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WHK Research Morning Summary

For further information regarding market conditions and your specific circumstances, please contact our experienced WHK Financial Planning Team.

Chris Malkin, Principal - Superannuation Audit

As of 1 July 2011 new rules came into effect governing investment in personal use assets and collectibles for SMSFs. The rules contain strict measures for holding and investing in these types of assets, and carry very severe consequences if broken, with little if any relief from penalties or discretion available to regulators.

What are Collectables?

Section 62A (SIS Act) defines collectables as follows ‘artworks, jewellery; antiques;

The results of a recent WHK small and medium sized business survey highlighted the continued difficulty for small & medium businesses (SMEs) have in Australia  accessing affordable finance.

On top of this, the ATO has announced a new, tougher, approach to their debt recovery, and proposed changes to the penalties business

John Kypreos - Head of Residential Lending

The Australian property market is always a popular conversation. And why not? Throughout the past two decades, and through a global financial crisis, Australian property values have remained solid.

Despite this we head into 2012 with more global financial uncertainty, and important changes to the legislative environment that governs borrowings, leading to  a surprising shift in lending practices rarely seen in Australia.

Changes to lending

Tim Cheong - Senior Manager, Tax

On 18 November 2011, the Governor General, Ms Quentin Bryce AC, provided formal assent to the Clean Energy Bill and other legislation that facilitates a price on carbon. In other words, the carbon price is now law.

This is a significant development for the Gillard government and all Australians. It is every bit as important as the GST was for the Howard government or the package of tax changes implemented by Hawke-Keating following the 1985 Tax Summit.

The Australian Taxation Office has revealed its targets for the 2011-2012 financial year, with small business benchmarks, wealthy individuals, sham contracting, work-related expenses and employer obligations for SMEs in the tax man's sights.

Releasing its compliance program for 2011-12, the Tax Office says fields as diverse as real estate, hospitality, carpentry, medicine, football and aviation will be in focus for the year to 30th June, 2012.

Here are some of the key targets the ATO has

There is a quiet revolution going on in transfer pricing. It is almost 30 years since the transfer pricing provisions, which require firms engaging in international dealings to do so at ‘arm's length', were inserted into domestic tax law. Since then, the Tax Office has generally interpreted these provisions using hypothetical profit-based modeling to arrive at an appropriate arm's length price. 

However, recent decisions in the Full Federal Court and the Administrative Appeals Tribunal

Changes to the Corporations Law in 2010 were supposed to make it easier for companies to pay dividends to shareholders.

However recent draft fact sheets released by the Tax Office seemingly wipe out the positive changes introduced by the amendments. Whether this due to a lack of communication between the top corporate regulators, a design fault in the existing law, or because the Tax Office is obstinately refusing to come to the party, one thing is clear: a breakthrough is needed so that

What happens to the GST when a passenger buys an airline ticket, later cancels or fails to board the plane and is not entitled to a refund? 

Obviously, the airline keeps the cash but what about the GST component of the ticket's purchase price?

Qantas, in a recent Full Federal Court case, argued that as there had been no supply at the time the passenger made the booking, no GST should be paid on non-refundable tickets when the passenger was a ‘no show'. Big money is at stake here -

It might be hard to believe but the Global Financial Crisis (GFC) need not be seen as all doom and gloom... it all depends on your perspective. Here, Christopher Brown explores how retailers and franchisors can draw inspiration from the banks to improve their position.

What the banks can teach us

In the midst, and in the wake, of the Global Financial Crisis (GFC), banks right around the world increased regulations and tightened lending. By becoming more selective and more risk averse,

With Woolworths already warning that next year will be the most challenging ever for retailers, the Government’s proposed carbon tax has the potential to be a double-whammy, adding more stress to retailers’ profit margins and growth as the economy continues to tighten.

It is natural then that uncertainty around how the carbon tax will impact Australia is creating a sense of fear, especially when you consider there are only 11 months to go until it kicks in.

Yet, savvy retailers who plan

Please find the RBA Media Release from the September 2011 Rates Meeting below:

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.

Conditions in global financial markets have been very unsettled over recent weeks, as participants have confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States. As a

Did you know?

At WHK Melbourne we have 3 offices - our William St Melbourne head office, and satellite offices in Ringwood and Geelong.

In addition we have recently added meeting facilities in Camberwell.

The next time you are scheduling a meeting with WHK, we'd be happy to meet you at any one of these locations if it is more convenient.

