse or former spouse; or
    • a spouse or former spouse of the individual, or of an individual referred to above.

    Unlike the other definition of ‘relative’, this definition of relative casts a wider net and includes cousins.

    Main circumstances where the definition in s 17A of the SISA is relevant  

    Broadly, the relevance of the term relative is as follows:

    • For funds with more than one member, no member of the fund can be an employee of another member of the fund, unless the members concerned are relatives. This would include cousins
    • Similarly, for single member funds with more than one trustee/director, the member must not be an employee of the non-member trustee/director, unless the member and the non-member trustee/director are relatives.

    The definition in s 17A is different to the definition in s 10. Some key differences include:

    • The definition in s 10 refers to ‘lineal descendant’. However, the definition in s 17A refers to ‘child’ and ‘grandchild’. This suggests that the definition in s 17A does not extend to great-grandchildren or subsequent generations. For example, an SMSF trustee may be prohibited from lending to the SMSF member’s great-grandchild. On a separate analysis, if the individual employed their great-grandchild they could not both be members of the same SMSF.
    • The definition in s 17A includes ‘great-aunt’ and ‘great-uncle’. Accordingly, if a ‘great-aunt’ or ‘great-uncle’ employed the individual, they could both still be members of the same SMSF.
    •  Both definitions refer to ‘spouse’. However, the definition in s 17A also includes ‘former spouse’, meaning the former spouses can share an SMSF even if one employs the other.

     

    Conclusion

    While there is some overlap, the definitions of relative in ss 10 and 17A of the SISA do not totally match. It is important to consider whether there are any relatives involved in certain courses of action such as acquiring an asset or establishing an SMSF. This is a complex area of law and where in doubt, expert advice should be obtained.

     

    For more information please speak with our SMSF Specialists at Leenane Templeton.  Also visit our main SMSF Services page.

    Article written and provided by DBA Lawyers – Joseph Cheung, Lawyer and David Oon, Senior Associate.

     

     

  • Winners of the SMSF & Accounting Awards

    Winners of the SMSF & Accounting Awards

    Leenane Templeton has won the SMSF & Accounting Awards 2017 for Community Engagement Program of the Year.  One of the major contributing factors was supporting and helping to establish Hope4Cure and other programs throughout 2017.  

    Leenane Templeton’s Andrew & Sarah Frith were presented the award at a function at the Sofitel Sydney last night.  Winners for the inaugural, state-based SMSF and Accounting awards were announced to a crowd of over 250 professionals.  SMSF Adviser, in partnership with SuperConcepts sponsored the SMSF and Accounting awards event.

    The judges commented on the exceptional quality of nominees this year, and particularly remarked on the efforts firms and individuals are going to with innovation and client servicing standards.

    Click here to discover more about our business awards

  • You might be surprised at what really drives interest rates

    You might be surprised at what really drives interest rates

    The Reserve Bank of Australia (RBA) and the major trading banks may play the most visible role in setting interest rates, but in many cases they are being reactive rather than proactive.

    A wide range of external factors feed into their decision-making process, including in no small part, our collective behaviour as investors and savers, borrowers and consumers. Then there’s the rate of inflation and wages growth, foreign currency exchange, the economic health of our trading partners, and the interest rates paid by local banks to borrow money from overseas.

    Suddenly it’s not so easy to figure out where interest rates are headed, even in the short term.

    A fine balance

    To look at just one part of the puzzle: the RBA dropped the cash rate to 1.5% in August 2016 – the lowest rate on record. This makes it cheaper for businesses to borrow and invest in job-creating activities. However, mortgage rates also followed the cash rate down, allowing homebuyers and investors to borrow more which subsequently drove up house prices.

    So how can the RBA keep a lid on housing costs without choking business activity and consumer spending?
    One way is to get by with a little help from its friends, in this case the banking regulator, the Australian Prudential Regulation Authority (APRA).

    APRA has imposed a range of restrictions on the banks. These include capping new interest-only lending, and limiting the growth in lending to investors. Lenders are also ordered to keep a tight rein on ‘risky’ loans, for example, where loans exceed 80% of the value of the property.

    While APRA’s main motive is to make the banks more resilient to any shocks such as another global financial crisis, a side effect is that the banks will have to reduce the amount they lend for housing. And according to the rule of supply and demand, if less money is available then the cost of that money – the interest rate – will go up.
    We are now seeing this happen. Bank mortgage rates have risen, particularly for investors and interest-only loans, even though the RBA’s cash rate has remained unchanged.

    Navigating uncertain waters

    Appreciating the complexity of interest rates doesn’t always help in deciding how to respond to them. Even the experts often get it wrong when trying to predict where interest rates are going. This doesn’t help answer borrowers’ eternal question: “do I lock in a fixed rate, or opt for a variable rate?”

    Locking in current rates provides protection against future mortgage rate rises. In the current low interest rate environment it’s very tempting to fix the rates on at least part of a mortgage, and for as long as possible (usually up to five years).

    Of course, if rates fall further, fixed-rate borrowers miss out on a windfall. However, with rates already so low, any falls are likely to be small which can minimise the downside risk.

    Still not sure what to do? If your mortgage is due for a review or you’re looking to invest or buy, talk to your licensed financial planner or mortgage broker to get a professional opinion.

    Call our team on (02) 4926 2300 or contact our advisors

     

     

     

     

  • Salary sacrifice vs personal contributions to super

    Salary sacrifice vs personal contributions to super

    Amongst the changes made to superannuation effective 1 July 2017 was the welcome and sensible move to give everyone who makes a personal contribution to super the option of claiming a tax deduction for it. Prior to this date, tax deductions on personal contributions could only be claimed by the “substantially self-employed”.

    The upshot is that, if you are an employee, there are now two ways in which you can optimise the tax-effectiveness of your additional super contributions:

    • opt for a salary sacrifice arrangement, whereby your employer makes additional superannuation contributions beyond the compulsory superannuation guarantee (SG) amount from your pre-tax earnings and reduces your salary accordingly; or
    • make a personal contribution and claim a tax deduction when you submit your tax return.

    Generally, higher income earners gain the greatest benefit from either of these strategies. Lower income earners may be better off not claiming the tax deduction and receiving a government co-contribution if eligible.

    Which option?

    For starters, employers don’t have to offer salary sacrifice. If they don’t, claiming a tax deduction is the only option.

    Another thing to look out for: if salary sacrifice is available, will your employer still make SG payments on your pre-sacrifice salary? Legally, employers only need to pay SG on the actual salary amount, so for every $1,000 of salary sacrifice you would lose $95 in SG contributions. In this situation, you will most likely be better off claiming a tax deduction.

    Fortunately most employers do the right thing and don’t reduce their SG contributions. The federal government has also announced plans to ensure salary sacrifice does not result in a reduction in SG payments. If this happens, it will pretty much level out the playing field between salary sacrifice and tax-deductible personal contributions, but some subtle distinctions remain.

    Let’s look at Jenny and Brian. They both earn $120,000 a year, and want to contribute an extra $12,000 pa ($1,000 per month) to superannuation as concessional (pre-tax) contributions. Jenny opts for salary sacrifice and will receive SG contributions based on her pre-sacrifice salary. Brian decides to make his own contributions and later claim them as a tax deduction.

    Both will see their overall annual income tax bill drop by $4,680. After allowing for 15% tax on the super contributions, they are both better off by $2,880 for the year.

    The key difference is that Jenny will enjoy her tax benefit each payday. Brian needs to wait until the end of the financial year and submit his tax return before he can receive any benefit from his choice.

