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[av_heading heading=’The News Brief_20201209′ 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-kigi1ie5′ admin_preview_bg=’rgb(34, 34, 34)’][/av_heading]

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[av_heading heading=’JobMaker registrations now open: ATO’ 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-kigi46ke’ admin_preview_bg=”][/av_heading]

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Administered by the Tax Office, the scheme will run for 12 months from 7 October, with registrations through ATO online services, the Business Portal, or through registered tax and BAS agents now open.

The scheme will see eligible employers able to access up to $200 per week for each eligible additional employee aged 16 to 29 years, and up to $100 per week for each eligible additional employee aged 30 to 35 years.

To be eligible, the employee will need to have worked for a minimum of 20 hours per week, averaged over a quarter, and received the JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one month out of the three months prior to when they are hired.

Employers cannot be receiving JobKeeper payments at the same time and must also meet a number of eligibility conditions, including being registered for pay-as-you-go (PAYG) withholding, holding an Australian business number (ABN), being up to date with their tax lodgement obligations, and be reporting through Single Touch Payroll (STP).

Entities exempt from STP reporting will need to meet additional requirements and provide these details by contacting the ATO by phone.

The hiring credit is paid every three months in arrears, with claims for the first quarterly payment to open on 1 February 2021.

ATO deputy commissioner James O’Halloran has encouraged businesses to check their eligibility and take the first step to register for the scheme from this week, noting that they cannot claim the credit if they are not registered.

“We encourage employers to register from now to ensure their hiring credits can be paid promptly from when the first quarterly claim period opens in February 2021,” Mr O’Halloran said.

“Employers are reminded that new employees must have received the Parenting Payment, Youth Allowance (Other) or JobSeeker Payment for at least 28 consecutive days (or two fortnights) within the 84 days (or six fortnights) of being hired to allow for a claim to be made by the employer.

“There are some key dates to keep in mind, and simple steps employers can take now, but please remember that not everything needs to be done from next week.”

Last week, Mr Frydenberg registered the rules of the scheme, while the Commissioner of Taxation registered a legislative instrument setting out the reporting obligations required under the scheme.
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[av_heading heading=’Property prices are at record highs in four cities’ 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-kigi5xew’ admin_preview_bg=”][/av_heading]

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Housing values are now at a record high levels across Brisbane, Adelaide, Canberra and Hobart.

According to CoreLogic, Perth values are still 21% below their 2014 peak and Darwin remains 29% lower than the 2014 peak.

In Sydney, values are almost 5% below their 2017 peak.

NSW is looking at offering homebuyers the ability to choose between stamp duty and a land tax.

An owner-occupier would have to pay $500 per year + 0.3% of unimproved land value, while investors would be taxed $1,500 annually + 1% of unimproved land value.

If you’re staying in the property longer than 12 years (the break-even point), the annual land tax would end up costing you more.


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[av_heading heading=’4 popular investment strategies’ 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-kigicon7′ admin_preview_bg=”][/av_heading]

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Property investing has been a powerful way to build wealth that Australian’s have been using for generations.

The great thing about property is that there are a number of different approaches you can use that all increase your wealth over time.

The exact strategy that you use as an investor will be dependent on your own personal situation, but here are 4 powerful strategies you can use to add value to your property or build a portfolio.

Renovate

 The great thing about investing in property is that, as the owner, you have the ability to add value to your investment.

Compare that to the share market and there isn’t much you can do to increase a company’s share price.

By doing a renovation, you are able to add value to the property and at the same time, increase the rental yield and overall appeal to potential buyers.

The trick to a renovation is to do your research before you start. You want to look at other properties in the same suburb that have similar characteristics.

Ideally, you want to see a large difference in price between renovated and unrenovated homes in that suburb. That way, there’s room to make a profit after taking into consideration all the costs involved.

Cash Flow

With interest rates at record low levels and mortgage rates incredibly affordable, the vast majority of properties in the current environment will be at least neutrally geared.

The idea of finding a positive cash flow property is that the income you receive from rent is more than the costs of owning the property. That includes mortgage and interest payments and all costs such as maintenance, repairs, and management fees. 

A positively geared property puts money in your pocket each month and allows you to build a larger property portfolio than one that is negatively geared. 

However, just because a property has a high yield and is potentially a positive cash flow property, doesn’t mean it’s a good investment. You still need to buy a property that has the potential for capital growth over time.

Getting a Good Deal

When a vendor sells a property, they are doing it for their own reasons. 

Depending on how motivated that vendor is to sell, will tell you how much they are willing to negotiate.

Generally speaking, a highly motivated seller, will be far more willing to accept a lower price in return for a quick settlement.

A motivated seller is often someone who needs to sell for personal or financial reasons and if you can identify these types of properties, you may be more likely to get yourself a great deal and also create instant equity in the process.