Three Speed Economy

When I meet our private and business clients they often ask me for WHK's view of the economy. When I answer this, I choose to look through the "lens of our business". Why? Because we have clients of every age group, working in, or retired, from every industry sector, with local and international experience, and living in all parts of Victoria. This provides incredible insight and experience. What have we learned from working with all these clients?

We see a three

David Lilja - Principal, Tax

As anticipated, as part of the last Budget announcement the Treasurer, Mr Wayne Swan, announced changes to the Fringe Benefits Tax (FBT) rules governing the taxing of company provided cars.

This change has followed on from debate, lead by the Greens who believe the historical four-tiered approach encourages employees to drive more in order to reduce FBT, conflicting with the promotion of a more environmentally conscious society.  As such, a phasing in approach to

Josh Pennell, Adviser - Wealth Management

Superannuation is a highly tax effective environment to invest your assets. Over the past decade successive Australian Governments have moved to simplify the legislation that governs Super.

However, there are still some important rules to follow in order to keep maximise the tax friendly environment super savings are maintained in. Firstly though, let's look at what the main advantages for Super are, and then at the implications of not meeting the

Sam Morris, Principal - Tax

On 10 July 2011, the Federal Government released Securing a Clean Energy Future - The Australian Government's Climate Change Plan. This document indicates the government's intention to push ahead with a price on carbon effective from 1 July 2012. Here we look at some key issues for business, and the impacts for individuals & families.

Overview

An initial $23 per tonne of CO2-e emitted will be charged to 500 of Australia's highest polluting businesses. This

Chris White, Divisional Leader - Wealth Management

It was expected that the US political parties would wait until the last minute before reaching a deal to raise the countries debt ceiling to unprecedented heights, and so they did.

Whilst politically the outcome is likely to have many impacts, economically markets firstly took the expected decision mostly in stride - that was before rating agencies downgraded the US debt rating from AAA, causing global market turmoil. What does the debt deal

David Gordon, Principal - Retail Industry Advisory

Reduced local demand

Let's start the discussion with a simple observation: consumer confidence is at relatively low levels and as a result consumers have opted to make a larger proportion of their disposable income, non-disposable: that is move this into savings or to reduce their debts, credit card levels and so on.

Thus there is less left over to spend. This has nothing to do with exchange rates and creates a reduction in local demand as a

The Proposed Building and Construction Industry Reporting Arrangements  

Andy Briggs, Principal - Tax Consulting

The Government's consultation paper is blunt about why reporting of payments to contractors in the building and construction industry (BCI) needs reform:

...the ATO has identified a high level of non compliance by contractors in the BCI, particularly in relation to lodgment, correct reporting and payment. There are also associated problems with contractors not complying

Trusts on 30 June 2011

Tim Holloway, Senior Manger - Tax

It was always going to be tight, but the Government's streaming measures Bill (Tax Laws Amendment (2011 Measures No 5) Bill 2011) finally received Royal Assent on 29 June, just before the end of the financial year. The legislation contains authority for the "streaming" of income through discretionary trusts. Importantly, the legislation also contains some time critical requirements that had to be met on 30 June 2011 in order to

Five Key Questions for business on the Proposed Carbon Tax

Tristan Webb, National Tax Director, WHK

When the Federal Government released Securing a Clean Energy Future - the Australian Government's Climate Change Plan and details of the proposed carbon tax on 10 July, not surprisingly there were many questions from business. Anyone who has read the document will agree that while it clearly explains the policy rationale for the carbon tax, it is a little hazy when it comes to the

More products mean more profits - or do they?

After rapid sales in the early years - usually as a result of providing a niche or new product or a redeveloped product to the market - many businesses find growth starts to slow. In response, they often begin offering variations to their initial products or services. In other words, "if we sell more, we will make more".

Typically, as a business expands its product or service list, it moves away from its core business. Indeed, the number of

The impact of the rising Australian dollar on the online retail sector has been well covered in recent months. Despite leading retailer and commentator Gerry Harvey's reported  scepticism about the future of online retail, media reports during April show that the Aussie dollar's upward trend against its US counterpart, coupled with the acceptance of online shopping among Australian consumers, is driving the next wave of retail.

Ever since heavy discounting during the GFC, when retailers

Could your business premises and the rent you pay to operate in them be used to better fund for your retirement?

Owning your business premises within your self managed super fund (SMSF) can make a lot of sense for your superannuation balance and your business.

