Category Archives: Tips

What to consider when investing in property

property keysThere are more people wanting to break into the property market than ever.  While this can be a daunting task, it doesn’t have to be if you seek the right advice from professionals who have extensive experience within the property game.  There are so many options out there, everyone seems to have an opinion and many of their suggestions are conflicting.  To start you on the right path you need to consider the following points;

Determine the type of property-

When a decision to invest in real property is made the first question an investor needs to ask is whether to acquire residential, commercial or industrial property. Small and first time investors have always preferred residential property largely because it is what they know. Commercial and industrial property has its advantages; however it is different to residential property. Commercial and industrial properties have different issues to residential property.

Some of the differences between commercial and residential property include:

  • Commercial leases normally have an initial lease term of 3 to 5 years,
  • Residential leases normally have an initial lease term of 6 months,
  • Commercial property normally have a yield that is around 6 to 8%
  • Residential property normally has a yield around 4 to 6%
  • Commercial properties are normally more expensive than residential properties

Determine the structure to hold the property

The decision of what type of structure to use is just as important as the purchase of the property itself.

The key questions that an investor should ask themselves include:

  • Will the property be negatively geared and who should receive this benefit?
  • Will this property be held long term?
  • What are the land tax costs of holding the property?
  • Will the property be transferred to another entity (i.e. SMSF) at a later stage and at what cost?
  • Who or what entity should receive income and capital gains in the future?

Selecting an appropriate structure that provides both tax efficiency and flexibility is often overlooked by many investors and advisors.

Key investment issues when acquiring a residential property investment

The following are some of the key factors to consider when selecting a residential investment property.

  • Is the area in strong demand and experiencing population growth?
  • Do the immediate surrounds offer great employment prospects for both tenants and future owners?
  • Does the area offer adequate infrastructure such as transport, shops and entertainment?
  • Is the area affordable to ensure constant demand?
  • Will the building type and design ensure that there is long term demand from both tenants and owner occupiers?

Don’t delay, talk to our professional team today and secure your financial future. For your FREE 1 hour property investment consultation please contact Lynda on (03) 9744 7144 or email lynda@mcmahonosborne.com.au

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Regular Reporting – Key to a Successful Business

A study reported by Global Business Camps shows that 88% of business failure was due to reasons within the control of the owners or directors.  Most worrying, is that the number one reason reported is a lack of regular reporting and financial management.  Have you ever wondered why larger businesses post “half yearly results”, “quarterly results” and “monthly results”?  Does it really matter to anyone?  Who uses these “results”?  Many small business owners only get their results to keep the tax man happy – sometimes up to nine months after the end of the financial year.  Effectively, the information being reviewed can be up to twenty one months old.  So what does all this mean and how does this impact on small business?

The underlying reason why successful businesses have regular reporting systems is to assist managers to operate a more efficient business and leaders to make more effective decisions.  Posting regular results allows business owners and managers to review the performance of their business more often and make any necessary adjustments in a timely fashion.  A 2% reduction in the Gross Profit Margin of a retail business can lead to a huge reduction in the cash position and net profit of the business over twelve months.  However if this is detected in a more timely manner (whether it be monthly or quarterly) the business owners and managers can take immediate action to remedy this issue.

The review of businesses over many years shows that each and every business has both good and poor periods.  The better businesses merely detect the poor periods sooner and take quick decisive action.  This means that their poor periods are shorter and their good periods are extended.  There’s no genius in this – there’s just consistency and discipline from the business owners who commit to reviewing business performance regularly.

Many successful business owners only take a cursory view of the financial accounts prepared on a regular basis.  Rather they look at the underlying Critical Drivers that impact business results.  To reach this point the business owners must create and develop a rigorous and trustworthy financial reporting system – allowing them to view summary reports with confidence in the supporting information.

Creating these systems is not difficult and most accounting packages, when used correctly, can provide much of the information business owner’s desire.  The key is to work out what information will assist the owners and managers in operating a successful business.  It is generally worthwhile to contact your accountant or advisor to ensure that the information being provided by your accounting software is reliable and assists you in achieving your business objectives.

If you would like to further discuss your business performance and the reporting procedures currently used to make your business decisions you can contact Tim McCarthy at McMahon Osborne Group via email tim@mcmahonosborne.com.au or phone 03 9744 7144.  Tim currently works with a range of small to medium businesses and their owners and can provide a one hour free needs assessment to identify how you can get more from your business.

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10 Tips for Business Owners – Spend your Choice Time Wisely

Whether you’re a single person operation or leading a large corporate entity, the name of the game is constant improvement.  The natural state of both your business and the world in general is to grow so unless you are constantly improving you are going backwards relative to your competition.  Making improvements to make your business better is a conscious choice and within the control of the business leaders and owners.  Business owners and leaders only have a limited amount of “choice time”.  These 10 tips should help you focus on the areas of business offering the biggest return on the choice time you invest in your business.

