April 2014 - Schuh Group

Schuh Biz
ACCOUNTING, WEALTH & FINANCIAL PLANNING NEWSLETTER!
APRIL 2014
SCHUH GROUP
YOUR WEALTH
IS OUR BUSINESS
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Accounting
Finance
Business Consulting
Property Management
Wealth Advice
COS SCHUH
DIRECTOR.
Associate of the Institute of
Chartered Accountants.
Certified Practicing
Accountant.
Taxation Institute of Australia
member.
Bachelor of Business,
Accounting Major.
DOM SCHUH
WEALTH ADVISOR.
Bachelor of Business
Management, Economics.
Bachelor of Arts, History &
International Relations.
Advanced Diploma Financial
Planning. Chartered Life
Practitioner. SMSF Specialist
Advisor.
DAVID SCHUH
FINANCE.
Property Valuation &
Sustainable Development Bond University.
Diploma Mortgage Broking.
SCHUH GROUP
58-62 Mary Street
Gympie, QLD 4570.
PO Box 191 Gympie, QLD 4570.
p: 07 5482 2855
f: 07 5482 2495
w: schuhgroup.com.au
e: info@schuhgroup.com.au
Disclaimer: Schuh Group’s Schuh Biz Newsletter
is intended to provide commentary and general
information. It should not be relied on as legal
advice as such. Formal legal advice should be
sought in particular transactions or on matters
of interest arising from this newsletter.
Special Thanks to Cameron & Tanya
Outridge from CustomerGetters.com.au
for the redesign of our newsletter.
DEBT FUNDING AND LIQUIDITY CHECKS
Liquidity issues? Contact us
early, before it’s too late
by Cos Schuh
In the current economic cycle, we are
finding many of our clients are
experiencing liquidity issues.
We have found it very beneficial for
those people who come to us with such a
potential issue to work with them before
the problem becomes a crisis.
The first step is to identify that you
have a potential problem. If you find
yourself in a situation where you cannot
pay your bills within 30 days, then the
best case scenario is that you have a
potential problem.
If you are !nding you are
unable to pay your bills for
90 days, you have a real
and concerning issue
Many businesses are reluctant to seek
help, often believing (sometimes because
of embarrassment) the problem will
rectify itself in due course. Unfortunately,
history indicates this is not the case.
It is essential to firstly identify the
problem and then seek some financial
guidance on how the issue can best be
managed. Where banks are kept
continuously informed of the situation,
we find they are much more willing to be
helpful in managing the particular crisis.
When the bank is presented with the
Schuh Group. Your Wealth is Our Business 07 5482 2855.
situation which has been existent for some
long time and left undiscussed, they are
understandably more reluctant to help.
A Banks relationship with their
customers is built around mutual
confidence. We all know a lack of
communication can erode confidence
from the other party.
If you believe you are having a
liquidity issue, or you will potentially run
into a problem with payment of your
debts – PLEASE make contact with us so
we can open dialogue with your lenders
and try to get your business back on an
appropriate footing.
We all know how much “thinking
time” financial problems take from us.
While we are stressing about these issues,
we are not concentrating on running our
business.
It is in times like this that we as your
trusted advisors should be in a position to
give you advice on how to deal with the
problem at hand.
How to solve the problem
If you would like me to do a liquidity
check on your business, discuss
profitability of your operation, or the
long-term value of the business you are
conducting – please feel comfortable in
contacting me. My direct email address is
cos@schuhgroup.com.au.
ACCOUNTING, WEALTH & FINANCIAL PLANNING NEWSLETTER!
APRIL 2014
‘HELP DEBT’ VOLUNTARY REPAYMENT BONUS
TO CONTINUE FOR THE TIME BEING
The Federal Government had previously announced that they
plan to scrap the current 5% HELP debt voluntary repayment
bonus. This change will be e!ective from 1 January 2014.
However, the legislation to implement the changes to HELP
debt has not been passed by the Senate and the Bill to
remove the discount has not become law.
As a result, the HELP debt voluntary repayment bonus will
continue for the time being. But for how long is the question,
what and what does this mean for you?
If you pay o! a HELP debt or make a voluntary repayment of
$500 or more, you will still receive the 5% bonus. Please note
that this bonus is 5% of the value of the payment made, not
5% of the outstanding debt.
SUPERANNUATION
How to manage
your SMSF so
the ATO isn’t
breathing down
your neck
A recent case has highlighted the need to be
thorough with the administration of your
Self Managed Super Fund (SMSF).
The case was between an SMSF Trustee
who was not fulfilling her trustee roles, and
the intended beneficiaries of the SMSF.
