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Please contact Integrity One if we can assist you with any of your financial needs.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
It is often called “the best loan you’ll even get” and Griffith University Business School lecturer Tracey West says that it is probably true. So should graduates pay off their HECS debt as quickly as possible or should they invest their money elsewhere.
It is called the best loan you’ll ever get because of the low interest and the high payback income threshold. Repayments are only collected once your income meets the $55,874 per annum threshold. The repayment rate once the threshold is reached is 4% of taxable income. If your income reaches $103,766 the repayment increases to 8%.
If you have other debts to be paid off such as a car loan, credit card, home loan or other debts with higher interest rates you should pay them off earlier because they compound quicker over time. They should also be paid off earlier because they can impact on your credit rating if they are not paid in time.
Dr West also said that there were no tax benefits associated with early repayment.
If the federal government has their way, the repayment threshold will be reduced to $42,000 and the repayment rate will be reduced to 3%. They also want to change the indexation to be linked to the bond rate rather than CPI, Dr West said.
Dr West says the consensus on student debt seems to be set and forget as it takes care of itself. Dr West also said it makes sense individuals in their early career to focus on lifestyle demands such as travelling and also acquiring other assets such as a car or saving for a home deposit.
Dr West said “If you assume an average inflation rate of 3 per cent per annum, a HELP debt of $20,000 will accumulate to $26,900 in 10 years’ time, with no repayments.”
We can’t just forget about our HELP debt as it still compounds over time, just at a lower rate. So yes we should focus on paying off other debts first, however there are still future benefits associated with paying off your HECS early. This is because you don’t want to be still stuck paying off your student loan when you’re older and have a young family and mortgage commitments.
Article source: Jessica Haynes, ABC news
Please contact Integrity One if we can assist you with any of your financial needs.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.
Budgeting is a great way to control spending, but it is also important to track what you are spending to ensure that you are sticking to your budget. This can be a challenge for some and hopefully the 5 ways to track your spending below help.
If you shop at a particular store regularly, you can track your spending at each individual store. Keeping receipts to work out the total amount spent over a period of time at the same place will help you track what you spend.
Set an amount for a period of time that you will spend at a specific store and aim to keep under that amount. Your amount will depend on different factors such as whether or not you have children.
As an example, you may set a budget for $600 a month to spend at Woolworths. If you only spend $550, the left over $50 can either be reinvested or put into a savings account towards a holiday or luxury item you were wanting to purchase.
This is the easiest way to budget and monitor what you spend. Using this method you should have an account for paying the bills and essential expenses such as insurance, phone bills and rent. A separate account for other spending or “fun money” for things such as going out for dinners and other luxury expenses should be created. A portion of your pay should be transferred into that account every pay period and when that account gets low you are forced to reduce those expenses. Another savings account for investing can also be created.
This involves keeping a spreadsheet that plans for expected bills and expenses over a month or another time period of your choice. When expenses are paid for they are then recorded in a running tally against budgeted expenses. By doing this you are not only budgeting, but you are also ensuring that you stick to the budget.
Similar to using a separate spending account and tracking spending by store. This is useful if you feel that you spend too much one thing or if you simply want to control what you spend on that particular thing such as going out for drinks. If you want to control what you spend at a bar on drinks then put an amount you think is appropriate in an envelope and when you run out you have to stop. You must be disciplined for this for this to work.
The envelope method can also be used to cover for unexpected expenses such as an unexpected vehicle expense or buying a new fridge or other expensive home appliance when your current one breaks down. Every week or month you would add an amount to that envelope to help cover for unexpected costs
If you just want to make sure you are not mindlessly indulging in certain areas this is a useful strategy.
This involves downloading your transactions into a spreadsheet every month. Then you would sort the transactions by merchant and add a label to each one such as food, clothing, cleaning, petrol, etc. Then you can identify areas that you may be spending too much on.
There isn’t a right or wrong way to track your spending. It is most important that you find a way that you can stick to and that works best for you. The purpose of these tips are to help you achieve your financial goals as well as enjoy life now.
Source: Kelley Long, Forbes
Please contact Integrity One if we can assist you with any of your financial needs.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.
A common long term investment in Australia is buying a property and renting it out. However there are significant pros and cons of this investment option that can be important factors when deciding whether or not to invest in property.
Low risk
Because the property market is more stable than other options such as the stock market and because of the fixed rental come the risk of the investment is low.
Fixed long term Income
You receive fixed regular rental payments from tenants. If this income is high enough, it can be used to cover the mortgage repayment and other costs associated with managing the property. The more certain income also reduces risk and increases your ability to plan for the future.
Capital gain
If your investment property increases in value, you can benefit from the capital gain when you decide to sell the property, along any rental income you received.
Tax benefits
There are a number of costs associated with buying, managing and selling an investment property. Most of these property expenses can be claimed on tax and if you are losing money on your investment property, these expenses can be offset against your income.
Physical Asset
Property is a physical asset that you can see and touch unlike other investment options such as shares.
