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Financial Year End Roundup 2008 Queensland Bar Association Chris Wyeth BA LLB MTax DFP FTIA Senior Financial Consultant.

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Presentation on theme: "Financial Year End Roundup 2008 Queensland Bar Association Chris Wyeth BA LLB MTax DFP FTIA Senior Financial Consultant."— Presentation transcript:

1 Financial Year End Roundup 2008 Queensland Bar Association Chris Wyeth BA LLB MTax DFP FTIA Senior Financial Consultant

2 important notice The information provided in this presentation includes, by its very nature, general information about complex areas such as taxation, superannuation and investing in securities. The information is current as at 3 June In compiling the information, Tynan Mackenzie has not taken into consideration the investment objectives, financial situation or specific needs of any particular person. We caution you that before making any decisions based on this information, you will need to consider, with or without the assistance of an appropriately qualified adviser, whether the information is appropriate with regards to your particular needs, investment objectives and financial situation. We would be delighted to offer you this assistance. TYNAN MACKENZIE PTY LTD ABN AFS Licence No Head Office, Level 10, Gateway Building, 1 Macquarie Place, Sydney NSW 2000 Telephone (02) Free call

3 Overview Budget Changes Salary Sacrifice vs Home Loan Borrowing for Super Investments

4 Tax Cuts FY2009 thresholdstax rate FY2010 thresholds tax rate $0 - $6,0000%$0 - $6,0000% to $34,00015%to $35,00015% to $80,00030%to $80,00030% to $180,00040%to $180,00038% $180, %$180, %

5 Tax Cuts FY2011 thresholds tax rate $0 - $6,0000% to $37,00015% to $80,00030% to $180,00037% $180, % salary sacrifice effect on gearing + higher interest benefits of imputation credits defer income bring forward expenses

6 Year End Planning deductions worth more this year - prepay expenses change loans from variable to fixed and prepay (not applicable to a line of credit) pay deductible expenses & tax (IT2582 / ATOID 2006/269) from investment debt – not on home loan employed spouse – wage plus super borrowings to pay spouse salary & super are deductible – use business debt

7 Medicare Levy Surcharge Increases Singles threshold $100,000 pa Couples threshold $150,000 pa Private Health insurance rebate continues

8 Co-contribution – reduced access Salary Salary Sacrifice to Super “Income” $75,000 ($45,000) $30,000 $75,000 ($45,000) $75,000 No entitlement to co-contribution

9 Tax Reform Tax review Entire system except:  GST rate  GST items  Tax free superannuation benefits

10 Salary Sacrifice vs Home Loan funds committed once invested in super balance preservation and liquidity helped by NCP immediate tax saving and tax free income on withdrawal

11 Salary Sacrifice vs Home Loan ongoing after tax interest cost opportunity cost if need equity in home for other investments consider duration risk, age and risk profile value reduced if necessary to withdraw pre-60 and pay lump sum tax legislative risk

12 Case Study Bob (50) earns $130,000 pa indexed assume no super & $300,000 loan living costs $50,000 indexed contractual debt repayments $2,510/mth either pay off debt asap or salary sacrifice as much as possible and pay out debt tax free at 60 interest at 7% or 9% over 10 years

13 Salary Sacrifice vs Home Loan

14 Borrowing for SF Investments Instalment lending arrangements Bank Security Trust SMSF Property

15 Borrowing for SF Investments Still considerable amount of questions to be answered ATO has focused on super law – not tax TA 2008/5 - lender may be a related party but  non-arms length rates of interest – high or low  capitalised interest  guarantees from related parties/members

16 Borrowing for SF Investments “Instalment Warrants and Super Funds – Questions and Answers” CGT or stamp duty on transfer to fund? GST credits? Depreciation? Deductions? Cost of establishment and cost of funds

17 Borrowing for SF Investments Is there any easier way? Geared managed funds Geared unit trust – with home as security Geared unit trust – property as security with multiple parties Simple off the shelf structure Simple banking arrangements Tax implications well understood

18 Borrowing for SF Investments Single Family Unit Trust Acquires property SF Individual borrows funds Use other asset as security

19 Borrowing for SF Investments 2 Families Unit Trust Acquires property Borrowings to UT Property as security Bill’s SFBen’s SF

20 Questions? Chris Wyeth


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