The trustee at fault was the second wife
of her deceased husband, and the intended
beneficiaries were the daughters from the
deceased husband’s first marriage.
The daughters eventually received their
estate entitlement, though not before a
prolonged and costly court case.
The document that “saved” the
daughters was a Binding Death Nomination
(BDN) completed by their now deceased
father, which ruled in their favour.
Normally a person’s “Will” does not
cover a member balance in an SMSF.
The Trustees are able to treat a member
balance “as they wish” unless the deceased
member has completed a BDN.
When a BDN is in place, the Trustee has
no discretion and must treat the member
balance as instructed by the BDN.
Your roles as Trustees or “administrators
of the fund” are also under scrutiny from
the ATO, and The Tax Office is now
implementing a penalty regime for Trustees
who make errors in fulfilling these roles.
ATO Penalties
Penalties will be in two forms ...
Fines which can amount to thousands of
dollars.
The ATO may also enforce compulsory
training courses for Trustees who make
mistakes.
How to avoid scrutiny
To avoid scrutiny please ensure ...
✓ All SMSF expenses are paid from the
SMSF bank account.
✓ If paying pensions, make sure the
required minimum pension amount is paid
by 30 June. Our office will always advise
you of the minimum repayment amount
prior to this date.
✓ Do not pay excess pensions – our
office always advises prior to 30 June if this
applies to you.
✓ Make sure all SMSF refunds or
income items are banked to the SMSF bank
account.
✓ Always make any payments to the
SMSF from related entities when advised by
our office.
✓ Always make reimbursements from
the SMSF if our office advises.
✓ Be careful not to make excess
Schuh Group. Your Wealth is Our Business 07 5482 2855.
contributions to your superfund. Check
with our office prior to contribution if you
have any doubts.
✓ Ensure you have made an Enduring
Power of Attorney so that in the event of
incapacity your interests are protected.
Make sure you discuss this with your
solicitor as a recent situation saw the Titles
office refuse an EPOA appointment
because it did not specifically cover the
appointment of SMSF trustee.
✓ Ensure your Executor is aware of
your SMSF membership and that they
understand their roll to look after your
SMSF balance. They will not automatically
become your replacement Trustee but will
need to be appointed by way of a meeting
of the SMSF Trustees.
Contact an SMSF Specialist
If you require assistance with any of
these matters please contact the following
accountants on their relevant email
addresses:
• Malcolm Diefenbach
malcolm.diefenbach@schuhgroup.com.au
• Peter Flemming
Peter.flemming@schuhgroup.com.au
• Ros Schroder
Rosalind.schroder@schuhgroup.com.au
ACCOUNTING, WEALTH & FINANCIAL PLANNING NEWSLETTER!
APRIL 2014
SCHUH GROUP PRESENTS FREE
SEMINAR WITH INDUSTRY LEGEND
In the field of risk insurance, Russell Collins is unrivalled in his knowledge
and experience. Schuh Group are fortunate that he has agreed to come
out of retirement and present at an Estate Planning and Insurance seminar
on May 21 at 7pm, in Gympie, for Schuh Group Clients.
Russell operated as a Financial Adviser in the Risk Insurance market from
the time he entered the Financial Services Industry in February 1971 until
his retirement in 2010.
He qualified for the prestigious Million Dollar Round Table in 1972 and
attended his first MDRT meeting in 1973. In 2012, he earned 40 year
membership within that organisation.
He is a Life Member of MDRT, a member of the MDRT Honour Roll, and
has spoken at three MDRT meetings on Business Insurance. Russell also
presented at the 2013 MDRT meeting in Philadelphia on 'getting back to
basics'. In 2003, Russell was awarded the Association of Financial Adviser’s
Inaugural ‘Award of Merit’, as well as Life Membership in that Association.
! To register your attendance at this free seminar, call 5482 2855.
INSURANCE
Forget your house or car — income is what
you really need to insure. Here’s why ...
How long could you last if you lost your
job, or worse, couldn’t work at all?
Research from Zurich says nearly 60%
of us would be looking behind the couch
within three months, while a recent survey
by an insurance comparison website found
it was closer to half of Australians.
Of course, this data comes from fairly
minimal surveys sizes, but these often
consistent findings do point to the high
levels of risk many Australians carry.
Insuring your salary will
provide a monthly income
if you are unable to
work due to sickness or
injury.
Our elevated house prices are
underpinned by high debt levels – our
housing debt to disposable income is still
near an all-time high, around 140%. Go
back fifteen years ago, to 1999 and it was
76%. These kinds of debt increases are
further partnered with other ongoing
commitments that quickly drain the
weekly income.
