“In Brief with Elite” Vol. 4 October 2005
Spring has sprung!!! And so has the DISCOUNT CAR BUYING
4th and largest edition of our quarterly SERVICE
newsletter, “In brief with Elite”.
Contained inside are the current issues We have recently introduced a new
concerning tax, accounting and wealth service to our portfolio. A discount car
creation. buying service. So the next time you
are thinking of buying a new car, truck
You will notice that you have received or even business equipment let us
this edition via email and not via the know. This service will provide YOU
post. This is to be our preferred with hassle free, competitive
method of delivery for future editions. quotations. YOU won’t have to worry
Inside this Issue If you wish to be posted a copy or do about negotiating prices with that car
not wish to receive our newsletter, salesman, YOU won’t need to waste
please contact us so that we may time ringing or visiting dealerships and
Important Dates update our records. there is no need to give out your
personal or financial details to
Discount Car Buying Service At Elite, we thrive on client referrals different institutions.
and recommendations so if you know
ATO Data Matching of any businesses or individuals that Simply give us the details of what type
would benefit from our outstanding of car or equipment you want and we
Personal Tax Record Keeper
and professional range of services, take it from there. Trade-ins are also
CGT Issues – Real Property please pass our contact details onto negotiated.
CGT Issues- Working from Home The cost, only $44.00.
As previously noted if you have any
Business Owners – Estate Planning comments regarding the newsletter or ATO DATA MATCHING
have any suggestions of what you
Christine’s Corner would like to see in these pages please Over the past few years the Australian
do not hesitate to contact us. Taxation Office has stepped up and
- Super Update improved its data matching process to
IMPORTANT DATES ensure taxpayers report all their
- Selling Shares
assessable income in any given finan-
Quote of the Quarter Sept Quarter BAS/IAS cial year.
Final Thoughts Self prepared 28 October 2005 Data-matching has been a successful
EFS Prepared 25 November 2005 part of the ATO’s strategy for
identifying and dealing with non-
October Monthly IAS compliance for a long time.
21 November 2005 By comparing external data with
Ph: (02) 9868 3900
November Monthly IAS taxpayer records they can detect
people who are failing to lodge returns
David Harrison 21 December 2005 or disclose income.
Income Tax Returns where taxpayer For example, each year the ATO runs
email@example.com does not have a tax agent an extensive income matching
program. Under this program
Sam Hasna 31 October 2005 information supplied by banks and
firstname.lastname@example.org other financial institutions, companies,
Where two or more prior year Centrelink and employers is matched
Christine Hallowes with taxpayers’ returns to check that
email@example.com Income Tax Returns are outstanding
interest and dividends (including from
James Solomons 31 October 2005 managed funds), benefits and
firstname.lastname@example.org employment income is corrected
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“In Brief with Elite”
Data matching is also an effective way Security – The record keeper does not • Is your home exempt from capital
to ensure people who profited from the connect to the internet or any other gains tax – Are you entitled to the
recent property market boom correctly system. You need to enter your tax main residence exemption from
disclose any capital gains on the sale file number to access your records. capital gains tax?
of investment properties. For this This helps protect your privacy from
purpose the ATO gathers data from other users of the computer. CGT ISSUES – WORKING FROM
land titles offices and state revenue HOME
agencies, to identify purchase and sale Help Only a Click Away - The record
data. keeper provides access to publications, Working from home may result in los-
rulings, help screens and examples. ing capital gains tax if you own your
This year the ATO will also match own home.
data on share market transactions to Also included are links to further
ensure capital gains realised are information to make it even easier for This issue will not arise if you rent
correctly reported. you to understand your tax obligations your home, or if you maintain a home
and entitlements. office but do not actually carry on a
So ensure that you provide to us business from your home. If you rent
details of all transactions that you CGT ISSUES – REAL PROPERTY your home and have a home based
received income from as chances are if business, part of the rent can be a
you don’t include it in your If you don’t move into your main business expense.
return the ATO will find it and include residence ‘as soon as practicable’ after
it for you!! settlement you may have a capital gain On the other hand, if you own a house
when you sell the property. You or unit that is used partly to carry on a
PERSONAL TAX RECORD should keep this in mind particularly if business, when you sell it you may be
KEEPER you buy a property which is being taxed on a portion of any capital gain
rented. that arises in the period that the
Available as a free download from property was used for business
www.ato.gov.au the record keeper If you leave your house vacant after purposes.
makes it easier for you to maintain moving out (ie not producing
complete and accurate tax records. assessable income) you will still have a The percentage of business use of the
CGT liability for the period up until home will also be taken into account.
Its specially designed rental property you sell the property (six month
and capital gains tax screens let you moving rule permitting), if you are As long as the property has not
know which records to keep and how claiming a main residence elsewhere. previously been used for income-
to organise them. You can record producing purposes, the cost base for
details of income, expenses and assets. You should keep complete and CGT purposes will be the property’s
accurate records, even for your main market value at the date that you
Convenience – You can record tax residence. Your circumstances can started to use it for business.
related details as they happen. If you change, and it may be difficult to
have expenses you need to claim, you reconstruct documents. If the property is sold at least 12
can enter the details at the time of the months after it was first used for
event and file your receipts. You can The ATO’s new range of electronic business purposes, you will be able to
then print the details and give them fact sheets provide you with claim the 50% CGT discount.
directly to us. information that you need in an easy to
understand format on topics such as: BUSINESS OWNERS – ESTATE
Save Time – You can roll over PLANNING
information from the previous year. If • property renovations – Are you in
you used the record keeper during the the business of renovating Business owners usually have some
2004-05 financial year and still have properties or a personal investor? sort of a business plan.
that file on your personal computer • Subdividing land – What are the
you can use the information you have CGT implications of subdividing They also frequently have key-person
stored to pre-populate your 2006 land, including subdividing your insurance in place.
record keeper file. main residence?