    On the other hand, Brian’s regular pay will be more than Jenny’s as his gross income remains at $120,000 pa compared to her $108,000. This gives him more flexibility. For example, he can wait to make his entire contribution just prior to the end of the financial year – if he hasn’t been tempted to spend it in the meantime. However, if he makes regular contributions to his super fund, his net disposable income each month will be lower than Jenny’s. Only when he receives any tax refund might they be back on equal terms.

    Beware the rules

    While the greatest benefit of extending tax deductibility on personal contributions goes to employees who are unable to access salary sacrifice, it’s still a positive move that provides everyone with flexibility and choice. However, whether you opt for salary sacrifice or claiming a tax deduction, there are rules to be followed. Talk to your financial planner about the best superannuation contribution strategy for you.

    For more information contact our team on (02) 4926 2300 or contact our advisors us here

     

  • What is GDP – and why should anyone care?

    What is GDP – and why should anyone care?

    GDP. If ever there were three letters designed to make us yawn, these would be solid contenders. So why are they so frequently on the lips of politicians, economists and finance journalists? More importantly, what does GDP mean for everyday Australians like you and me?

    Let’s get the boring bit out of the way first.

    What is GDP?

    GDP stands for Gross Domestic Product, which is the value of all of the goods and services produced by a particular country. This includes, amongst other things, private and public purchases, government spending, investment, plus the value of exports minus the value of imported goods and services.

    Yep, boring.

    Except that GDP provides a relatively simple way of conveying the overall strength of a country’s economy which directly affects our lives.

    In particular, the focus is on whether GDP is growing (good) or contracting (bad). Economic growth supports more jobs, stimulates our spending, and garners more in taxes so governments can spend more on infrastructure and services, like hospitals and schools.

    Changes in GDP are usually reported on a countrywide basis, but in many ways a more important measure is GDP per capita (that’s you and me). On this basis, Australia does very well, ranking 9th out of 190 countries in 2016. But if, as a nation, we’re ‘rolling in it’, why do so many Aussies feel like they’re doing it tough?

    Devil in the detail

    The problem with GDP is that, because it is such a simple measure, it hides a wealth of detail. It’s like a fairy tale that reads ‘once upon a time they all lived happily ever after’.

    GDP growth figures don’t reveal the widening gap between high and low income earners.

    GDP doesn’t measure mortgage or rental stress.

    GDP doesn’t reveal that company profits make up a higher share of national income than they did in 1975 while the wage share has fallen.

    As it happens, recent GDP and other figures reveal a sluggish economy for us. GDP only grew by 0.3% in the March 2017 quarter, and 1.7% for the year. The total amount paid to employees only went up 1.5%. Given that population grew by 1.6% over 2016, both wages income and GDP per capita barely changed.

    No crystal ball

    So what does the future hold for us, economically? The simple answer is that nobody really knows.

    We do know that Australia’s household debt is at record levels, and that if interest rates rise or there’s a significant uptick in unemployment, many households will experience real hardship. That will dampen retail spending and put further downward pressure on the economy, potentially sparking a recession (defined as at least two consecutive quarters of declining GDP).

    Control what you can, prepare for what you can’t

    While you and I can’t control interest rates or inflation, and most people are having a hard time getting a pay rise, there are many aspects of your financial life that we can control.

    These include keeping a rein on discretionary spending, building up some savings, or drawing down on a mortgage to repay high-interest credit card debt. It could even extend to selling a home if the repayments have become a burden.

    Most people rate health, happiness and good relationships as being more important than possessions, so think about what’s most important to you and your family. Then talk to a qualified financial planner. You don’t need to be rich to have one. On the contrary, a licensed adviser can help you clarify your goals and work out a plan to achieve them. Just as importantly he or she can help you stick to the plan, to beat off the big bad wolves of an uncertain economy and deliver more of the happily ever after.

    To chat with one of our team call (02) 4926 2300 or contact an advisor here.

     

     

  • Tax treatment of death benefits paid from SMSF to the estate

    Tax treatment of death benefits paid from SMSF to the estate

    Demystifying the tax treatment of death benefits paid from an SMSF to the estate

    The tax treatment of death benefits paid from an SMSF to a deceased member’s estate can be complex. Tax law contains a ‘look through’ provision in respect of death benefits paid to an estate (ie, to a legal personal representative being the executor of a will or the administrator in the case of intestacy).

    This article examines the key criteria of this ‘look through’ provision and the resulting tax treatment.

    ‘Look through’ provision for death benefits paid to the estate
    The relevant provisions that deal with death benefits paid to an estate are contained in div 302 of the Income Tax Assessment Act 1997 (Cth) (‘ITAA 1997’). Relevantly, s 302 10 provides:

    (2)  To the extent that 1 or more beneficiaries of the estate who were *death benefits dependants of the deceased have benefited, or may be expected to benefit, from the *superannuation death benefit:
    (a)  the benefit is treated as if it had been paid to you as a person who was a death benefits dependant of the deceased; and
    (b)  the benefit is taken to be income to which no beneficiary is presently entitled.

    (3)  To the extent that 1 or more beneficiaries of the estate who were not *death benefits dependants of the deceased have benefited, or may be expected to benefit, from the *superannuation death benefit:
    (a)  the benefit is treated as if it had been paid to you as a person who was not a death benefits dependant of the deceased; and
    (b)  the benefit is taken to be income to which no beneficiary is presently entitled.

    Section 302 10 focuses on two questions, namely:
    • Are the beneficiaries death benefits dependants?
    • To what extent have the relevant beneficiaries ‘benefited, or may be expected to benefit’ from the superannuation death benefit?

    Death benefits dependant 
    The definition of a death benefits dependant is found in s 302-195 of the ITAA 1997. Broadly, a death benefits dependant, of a person who has died, is:

    the deceased person’s spouse or former spouse; or
    the deceased person’s child, aged less than 18; or
    any other person with whom the deceased person was in an interdependency relationship with just before he or she died; or
    any other person who was a dependant of the deceased person just before he or she died.

    If the beneficiary is a death benefits dependant, s 302-10(2) will need to be considered. If the beneficiary is not a death benefits dependant, s 302-10(3) will need to be considered.

    Benefited, or may be expected to benefit
    The tax treatment of death benefits paid to the estate does not simply turn on the number of beneficiaries of the estate who are death benefit dependants versus the number of beneficiaries who are not death benefit dependants. Rather, the tax treatment of any death benefits proceeds that are paid to the estate depends on the extent to which death benefit dependants have benefited or may be expected to benefit from the proceeds. This will need to be calculated. In some circumstances, particularly where multiple beneficiaries and testamentary trusts are involved, the calculation process will be complex and may require actuarial input.

    Tax treatment
    Once the calculation is performed, any proceeds paid to the estate from which death benefits dependants have benefited or may be expected to benefit:
    • are treated as if they had been paid to a death benefits dependant of the deceased; and
    • are not included in the assessable income of the estate (ITAA 1997 s 302-60).

    For any death benefits paid to the estate where death benefits dependants do not benefit or may not be expected to benefit, the tax treatment of such proceeds depends on the nature of the lump sum amount that was paid to the deceased’s estate. Accordingly, the tax treatment of the super proceeds will be as follows (based on the nature of the lump sum):
    Any tax free component of the amount is not included in the assessable income of the deceased’s estate (ITAA 1997 s 302 140).
    Any taxable component (element taxed in the SMSF) of the amount is included in the assessable income of the deceased’s estate, but the estate is entitled to a tax offset to ensure that the rate of income tax does not exceed 15% (ITAA 1997 s 302 145(2)).
    Any taxable component (element untaxed in the SMSF) of the amount would be included in the assessable income of the deceased’s estate and the estate would be entitled to a tax offset to ensure that the rate of income tax does not exceed 30% (ITAA 1997 s 302 145(3)).

