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[av_heading heading=’The News Brief_20201118′ tag=’h1′ style=’blockquote modern-quote modern-centered’ subheading_active=’subheading_below’ show_icon=” icon=’ue800′ font=” size=’6vw’ av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’20’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=’custom-color-heading’ custom_font=’#000000′ icon_color=” margin=’0′ margin_sync=’true’ padding=’0′ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-khlr85xc’ admin_preview_bg=’rgb(34, 34, 34)’][/av_heading]

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[av_heading heading=’ATO updates’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-khlr9na4′ admin_preview_bg=”][/av_heading]

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Shareholder loans – minimum yearly repayments

If you have a loan from a private company you control (or from an interposed entity) and a complying loan agreement is in place, you must make a minimum yearly repayment by the end of the company’s income year throughout the loan term. Failure to do so may result in your being taken to have received an unfranked dividend.

The ATO realises that, as a result of the COVID-19 pandemic, some borrowers are facing difficult circumstances beyond their control. If you are in that situation, and were unable to make the minimum repayment for 2019–20 by the due date (30 June 2020 in most cases), the ATO will look favourably on a request to extend the repayment period (up to 30 June 2021). Note the minimum yearly repayment for 2020–21 is due as normal by 30 June 2021.

You can request an extension by completing a streamlined online application form.

Advising businesses through early engagement

The ATO recommends that you engage early with them to avoid mistakes if entering into complex tax and super arrangements. The ATO will work with you and your tax adviser to:

Foreign investment real estate rules

A foreign person must apply for foreign investment approval before they purchase Australian residential real estate and vacant land, unless they purchase it as joint tenants with a permanent resident or Australian citizen.

If you think you may have broken the foreign investment rules, you should contact the ATO. If you tell the ATO about your breach of the rules, the penalty amount may be lower than if the ATO detects your breach.

The ATO also encourages people to provide information about someone else who may be breaking the foreign investment rules. The ATO will investigate all reports of suspected breaches if enough information is provided.

You can complete the tip-off form on the ATO website or in the Contact us section of the ATO app, or phone the tip-off hotline on 1800 060 062.
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[av_heading heading=’Auction clearance rates on the rise’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-khlrbayt’ admin_preview_bg=”][/av_heading]

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Preliminary auction clearance rates are once again on the rise in both Sydney and Melbourne. 

The latest data from CoreLogic has shown a 75.11 per cent clearance rate for the week, which was up from 72.9 per cent for the same time last week.

Sydney’s auction clearance rate which has always been a good indicator of price movements has been sitting above 70 per cent, with preliminary rates reaching 80 per cent at times. Again on lower volumes than the same time last year.

Melbourne has been the one that has seen a large increase in auction activity as lockdown measures ease and the clearance rate has been slowly increasing over the past few weeks. 

Last week Melbourne posted a preliminary clearance rate of 73.51 per cent, up from 68.1 per cent as both buyers and sellers look to get back to business with lockdowns easing.
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[av_heading heading=’Five questions to ask before putting in an offer on a home’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-khlrj89r’ admin_preview_bg=”][/av_heading]

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We all want to get a bargain when we buy a property, however, the reality is that you need to meet the vendor halfway in most cases. Knowing how much you should offer and exactly where you need to meet the vendor when it comes to price comes down to asking a few key questions.

What’s the basis for the asking price?

Just because a house is listed at a certain price by the sales agent doesn’t mean the price is a realistic one. 

The key to understanding whether a price is fair and reasonable is to do your market research beforehand. 

These days it’s easy to access sales data on the real estate portals and you can quickly and easily see what other comparable properties have been selling for in the same area. 

Try and find a house of similar age, land component and condition that has sold in the last three to six months, and present those to the agent when making an offer. 

Are there multiple offers?

If you’re the only one putting an offer in on a property, then there is a fair chance you’ll be able to negotiate a lower price.

If there are multiple parties interested then the odds of you getting a bargain are slim.

At the end of the day, buying and selling is about supply and demand and if you need to compete for a property, then you likely won’t be able to put in a low ball offer successfully.

How long has the property been listed?

 If a property has been sitting on realeaste.com.au for six months with no interest then there is a fair chance the property is overpriced.

At that point, the vendor might be willing to accept something less then they had previously hoped for and meet the market’s expectation.

If they aren’t then it’s likely that they are simply asking too much and are not prepared to budge.

What’s the vendor’s motivation?

How eager is the vendor to get a deal done? If they need to sell the property quickly for family or financial reasons, then you might be able to put in a lower offer with good terms.

If the vendor has a set price in mind and no reason to sell, then there is not much chance of getting a low offer through.

Has the asking price changed?

If the asking price is slowly dropping each week or month, then it’s fair to say that the property was initially priced too high, either by the agent or the vendor.

