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Personal Finances2018-07-13T13:39:04+00:00

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Personal Finances

Federal Budget 2018: Tax (Individuals)

Federal Budget 2018: Tax (individuals) Federal Budget 2018 Initiatives: Tax (individuals) The Personal Income Tax Thresholds Low and Middle Income Tax Offset Medicare Levy Retained Increase to the Medicare Levy Threshold for Low Income Earners The Personal Income Tax Thresholds Effective 1 July 2018 Over a seven year period commencing in the 2018-19 financial year, the Government will introduce a 3-phase personal income tax plan that will see the income threshold of the 32.5% marginal tax rate progressively increase to $200,000 by 1 July 2024. Which will eventually abolish the 37% tax bracket from 1 July 2024. At the end of the 7 year period, the tax thresholds will be simplified to four brackets, resulting in the majority of taxpayers being on a marginal tax rate of 32.5 per cent or less. Low and middle income earners will benefit from tax savings of up to $530 per person (or $1,060 per couple), via a 3-phase personal income tax plan over a seven year period. The table below outlines the Government’s personal income tax threshold transition plan: Low and Middle Income Tax Offset A new non-refundable Low and Middle Income Tax Offset (LMITO) will be introduced. The LMITO will be a temporary measure applying from 2018-19 and phasing out in the 2021-22 financial year. The maximum annual offset will be $530 and will cut out for those with a taxable income above $125,333 per annum. The table below illustrates the impact of the changes to the tax thresholds during the

Federal Budget 2018: Tax (Investors)

Federal Budget 2018: Tax (investors) Federal Budget 2018 Initatives: Tax (investors) Removing the capital gains discount for managed investment trusts Deductions denied for vacant land   Removing the capital gains discount for managed investment trusts Effective 1 July 2019 Managed Investment Trusts (MITs) and Attribution MITs (AMITs) will be prevented from claiming the 50% capital gains discount at a trust level from 1 July 2019. MITs and AMITs will continue to be able to distribute realised capital gains to beneficiaries. Who are still able to apply the 50% capital gains tax discount for proceeds from assets that are held longer than 12 months. Deductions denied for vacant land Effective 1 July 2019 As an integrity measure to address concerns that dedications are being improperly claimed for expenses associated with vacant land, the Government will deny deductions such as borrowing expenses and council rates, where the vacant land is not genuinely held for the purpose of earning an assessable income. Denied expenses that would ordinarily be included in an asset’s costs base, may continue to be included for capital gains tax (CGT) purposes when sold. Expenses that would not ordinarily be included in the costs base of the asset for CGT purposes and will now also be denied a deduction will continue to be excluded in the cost base calculation. This initiative will not apply to expenses associated with holding land that are incurred after: A property has been constructed on the land, it has received approval to be occupied

Federal Budget 2018: Superannuation

Federal Budget 2018: Superannuation Federal Budget 2018 Initiatives: Superannuation 3 Year audit cycle for some SMSF SMSF Membership increasing to a maximum of 6 Super exit fees banned 'Opt-in' for Insurance in Super   3 Year Audit cycle for some SMSF Effective 1 July 2019 Some SMSFs will be allowed to move from an annual to a three-yearly audit cycle if they have: Three consecutive years of clear audit reports; and Lodged the fund’s annual returns in a timely manner SMSF Membership increasing to a maximum of six Effective 1 July 2019 The SIS Act will be updated to enable the number of fund members in new and existing Self-Managed Superannuation Funds (SMSFs) to increase from a maximum of four to six. Super exit fees banned Effective 1 July 2019 Effective 1 July 2019, A ban will be placed on all exit fees on superannuation account in addition to a 3% annual cap on passive fees charged by superannuation funds on accounts with balanced below $6,000. "Opt In" for insurance in superannuation Effective 1 July 2019 Insurance in superannuation will change from a default framework to an ‘Opt In’ basis for those: With balances less than $6,000 Under the age of 25 years Whose accounts have not received a contribution in 13 months The proposal has been designed to protect the retirement savings of young Australians. Impacted members will need to decide whether they will opt-in to the existing cover or allow it to switch-off.

Changes to GST on property developments

Back in May 2017 when the 2017-2018 Budget was announced, the government made a decision to introduce new GST withholding legislation on property developments to strengthen compliance with GST law. On 29 March 2018, the amendment to the GST laws received Royal Assent with the legislation due to take effect from 1 July 2018. Changes to GST on Property Developments Back in May 2017 when the 2017-2018 Budget was announced, the government made a decision to introduce new GST withholding legislation on property developments to strengthen compliance with GST law. On 29 March 2018, the amendment to the GST laws received Royal Assent with the legislation due to take effect from 1 July 2018. The new obligations apply for new residential developments, new residential subdivisions and long-term leases, and will have a significant impact on the property sector. Extending beyond property developers and purchasers to include lawyers, conveyancers and financial institutions to name a few. Why the need to amend the legislation? The current process for property developments is that vendors collect GST on property transactions at settlement and remit it to the ATO as part of their business activity statement process. However, some developers have failed to remit the GST to the ATO despite claiming GST credits on their construction costs. With growing concern from the Federal Government regarding “pheonixing”, which involves developers collecting GST on sales and then dissolving or declaring bankruptcy before remitting GST to the ATO, resulting in unrecoverable receipts. The Government suggests that

Investing for income when interest rates are low

Investing for income when interest rates are low Looking for income producing assets while interest rates are low? The official cash rate has been sitting at a historic low of 1.50% p.a since August 2016. With global growth barely moving and consumer debt at high levels, it’s conceivable that rates could remain low for a long time to come. Lower rates over a number of years aren’t all bad. Offering benefits for those paying off a mortgage or funding a business, but it is the savers and income investors who get hurt the most. With cash investments offering low returns, those nearing retirement are going to have to save more while working to meet their retirement goals. And that’s difficult enough as it is with an increased cost of living. Fortunately, there are a few options available outside of cash, when investing for income when interest rates are low. Risk versus reward when investing for income It's important to know upfront that while there is some promising income producing investment ideas in the current low-interest rate environment, they do come with a higher level of associated risk. That's something you need to wrap your head around before you start thinking past a savings account or term deposit for better returns. By diversifying your investments across a range of asset classes, you can prevent exposing yourself to an unacceptable level of risk by putting all of your eggs in one basket. We've put together some of the income-producing investments available

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Richard

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Peter & Merle

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Glenn

“Professional service with the personal care factor.”

Kathy

“We are very happy with the service that Modoras have provided and find all staff very friendly and helpful.”

Tom

“Super friendly staff . Would recommend and have recommended.”

Danielle

“We really enjoy the hospitality every time we visit the office, to meet and talk directly with the ‘Modoras family’ has a huge impact in entrusting our financial future.”

Robert

“We have built an excellent business rapport with our Accountant over many, many years. He has managed both personal and business tax and accounting matters for us. It is a pleasure to attend the lovely office in Mt Gravatt. The Reception staff are friendly and efficient. AND they make a great coffee!”

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