    An element untaxed in the fund is rare in an SMSF context and typically only arises if deductions were ever claimed in respect of policy premiums for a life insurance policy held in the SMSF.

    For completeness, it should be borne in mind that any death benefits paid to an estate do not attract the Medicare levy.

    The following example demonstrates the application of the ‘look through’ provision and the resulting tax treatment.

    EXAMPLE
    Alfred was 66 years old when he died. He was a member of Alfred Superannuation Fund. Alfred did not complete a (binding or non-binding) death benefit nomination in respect of his entitlements in the Alfred Superannuation Fund prior to his death. Accordingly, the trustee of the Alfred Superannuation Fund exercises its discretion and pays Alfred’s death benefits to Alfred’s estate pursuant to the governing rules of the fund. The sum of $100,000 that is paid to the estate comprises 50% tax free component and 50% taxable component (element taxed in the Fund).

    The beneficiaries named in Alfred’s last will are: his wife Diana, his two sons Bruce (17 years old) and Clarke (15 years old), and his best friend Robin (50 years old and not a dependant for tax purposes).

    The will provides that Alfred’s superannuation death benefits proceeds are to be divided as follows: Diana ($90,000) and Robin ($10,000).

    Applying the ‘look through’ provision, Diana, Bruce and Clarke would meet the definition of death benefits dependant under s 302-195 of the ITAA 1997. However, of these death benefits dependants, only Diana may be expected to benefit from the superannuation death benefits proceeds. Accordingly, the $90,000 to be paid to Diana would not be included in the assessable income of the estate.

    The $10,000 to be paid to Robin will comprise $5,000 tax free component and $5,000 taxable component (element taxed in the Fund).

    The $5,000 tax free component is not included in the assessable income of the deceased’s estate. The $5,000 taxable component (element taxed in the Fund) is included in the assessable income of the deceased’s estate, but the estate is entitled to a tax offset to ensure that the rate of income tax does not exceed 15% pursuant to s 302 145(2) of the ITAA 1997.

    Conclusion
    Where any superannuation proceeds are paid to an estate, the tax payable in respect of the death benefit proceeds will depend on whether the ultimate recipient of the superannuation proceeds is a death benefits dependant. This is a complex area of law and where in doubt, expert advice should be obtained.

    Article provide by permission of DBA Lawyers, written by Joseph Cheung and William Fettes 15 August 2017

    For more information about SMSFs please call our SMSF team on (02) 4926 2300 or email success@leenanetempleton.com.au

    Visit:  https://leenanetempleton.com.au/self-managed-super-fund/

  • SMSF Accounting Awards Finalists

    SMSF Accounting Awards Finalists

    Leenane Templeton is in the running to take out one of Australia’s most coveted SMSF awards.  Leenane Templeton was delighted to be shortlisted as a finalist in not one but four categories at the state-based 2017 SMSF and Accounting Awards hosted by SMSF Adviser, Australia’s top publication for SMSF professionals.

    The four finalist categories achieved include:

    • Tax & Compliance Firm of the Year
    • SMSF Specialist Accountant of the Year
    • Partner of the Year
    • Community Engagement of the Year

    The inaugural SMSF and Accounting Awards will recognise individuals and businesses that are making their mark in SMSF and accounting advice by championing professionalism, quality advice and innovation.

    Founded in 2000, Leenane Templeton offers a wide range of SMSF, Accounting, Tax and Financial advice to the Newcastle and surrounding community. It has particularly strong relationships with small businesses and high wealth individuals and specialises in proactive advice.

    Managing editor of SMSF and Accounting, Katarina Taurian, said that the winners “represent a cross-section of this state’s outstanding professional talent, pointing to an absolute dedication to delivering specialist, unique advice to a burgeoning client base”.

    “Some top-performing firms and professionals are focused on doing business in their home states and locales, and we are excited to acknowledge the unique excellence and expertise they are bringing to their client base,” she said.

    Harlan Marriott, Chief Commercial Officer at Leenane Templeton said he is delighted by the nominations. “That Leenane Templeton has been recognised for its excellent contribution to the SMSF and Accounting industry reinforces the strength of our brand in connecting with our target market and customers,” he added.

    The winners will be announced at a gala dinner at the Sofitel Sydney on 2nd November.

    Leenane Templeton has a variety of accounting awards.

     

     

  • Overcoming critics when developing your business

    Overcoming critics when developing your business

    When developing a business or coming up with a new idea, there will always be people that focus on the negative; they say you can’t do it, that something will go wrong and you’re too ambitious.

    If everyone listened to these people who tell you it’s safer not to take risks, great achievements would never happen. Sometimes addressing critics can be frustrating and irritating; follow the tips below to overcome critics when developing your business:

    Surround yourself with supporters

    Supportive and creative people; people who believe in you and aren’t scared to follow their own dreams are the kinds of personalities you should surround yourself with. They will encourage you and will be there for you when you have concerns. When you face a setback, they won’t say ‘I told you so’ and they won’t add further stress, they will help you come up with a solution.

    Don’t engage with them

    If someone is only feeding you negative energy, don’t invest valuable time around them. This can be tricky if that person is a colleague, a loved one, or someone else you spend a considerable amount of time with. If you can’t ignore someone or spend less time with them, you can acknowledge what they are saying without disagreeing or getting into an argument. For example, if someone tells you that your idea is nothing new and won’t be successful, you can respond with ‘I appreciate your opinion and you may be right. But I’m still going to try.’ Then avoid bringing the conversation up with them again.

    Keep your cool

    Someone may be giving you their opinion; one that is uneducated, not grounded in facts or simply unhelpful. The worst thing you can do is lose your cool. Losing your cool is a quality of someone who can’t handle critique and who can’t step back and think of the bigger picture. One thing worse than someone thinking your business idea is not a very good one is them also thinking you are irrational.

    Keep doing your research

    When someone brings up an issue or concern about how successful or thought out your business idea is, don’t be too proud to brush up on your research. Markets and trends are always changing and there might be new data out there that you have not yet considered. Even if you do further research and find nothing new, at least you can reassure yourself that you have a sound business plan.

    Come in for a coffee and meet with one of our business services accountants and advisors to see how we can help with your business growth and accounting.   

    Call Harlan on (02) 4926 2300

  • ATO targeting online selling

    ATO targeting online selling

    The Australian Tax Office is collecting data from financial institutions and online selling sites as part of their data matching programs for credit and debit cards and online selling.

    The data will include:

    • the total amount of credit and debit card payments businesses received
    • online sellers who have sold at least $12,000 worth of goods or servicesThe ATO will match this data with information from income tax returns, activity statements and other ATO records to identify any discrepancies.Data matching helps the Tax Office to identify businesses that need help and those that may not be reporting all their income or meeting their registration, lodgment or payment obligations.Business owners who think they might have made a mistake or left something out are urged to contact our office to correct your mistake, amend your return or make a voluntary disclosure.
      The ATO may reduce or even waive penalties if you make a disclosure before the Tax Office contacts you.

    For more information, contact us at Leenane Templeton on 02 4926 2300 or email success@leenanetempleton.com.au

    See also:

    ATO crackdown on rental property

    ATO data sharing

    ATO focus on collectables

  • Balancing, Life, Work and Money

    Balancing, Life, Work and Money

    This article focuses on the topic many people grapple with in life – what to do to achieve a balance in work and lifestyle without a major impact on finances. It covers various options and recommends financial advice before making a big move.