  1. Know Yourself: Every successful business owner, even Bill Gates, has a clear idea of their abilities and limitations. By truly discovering yourself, you can deliver on your strengths and find support in areas of weakness.
  2. Master Concise Presentations: A powerful business presentation can help improve your small business by leaps and bounds. Learning the essentials of how to deliver a knockout business presentation in a concise way can reap many rewards.
  3. Keep Score Regularly: The number of small and medium businesses that have no or little idea of the daily, weekly, and monthly numbers and financial trends in the organisation is worrying. Dedicate a regular time keeping up to date on cash flow and business trends.  If you lack the financial skills to obtain this information on a regular basis invest in some external or internal support.
  4. Set Goals & Targets: Like keeping score, setting goals and objectives is an essential part of business success.  Without the goals it’s possible that you’re comparing your actual results against the wrong targets.
  5. Don’t Reinvent the Wheel: Every industry has its own best practices or ways of doing things that are tried and true. Don’t waste money and time reinventing the wheel.  Unless you are producing a new innovation to the industry make use of the resources already out there.
  6. Know the External Market: Sadly for business owners, business doesn’t operate in a vacuum. The events and changes in the world impact your business. Create a regular review system that allows you to keep up to date with the events beyond your four walls.
  7. Smart Marketing: It’s easy to waste money on ineffective or expensive marketing campaigns and programs. Learn how to use cost effective high impact marketing to improve your small business.
  8. Sharpen Selling Skills: The sales function can be daunting for many business owners who are experts in their service or product but not necessarily selling that service or product. Whether you’re selling to big companies or managing a sales team keep looking to improve your selling skills.
  9. Motivate Team: Start by having a team rather than staff.  Talented and motivated team members can bring on big improvements in business. Learn what motivates your team and watch them perform at their optimal level.
  10. Sharpen the Saw: Running a small business is hard work – that’s one of the key reasons why everyone doesn’t jump into their own business. Stephen Covey (author of The 7 Habits of Highly Effective People) recognises that the seventh habit is to sharpen the saw.  That can be in the form of vacations or development outside your core skills.

If you can master each of these 10 tips you’re well on the way to growing your business beyond that of your competition.

If you’d like to learn more about opportunities to improve your business contact the team at McMahon Osborne Group on 03 9744 7144 or via email admin@mcmahonosborne.com.au  For up to date information on McMahon Osborne Group events and workshops to improve your business and financial position you can follow Tim McCarthy on twitter via twitter.com/tmccarthy31

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Proposed FBT Changes

Last week, the Federal Government announced it’s intention to change the method of calculating the Fringe Benefits Tax (FBT) on cars.  The proposed changes will abolish the Statutory Formula for all new motor vehicle contracts entered into from 16 July, 2013.  As a result, employers will use the operating costs method (logbook method) to calculate FBT.

The operating cost method is more arduous and is based on the actual business use of the car as recorded in a log book.  Tax is payable on the portion of operating costs attributable to private use. It is important that sufficient detail is recorded in relation to each work related trip, otherwise the employer risks the logbook being deemed by the Australian Tax Office as invalid and it is therefore assumed that the total running costs of the vehicle be subjected to FBT.

The proposed changes will also affect employees, with those with salary package cars expected to be most affected.  The tax saving from packaging cars has traditionally come through the use of the statutory formula method.

It should be noted that this proposal has not yet been passed through Parliament.  Should the legislation be passed by Parliament, the change from Statutory Method to Operating Cost Method will apply to all contracts entered into- or materially varied-after the announcement on July 16, 2013, with effect from 1 April, 2014.  All existing contracts prior to the announcement will not be affected by the change.

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Do you have lost super waiting to be claimed?

super

It is estimated there are billions of dollars in unclaimed super floating around Australia’s funds – and 50% of Australian workers have at least some super that’s gone astray.

Every week we have new clients who tell us that they’ve lost track of their super. Each new job they take has a different superannuation provider and as years go by, they simply lose track of it all. As for finding their old super in other funds, they don’t know where to start.

Does this sound like someone you know?  It might even be you!

There is any easy way to check if you’ve got lost super waiting to be claimed…

SuperSeeker Quick Search

SuperSeeker Quick Search is a secure online tool provided by the Australian Tax Office which provides information on your superannuation.

In just a few simple steps you can perform a search to see whether any of the billions of dollars of unclaimed superannuation is yours…

  1. Visit the SuperSeeker Quick Search website, read and accept their terms and conditions.
  2. Fill in your TFN, Name and Date of birth and select Login.
  3. See if the search results list you as having unclaimed super

It’s that easy!

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5 Ways the 2013 Budget impacts individual taxpayers

On 14 May 2013, Treasurer Wayne Swan delivered his sixth annual budget.
Below, we cover 5 of the outcomes that are most likely to impact on individual tax payers:

1. Income Tax Rates
Income tax rates will remain unchanged. Importantly though, plans to increase the tax free threshold from the current $18,200 to $19,400 in 2015 have been scrapped.
At this stage, the rates for 2013/14 are set to stay in place until at least 2017/18.

Tax Rates for Non Residents:
From next year (2013/14), non-Australian residents will pay a flat tax rate of 32.5% of their taxable income up to $80,000. From there the tax rates will be same as resident Australians.

2. Medicare Levy
From 1 July 2014 the compulsory Medicare Levy will be increased from 1.5% to 2% to help fund the introduction of the National Disability Insurance Scheme.

3. Net Medical Expenses Tax Offset
The net medical expenses tax offset will be phased out starting from 1 July 2013.
During the phase out period, it will also become more difficult to claim the offset. Only if you claim the offset in your 2012/13 tax return, can you then claim it again in 2013/14. Taxpayers who then claim it in 2013/14 can claim it again in 2014/15.
So, if you are not eligible or choose not to claim the offset in 2012-2013, you will not be able to claim the offset in future years.

4. Work Related Self-Education Expenses
From 1 July 2014 the amount of self education expenses you can claim under item D4 in your tax return will be limited to a maximum deduction of $2,000. Previously there has been no limit in place on these deductions.

5. Baby Bonus
The current $5,000 baby bonus will be abolished from 1 March 2014. Instead – families who are eligible for Family Tax Benefit A will receive $2000 following the birth of their first child and $1000 for each subsequent child.

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Case Study 2 for Gen X Superannuation Seminar

Case study 2 - image

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May 14, 2013 · 10:54 am