Four powerful ways to build investing confidence

Here are some tips that can help you build confidence in your investing approach, no matter what the markets are doing.

Emotions always play a role in investing. For some investors, especially newer ones, it can be hard to separate the idea of investing from “losing it all.” If you’re anxious or insecure about your investing plan, you could make heat-of-the-moment decisions during market downturns that might not be best for your long-term goals. That’s why it’s important to acknowledge those nerves early and make sure your emotions are working for you when you invest, not against you. Here are some tips that can help you build confidence in your investing approach, no matter what the markets are doing.

Consider dollar-cost averaging

Say you have a large lump sum of money to invest. Maybe it was an inheritance or a gift. If you’re very risk averse, one of the first thoughts you might have is “what if I invest all this money at once, and the market drops right after?” If that sounds like you, dollar-cost averaging might bring you some peace of mind.

Dollar-cost averaging means buying a fixed dollar amount of a particular investment on a regular schedule, no matter what its share price is at each interval. Since you’re investing the same amount each time, you automatically end up buying more shares when prices are low and fewer shares when prices rise. This can help you avoid that potential buyer’s remorse of investing a lump-sum amount when prices are at their peak. Incremental investing is one way to help you get comfortable with the market’s natural movement, and it can be especially helpful for self-identified worriers.

Make saving automatic

Some investors worry they’re not saving enough to reach their long-term goals—or that they’re not doing enough to keep their financial lives on track. You can take some of that uncertainty out of the equation by setting your savings on autopilot. Put a percentage of each paycheck or your annual salary into your investment accounts. You’ll be taking positive action to stay on track—and that’s a great feeling!

Diversify your investments

Diversifying your portfolio is one way to help control risk. It’s a fancy way to describe putting your eggs in many baskets—or in this case, putting your money into high-, moderate-, and low-risk investments, both domestic and international. Your portfolio will still have the growth potential that comes from higher-risk shares, but you won’t be as vulnerable during market downturns because you’ll ideally also hold safer investments like bonds and cash. The breakdown of shares, bonds, and cash in your portfolio determines how much risk you take on when you invest, and you have the freedom and flexibility to choose a mix that feels right for your life.

Think long term

Successful investing isn’t about reacting to today’s news or to the latest trends bubbling up on social media. It’s about letting your long-term goals guide your financial choices. That’s what inspired you to invest in the first place! You might be tempted to pull your money out of the market during periods of volatility. But if you do that and reinvest when the markets calm down, you could end up farther away from your goal. Why? Because your investments lose the power of compounding. And while a measured, disciplined investing approach isn’t always easy, it can be worth it in the end.

Remember: Strong financial plans are built with market volatility in mind. If you diversify your holdings, invest regularly, and stay focused on your big-picture goals, you can feel confident that you’re doing your part to set your portfolio up for success—and set yourself up for ongoing financial wellness.

Call us today to discuss your investment strategy, we’re here to help.

Source: Vanguard

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2022 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

How to spot and stop financial abuse

Until recently, financial abuse was often kept secret, especially where it occurred within the family. Thankfully that’s changing with public awareness campaigns and help becoming more readily available.

The emotional and economic damage caused by financial abuse can be far reaching and devastating. A recent Australian report calculates that in 2020 alone, financial abuse victims lost $5.7 billion while the cost to the broader economy was $5.2 billion.i

Nearly one in 30 women and one in 50 men suffer financial abuse each year, according to the Deloitte Access Economics report The Cost of Financial Abuse in Australia, 2022. These figures are almost certainly an underestimate, the report adds.

There are no typical victims of financial abuse: those affected are of all ages and means. Sadly, the abuser is often a friend, carer, partner or family member.

What is financial abuse?

Financial abuse is when someone uses your money without your permission, prevents you from getting access to money or takes charge of your financial decisions.

These days, financial abuse is considered a form of domestic and family violence, taking away your independence and leaving you feeling vulnerable and anxious. Victims may also suffer physical violence and emotional abuse.

The most common type of financial abuse is withholding income or controlling how it is spent, according to the Deloitte report. But there are other forms of abuse that can be equally harmful such as making a partner liable for a joint debt, preventing someone from working, refusing to contribute to household expenses and refusing to contribute to the costs of raising a child.

Many victims also suffer flow-on effects of the abuse such as financial hardship and stress, leading to mental health issues. Some may also lose their home.

