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[av_heading heading=’The News Brief_20210217′ 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-kl7echi2′ admin_preview_bg=’rgb(34, 34, 34)’][/av_heading]

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[av_heading heading=’What has the ATO been doing?’ 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-kl7edbco’ admin_preview_bg=”][/av_heading]

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Online sales – data-matching

The ATO will acquire data on Australian sales made through online selling platforms through to 2022–23. The collected data may include business names, ABNs, addresses (e.g. business, postal and email), contact details, account names, account registration information and the number and value of monthly and yearly sales transactions.

The ATO estimates the total number of account records obtained will be between 20,000 and 30,000 each financial year. It expects around half of the matched accounts will relate to individuals.

These records will be electronically matched with ATO data holdings to identify non-compliance with registration, lodgment, reporting and payment obligations under taxation laws.

Tip! If you have online sales transactions, talk to your tax adviser to make sure you are complying with all your taxation obligations.

Vehicle registrations – data-matching

The ATO will acquire motor vehicle registry data from State and Territory motor vehicle registry authorities through to 2021–22. The collected data may include identification details (e.g. names, addresses and ABNs) and transaction details (e.g. date and type of transaction, sale price of the vehicle and market value of the vehicle).

The ATO estimates that records relating to approximately 1.5 million individuals will be obtained each financial year.

The data will be acquired and matched to the ATO’s internal data holdings to identify relevant cases for administrative action. For example, the data may be used to identify taxpayers buying, selling or acquiring motor vehicles who are at risk of not complying with their taxation obligations. That could be a licensed motor vehicle dealer who may not be complying with luxury car tax obligations or a business with little reported income buying a very expensive vehicle.

Don’t forget that if you are contemplating buying a new car for your business (e.g. to take advantage of full expensing), your deduction cannot exceed the car limit ($59,136 for 2020–21).

Tip! Buying a car for your business can have various tax implications, e.g. depreciation, GST and FBT. If you are contemplating buying a car, discuss the potential tax implications with your tax adviser.
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[av_heading heading=’Property prices set to boom 16pc, says CBA’ 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-kl7edzru’ admin_preview_bg=”][/av_heading]

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The property housing market is on the verge of a boom and property prices are expected to rise as much as 16 per cent over the next two years, Commonwealth Bank economists have forecast.

Record low interest rates and better-than-expected employment levels will fuel the price rises.

“The Australian housing market is on the cusp of a boom,” CBA’s Gareth Aird said in a note to clients on Monday.

The bank economists expect national dwelling prices to rise by 8 per cent in 2021 and 6 per cent in 2022 and a result “tilted towards stronger outcomes” was more likely.

The bank said it expected a disparity between price growth for houses compared to apartments.

“We forecast national house prices to rise by about 16 per cent over the next two years and unit prices to rise by about 9 per cent.”

The bank points out that new lending has lifted sharply, dwelling prices are already rising briskly in most capital cities and turnover is up significantly on levels 12 months ago.

However, the key driver behind this “boom” was simply record cheap money and improving employment conditions.

“The boom is being driven by record low mortgage rates coupled with a V‑shaped recovery in the labour market,” Mr Aird said.

The lower unemployment rate has surprised economists; it fell to 6.6 per cent in December and is expected, by some bigger banks, to fall to 6.4 per cent when official figures are released this Thursday.

The Reserve Bank has also nailed record low interest rates to 0.1 per cent for what it predicts to be as long as four years.

“A critical assumption underpinning our forecasts is the cash rate remaining at its record low of 0.1 per cent, which is in line with RBA forward guidance,” Mr Aird said.

The CBA said that even if the Reserve Bank starts taking its foot off some low interest rates such as the benchmark three-year bond, that would still not dampen the booming prices.

“We do, however, factor in a modest increase in fixed rate mortgages, which will rise if the RBA removes or raises its target yield on the 3-year Australian Government bond, as we expect in the second half of 2021.”

Both the CBA’s home buying measure and the house price expectations index from the Westpac Melbourne Institute’s Consumer Sentiment survey have surged.

Westpac’s economists have also forecast a 15 per cent national price “surge”, or about a 7.5 per cent rise per year for residential property.
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[av_heading heading=’Is it worth cancelling your credit cards?’ 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-kl7ekrud’ admin_preview_bg=”][/av_heading]

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Even if you don’t have any loans or debts, having a credit card might be enough to significantly reduce your borrowing capacity.

The reason why a credit card can be a hindrance to your ability to borrow money, is that lenders assess your credit card on the overall limit, not on how much you currently have in credit card debt.

Even if you’ve never reached your credit card limit since you’ve had the credit card, many lenders will assess a credit card as if it is maxed out. For example, if you have a credit card with a limit of $10,000, the lender is likely to assess your debt based on around 3% of this total amount per month.

This monthly amount, which in this case would be $300, is added to your ongoing expenses, with the result that your overall borrowing capacity is reduced. With a credit card limit of $10,000, that could mean a $75,000 reduction in borrowing capacity, which is significant and can quickly limit the number of potential properties a first home buyer has access to.

Assessing Your Situation

Lenders do not only focus on what your credit card limit will do to your borrowing capacity. They also take other factors into consideration!

One of the most important elements of any debt, in the eyes of a lender, is your track record of making repayments. If you continually miss payments and increase your debt levels, that doesn’t bode well in the eyes of a bank.