    Work-life balance. It’s something everyone seeks, but achieving it can seem an impossible task. Not only does the ideal balance vary from person to person, it can change frequently throughout life. If your wheel of life has developed a wobble, it might be time to do some repairs to regain stability for the journey ahead.

    What’s the problem?
    The source of your imbalance may be clear. Too many hours in the office; too long spent commuting; or maybe you need to support elderly parents or to care for young children. Sometimes it’s more subtle – the desire to unleash your inner artist; a yearning to find more meaning in your life; or to simply have enough time to “get everything done”. Once you’ve identified the source of your wobble you’ll be in a better position to fix it.

    What are some options?
    The available options will depend on the problem, the type of job you have, and the attitude of your employer. Here are some thoughts:
    – Is the daily commute getting you down, or do you need to help care for young children? Maybe you can work from home one or more days a week.
    – Are you looking for some time to start writing that best-selling novel, or just some breathing space for yourself? Working nine days a fortnight might be the solution.
    – Too busy to keep up with household chores? Consider hiring a domestic cleaner or gardener.

    Frazzled business owners or managers might consider hiring additional staff. Or perhaps the solution is simpler, such as improving time management skills, or turning off electronic devices when not at work.Empathetic employers actively help employees achieve a better balance. It helps to retain good staff, and happy workers are more productive. Once you know what you want, it’s time to talk to the boss. He or she may even suggest solutions you haven’t thought of. If your boss is uncooperative you may need to revise your plan. Maybe start looking for a new, more accommodating job.

    What’s the financial impact?
    If you are working excessive hours and headed for a burnout, a sensible boss will encourage you to cut back to a sustainable level of effort without financial penalty. However, anything that reduces your working hours and productivity below the norm is likely to result in a reduction in income, which raises a number of questions.
    1. Can you afford it and for how long?
    2. Does cutting back your hours allow a spouse or partner to increase theirs?
    3. What are the implications for tax and childcare benefits?
    4. How will it affect the growth of your superannuation?
    5. If you are over 55, can you use a transition-to-retirement pension to offset a drop in employment income?
    These are all questions your financial adviser can help you address.

    Career consequences
    Historically it has been women who interrupted their careers to care for young children, often finding it difficult to regain footing on the career ladder. With more men seeking a better balance between work and family, career progression is a key consideration. The long-term financial impacts of lingering on lower pay rungs may be substantial and cause issues in later life.

    Getting the work-life balance right can deliver many rewards: greater contentment, improved health, and better relationships with the people you love. Finances may suffer a bit, but what’s the price of happiness? Still, if you plan any big changes in your life, talk to your licensed financial planner to make sure there aren’t any consequences you haven’t thought of.

    For more information, contact us at Leenane Tempelton on 02 4926 2300 or email success@leenanetempleton.com.au

  • CGT relief provisions for SMSFs

    Self-managed super funds can access capital gains tax (CGT) relief to provide temporary relief from certain capital gains arising as a result of trustees complying with the super reforms commencing on 1 July 2017.

    The CGT relief provisions have been made available to preserve the income tax exemption for certain, accrued capital gains which would have been exempt if the underlying CGT assets had been disposed of before a member transfers to comply with the transfer balance cap and before the changed treatment of TRIS’s.

    Transitional CGT relief is available for certain CGT assets held by a complying SMSF at all times between the start of 9 November 2016, to ‘just before’ 1 July 2017. However, the CGT assets eligible for the relief depend on whether the fund uses the segregated or proportionate method for the 2016-17 income year.

    Trustees need to be aware that CGT relief is not automatic – it must be elected by a trustee on an asset-by-asset basis. SMSF trustees will need to review their fund’s circumstances and determine if CGT relief is available and appropriate. If trustees do decide to obtain CGT relief, trustees must advise the ATO in the approved form on, or before, the day they are required to lodge their fund’s 2016-17 income tax return.

    As the decision is irrevocable, careful planning is required. Trustees should contact our office if they are unsure if CGT relief is suitable for their circumstances.

    For more information, contact us at Leenane Tempelton on 02 4926 2300 or email success@leenanetempleton.com.au

    Need SMSF investment planning – Speak with our team

     

  • ATO’s data sharing. Act now before 1 July.

    From 1 July this year, the ATO will be able to pass on to credit agencies the tax debt information of businesses that have not effectively engaged the ATO to manage these debts.

    This should encourage business to pay taxation debts in a more timely manner to avoid affecting their credit rating. It may also have an impact on trade credit, traditional small business funding and banks tightening up their funding options for businesses with tax debts.

    The criteria to be applied by the ATO is that a business has a tax debt greater than $10,000, the debt is older than 90 days, is not in dispute and the business has no payment plan with the ATO.

    The ATO will notify beforehand any business that it intends to refer its tax debt too a credit bureau.

    Should any clients be concerned that they may be in this position please contact our office for advice.

     

     

     

  • 2017 year end tax tips

    2017 year end tax tips

    Capital losses
    Selling poor performing assets may enable you to bring forward a tax loss that can be offset against any capital gains made throughout the financial year.

    Write-off bad debts
    To obtain a bad debt deduction, a debt must not be merely doubtful and must be written off as bad during the year of income in which the deduction is claimed. The debt must have been previously included as assessable income.

    Trust resolutions
    Trustees are required to make trust resolutions before 30 June in relation to how trust income will be distributed among beneficiaries.

    Prepaid expenses
    For small businesses, you can bring forward operating expenses, such as rent, insurance, repairs and office supplies that cover a period of no more than 12 months.

    Superannuation strategies
    Review your super strategies before year end to maximise your contribution caps, roll-over capital gains and review your eligibility for the spouse contribution tax offset and government co-contributions.

    Write-off obsolete inventory
    Slow moving, damaged and obsolete stock must be written off prior to 30 June to claim a tax deduction.

    Claim self-education expenses
    Self-education expenses, such as course fees, textbooks, stationery, etc. are tax deductible if your study is work-related or if you receive a taxable bonded scholarship.

    Small business CGT concessions
    Capital gains tax (CGT) concessions may apply to small businesses when an active asset is disposed of. There are four types of concessions; small businesses can apply as many concessions they are entitled to until the capital gain is reduced to nil.

    Employer super contributions
    Employers must pay all superannuation guarantee contributions for employees before 30 June to receive a tax deduction in 2017.

    PAYG income tax instalments
    Small businesses should review their PAYG income tax instalments and notify the ATO if expected profit will be higher or lower than previous financial years.

    Home office expenses
    Individuals operating businesses from home may be entitled to claim deductions for a number of expenses including room utilities, business phone costs, occupancy, and motor vehicle expenses.

    CGT roll-over relief
    After 1 July 2016, small business owners have greater flexibility in changing the legal structure of their business. Small businesses can defer gains or losses that would otherwise be realised when business assets are transferred from one entity to another.

    For more information, contact us at Leenane Tempelton on 02 4926 2300 or email success@leenanetempleton.com.au

  • ATO warns of scam risk at tax time

    ATO warns of scam risk at tax time

    The ATO has issued a warning of an increased number of scammers at this time of year. 

    Last year we saw a number of tax scams including an aggressive phone scam threating taxpayers with arrest and legal action unless they comply, this and many other scams look to continue.

    ATO Assistant Commissioner Kath Anderson said 48,084 scams were reported to the ATO between July and October last year.

    “We have already seen a five-fold increase in scams from January to May this year and typically expect further increases during the tax time period,” Ms Anderson said.

    “Already this year, the ATO has registered over 17,067 scam reports. Of these, 113 Australians handed over $1.5 million to fraudsters with about 2,500 providing some form of personal information, including tax file numbers.

    “One victim lost $900,000 to scammers over the course of several months, even borrowing money from family and friends.