In some cases of family violence, one partner takes control of the couple’s finances, preventing the victim from leaving the relationship. In others, where the victim does manage to leave, the abuser may continue their abuse using tactics such as expensive legal action or disrupting the victim’s work or business.

Recognising the signs

Victims of financial abuse may not be aware of the abuse for some time, allowing perpetrators to empty bank accounts, deplete investments and incur large debts in the victim’s name.


The federal government agency, Services Australia says the warning signs include:

  • taking or using your money without your permission
  • not being allowed to work
  • having to account for how you spend your money
  • withholding financial information from you
  • spending any government payments you receive without your consent.ii

Incurring debts in your name is another form of financial abuse. Your partner may spend more than you agree on your credit card, pressure you into co-signing a loan with them, or take out a loan in your name, according to Australian Family Lawyers.iii They may also limit your educational opportunities by, for example, preventing you from enrolling in studies that could advance your career.

Older people and those living with disability can be particularly vulnerable to financial abuse if they rely on others for help and advice. Financial abusers may take money from their bank accounts or wallets, ask an older person to change their Will, take jewellery or other valuable items from their home, or take control of their decisions using a Power of Attorney when they are still capable of making their own decisions.

Where to go for help

If you or someone you know is suffering financial abuse, a number of free and confidential resources are available.

The MoneySmart website provides information about free legal advice at community legal centres or legal aid centres, and a number of suggestions if you need urgent help with money.

You can also find free and confidential counselling for family violence, abuse and sexual assault at: 1800RESPECT (24 hours a day, seven days a week)
1800 737 732

For crisis support, contact Lifeline (24 hours a day, seven days a week)
13 11 14

We understand that it can be difficult reaching out for support if you feel you or someone you love is being taken advantage of financially, especially if a family member is involved. Please call us if you would like a confidential discussion about safeguarding your finances.

https://www.commbank.com.au

ii https://www.servicesaustralia.gov.au/what-family-and-domestic-violence?context=60033#a8

iii https://www.australianfamilylawyers.com.au/information-centre/signs-of-financial-abuse


Tax Alert March 2023

Family trust rules and new guidance on contractors

The Australian Taxation Office (ATO) has confirmed its position on family trust distributions, while also providing employers with new information to simplify completion of Single Touch Payroll (STP) activity statements. Here are some of the latest developments in the world of tax.

Prefilling of PAYGW

Completion of PAYG withholding via STP will become easier for employers when the ATO begins prefilling some of the required activity statement data.

From the July 2023 statement, PAYG withholding labels W1 and W2 will be prefilled for all monthly PAYG employers. Quarterly withholders will find the information on their September 2023 statement.

The ATO is also piloting an employer reminder system for businesses with a late activity statement and STP-reported PAYG withholding. If you fail to lodge by the reminder date, the ATO will consider there are no corrections to report and the recorded amounts will be added to your client account.

Final rules on family trusts

Taxpayers with family trusts should check the implications of the ATO’s final guidance on the taxation of family trust payments, as the new rules may reduce the attractiveness of these tax structures.

Under the ATO’s new approach, common tax planning strategies relying on the section 100A exemption covering trust distributions to companies and family members may no longer be available in some situations.

Taxpayers with a discretionary trust should discuss the implications with us, particularly where there are parent controllers of the trust and adult-aged child beneficiaries. The ATO website provides a number of case studies outlining common situations.

Employees vs. independent contractors

The ATO is consulting on its new draft guidance covering both classification of employees and independent contractors, and its proposed compliance approach in this area.

The draft guidance outlines the regulator’s priority areas, which include situations where particular risk factors are present and where an unpaid superannuation query has been received from a worker.

The guidance also indicates employers must have specific advice from an appropriately qualified third-party confirming their classification of a worker as a contractor is correct.

Recordkeeping for self-education expenses eased

Taxpayers claiming self-education expenses will find things a little easier this tax time, as new legislation has removed the requirement to exclude the first $250 of deductions for education courses.

The new rules can be used when completing your 2022-23 tax return, while for employers, the change applies to the Fringe Benefits Tax year starting 1 April 2023.

Sharing economy reporting extended

Providers of ride-sourcing and short-term accommodation services will find themselves swept into the compulsory Taxable Payments Reporting System (TPRS) from 1 July 2023.

Electronic platform operators for these services (such as Uber and Airbnb) are required to report all transactions involving Australian purchasers under new legislation passed in December 2022.

