Hi Paul,

Unfortunately you can’t salary sacrifice your HECS debt without incurring FBT at 46.5%.

Non-profit organisations and charities have exemptions from FBT up to about either $7500 or $15,000 for charities, so they can salary package anything up to these limits without paying FBT.

Everyone else is subject to FBT at the full rate, except…[Read more]

I think people also forget that when they do retire they may still have 20-30 years or so until they depart this world. That is a long time, so retiring may be from the fulltime workforce, but that doesn’t mean that you are retiring from life or from investing, if anything you’ll have more time to concentrate on your investments and hopefully…[Read more]

I agree that the 27% is maybe the average tax rate on Summersby’s current income, but the reason that I queried the 27% tax rate is that the average tax rate is really irrelevant, because it only matters how the next dollar is going to be taxed , or how much of a tax benefit you’ll get, which is based on the marginal tax rate, 16.5%, 31.5%, 41.5%…[Read more]

Summersky,

as Richard noted, remember that super is only a regulated tax structure. You can usually invest in exactly the same asset within super or outside, although super is much more restrictive, ie not borrowing.

Obviously depending on your age, income, family, risk tolerance, etc, will help determine which asset class to invest in and how…[Read more]

Sunny1,

If you have a profit of $50,000 you will be paying tax of $11,010, due to the progressive tax scales.

To reduce this to nil$ you will need to reduce your taxable income to $10,000. You will need a $51,667 deductible super contribution to achieve this as only the first $5000 is fully deductible, and then 75% of any amounts above that,…[Read more]

Kuade,

There is no FBT, because the salary package is “otherwise deductible”. So no effect on anything except your tax, and it may also help with avoiding the medicare surcharge if you don’t have health insurance.

tax@guardianaccounting.com
http://www.guardianaccounting.com

Kuade,

If your employer allows salary packaging, you can salary package the expenses effectively claiming all cash deductions in your name, and then the remaining profit is split 50/50

tax@guardianaccounting.com
http://www.guardianaccounting.com

Bricks and mortar depreciate, land appreciates

But this doesn’t take into account irrational markets in action,

Be careful of buying into unit developments

6% average compound growth will result in your investment value being 2.4 times cost, so it sounds ok, but you can get 6.5% in the bank

just some…[Read more]

Peter,

I can see where you’re coming from but, you should be a little more positive and optimistic, as what you beleive is what you’ll become.

Markets, whether they’re property, shares, bonds, interest rates, whatever run in cycles, so take a step back and look at what is happening, do some historical research and you’ll be able to see where to…[Read more]

Good points there Terry, and I guess as with developments, the money is made in the development itself

tax@guardianaccounting.com
http://www.guardianaccounting.com

I recently went to a seminar on a new storage development in our area, basically they were offering a yield of about 7%, guaranteed for the first year, with an option to then either take over management or use the on-site manager. They also claimed that they had a major bank that would take security over the storage unit.

Do any of the brokers…[Read more]

If you expect to get a reasonable size tax refund, you can lodge a PAYG Tax Variation with the ATO, to reduce the amount of tax withheld from your wage during the year, ie if you will get a refund of about $5000 then you can have your wages tax withheld reduced by about $96pw,

You’re much better off having more cash now than waiting until your…[Read more]

redwing,

I’m assuming that the contract is in the trust name, otherwise, yes it is too late unless the contract can be changed before settlement.

The loan situation is a seperate issue to ownership of the property.

tax@guardianaccounting.com
http://www.guardianaccounting.com

If you’re negative gearing, what about a Tax Variation form, to improve your cashflow
Do you have a good tax accountant that is interested in what you’re doing?
Do you have an investment plan?

tax@guardianaccounting.com
http://www.guardianaccounting.com

Terry,

the fact that the loan is in two names doesn’t impact on the CGT, Asset protection, or Estate planning as the property is still owned by the trust,

tax@guardianaccounting.com
http://www.guardianaccounting.com

Why is that just because Johnny Howard starts talking about something, then all of a sudden it is a catastrophe and we must do something now. I believe strongly that renewable energy is the only way to go, if not just to reduce that choking pollution in our capital cities, we’ll all be much healthier.

Solar power hasn’t been taken up by…[Read more]

No problem Andrew, just draw up an agreement with your wife to lend her 50% of the loan from her, so that way you practically have the complete loan. Your wife has an interest expense to the bank but and equal amount of interest income from you. The ATO have accepted that a husband and wife may enter into a joint loan agreement even though only…[Read more]

Smifter, I would agree with you that your investment position has only increased by $50k, the other $50k debt reduction is from cash paid off the loan, so whether you pay it off the loan or invest that cash you’ll still have $50k more than you had at the start. So really, it’s only the property value increase that has increased your net…[Read more]

Thanks, Richard for clarifying my comments, although the transitional rules do expire in the near future, 2008 is it?

ross@myobmechanic.com
http://www.myobmechanic.com

Hybrid Discretionary Trust or just Hybrid Trust, although it won’t be of use with your current property, but for future investments it can have a similar outcome to what you are suggesting.

I like your thinking though, but unfortunately, it doesn’t really matter what the property is doing, private or investment, it matters what the loan funds are…[Read more]