• Important dates relating to real Some even have a succession plan in
Flexibility – You only need to estate – When to use contract mind.
download and install the record keeper dates and settlement dates to make But even if business owners have all
software once. More than one person capital gains tax calculations? such risk management approaches in
in a household may use the same • Record keeping for real estate – place, the chances are they still do not
software to keep their records. The What records to keep for any real have a properly developed estate
record keeper will prompt each new estate you own? planning approach.
user to save their file to a particular • Inherited real estate – Are you Estate planning is something
name. entitled to an exemption from overlooked by most Australians, and
capital gains tax on an inherited perhaps this is understandable.
dwelling you have disposed of?
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“In Brief with Elite”
After all, who really wants to plan for - Advice – industry funds’ fees may Tax may be payable when the shares
what happens after their own death? be cheaper as they don’t pay an are sold and this will reduce funds
adviser to offer you super advice. available for investment.
But the impact of lack of estate Getting advice on super strategies
planning, coupled with the death of the and government schemes will And, if growth is still required for the
person who is the driving force behind keep you informed to make the fund to provide a comfortable
a family business, can be devastating, right choices. retirement, how will the proceeds of
not just because of the family’s - Investment options – more in- any share sale be re-invested? A bell
emotional loss, but for their future vestment options gives you greater doesn’t ring when a bear market hits
well-being and the survival of their flexibility. For example our rec- bottom and when the market turns,
business. ommended super funds share prices can rise quickly.
offer up to 90 investment options
Take the simple example of a husband across all assets classes. Realisation that it’s a good time to
and wife who own 50% each of a - Binding nomination of beneficiar- reinvest usually comes some time after
company worth $1,200,000 that they ies – lets you choose who will the market has actually turned. By
set up jointly when it had no value at receive your superannuation bene- then, share prices may be higher than
all. fit if you pass away. All retail the amount they were sold for and this
funds offer this whereas only 22 can be a psychological barrier to
If the business is left equally to three percent of industry funds offer this reinvestment.
children, and the parents are killed service.
simultaneously in an accident, the - Administration service standards – Experience investors will tell you its
small business CGT concession is lost includes customer service and often better to ride out falls in the
as no one holds 50% of the business. regular documents like member market.
statements. Services standards of
The capital gains tax payable in this retail funds are much higher than QUOTE OF THE QUARTER
instance could be $291,000, a tax pay- industry funds.
ment that could have been avoided if Luck is what happens when
the family business had been When you decide to change your preparation meets opportunity!
structured in a different way. superannuation fund we can
recommend a fund that is backed by FINAL THOUGHTS
It is also a tax payment that family finance research agencies and is suited
members may have difficulty funding to your needs. On top of this, the With the year quickly coming to an
if their own finances are tied up in the recommendation is combined with end, why wait till New Years Day to
business. effective advice which can help you make that resolution to sort out your
contribute even more to your super. wealth creation and protection affairs.
This is one example of the importance With the share market trading at all
of estate planning for all business So before you jump into a low fee time highs are your assets earning you
owners to ensure that the full value is superfund speak to us and let us help the greatest return that they could?
gained from their inheritance. you make an informed decision.
In this time of ever increasing threats
Who gets what assets, and the CGT SELLING SHARES on our civil liberties are you and your
treatment of each, can mean some fam-
family adequately covered in the event
ily members inherit a large CGT obli- Australia has a relatively high of an accident?
gation while others receive their in- proportion of private ownership of
heritance tax-free. listed public companies.
Some may say that it will never
CHRISTINE’S CORNER For many it’s part of a retirement plan. happen to them or that there is always
Others see the sharemarket as a good time to start saving for retirement.
SUPER UPDATE But, as history has shown, the earlier
way of preserving and growing the
With the introduction of Super Choice value of their assets. you start preparing for these events the
industry funds have been heavily more comfortable you will be later in
promoted as offering lower fees when When there is a “correction” like the life.
compared to retail super funds. one that recently occurred, investors
get nervous. They think about selling So give us a call and we will help you
Don’t let the promise of savings lure shares before values become even plan for those “golden” years
you! Fees are not the only factor you lower. Before doing so they should
should consider when choosing a super seek advice and remember their overall DISCLAIMER
fund. Weigh up all aspects of a fund investment strategy and the need for a
like the level of service offered. In long term view. The information contained in this
newsletter is of a general nature and is not con-
some cases higher fees may be stituted as advice. Elite Financial
justified for the additional services If share portfolios have been built up Solutions take no responsibility for clients who
provided. Valuable services you over a number of years, current low act upon the information contained in this
should look out for are: prices may still result in capital gains. newsletter without consulting us first.
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