For the SMSF it can provide a reliable ongoing source of income, and the potential future capital growth. For you as a business owner, it provides more stability than a third party landlord. Even if you have the means to purchase your

The Budget

Whatever your political leaning, this minority government was in a bind with this budget whatever way you cut it. They had to make inroads on the deficit and they did but there is little doubt they couldn't go much further. Political pragmatism and visionary action are uneasy bedfellows.

There was a positive emphasis on infrastructure development, back to work initiatives, skilling our workforce and being more creative in the disability sector. However, some big challenges

Will the redesigned tax put at risk investment in the industry that has played such a central role in Australia's growth?

It is a function of their business model that mining companies bear massive risks and costs associated with the exploration & investment required in new mining projects - and this new, complex tax will add another financial burden into the mix.  

Discussing the Mineral Resources Rent Tax (MRRT), Federal Treasurer Wayne Swan commented:

 "It's good to be here today with

Retailers face many challenges. The more complex of these tend to relate to juggling inventory levels and Delivered Gross Margins.

I have often heard the phrase ‘let the buyers do the buying'. We should follow this mantra but without abdicating the responsibility of providing them with budgets and targets and the ability to model the impact of their decisions on sales, margins and inventory levels.

Enter the discipline of Merchandise Financial Planning!

The process of Merchandise Financial

It was only November 2010, when the Australian dollar was pushing parity with the US dollar that we marveled and wondered, how high can it go? Now deep into 2011 the rise, and rise, of the Australian dollar continues to make Australian headlines.

For most people the news of our currency increasing in value is welcome - as individuals, we in effect, feel empowered as we can afford to buy more, imported goods reduce in price, the overseas holiday within reach, and the bargains of online

We all know that we need to submit a tax return each year following 30 June. What many of us often miss out on however, are the steps that can be taken before this date to save on tax payable and capitalise on any opportunities that may have been created throughout the year.

Here are four key areas of opportunities and risks that can be identified and addressed before the end of the financial year:

Know the impact of new or changed rules
There can often be significant developments in

Streamlining of Fringe Benefits Tax (FBT) for salary-packaged cars

This will be phased in over four years and apply to new contracts entered into after 7:30pm (AEST) on 10 May 2011 as follows:

This article appeared in Summer 2011 edition of SMSF Magazine:

Is there a sensible solution for auditing SMSFs while meeting the practicality of following every audit standard?

Sharif Eldebs, Senior Manager - Superannuation Audit

It is a requirement each year for a SMSF to engage an auditor to perform a financial and compliance audit. The ATO regularly express concerns over the quality of SMSF financial statement audits. Their focus has bee on auditors displaying a lack of understanding

A bold statement - sure - but one based on our understanding of current markets, our solid and constant research, and our processes to ensure only the best investments are selected and managed in a diligent manner.

In the 2011 Top 10 Best Investment Ideas publication we will explain the state of current markets and how we believe these can be used to best maximise your financial plan and investment

Sam Morris, Senior Manager - Tax Consulting

2010 has marked the 10th anniversary of the Goods & Services Tax in Australia.

Yet despite being introduced on the back of a number of similar consumption tax systems around the world, the Australian GST regime has undoubtedly experienced a considerable amount of change and controversy in its relatively short life.

The prominent ‘Henry Review' which stole headlines for little more than the timing of its publication around the Federal Election was

There are many surprising and often shocking horror stories when it comes to estate planning.

One famous example is Robert Holmes á Court, who rumour has it, still had his Will unsigned in his briefcase when he died! However, more often these stories are simply the result of poor estate planning, and the impact this has on surviving family members is often devastating and sadly, nothing like the intent we may have wished.

One situation that should

Sharif Eldebs, Senior Manager - SMSF Audit and Andy Briggs, Principal - Tax Consulting

Since 2007 it has been possible for self managed superannuation fund (SMSF) Trustees to borrow funds to acquire property, but is it possible to develop property owned by a SMSF?

The major appeal of having a SMSF comes from the investment choice and flexibility granted to the Trustee combined with taxation benefits - and one of the most popular investment choices over the years for many Australians has been,

Ben Rossi, Principal - Wealth Management

Whenever I meet a new client, I will commonly hear that they hold many ‘truths' about super that they have learned from the media or friends.

And often they will be wrong, and would be extremely costly if followed by a client.

This is a list of the most common superannuation myths, and why they are incorrect:

MYTH - "You shouldn't start drawing a pension out of your superannuation until you retire."

Because we don't generally have to physically pay

Natalie Forte, Senior Manager - Business Advisory

Activity in the franchise industry has exploded over recent months.And many organisations are looking to the franchise industry as a viable option to maximise success.