    “The large number of people lodging their tax returns means scammers are particularly active, so it’s important to keep an eye out for anything that looks suspicious and protect your private information.”

    Ms Anderson said Australians are generally good at catching and reporting scams, but some scams are harder to spot than others.

    “Scammers locate genuine ATO numbers from our website and project these numbers in their caller ID in an attempt to legitimise their call – a form of impersonation known as “spoofing”. While we do make thousands of calls per week to the community, our outbound calls do not project numbers on caller ID. If one appears, it’s most likely a scam.

    “People should be wary of emails, phone calls and SMS during tax time that claim to be from the ATO, even if it seems legitimate. If you’re ever unsure about whether a call, text message or email is genuine, call us on 1800 008 540. If it’s real, we will connect you with the right area of the ATO.”

    If you think you or someone you know has fallen victim to a tax related scam, call the ATO on 1800 008 540 to make a report.

    For more information on how to verify or report a scam, visit ato.gov.au/scams or for updates on the latest scams, visit Scamwatch

     

     

    Top tips to avoid tax time traps

     

    1. Be aware of what you share

    You should only share your personal information with people you trust and organisations with a legitimate need for it.

    2. Stay secure

    Keep your mobile devices and computers secure by changing your passwords regularly, keep your anti-virus, malware, and spyware protection software up-to-date and don’t click on suspicious links.

    3. Don’t reply

    Don’t reply to any SMS or email with your personal or financial information.

    4. Recognise a scam

    If someone asks you for your bank account or personal details, or demands money, refunds or free gifts, be cautious. Also avoid requests in emails or SMS requesting you to click on a link to log onto government or banking digital services.

    5. Report scams

    If you think you or someone you know might have been contacted by a scammer, or have fallen victim to a tax-related scam, contact the ATO on 1800 008 540.

     

     

     

     

  • Australian Accounting Award Winner 2017

    Australian Accounting Award Winner 2017

    Leenane Templeton Wins Australian Accounting Awards for Community Engagement.

    Leenane Templeton Chartered Accountants & SMSF Advisors have won the community engagement award at the prestigious Australian Accounting Awards, partnered by Thomson Reuters.

    Andrew & Sarah Frith of Leenane Templeton took out one of Australia’s top industry awards.

    Leenane Templeton was shortlisted as a finalist in the categories of “Partner Of The Year – Boutique Firm” and “Community Engagement Program Of The Year” at the 2017 Australian Accounting Awards, hosted by Accountants Daily, Australia’s top publication for the accounting industry.

    Founded in 2001, Leenane Templeton offers Business accounting and advice, SMSF advice and financial planning. It has particularly strong relationships with high wealth individuals and business owners and specialises in proactive advice.

    Leenane Templeton’s staff, clients and partners have worked hard over the past year to establish community engagement programs within the Hunter region including the establishment of Hope4Cure’s foundation which supports women with ovarian cancer in the Hunter region.

    Andrew Frith, CEO at Leenane Templeton said he was delighted and humbled by the nomination.  “These awards show the dedication, ability and professionalism of our whole team and clients all of whom make Leenane Templeton the success it is today”.

    “Leenane Templeton’s recognition for its excellent contribution to the community reinforces the strength of the brand in connecting with the community and engaging with its customers,” he added.

    Leenane Templeton can be discovered at www.leenanetempleton.com.au

     

     

     

  • Federal Budget News 2017

    Federal Budget News 2017

    We have pleasure in enclosing a summary of the significant announcements from the Federal Government’s 2017 Budget.

    This is a fairly subtle budget in terms of changes when compared to recent years – almost boring, however there was a strong emphasis on the “political hot potato” of housing affordability. Despite being boring there are some good planning opportunities. We look forward to working with you to and taking advantage of these opportunities. However please give us a call to discuss how these changes apply to your individual circumstances.

    2017/18 Federal Budget Highlights

    Mr Scott Morrison, the Federal Treasurer, has handed down his second Budget (the government’s first of its three-year term). Mr Morrison said the Budget is focused on boosting the economy and households, so that “we live within our means and are able to return the Budget to balance in 2020/21”.

    The government is proposing to address the housing affordability crisis with a package of tax, superannuation and other measures. Additionally, the Budget contains measures intended to ensure the integrity of the tax and superannuation system.

    Here are the tax, superannuation and social security highlights:

     

    HOUSING AFFORDABILITY MEASURES

    Access to super for first home deposit

    Individuals will be able to make voluntary contributions into their superannuation of up to $15,000 per year and $30,000 in total, to be withdrawn subsequently for a first home deposit. The contributions can be made from 1 July 2017 and must be made within an individual’s existing contribution caps.

    From 1 July 2018 onwards, the individual will be able to withdraw these contributions and their associated deemed earnings for a first home deposit. The withdrawals will be taxed at an individual’s marginal tax rate, less a 30% tax offset.

    Under this new first home super saver scheme, both members of a couple can take advantage of this measure to buy their first home together. The scheme is intended to provide an incentive to enable first home buyers to build savings faster for a home deposit, by accessing the tax advantages of superannuation.

    Source: Budget Paper No 2, p 30; Treasurer’s media release “Reducing Pressure on Housing Affordability”, 9 May 2017.

     

    Super contributions from downsizing
    A person aged 65 or over can make a non-concessional contribution into superannuation of up to $300,000 from the proceeds of selling their principal residence. They must have owned their principal residence for at least 10 years. This measure will apply from 1 July 2018 and is available to both members of a couple for the same home.

    These contributions are in addition to existing rules and caps and are exempt from the age test, work test and the $1.6m total superannuation balance test for making non-concessional contributions.

    Source: Budget Paper No 2, p 28.

     

    Travel expenses related to residential rental properties disallowed
    Deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will be disallowed from 1 July 2017.

    This is an integrity measure to address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes.

    This measure will not prevent investors from engaging third parties such as real estate agents for property management services. These expenses will remain deductible.

    Source: Budget Paper No 2, p 29.

     

    Depreciation deductions limited for residential rental properties
    Plant and equipment depreciation deductions will be limited to outlays actually incurred by investors in residential real estate properties from 1 July 2017.

    Plant and equipment items are usually mechanical fixtures or those which can be “easily” removed from a property such as dishwashers and ceiling fans. This is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value. Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent investors.

    These changes will apply on a prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30pm (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either the investor no longer owns the asset, or the asset reaches the end of its effective life.

    Investors who purchase plant and equipment for their residential investment property after 9 May 2017 will be able to claim a deduction over the effective life of the asset.

    However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property.

    Source: Budget Paper No 2, p 30.

     

    Managed investment trusts investing in affordable housing
    Managed investment trusts (MITs) will be able to invest in affordable housing, allowing investors to receive concessional tax treatment.

    MITs allow investors to pool funds to invest in primarily passive investments and cannot carry on or control an active trading business. Non-resident investors are generally subject to a 15% final withholding tax rate on fund payments from an MIT where they are resident of a country with which Australia has an effective exchange of information treaty. Resident investors are taxed at marginal rates and their capital gains are eligible for the CGT discount.

    From 1 July 2017, MITs will be able to acquire, construct or redevelop property but must satisfy the following conditions:

    • the MIT must derive at least 80% of its assessable income from affordable housing in an income year. Up to 20% of income may be derived from other eligible investment activities permitted under the existing MIT rules. If either of these requirements are not satisfied, non-resident investors will be liable to pay withholding tax at a rate of 30% of investment returns for that income year
    • qualifying housing must be provided to low to moderate income tenants
    • rent is to be charged at a discount below the private market rental rate, and
    • the affordable housing must be available for rent for at least 10 years. If a property is not held for rent as affordable housing for at least 10 years, net capital gains arising on its disposal will attract a 30% withholding tax rate.