Annual TPRS reporting is already compulsory in industries such as building and construction, cleaning, courier and security services.

Plug-in hybrid electric vehicles to face FBT

Under rules applying from 1 April 2025, plug-in hybrid electric vehicles will no longer be considered zero or low emissions vehicles and will not be eligible for the fringe benefits tax exemption applying to these vehicles.

You can apply for the exemption if the hybrid vehicle was exempt before 1 April 2025 and there is a financially binding commitment to continue providing private use of the vehicle after this date.

No business activity could mean no ABN

The ATO is again reminding small businesses their Australian Business Number (ABN) may be flagged for cancellation if there is no reported business activity in their tax return, or no signs of business activity in other lodgements or third-party information.

If an ABN is identified as inactive, the ATO will contact the holder by email, SMS or mail to check if the ABN is still required and explain the action required to keep it. Where the business is no longer operating, the ABN will be cancelled.

Source: Vanguard

https://corporate.vanguard.com/content/dam/corp/research/pdf/Cash-panickers-Coronavirus-market-volatility-US-CVMV_072020_online.pdf

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2022 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Tax Alert – December 2021

As COVID-19 turbulence starts to settle, the ATO is moving away from its supportive position and returning to its more usual compliance focus.

That means taxpayers need to be aware their financial affairs will come under renewed attention in the year ahead.

Data gathering programs increase

In recent months the ATO has announced programs to gather data on various aspects of Australians’ financial lives to use in its ongoing data-matching projects.

Recent programs include gathering data on property management and rental bonds, cryptocurrency, online selling and novated leases for the upcoming financial year (2022-23). The ATO will also be collecting data on payments made by government agencies such as Comcare, the Department of Health, the NDIA, Department of Veterans’ Affairs and the clean energy regulator.

Taxpayers who buy and insure high-value lifestyle assets will also be under the microscope, with the ATO looking to collect details that will “assist with profiling [to obtain] a holistic view of a taxpayer’s wealth”. Under this program, the taxman will be obtaining information from insurance companies for the period 2020-21 to 2022-23 about assets exceeding certain nominated thresholds.

These high-value assets include boats valued over $100,000, motor vehicles (including caravans) and thoroughbred horses valued over $65,000, fine art worth over $100,000 per item and aircraft valued over $150,000. Data obtained from insurers will include individual client identification and policy details.

Overseas gifts or loans under scrutiny

The ATO has also announced it will be increasing scrutiny of undeclared foreign gifts or loans from related overseas entities, including family and friends.

The regulator says it has encountered many situations where Australian taxpayers are deriving assessable income or capital gains offshore but failing to declare these in their income tax returns. The ATO will be looking at arrangements where taxpayers are attempting to avoid tax on foreign assessable income by disguising amounts as gifts or loans.

Anyone receiving genuine monetary gifts or loans should keep supporting documentation. Inheritances count as gifts, so if you receive an inheritance from overseas, get a certified copy of the person’s will or estate distribution statement.

Focus on working from home deductions

On a positive note, if you are still working from home due to COVID-19, you can continue using the shortcut method for claiming deductions until 30 June 2022.

From 1 July 2022, you will need to use either the traditional fixed rate or actual cost methods and meet their eligibility and recordkeeping requirements.

The ATO says it’s currently reviewing the 52 cents per hour fixed rate method to make it easier and simpler to use, given more people will be working from home in the longer term.

Backpacker tax under fire

Employers paying working holidaymakers will need to keep a close eye on developments in this area following a decision by the High Court that tax rates applied to these employees is discriminatory as it is based on nationality.

The decision could affect the applicability of the backpacker tax for workers from countries with double tax agreements with Australia. According to the ATO, this means working holidaymakers from Chile, Finland, Germany, Japan, Norway, Turkey, UK, Germany or Israel.

The ATO is currently considering the implications of the High Court decision and will provide further guidance for employers. In the meantime, employers should continue using the tax rates in the ATO’s published withholding tables for backpackers.

Self-education expense threshold to go

The government has made good on its May 2021 Budget promise to remove the $250 non-deductible threshold for claiming work-related self-education expenses.

The Treasury Laws Amendment (2021 Measures No.7) Bill 2021 is currently before Parliament. If passed, it will remove the current threshold for taxpayers claiming self-education expenses. It’s also expected to simplify the claims process in your annual tax return.

The start date for the change is likely to be 1 April or 1 July 2022.