The forecast for 2011 continues to be bullish. According to the franchisor expansion study for 2010 conducted by 10 Thousand Feet (a strategic marketing intelligence company), 70% of franchisors intend to recruit more franchisees in 2011 as their optimism returns to pre-GFC

Touted by its users as the future of franchisee management and intelligence, OpenMeasures is one of the first realtime online business intelligence tools geared towards the franchise industry. With its powerful analysis, franchisors using OpenMeasures are enjoying dramatic improvements in their business. [Author's name] explains what OpenMeasures could mean for your business' results.

There are some franchisors that begin each working week with a review of the financial and non financial

The franchising revival
Being ‘bank ready' - attaining and retaining accreditation with a bank - is a significant challenge for most franchise systems and organisations looking to franchise. Yet the benefits of accreditation are extremely worthwhile, especially in the current environment.

Activity in the franchise industry has exploded in recent months as many organisations look to franchising as a viable business development option. And the forecast for 2011 is bullish. According to the 2010

Sales outlook pre and post Christmas 2010

In the lead up to Christmas many retailers went on sale rather than waiting for the traditional post Christmas sale period. But at what cost?

Although the official December 2010 retail sales figures are yet to be released, in its press release on 4 January 2011 the Australian Retail Association ("ARA") anticipated 3.5% sales growth for December 2010 compared to December 2009.

The ARA was also positive on the post Christmas sales period,

If you were born around 1955 and are planning to retire at age 65 in the year 2020, your Mondays may be set forever! This is about retirement planning - and being able to afford to retire.

The challenge facing all post-baby boomers (as well as me, as a baby boomer) is how to accumulate enough retirement savings by the time we retire, to enable us to live relatively comfortably without relying on the aged pension. In fact, by the time we retire it is expected that the pension will only be

Australian interest rates have increased by close to 50% through the course of the past year. Currently the Australian interest rate ranks as one of the highest amongst international peers, as shown in figure 1.

While this is testament to the strength of the Australian economy, these rises, coupled with increases made independently by the major banks, have greatly increased the cost of servicing a loan.

Even with a surprise October decision to hold rates steady, decreasing

Before the first 2010 AFL Grand Final, St Kilda coach Ross Lyon talked about the "What If" meeting he always holds on the morning of a game. AFL clubs plan to succeed.  They understand that succeeding involves developing strategies, understanding risks and being prepared in advance to respond.

Businesses and individuals have two choices, sit back and react to whatever hits them next - and yet, we know that future change and uncertainty is a given.  The alternative is to actively scrutinise

With Australia currently experiencing a major shift in its political landscape, uncertainty now reigns over the proposed tax policies of the new Government.

The Australian Labor Party announced the following proposed tax changes throughout its election campaign, however under the newly formed minority government, it remains to be seen whether these policies can be passed through parliament in their current form.

• A reduction in the company tax rate to 29% for the 2013-14 income year

During 2010 the Tax Office identified around 110,000 taxpayers who it believes may be participating in the cash economy. In August, the Tax Office revealed that it had sent letters to each of these taxpayers and presumably a number of them will be subject to a full scale tax audit.  How does the Tax Office decide whether someone is operating in the cash economy?  This article looks at some of the Tax office methods.

The Tax Office has developed a number of small business benchmarks that it

As reported in the Australian Financial Review recently, the Australian Taxation Office is targeting SMEs, including franchised businesses, which claim the small business capital gains tax concessions following the sale of business assets.

The ATO's 2010-11 compliance program indicates that it will be using specific reviews to identify businesses that may have incorrectly claimed these concessions.

Given the complexity of small business CGT concessions, it is little wonder that the ATO

In the previous edition of Talking Franchise and Retail, we highlighted a number of amendments to the Franchising Code of Conduct (the Code). The amendments are a mix of significant changes to the form of the disclosure document, and a number of minor changes which simply reflect accepted practice. The amendments took effect on 1 July 2010 and apply to all franchise agreements entered into on or after that date.

In this edition, we take a look at some of the major disclosure document

During 2010 the Tax Office identified around 110,000 taxpayers who it believes may be participating in the cash economy. In August, the Tax Office revealed that it had sent letters to each of these taxpayers and presumably a number of them will be subject to a full scale tax audit. How does the Tax Office decide whether someone is operating in the cash economy? This article looks at some of the Tax office methods.

The Tax Office has developed a number of small business benchmarks that it uses to