    This measure will apply to income years starting on or after 1 July 2017 and is intended to increase private investment in affordable housing. It is estimated to have an unquantifiable cost to revenue over the forward estimates period and the ATO will be provided $1.5m to implement the measure.

    Source: Budget Paper No 2, pp 26 and 29.

     

    CGT discount increased for affordable housing investments
    The CGT discount will be increased from 50% to 60% for Australian resident individuals investing in qualifying affordable housing.

    The conditions to access the 60% discount are:

    • the housing must be provided to low to moderate income tenants
    • rent must be charged at a discount below the private rental market rate
    • the affordable housing must be managed through a registered community housing provider, and
    • the investment must be held for a minimum period of three years.

    This measure will apply from 1 January 2018.

    The higher discount will flow through to resident individuals investing in affordable housing via managed investment trusts as part of the tax measure enabling such trusts to invest in affordable housing (see the item “Managed investment trusts investing in affordable housing”).

    Source: Budget Paper No 2, p 29.

     

    CGT main residence exemption removed for foreign and temporary residents
    Individuals who are foreign or temporary tax residents will no longer have access to the CGT main residence exemption from 7.30pm (AEST) on 9 May 2017.
    Existing properties held before this date will be grandfathered until 30 June 2019.

    Source: Budget Paper No 2, p 27.

     

    Expansion of foreign resident CGT withholding regime
    The CGT withholding rate that applies to foreign tax residents will be increased from 10% to 12.5% from 1 July 2017.

    Currently, the foreign resident CGT withholding obligation applies to Australian real property and related interests valued at $2m or more. This threshold will be reduced to $750,000 from 1 July 2017, increasing the range of properties and interests that will come within this obligation.

    Source: Budget Paper No 2, p 27.

     

    Annual levy for foreign-owned vacant residential properties
    Foreign owners of vacant residential property, or property that is not genuinely available on the rental market for at least six months per year, will be charged an annual levy of at least $5,000. The annual levy will be equivalent to the relevant foreign investment application fee imposed on the property when it was acquired.

    The measure will apply to persons who make a foreign investment application for residential property from 7.30pm (AEST) on 9 May 2017.

    Source: Budget Paper No 2, p 27; Treasurer’s media release “Reducing Pressure on Housing Affordability”, 9 May 2017.

     

    Foreign ownership in new developments restricted to 50%
    A 50% cap on foreign ownership in new developments will be introduced through a condition on new dwelling exemption certificates. The cap will be included as a condition on new dwelling exemption certificates where the application was made from 7:30pm (AEST) on 9 May 2017.

    New dwelling exemption certificates are granted to property developers and act as a pre-approval allowing the sale of new dwellings in a specified development to foreign persons (without each foreign purchaser seeking their own foreign investment approval). The current certificates do not limit the amount of sales that may be made to foreign purchasers.

    The measure will ensure that a minimum proportion of developments are available for Australians to purchase.

    Source: Budget Paper No 2, p 31.

     

    Integrity measure for foreign resident CGT regime
    The principal asset test in Div 855 of the Income Tax Assessment Act 1997 will be applied on an associate inclusive basis for foreign tax residents with indirect interests in Australian real property. The test is relevant to determine whether a foreign resident’s asset is a taxable Australian property.

    This measure will apply from 7.30pm (AEST) on 9 May 2017. It is intended to ensure that foreign tax residents cannot avoid a CGT liability by disaggregating indirect interests in Australian real property.

    Source: Budget Paper No 2, pp 27-28.

      

    TAX INTEGRITY ISSUES

    Funding to address serious and organised tax crime
    The government will provide $28.2m to the ATO to target serious and organised crime in the tax system. This extends an existing measure by a further four years to 30 June 2021. This measure is estimated to have a gain to revenue of $408.5m and a net gain to the budget of $380.3m over the forward estimates period.The ATO’s compliance work is currently funded to 30 June 2017.Source: Budget Paper No 2, p 20.

     

    Interim report into black economy
    The Black Economy Taskforce has delivered an interim report to the government and the government has accepted the following recommendations for immediate action:

    – extending the taxable payment reporting system (TPRS) to two high-risk industries; cleaning and couriers – to ensure payments made to contractors in these sectors are reported to the ATO

    – banning the manufacture, distribution, possession, use or sale of sales suppression technology. This technology allows businesses to understate their income and has been identified as a threat to the integrity of the tax system, and

    – providing funding for ATO audit and lodgement activities to better target black economy risks.

    In addition, the government has agreed to a recommendation that government processes encourage good tax behaviour. The Taskforce will develop a proposal in conjunction with government agencies for the 2017/18 Mid-year Economic and Fiscal Outlook.

    The Taskforce will consult widely and the public are invited to make submissions at  www.treasury.gov.au/blackeconomy by 30 June 2017.

    Source: Minister for Finance’s media release “Release of the Interim Report into the Black Economy, 9 May 2017.

     

    Payments reporting extended to couriers and cleaners
    The government will extend the taxable payments reporting system (TPRS) to contractors in the courier and cleaning industries. The measure will have effect from 1 July 2018 and is estimated to have a gain to revenue of $318m in the forward estimates period.

    The TPRS is a transparency measure and already operates in the building and construction industry, where it has resulted in improved contractor compliance. Under the TPRS, businesses are required to report payments they make to contractors (individual and total for the year) to the ATO.

    This measure brings payments to contractors in the courier and cleaning industries into line with wages paid to similar workers, which are reported to the ATO. Businesses in these industries will need to ensure that they collect information from 1 July 2018, with the first annual report required in August 2019.

    Source: Budget Paper No 2, p 35.

     

    Sales suppression technology to be prohibited
    The government will act to prohibit the manufacture, distribution, possession, use or sale of electronic point of sale (POS) sales suppression technology and software. The prohibition will have effect from the date of assent of the enabling legislation.
    Sales suppression technology and software allow businesses to understate their income by deleting selected transactions from electronic records in POS equipment. Income earned from these transactions and tax owing from this income is not reported to the ATO. The revenue risks such technologies pose have been highlighted by the OECD. The government’s action is in line with responses of other jurisdictions.

    Source: Budget Paper No 2, p 36.

     

    Black Economy Taskforce funding extended The government will provide additional funds of $32m to extend the ATO’s audit and compliance programs targeting black economy risks. This funding was to expire on 30 June 2017.

    Under this measure, a further year of funding will be provided for the ATO’s “Strengthening Foundations” and “Level Playing Field” programs. “Strengthening Foundations” focuses on businesses with a turnover between $2m and $15m that have disengaged from the tax system. The “Level Playing Field” program involves audit, review and intensive follow up and targets small businesses with turnover below $2m.

    These programs are directed at changing black economy and related behaviours such as non-lodgement, omission of income and non-payment of employer obligations. The government will make decisions about the future of these programs beyond 2017/18 in light of the Black Economy Taskforce’s final report, which is expected to be delivered in October 2017.

    This measure is estimated to have a net gain to the budget of $447.2m over the forward estimates period. The revenue includes an additional GST component of $109.8m which will be paid to the states and territories.

    Source: Budget Paper No 2, pp 35-36.

     

    Publicising tax integrity measures The government will provide $8.1m over two years from 2016/17 to communicate the key tax integrity measures to the Australian business community and the general public. The campaign will demonstrate Australia’s international leadership in addressing multinational tax avoidance.

    Source: Budget Paper No 2, p 171.