Reminder on super stapling

If you are an employer, don’t forget to request super fund details from new employees, now the government’s super stapling rules are in place.

If a new employee doesn’t choose a super fund, you must request their stapled super fund from the ATO if they have one. This fund is linked to them and must be used for your Superannuation Guarantee (SG) contributions unless the employee requests otherwise.

If you would like help getting your tax affairs in order for the new year, contact our office today on 03 5120 1400 and speak to one of our tax accountants or send us a message via our contact page.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.




Years of Service

RGM Staff, Back – L to R: John Saxton, Prue Cox, Pearse Morgan, Melissa Wigley, Mark Reidy. Front – L to R: Daniel Bremner, Mardi Salienko, Joe Auciello, Reni Mincella.

At the end of last year we presented our staff with 10, 20, 30 & 40 years of service certificates to recognise their commitment to our firm. The dedication our employees have shown over many years deserves to be recognised, as each employee has played an important role within our firm. The qualities such as organisational skills, leadership, honesty, strong work ethic and teamwork are all character traits worthy of recognition.

We are proud to have all our employees as part of our work family here at RGM and we congratulate the following staff on their years of service:

Platinum  – 40 Years

Pearse Morgan

Gold – 30 Years

Phil Lane

Silver – 20 years

Mark Reidy

Anita Baxter

Bronze – 10 Years

Reni Mincella

Colleen Mills

Joe Auciello

Mardi Salienko

Melissa Wigley

Christine Turra

Bronze – 10 Years

Daniel Bremner

Jason Low

Prue Cox

John Saxton

Maybe just maybe, Christmas is a little more in 2020

What if Christmas, doesn’t come from a store. What if Christmas…perhaps…means a little bit more!” 
― Dr. Seuss

This year has looked different to other years, as the COVID-19 pandemic impacted our lives in many ways. As we look towards the festive season after what has been quite a challenging year for many, we need to consider how this celebration too might change. 

It’s not all doom and gloom. Gratitude has been a real focus to the year, and as a result many people are shifting away from the silly season’s materialism and excess to reassess what Christmas means to them. 

Our “new normal” festive season, can be one that is memorable and joy-filled, whether you celebrate this holiday or just enjoy unwinding at the end to the year. 

Expressing gratitude

Being thankful for what we have is important; especially so in a year in which bad news may have overpowered the good. While perhaps you will be unable to travel to your annual holiday destination or see as many people as you ordinarily would, it’s helpful to focus on what you still have instead of what is missing. 

Rather than merely being a buzzword, gratitude has been shown to reduce depression, anxiety and stress.i Whether it’s around the table at Christmas or in the lead up to the holidays, tell your loved ones what you’re thankful for, as this can inspire them to also reflect on this. It can also help reframe the year from being one of hardship to also having contained moments of happiness and opportunities. 

Creating memories

As many of us have been separated from loved ones due to restrictions, the holidays provide an opportunity to reconnect in person. Even if you’re unable to continue certain traditions, such as a family road trip or a big indoor gathering, what truly matters is the time you spend with those you care for. 

Perhaps even new traditions can be formed as you create memories together. Depending on what the restrictions will be come late December, you might be able to spend time with family and friends trying something different – if there has always been one designated Christmas host, perhaps this year you have a family picnic where everyone brings a dish to share. 

Supporting others

Christmas time is synonymous with extending goodwill to all – and this year there are more people who are doing it tough as a result of the pandemic, as well as the bushfires earlier in 2020. 

Give a helping hand to those who have fallen on hard times by volunteering some of your time to a worthy cause (such as a free meal service to those in need) or donating money if you’re able to. These gestures can also reaffirm your understanding of what you have to be thankful for. 

Reducing overspending

Whether or not you were financially impacted by the pandemic this year, there is expected to be a trend of reduced spending over the Christmas period. A recent survey by Finder reported that 37% of Aussies plan to spend less on average this Christmas.ii 

To reduce your spending, set and then stick to a budget. Don’t leave gift buying to the last minute when you’re more likely to miss bargains or to panic buy. Also watch your usage of your credit card, or buy-now-pay-later schemes so you don’t have a debt hangover in the new year to worry about. 

https://www.tandfonline.com/doi/abs/10.1080/17439760.2016.1221127 

ii https://www.finder.com/christmas-spending-statistics

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Watching Our Online and Social Spending

The changes to our daily lives of late have caused us to re frame our views on ‘screen time’, an activity that now more than ever takes up a significant proportion of our day.