Capital Growth

Arguably the key objective of most Australian property investors is to look for capital growth potential.

Australian property has a long history of appreciating in value and that is expected to continue over the long term.

However, the property market is not one big market, but rather thousands of smaller markets made up of tens of thousands of suburbs.

If you can identify areas where demand will outstrip supply, then you’ll likely see above-average capital growth as well.

These types of areas are often located in highly sought-after owner-occupier areas that have great amenity, access to rivers and beaches and good school zones. Alternatively, they can be areas that are being rezoned and going through gentrification.

There’s no one right strategy for property investors, and a more powerful way to create wealth is to try and combine as many of the elements mentioned as you can into your next property purchase.
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[av_heading heading=’ATO issues alert on imputation benefits and derivatives’ 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-kigif9ws’ admin_preview_bg=”][/av_heading]

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The ATO issued Taxpayer Alert TA 2020/5 this week which relates to arrangements involving an Australian taxpayer who already holds an existing long position in a portfolio of Australian shares acquiring additional parcels of Australian shares and, on the same day or around the same time, enters into derivative instruments which are a short position in relation to those additional shares.

The ATO said in the alert that it is reviewing arrangements that are intended to provide imputation benefits to Australian taxpayers in respect of a parcel of shares where, as a result of derivative instruments entered into as part of the arrangement, the taxpayer retains no or nominal economic exposure to the dividend and capital performance associated with that parcel of shares.

“Due to the taxpayer’s existing holding of Australian shares, the taxpayer calculates the delta of their overall net position to be greater than 0.3. That is, the taxpayer relies on an existing long position of Australian shares to purport to meet the substantive integrity rules in Division 1A of former Part IIIAA of the Income Tax Assessment Act 1936 (ITAA 1936) in relation to holding shares at risk for the purposes of claiming franking credits. This results in the taxpayer claiming franking credits in respect of both the existing Australian shares and the additional parcel of shares,” the ATO explained.

The ATO outlined that its concerns only relate to arrangements where the additional Australian shares are held with no or nominal economic exposure, due to matching short position being taken through a derivative instrument.

“We are concerned that Australian taxpayers involved in these arrangements may be claiming imputation benefits that they are not entitled to under the law,” it cautioned.

“Our concerns regarding these arrangements include instances where Australian taxpayers hold and acquire Australian shares directly or indirectly through a managed investment trust (MIT) or attribution managed investment trust.”

The Tax Office noted that one of the objects of the qualified person rules referred to in paragraph 207-145(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) is that the benefits of imputation should only be available to the true economic owners of shares.

The ATO said it is currently reviewing these arrangements and engaging with taxpayers who have entered into or are considering entering into these arrangements.

“Compliance activity and engagement will continue while we are developing our technical position on the arrangements,” it said.
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[av_heading heading=’Advisers warned on limitations with life expectancy estimates’ 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-kigigkqf’ admin_preview_bg=”][/av_heading]

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Challenger chairman of retirement income Jeremy Cooper said while the concept of average life expectancy and estimating what pool of retirement savings people require may be a useful tool for government or annuities providers when dealing with large pools of people, its usefulness for advisers becomes very limited when dealing with one or two clients due to the huge distribution.

“You can estimate quite accurately what the life expectancy of a very large number of people is going to be, even though there will be people who die at 70, or 80 or all the way through to over a 100,” he said, speaking in an SMSF Adviser podcast. 

“[However], super is essentially individualised and we’re taking that pooled number into an adviser’s office, and there might be one or two people sitting opposite and we’re using that pooled number to try and inform a couple, which is your typical SMSF, and saying your life expectancies are 87 and 90. But there couldn’t be a less useful way of explaining the life expectancy concept.”

Mr Cooper explained that while life expectancy may be fairly accurate in a pooled sense, the chances of an individual actually dying at that life expectancy age is very small.

“What in fact happens, let’s say you’re looking at the [female population], the average expectancy is 90, but two-thirds of the 67-year-olds who you’re saying these things to will die between the age of 81 and 99, and the chances of them dying in that year they turn 90 is actually less than 5 per cent — so a one in 20 chance,” he said.

“So, to say to someone, your life expectancy is 90 but is such a weird predictor of what’s actually going to happen. There’s this massive distribution either side of that mean, great in a pool sense, there will be all these random deaths and lifespan, but when averaged out, it’ll click down at 90, but to say it to an individual is worse than useless.”

Based on data through Accurium’s actuarial database, Mr Cooper noted that the average life expectancy for SMSFs overall tends to be slightly higher than the rest of the population.

“We estimate that you need to add two or three years just to get to the average point for an SMSF member,” he said.
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Sources: The Adviser, Accountants Daily, SMSF Adviser 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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