      

    SMALL BUSINESS

     

    Small business CGT breaks to be tightened
    Access to the small business CGT concessions will be tightened from 1 July 2017 to deny eligibility for assets which are unrelated to the small business.The concessions assist owners of small businesses by providing relief from CGT on assets related to their business which helps them to re-invest and grow, as well as contribute to their retirement savings through the sale of the business. However, some taxpayers are able to access these concessions for assets which are unrelated to their small business, for instance through arranging their affairs so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.The small business CGT concessions will continue to be available to small business taxpayers with aggregated turnover of less than $2m or business assets of less than $6m.Source: Budget Paper No 2, p 38.Instant asset write-off extended for 12 months
    The $20,000 instant asset write-off for small business will be extended by 12 months to 30 June 2018, for businesses with an aggregated annual turnover of less than $10m.Small businesses will be able to immediately deduct purchases of eligible depreciating assets costing less than $20,000 provided they are first used, or installed ready for use, by 30 June 2018. Only a few assets are ineligible (such as horticultural plants and in-house software).Depreciating assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the general small business pool (the pool) and depreciated at 15% in the first income year, and 30% for each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).

    The current “lock out” laws from the simplified depreciation rules will continue to be suspended until 30 June 2018. These rules prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out.

    From 1 July 2018, the immediate deductibility threshold, and the balance at which the pool can be immediately deducted, will revert to $1,000.

    This measure is designed to improve cash flow for small businesses, providing a boost to small business activity and investment for another year. It is estimated to have a cost to revenue of $650m over the forward estimates period.

    Source: Budget Paper No 2, pp 21-22; Treasurer’s media release, “Stronger growth to create more and better paying jobs”, 9 May 2017; Minister for Small Business media release, “Budget boost for small business”, 9 May 2017; and Budget 2017-18 Glossy: Stronger growth to create more and better paying jobs, pp 5-6.

      

    GST

    Purchasers of new residential properties to remit GST

    Purchasers of newly constructed residential properties or new subdivisions will be required to remit the GST directly to the ATO as part of settlement from 1 July 2018.

    Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs. The new measure is an integrity measure to strengthen compliance with the GST law.

    Source: Budget Paper No 2, p 38.

     

    Double taxation of digital currency removed
    The GST treatment of digital currency (such as Bitcoin) will be aligned with that of money from 1 July 2017.

    Digital currency is currently treated as intangible property for GST purposes. Consequently, consumers who use digital currencies as payment can effectively bear GST twice: once on the purchase of the digital currency, and again on its use in exchange for other goods and services subject to GST.

    This measure will ensure purchases of digital currency are no longer subject to GST. Removing double taxation on digital currencies will remove an obstacle for the financial technology (fintech) sector to grow in Australia.

    Source: Budget Paper No 2, pp 22-23.

     

    Diplomatic concessions under Indirect Tax Concession Scheme extended
    Access to refunds of indirect tax (including GST, fuel and alcohol taxes) under the Indirect Tax Concession Scheme has been extended.

    New access to refunds has been granted to the diplomatic and consular representations of Belarus, Cuba, Zambia and Ethiopia. The diplomatic and consular representations of Mauritius and Thailand have had their access expanded.
    These concessions are provided in accordance with Australia’s international obligations in relation to diplomatic missions and consular posts. Each of these changes will have effect from a time specified by the Minister for Foreign Affairs.

    Source: Budget Paper No 2, p 23.

      

    SUPERANNUATION

    LRBAs included in super balance and transfer balance cap
    The use of limited recourse borrowing arrangements (LRBAs) will be included in a member’s total superannuation balance and transfer balance cap from 1 July 2017.
    LRBAs can be used to circumvent contribution caps and effectively transfer growth in assets from the accumulation phase to the retirement phase that is not captured by the transfer balance cap. The outstanding balance of an LRBA will now be included in a member’s annual total superannuation balance and the repayment of the principal and interest of an LRBA from a member’s accumulation account will be a credit in the member’s transfer balance account.Source: Budget Paper No 2, p 33.
    Related party transactions to increase super reduced Opportunities for members to use related party transactions on non-commercial terms to increase superannuation savings will be reduced from 1 July 2018.
    The non-arm’s length income provisions will be amended to ensure expenses that would normally apply in a commercial transaction are included when considering whether the transaction is on a commercial basis.Source: Budget Paper No 2, p 34.
     
      

    INDIVIDUALS

    Medicare levy to increase from 2.0% to 2.5%
    The Medicare levy will be increased from 2.0% to 2.5% of taxable income from 1 July 2019. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

    Low income earners will continue to receive relief from the Medicare levy through the low income thresholds for singles, families, seniors and pensioners. The current exemptions from the Medicare levy will also remain in place.

    This measure is estimated to have a gain to tax revenue of $8.2b over the forward estimates period (across all heads of revenue, not just the Medicare levy).
    All revenue generated by the Medicare levy will be used to support the National Disability Insurance Scheme (NDIS) and to guarantee Medicare. For example, $9.1b will be credited over the forward estimates period to the NDIS Savings Fund Special Account when it is established.

    Source: Budget Paper No 2, pp 24-25; and Budget 2017-18 Glossy: Budget overview, p 16.

    Medicare levy – low income thresholds to increase
    The Medicare levy low-income thresholds for singles, families, and seniors and pensioners will increase from the 2016/17 income year.

    The threshold for singles will increase to $21,655 (up from $21,335 for the 2015/16 year).

    The family threshold will increase to $36,541 (up from $36,001 for the 2015/16 year).

    For single seniors and pensioners, the threshold will increase to $34,244 (up from $33,738 for the 2015/16 year). The family threshold for seniors and pensioners will increase to $47,670 (up from $46,966 for the 2015/16 year).

    The child-student component of the income threshold for all families will increase to $3,356 (up from $3,306 for the 2015/16 year).

    The increases take into account movements in the consumer price index so that low-income taxpayers generally continue to be exempted from paying the Medicare levy. This measure is estimated to have a cost to revenue of $180m over the forward estimates period.

    Source: Budget Paper No 2, p 25.

     

    New HELP repayment thresholds and rates to be introduced
    A new set of repayment thresholds and rates under the higher education loan program (HELP) will be introduced from 1 July 2018.

    A new minimum repayment threshold of $42,000 will be established with a 1% repayment rate. Currently, the minimum repayment threshold for the 2017/18 year is $55,874 with a repayment rate of 4%.
    A maximum threshold of $119,882 with a 10% repayment rate will also be introduced. Currently, the maximum repayment threshold for the 2017/18 year is $103,766 with a repayment rate of 8%.

    Source: Budget Paper No 2, p 83.

      

    OTHER TAX CHANGES

    Foreign investment framework to be clarified and simplified
    The foreign investment framework will be clarified and simplified with effect from 1 July 2017. This will make foreign investor obligations clearer, and allow for more efficient allocation of Foreign Investment Review Board screening resources to higher risk cases.The amended framework will allow the foreign investment framework to operate more efficiently by facilitating business investment and reducing unnecessary red tape by:
    • refining the type of developed commercial property subject to the lower $55m threshold by removing low sensitivity applications from the meaning of “sensitive land”
    • improving the treatment of residential applications by allowing failed off-the-plan purchases to be considered as “new”
    • overcoming limitations with the existing exemption certificate system for individual residential real estate purchases and amending the treatment of residential land used for a commercial purpose
    • streamlining and simplifying foreign investment business application fees, including legislating existing fee waiver arrangements
    • introducing a new exemption certificate that applies to low risk foreign investors
    • clarifying the treatment of developed solar and wind farms, and
    • restoring the previous arrangement whereby companies with significant foreign custodian holdings (ie legal rather than equitable interest holders) are not subject to notification requirements.