However, as we spend more time online we are also spending more cash, and it pays to be mindful of the ways our browsing habits impact our hip pocket.

With the average Australian spending over six hours on social media every week, it’s safe to say we’re affected by what we consume online.i This can happen consciously, from actively looking up brands and products, or subconsciously, through viewing advertisements directed at us.

Social networking to selling

When Facebook first started gaining popularity in the noughties, its focus was on social networking. By 2016 it had evolved into a marketplace in which users could sell to each other, regardless of whether they were connected. Facebook also had over seven million advertisers during the third quarter of 2019 alone.ii So when you log into your Facebook account these days, it’s just as likely that you’ll end up buy something than socialising.

Instagram has similarly developed beyond simply sharing photos. A 2019 survey showed that 81% of respondents use their accounts to research products and services, and 130 million users view shopping posts each month.iii,iv

Easy social shopping

The sophisticated and seamless purchasing experience offered by social media platforms has made shopping even easier. Buy now, pay later services such as Afterpay also make it easier to purchase online through installments.

Hard to resist targeted advertising

Data collected from social platforms allows marketers to target individuals based on their demographics, interests and online behaviour. Have a look at the ads that appear when you next log in – chances are they’ll be relevant to you. Your data, such as your browsing history and the apps you use, can be tracked and used to present targeted advertising on your feeds.v This practice isn’t a secret, but it can still be surprising (and even unsettling) how tailored this advertising can be. With advertising pinpointing your real and anticipated needs, it can be hard to resist buying. And with data kept from previous ads you responded to, you’ll see even more similar ads popping up – keeping you in the spending loop.

Influencing our buying behaviours

‘Keeping Up With The Joneses’ is prevalent on social media, where people compete for the most likes. But it’s not just envy which induces us to spend. We turn to those we trust when it comes to making decisions, which is why when we see friends, families and ‘influencers’ using a product or service and having a positive experience, it acts as social proof.

Fear Of Missing Out

FOMO – it’s a thing, and something that can be worsened by social media, making it tempting to spend on the latest gadgets or lifestyle trends. Comparing yourself to others can create anxiety and also induce spending in an effort to ‘keep up’. However, there’s a growing movement towards JOMO, the joy of missing out.

With financial anxiety on the rise, JOMO is much better for our hip pocket than FOMO.vi

Watching your hip pocket when it comes to your social spend can be challenging. If you are concerned about your spending, set a budget which allows for the amount of online shopping you are comfortable with. It’s a good idea to keep track of your purchases to ensure your spending is not to the detriment of your day to day needs or your long-term financial goals.

Finally, just having a greater awareness of how social media influences your behaviour will help you to resist the subtle enticements of social marketing.

If you would like to speak to a financial planner about your spending habits, contact us on 03 5120 1400.

https://www.genroe.com/blog/social-media-statisticsaustralia/13492

ii https://sproutsocial.com/insights/social-media-statistics/

iii https://business.instagram.com/blog/how-to-sell-yourproducts-on-instagram/

iv https://blog.hootsuite.com/instagram-statistics/

https://www.wired.com/story/whats-not-included-infacebooks-download-your-data/

vi https://www.news.com.au/finance/economy/australianeconomy/younger-australians-are-embracing-the-joy-ofmissing-out-as-financial-anxiety-takes-its-toll/news-stor y/11ac6520fa3be768d885b855ae0c8c76

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

End of Financial Year checklist

Person writing in notebook with the text 'end of financial year checklist'

It always takes some planning to get your finances in order for the end of financial year, and this year may look a little different, come June 30. The COVID-19 pandemic may have impacted your circumstances and therefore your situation could be looking different to normal. 

Perhaps you have been working from home, your wages may have reduced or been boosted by government payment support, or you have had to make major financial decisions as a result. 

Here are things to consider to ensure you’re on the front foot come June 30. 

Working from home deductions

Whether you’re used to working from a home office or have been forced to due to COVID-19, it’s good to be across what you can claim on tax. 

Given that working from home is a new situation for many, the Australian Taxation Office has made it easier to claim deductions. You won’t have to submit a detailed logbook, as you can now claim a deduction of 80 cents for each hour you work from home due to COVID-19. Therefore you only need to keep track of the hours you work from home, along with proof of your expenses. 