This also shows the vendor does want to sell and that they are prepared to be flexible on what they accept. 

In this case, a low offer might be something that the vendor is prepared to consider.
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Calculating aggregated turnover

Whether a business is entitled to certain tax concessions – e.g. the simplified depreciation rules and the small business CGT concessions – depends on the business’ “aggregated turnover”.

Aggregated turnover is generally the business’ annual turnover plus the annual turnovers of affiliates of the entity and entities connected with the entity.

Annual turnover is all ordinary income the business derived in the ordinary course of carrying on a business for the income year.

The ATO has confirmed that JobKeeper payments are not included in annual turnover. This is because they are not derived in the ordinary course of carrying on a business, even though they are ordinary income (and therefore should be included in your assessable income). Other amounts that are not included in annual turnover are:

Closing a small business

Unfortunately, some businesses may need to close their doors – either temporarily or permanently – due to the COVID-19 pandemic. The ATO has called on such businesses that are closing temporarily to “do their best to keep up with tax and superannuation obligations”.

If you are in this situation and you need additional time or support, you should contact your registered tax professional or the ATO on 1800 806 218.

If a business is forced to close permanently as a result of the COVID-19 pandemic, or for any other reason, it must still lodge any outstanding activity statements and instalment notices, make GST adjustments on the final activity statement and lodge final tax returns. This will enable the ATO to finalise the taxpayer’s account and issue any refunds that might be owed.

Once the entity’s tax affairs are finalised, the ABN and GST registration should also be cancelled. Business records must be kept for at least 5 years after the end of the financial year in which a business is sold or closed.
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[av_heading heading=’Regulation 8.02B and evidence required to support real property valuations’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-khlrlu2x’ admin_preview_bg=”][/av_heading]

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Assets must be valued every year

From 1 July 2012 when trustees prepare the financial statements and accounts for their self-managed super fund (SMSF), they must report the fund assets at market value to comply with regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 (SISR).

Prior to Regulation 8.02B coming into effect on 7 August 2012, unless the fund was paying a pension or held in-house assets, trustees could provide a valuation for fund assets every three years. This is no longer sufficient, and assets must be reported at market value every year with evidence to support the valuation.

Real property valuations

When valuing real property, an SMSF trustee may consider using a qualified independent valuer (external valuer), especially where the property represents a significant proportion of the fund’s value. If they choose to do this, an external valuation is not required each year.

However if the trustee believes the external valuation has become materially inaccurate or, the value of the property has since been affected by events such as a natural disaster or COVID-19, they should no longer rely on it and obtain a new valuation or other sources of evidence supporting the valuation.

Trustees must provide objective and supportable evidence to their auditor

Each year trustees must provide objective and supportable evidence in accordance with the requirements under our SMSF valuation guidelines to their auditor. This demonstrates compliance with regulation 8.02B.

Real estate agent appraisals stating what the property is likely to sell for based on sales in the area, without listing details of those sales, would not on its own be sufficient and appropriate.

The evidence should also support a market value for the property as close as possible to 30 June, especially where the market is potentially volatile.

Listed below are some of the documentation we consider acceptable evidence for substantiating the market value of real property other than an external valuation.

Generally, a single item of evidence listed below will not be sufficient on its own unless the property has been recently sold. We suggest a variety of sources of evidence to support compliance with regulation 8.02B which may include:

Responsibilities of the trustee and auditor

It is the trustee’s responsibility to provide documents requested by their auditor which supports the market valuation for their assets. It is not the auditor’s role to determine the market value of the fund’s assets.

The auditor must obtain sufficient appropriate evidence in accordance with Auditing Standard ASA 500 Audit Evidence, either from the trustee or external sources, to form an opinion about whether the SMSF has complied with regulation 8.02B. The auditor must also document that evidence and any judgments made in their audit file.

Where the evidence is not sufficient and appropriate to enable the auditor to form an opinion the asset was valued at market value, the auditor must modify their audit report and consider whether an Auditor/actuary contravention report (ACR) should be lodged.

Impacts of COVID-19

During the 2020 and 2021 financial years, if the trustee has difficulty obtaining valuation evidence due to the impacts of COVID-19, auditors should still consider modifying Part B of the audit report and lodge an ACR if necessary. They should provide reasons on the ACR as to why the trustee was unable to obtain the appropriate evidence.

If we are satisfied this was due to the impacts of COVID-19, the contravention will not result in penalties. Instead the trustee will receive a letter from us advising them to ensure they comply with our valuation guidelines and have supporting valuation evidence by the time of their next audit if possible, as repeated contraventions can lead to penalties.
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Sources: ATO and CFH Partners
Disclaimer: This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product. The Content provided herein has been prepared for informational purposes only. The Content does not constitute tax, legal or accounting advice and should not be relied upon as such. You should seek tax, legal or accounting advice before acting or relying on any Content.

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