    These amendments are informed by stakeholder views and a public consultation process on options to improve the framework and make obligations clearer.

    Source: Budget Paper No 2, p 32.

     

    Major bank levy to be introduced
    A major bank levy (the levy) will be introduced for authorised deposit taking institutions (ADIs), with licensed entity liabilities of at least $100b, from 1 July 2017.
    The $100b threshold will be indexed to grow in line with nominal gross domestic product.

    The levy will be calculated quarterly as 0.015% of an ADI’s licensed entity liabilities as at each quarterly reporting date mandated by the Australian Prudential Regulation Authority (APRA). This equates to an annualised rate of 0.06%.

    Liabilities subject to the levy will include items such as corporate bonds, commercial paper, certificates of deposit, and Tier-2 capital instruments. The levy will not apply to the following liabilities: additional Tier-1 capital, and deposits of individuals, businesses and other entities protected by the Financial Claims Scheme. It will not be levied on mortgages.

    Superannuation funds and insurance companies will not be subject to the levy.
    The levy is forecast to raise $6.2b over the forward estimates period, net of interactions with other taxes (principally corporate income taxes). The levy is designed to assist with budget repair and to provide a more level playing field for smaller banks and non-bank competitors. It complements prudential reforms being implemented by the government and APRA.

    To facilitate the introduction of the levy, the Australian Competition and Consumer Commission (ACCC) will undertake a residential mortgage pricing inquiry until 30 June 2018. As part of this inquiry, the ACCC will be able to require relevant ADIs to explain changes or proposed changes to residential mortgage pricing, including changes to fees, charges, or interest rates by those ADIs.

    Source: Budget Paper No 2, p 24; and Budget 2017-18 Glossy: Guaranteeing the essentials for Australians, p 17.

     

    Skilling Australians Fund levy introduced
    Businesses that employ foreign workers on certain skilled visas will be required to pay a levy that will provide revenue for a new Skilling Australians Fund from March 2018.
    Businesses with turnover of less than $10m per year will be required to make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

    Businesses with turnover of $10m or more per year will be required to make an upfront payment of $1,800 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $5,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

    The levy will replace the current training benchmark financial obligations for employers of workers on Temporary Work (Skilled) (subclass 457) visas, which are being abolished, and permanent Employer Nomination Scheme (subclass 186) Direct Entry stream visas.

    Source: Budget Paper No 2, p 16.

     

    Aligning tax treatment of “roll your own” tobacco and cigarettes
    The taxation of “roll your own” (RYO) tobacco and other products (eg cigars) will be adjusted so that manufactured cigarettes and RYO tobacco cigarettes receive comparable tax treatment. This will be achieved by calculating the per kilogram excise and excise-equivalent customs duty rates on the assumption that the average tobacco content of a cigarette is 0.7 gm, rather than the current assumption of 0.8 gm. Since the average cigarette contains less than 0.8 gm of tobacco, the current tax treatment of RYO tobacco is relatively more favourable. The adjustment to the rates of duty will better align the tax on tobacco regardless of its form.
    The adjustment will be phased in over four years, from 2017 to 2020, to match the timing of the previously legislated 12.5% tobacco tax increases, which occur on 1 September each year. The first of the four annual changes will occur on 1 September 2017.

    Source: Budget Paper No 2, p 12.

     

    Legislative drafting – additional resources
    The government will provide $16.9m to Treasury and $5.2m to the Office of Parliamentary Counsel over four years from 2017/18 to ensure dedicated drafting resources are available to progress financial services and tax reform legislation.

    Source: Budget Paper No 2, p 168.

     

    We look forward to working with you to and taking advantage of these opportunities. Please call to discuss how these changes apply to your individual circumstances.

     

     

  • Finalists in the Australian Accounting Awards 2017

    Finalists in the Australian Accounting Awards 2017

    Newcastle based Leenane Templeton Chartered Accountants & Business Advisors has been shortlisted for the prestigious Australian Accounting Awards, partnered by Thomson Reuters.

    Andrew Frith of Leenane Templeton is in the running to take out one of Australia’s top industry awards.

    Leenane Templeton has been shortlisted as a finalist to win two awards in the categories of “Partner Of The Year – Boutique Firm” and “Community Engagement Program Of The Year” at the 2017 Australian Accounting Awards, hosted by Accountants Daily, Australia’s top publication for the accounting industry.

    Founded in 2000, Leenane Templeton offers business accounting & advice, financial planning and SMSF advice to the Newcastle and surrounding areas. It has particularly strong relationships with local business and high wealth individuals and specialises in proactive advice.

    Now in its fourth consecutive year, the Australian Accounting Awards recognises individual excellence in accounting, from the profession’s most senior ranks to its rising stars.
    Winners in the individual categories will automatically be shortlisted for the coveted Accountants Daily Excellence Award. In addition, Leenane Templeton will be in the running for the Editor’s Choice Award, which recognises an individual’s outstanding contribution to the Accounting Industry.

    “We broadened the awards program this year to better recognise the breadth and depth of the talent in this industry. For those who have made it to the finalist stage, congratulations, you have secured your place amongst Australia’s leading accounting professionals,” said Terry Braithwaite, head of partnerships at Accountants Daily. “We are set for a superb evening when the awards are presented. The judges have a tough job on their hands this year and there no doubt will be huge excitement to hear their verdicts.”

    Andrew Frith, CEO at Leenane Templeton said he was delighted and humbled by the nomination. “These awards show the dedication, ability and professionalism of our whole team all of whom make Leenane Templeton the success it is today”. “Leenane Templeton’s recognition for its excellent contribution to the Newcastle and surrounding community reinforces the strength of the brand in connecting with the community and engaging with its customers,” he added.

    The winners will be announced at a black tie awards dinner on Friday, 26 May at the Sofitel Sydney Wentworth.

    To discover more about Leenane Templeton please call our team on (02) 4926 2300.

  • Understanding Asset Allocation

    Understanding Asset Allocation

    Here’s an easy way to understand asset allocation

    The allocation of your money to different types of investment assets, generally referred to as “asset allocation”, is the major factor that determines the risk level and performance of an investment portfolio as a whole.

    For example, if you have all of your money in cash you have a low risk but relatively low returns. At the other extreme, if it is all invested in shares in Asian stock markets you may, over time, receive a much higher return but with a very much higher risk of experiencing negative returns – and stress – along the way.

    Designing an individual’s asset allocation is very much like designing a piece of machinery. We know that different types of investment will provide certain average performances over lengthy periods. We also have a good idea of the probability of negative returns for investment types.

    It is also a fact that different types of investment will perform better one year than the next. By allocating assets into certain combinations of investment types we can estimate the likely return over longer periods, and the risk of having a negative return in any one year. This is why each person needs to have their own asset allocation to suit his or her personal objectives and risk tolerance.

    An example to make it easier to understand…

    Chris is close to retirement and is becoming very conservative and cautious in his outlook. His asset allocation might look like this:

    • Cash 10%
    • Property 10%
    • Australian Shares 25%
    • International Shares 15%
    • Bonds 40%

    However, Travis is only 25. He has nearly 40 more years to retirement and just wants to see a maximum return on his money, while being happy to accept negative returns some years. His portfolio is illustrated below:

    • Cash 5%
    • Property 10%
    • Australian Shares 55%
    • International Shares 25%
    • Bonds 5%

    From these examples, we not only see different risk profiles but also allocations to higher income producing investments for Chris, who is nearing retirement.

    As goals and attitudes differ greatly from one person to another, it is important your portfolio asset allocations are personally designed. Talk to a licensed financial adviser who has expertise in this area. 

    Leenane Templeton advisors are available on (02) 4926 2300 or email us today.