There are a couple of provisos with this ‘shortcut method’: the work needs to be fulfilling your employment duties (not simply checking your email every now and then) and you must have incurred additional deductible running expenses as a result of working from home. These home deductions must be directly related to earning your income – as tempting as it is to claim Netflix as a research tool, unless you’re a television critic this is unlikely to fly! 

You need to keep records of your expenses and be able to show that you, not your employer, has paid for them. You must also include any allowance you receive from your employer as income on your tax return. Be mindful that the ‘shortcut’ method may not be the best for your circumstances and it may be worthwhile, if a little more laborious, sticking to the old method. For more information on working from home deductions, visit the ATO’s website

Boosting your super

While the COVID-19 situation has seen some dipping into their superannuation, if you’re able to, it’s always a smart idea to use the end of financial year to give your super a bit of a boost as even the smallest amount can really add up over time. 

There are many ways of growing your super to think about, including; 

Making tax deductible contributions:

  • Salary sacrificing up to your $25,000 annual cap.
  • The low income super tax offset is available to those who earn $37,000 or less a year, and means that if you or your employer contribute to your super, you may be eligible for a tax offset of up to $500 per year.
  • The spouse contributions tax offset means you may be able to claim an 18% offset (maximum of $540 offset) on contributions up to $3000, that you make on behalf of your non-working or low-income-earning partner.
Bring forward expenses

If you are in a position to do so, bring forward any expenses and delay income. This may not be possible for many businesses and individuals in the current climate, but it’s worth keeping in mind if this is an option for you. 

Working from home may have made you realise you need to upgrade your home computer or invest in better office furniture. Making your purchases before the end of the tax year will not only impact your return sooner rather than later, but you can take advantage of EOFY sales. 

Clear the decks

With some tough times ahead on the economic front, it’s is a good time to evaluate your income and expenditure. Now is the perfect time to look at your insurances, utilities and seek out any no longer relevant expenses to see what you can cut back on. 

It’s a bit of a different environment for end of financial year this year, if we can do anything to make things easier for you please get in touch with your Accountant/Financial Adviser on 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

The Economic Stimulus Package

Maintaining confidence, supporting investment, keeping people employed

By now you’re probably aware that the Federal Government has “announced” a $17.6 billion stimulus package. One designed to “protect the economy by maintaining confidence, supporting investment and keeping people in jobs”.

If you’re wondering what that might mean for you, here’s a brief guide to the four major components of the package.i

Payments to lower-income households

Post-GFC, the Rudd Government sent $900 cheques to adult Australians earning less than $80,000.ii The Morrison Government is doing something similar by providing Newstart recipients, age pensioners and veterans a one-off payment of $750. These payments will start flowing into the bank accounts of 6.5 million (mainly) lower-income Australians from March 31. While most working Australians won’t receive this payment, this type of tightly targeted payment will provide maximum bang for buck in terms of stimulating the economy. 

Cashflow assistance to business

Business owners and their employees have also been well-catered for in the stimulus package. 

Small and medium-sized businesses that employ staff and have a turnover of less than $50 million will be eligible for tax-free payments of between $2000-$25,000. It’s estimated this “Boosting Cash Flow for Employers” measure will benefit 690,000 businesses that collectively employ 7.8 million people. Given there’s a $25,000 ceiling on the payment regardless of the size of a business’s workforce, it’s a measure that will benefit smaller businesses much more than medium-sized ones.iii

Business owners who employ apprentices and trainees are also eligible to apply to have the Government pay half their wage for the first nine months of 2020. It’s estimated this measure will assist 70,000 business and 117,000 apprentices and trainees. 

While it’s a separate initiative, the Government’s provision of modest financial support for casual workers who contract Coronavirus will directly benefit those casual workers and indirectly benefit their employers. Without this payment to casuals, employers might have, for instance, had to worry about infected staff turning up to work out of financial desperation.iv

Support for business investment

The government is loosening the criteria around the instant asset write-off. Pre-Coronavirus, businesses with a turnover of up to $50 million could instantly write-off the purchase of assets costing up to $30,000. Post-Coronavirus, businesses with a turnover of up to $500 million can write off asset purchases of up to $150,000. 

On top of this, the Government has also accelerated depreciation deductions for the next 15 months. Up until June 30, 2021, businesses turning over less than $500 million will be able to deduct 50 per cent of the cost of any eligible asset the moment it’s installed. It’s predicted these two tweaks to the investment rules could benefit up to 3.5 million businesses that collectively employ almost 10 million Australians. 