Forget your house or car, generating the
income to pay for them along with the
food on your table (and all the other bills)
is your most important asset. The two
most obvious options to protect yourself
are a consistent savings plan and
insurance.
However, saving won’t be anything
more than a short term bridge because it
would often be impossible to save what
insurance could cover in the event of
illness or injury. When it comes to
considering insurance the worst thing to
think is “it can’t happen to me”. Walk into
any hospital and you’ll find people in
shock that a permanent injury or serious
illness has struck them down.
In Australia while cancer and
cardiovascular disease deaths are down,
more people are living with their aftereffects, which inevitably impact their
employment and income.
For a 40 year old male there’s a 28%
chance they’ll suffer a disability or medical
trauma by 65, while for a 40 year old
female there’s a 23% chance.
No one knows if (or when) they may
suffer a serious health issue, but everyone
can plan in the event of it. It might
remove that concern about what happens
after three months without an income.
Contact Dominique for advice
! If you’d like to talk more about how
life or disability insurance would apply to
you, please contact Dominique Schuh on
07 5480 4877 or email
dominique.schuh@schuhgroup.com.au.
NO MORE REFUND CHEQUES FROM ATO
From 2013, all refunds for
individual tax returns
were deposited directly
into the taxpayer’s bank
account.
The ATO has announced
that from the 2014 year,
direct deposit of refunds
will be expended to
include:
• Individual income tax
returns
Schuh Group. Your Wealth is Our Business 07 5482 2855.
• Company income tax
returns
• Trust income tax returns
• Self-managed super
fund annual returns
• Fringe bene"ts tax
returns
Therefore, these entities
will also need to provide
their bank account details
when returns are lodged.
YOUR ACCOUNTING,
WEALTH
& FINANCIAL
PLANNING
NEWSLETTER!
ACCOUNTING,
WEALTH
& FINANCIAL
PLANNING
NEWSLETTER!
APRIL 2014
2014
APRIL
FRINGE BENEFITS TAX
DON’T PULL UP SHORT ON YOUR
ODOMETER READINGS
• If you have a car that is used for business and is claimed
under either the actual business usage method (log
book) or the one-third running costs method, you need
to provide us with your odometer reading as at 30 June
each year. This is required to enable usage of that
particular method to substantiate your deduction claim.
• If you have a company or trust that owns or leases a car,
you also need to record and to provide us the car
odometer reading as at 31 March each year. This is due
to a di!erent "nancial year applying for fringe bene"ts
provided (private usage of the car is treated as a fringe
bene"t).
• QUERIES? If you have any queries please contact
Malcolm Diefenbach at
Malcolm.diefenbach@schuhgroup.com.au or call
Malcolm at our o#ce .
CREDIT REPORTING
8 easy ways to manage your credit rating
On March 12 a new comprehensive credit
reporting system came into effect in
Australia that will change the way lenders
assess risks when taking new clients.
At present, a person’s credit file — the
detailed collection of their financial history
— is governed by the Privacy Act and only
provides limited negative information, such
as defaults and bankruptcies to lenders.
However under the new system, known
as CCR, a much wider range of
information will be available, from details
of credit cards and personal loans to
monthly bill repayment history.
The information will also be able to be
shared among credit providers, although
not with telecommunications and utility
companies at this stage.
People will need to
remember to be vigilant
with bill payments in order
to keep their !le clean
The changes are designed to provide a
clearer picture of consumer behaviour,
however the changes also mean companies
will be able to access additional
information around the types of credit,
limits and how often people pay their bills
on time.
For example, under the new system, if
you miss a repayment by more than five
days that will be marked on your file,
however a default is not marked just
because you missed a repayment. Credit
defaults are when a payment of $150 is
more than 60 days overdue.
On a positive note, the changes will
allow people to establish a positive credit
rating quickly and show they have
recovered from negative events.
It will also mean that consumers can
actively use their credit score to seek out a
good deal from providers.
However people will need to remember
to be vigilant with bill payments in order to
keep their file clean — which could be a
struggle considering 80 per cent of
Australians don’t keep track of their credit
history.
Schuh Group. Your Wealth is Our Business 07 5482 2855.
Some handy tips for managing
your credit rating are:
1. Set up direct debits to ensure bills are
paid on time
2. Schedule loan repayments for payday
3. Keep track of credit commitments and
only apply for credit when you really need
it
4. Credit includes things like store finance
so don’t neglect payments on your fridge or
car
5. Close any accounts you don’t need
6. Get your bills via email and flag them
to make sure they’re paid on time
7. If you’re having trouble meeting
payments, ask for an extension or negotiate
new terms
8. Get a copy of your credit report from
veda.com.au so you know where you stand.