Similarly, if you are living off your credit card, and are one pay cheque away from not just missing a payment, but also missing your rent, then that doesn’t make you look overly appealing in their eyes.

It is important to understand that, with the implementation of Comprehensive Credit Reporting (CCR), lenders have incredibly detailed data on your spending habits, drilling down to how early or late you pay off your debts, or other bills.

Credit Cards Are Not All Bad

Now that we understand the impact credit cards have, it’s also important to note, that having a credit card is not necessarily a bad thing in the eyes of a bank. 

As mentioned, how you manage your credit cards is far more important than the fact that you have them.

Lenders like to see that you are responsible with money. In fact, if you have a credit card and manage the credit very well, you will be looked upon far more favourably than someone who doesn’t have a credit card at all.

Whether or not you get rid of your credit cards to help you get a home loan really comes down to a few key factors.

  If you have a huge credit card limit that you simply don’t need, it might not be worth it. You could consider reducing the limit to help your application.

  If you have a poor track record of making payments or living off your credit card, it might be worth improving your money management skills.

  If your application is very tight, then your mortgage broker will be the person best suited to help you decide whether you need to get rid of your credit card.

If you’re reliant on your credit cards, take a step back and assess your personal financial and living situation and get that in order before you start the home loan application process.
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[av_heading heading=’Insolvency reforms’ 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-kl7eg1lb’ admin_preview_bg=”][/av_heading]

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Important changes to Australia’s insolvency laws commenced on 1 January 2021. The Assistant Treasurer has said that they are the most important changes to Australia’s insolvency framework in 30 years.

The changes introduce a new, simplified debt restructuring process for eligible small businesses. The process allows financially distressed small businesses to access a single, streamlined process to restructure their debts, while allowing the owners to remain in control of their business. According to a Treasury fact sheet, this will support more small businesses to survive, meaning better outcomes for businesses, creditors, employees and the economy.

Link to fact sheet

Simplified debt restructuring process

To be eligible to access this new process, your company must:

A list of restructuring practitioners that can undertake this work is available on ASIC’s website.

The debt restructuring plan

The debt restructuring plan sets out how a company’s creditors are to be repaid. For example, the plan could specify how creditors will be repaid as a proportion of the debt owing to them, or what “cents in the dollar” they will receive.

The company must put the debt restructuring plan to its creditors for a vote within 20 business days of entering the process (an extension of up to 10 business days may be allowed if reasonable). Once the plan is put to creditors, they have 15 business days to vote to accept or reject the plan.

A plan is accepted if more than 50% of the creditors by value that vote, vote to accept the plan. Once a plan is made, payments must be disbursed to a company’s creditors in accordance with the terms set out in the plan.

All admissible debts and claims rank equally upon repayment of the plan. That means that all creditors are paid the same “cents in the dollar” and all are paid at the same time.

If the restructuring plan is not accepted, the restructuring process ends.

Giving you time

The Government recognises you may need some time to find a small business restructuring practitioner and has therefore extended the temporary insolvency relief (including relief from liability for trading while insolvent) for up to 3 months.

To access this relief, you can declare your intention to access the restructuring process by publishing the declaration on the published notices website from 1 January 2021. Your company’s period of temporary restructuring relief begins on the day the declaration is published.

You also need to notify ASIC within 5 business days that you’ve made this declaration. The appropriate form is available on the ASIC website.

Staying in control

Once your company enters the restructuring process, it remains in control of the process and may undertake transactions that are in the ordinary course of business.
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[av_heading heading=’SMSF loans speeding towards efficiency as major banks exit’ 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-kl7egkwa’ admin_preview_bg=”][/av_heading]

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The SMSF loan space is seeing increased efficiency in processes after the exodus of major lenders and is shaping up for a strong appetite this year, according to an SMSF loans expert. 

Speaking to SMSF Adviser, Sean Murphy, director of My Mortgage Freedom, said the continued trend he was seeing was a solidification from non-bank lenders in the SMSF lending space and a move towards an improvement of renewed processes.

“The only issue with the banks pulling out of the SMSF lending landscape is that it didn’t happen soon enough,” Mr Murphy said.

“Their processes were clunky in residential, and dismal in commercial assets. Non-bank lenders pioneered this space and did it far better with specialist assessors making it easy to work with, faster turnaround times, and far less complicated document and legal processes. 

“The non-banks got it from day one. It took years for the banks to get it, and even then when you found someone that understood it, they’d move on or get pushed into another division by the time you wrote a couple of loans with them. 

“The space has become a lot more efficient since the bank exodus, and now in 2021, the price point for the non-banks has become a lot more competitive.”

With the property market performing well compared to other asset classes, Mr Murphy said he is also seeing increased appetite from SMSF loans for the property market that is strongly trending in the area of SME properties this year.

“The main shift I have noticed is small businesses acquiring their business premises. The residential front is still largely focused on new dwellings, be it townhouses or apartments with high rental yields,” he said.

“I think the product is best designed for small businesses to acquire commercial real property. 

“It is a win-win for business owners who are already paying rent to be able to own their premises and that expense their business will incur is still going into their future.”

Mr Murphy said the perspective from the residential side is still active, but it is the same story for most borrowers wanting to get into the investment property market and have exhausted their personal borrowing power, “so they turn to their SMSF to add that extra property without any material change to their personal finances”.

“It is still a very strong model for the right borrower, but it is certainly not suitable for everyone though,” Mr Murphy said.
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Sources: The Australian Financial Review, 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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