Special knowledge not required
Although it is important to have some knowledge on the property market, it is not essential to have specialised knowledge unlike other investments.
High buying and selling cost
The initial cost of the property is generally very high and may require a loan to purchase, whereas shares can be purchased for a much lower investment. There are also other costs associated with buying and selling such as stamp duty, legal fees and real estate agent fees.
Costs of managing and maintaining the property
Along with the buying and selling costs, there are a number of expenses associated with managing the investment property such as insurance, repairs and maintenance fees, water and council rates and mortgage repayments. These expenses may be greater than the rental income you receive
Vacancy and bad tenants
There may be a period of time where you don’t have a tenant. As a result you would be receiving no rental income and be forced to cover the cost of managing the property yourself. Bad tenants who don’t pay rent or cause damage can increase financial stress as well.
Loss of value
There is a chance that the value of the property may decrease over time. This could result in you owing more than what the property is worth and/or having to sell the property for less than what you bought it for.
Inflexible
You are normally locked into a contract with tenants for a fixed time and fixed rental payments. Therefore you wouldn’t be able to receive more rental income until the contract is finished, even if the value of the property increases during the contract.
Risk of the property being your only investment
Because of the high entry cost, it is common for a property to be an investor’s only investment. Therefore if the market changes and the investment doesn’t perform well you can be opened up to devastation. You should diversify your investments or grow your skills and specialise in the property market.
Sources: ASIC, On Property, Loan Market
Please contact Integrity One if we can assist you with any of your financial needs.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.
They can save you time
Yes it costs more to pay for an accountant, however the value of your time should be taken into consideration when deciding if you want to pay an accountant or do your own tax. By paying for a professional you can maximise your time to focus on your own interests. Depending on how complicated your tax situation is, the cost of a professional may be very small when compared to the time saved by not doing it yourself.
Reduced risk of errors
This is important if you own or have sold shares, if you don’t understand capital gains tax, if you are unclear on what deductions you’re eligible for and if you have a complex tax situation. Hiring a professional reduces the risk of mistakes and fines from the ATO.
Higher tax return
Accountants may be able to find deductions that you didn’t realise you’re eligible for, therefore reducing your tax liability. The deductions that they find for you may outweigh the fee for the accounting service.
It is tax deductable
On top of finding deductions you may not have been aware of, the accounting fees are also tax deductable
They can help plan for the future
As well as maximising your tax return for a previous period, accountants can also help organise and maximise your finances in a safe and legal manner. What sets Integrity One apart is that we focus on planning for the journey ahead.
Source: Savings guide
Please contact Integrity One if we can assist you with any of your financial needs.
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.
If you purchase a business asset and it is ready for use before June 30 2017 you could qualify for an instant deduction
For more on the small business tax write off visit https://www.integrityclients.com.au/news/20000-small-business-tax-break-explained/
Eligible small business can claim deductions this year if they pay taxable expenses in advance such as next year’s professional subscription, insurance policy or accounting fees.
If you have customers that are unlikely to pay their accounts in the new financial year, these accounts should be written off as a bad debt before June 30 so a deduction can be claimed. Have a record of the debt and the actions taken to recover the debt to ensure you meet tax office requirements.
Check to see whether you can write off or write down the value of any of your stock to claim a deduction.
Small businesses under $2m in aggregated turnover have the option to restructure their affairs without incurring any capital gains tax liability.
This may allow an entity the opportunity to genuinely restructure to a corporate entity to take advantage of a lower tax rate. Alternatively, the restructure can be reversed from a company back to a sole trader/partnership without any capital gains tax liabilities.
Subject to cash flow considerations and anti-avoidance rules, income could be deferred to the following year, particularly if:
– Income in the following year is likely to be lower, or
– Tax rates for the following year are expected to be lower
High income earners will also have to factor in the effect of the 2% “budget deficit levy” applying in 2016/17. This is the final year in which the temporary budget repair levy will apply.
For cash businesses – deferral of income can be risky, especially when the deferral puts them outside the ATO small business benchmarks
When possible defer:
– Sales
– Contract dates for the sale of CGT assets
– Insurance recovery claims
Ensure that contributions for the June quarter are paid to a complying fund by June 30 2017 (otherwise the deduction is delayed until 2017/18).
Do not leave payment processing until late June as funds have different processing cut off dates. Check with your funds
April to June 2017 quarter contributions must be paid no later than 28th July 2017
Cap limits of concessional contribution a member can make before June 30 2017:
– $35,000 for members aged 49 or over
– $30,000 for members aged 48 or under
In the 2017/18 financial year the cap will be cut to $25,000 for all ages
For more on the changes to superannuation as of July 1 2017 visit https://www.integrityclients.com.au/news/superannuation-changes-july-1-2017/
Sources: Commonwealth Bank, Finder, ATO
For any advice on these issues please contact the Integrity One office
Phone: (03) 9723 0522
Suite 2, 1 Railway Crescent
Croydon, Victoria 3136
Email: integrityone@iplan.com.au
This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.