Assistance for regional Australians

Regional Australia, already laid low by drought and bushfires, will be disproportionately impacted by Coronavirus. Many regional economies are dependent on the industries – tourism, education and agriculture – most affected by the pandemic. It’s yet to provide much detail, but the Government has promised to spend $1 billion propping up the nation’s regional economies. 

The end of the beginning

There’s broad agreement the Government’s stimulus package has been well-designed and will reduce the chance of Australia slipping into its first recession in three decades. But with share markets across the globe increasingly volatile and countries closing their borders, Australia is in unchartered territory and there may well be further changes to Australia’s economic policy settings in months to come. 

If you have any queries in relation to how the above measures may apply to your circumstances, please do not hesitate to contact our office. 

i Unless otherwise end noted, all the facts, figures and claims in this article come from the CommSec Economic Stimulus Package document 

ii https://finance.nine.com.au/personal-finance/900-cash-bonus-who-gets-it/facdc354-9a48-4e9e-850c-2bb8705dbe29 

iii https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf 

iv https://www.smh.com.au/politics/federal/casual-workers-face-wait-up-to-13-weeks-for-coronavirus-payment-20200312-p549cj.html

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.



Ins and outs of SMSF property investing

With a property market recovery underway, most notably in Sydney and Melbourne, Australian investors are once again pursuing their love affair with property investing.

For many investors, a popular way to invest directly in residential or commercial property is through their self-managed super fund (SMSF). In fact, ATO statistics show property is the “third most popular” asset class in SMSF portfolios.

Part of the attraction of holding investment property within your SMSF is the concessional tax rates applying in the super system, with rental income taxed at only 15 per cent – or nil if fund members are in pension phase. As with property investments outside super, rental property expenses are tax-deductible and if the property is owned for more than 12 months any capital gain is taxed at a discount rate.

Keep an eye on the super rules

But before you rush off to buy a property through your SMSF, there are some key rules you need to keep in mind if you want to stay on the right side of the tax man and superannuation law.

The key one is that the property must meet the “sole purpose test“, which requires any SMSF investment to solely provide retirement benefits to the fund’s members.

This means you can’t buy a residential property through your SMSF for you or a family member to live in – even temporarily.

A property owned by your SMSF can be rented, but it must be at normal market rates. The tenant must not be a “person or entity related to a fund member” if the property’s market value “exceeds 5 per cent” of the total value of the SMSF’s assets.

Buying a commercial property

SMSFs are unable to buy a residential property from a “related party“, but if you purchase business real property – such as your business premises – and pay rent at the market rate, it’s not considered a related party transaction.

The property must be used exclusively in a business and the price must be normal market value.

If your SMSF rents out the property to your business, it must be at commercially competitive rates and you must not gain a financial advantage.

Regular rental payments must be made as with a normal lease.

Borrowing to buy an SMSF investment

In general, SMSFs “can’t borrow” to buy an investment asset, but there is an exemption if the fund enters into a special loan structure called a limited recourse borrowing arrangement (LRBA) to purchase a property.

With an LRBA, if the loan defaults the lender only has recourse to the property – not the SMSF’s other assets.

LRBAs are complex borrowing arrangements with different loan conditions to a normal mortgage. If they are structured incorrectly, the borrowing exemption lapses and the SMSF will have breached the super rules.

Repair and maintenance of the property

Another important rule to remember is if your SMSF owns the property outright, it can be renovated or improved as desired.

If the fund has used an LRBA to buy the property and the loan is still in place, however, you need to be careful how you pay for renovations.

Under super and tax law, repairs and maintenance on a property purchased through an LRBA can be paid from the loan, but?improvements to the property?must be financed by existing money in the SMSF, not borrowings.

Repairs and maintenance are work done to prevent defects, damage or deterioration of the asset. Improvements on the other hand, significantly alter for the better the state or function of the property, unless they are “minor” improvements.

Consider the investment issues

If you are thinking about buying a property for your SMSF, you need to consider the investment issues involved. It’s essential the SMSF’s trust deed permits such a purchase and it must also be in line with the fund’s “investment strategy.”

Acquiring a property asset may mean the fund’s investment portfolio is not appropriately diversified, which is something the ATO has been “contacting SMSF trustees about.”

If you would like to know more about investing in property through your SMSF, contact a financial adviser on 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.