M Group - Latest News

The stages of your financial life - why they are important.

Tue, 05 May 2026 03:12:19 GMT

In a financial planning context, a person’s Human Capital refers to the present value of their future earning capacity, while physical capital refers to the tangible assets they own that generate value.

Person’s Human Capital

This is the person’s ability to generate future income through:

employment income
business income
skills and qualifications
work experience
health and ability to work

For example, a 30-year-old doctor with stable income has high human capital because they are expected to earn significant income over their working life.

Person’s Physical Capital

This refers to accumulated tangible assets, such as:

cash savings
investment portfolios
real estate
business assets
superannuation/pension balances

For example, a retired person with investment properties and savings but no salary has high physical capital, but low human capital.

Why this matters in financial planning

Financial planners use the balance between human capital and physical capital to guide:

risk management – younger people with high human capital need income protection and life insurance
investment strategy – people with stable human capital may tolerate more investment risk
retirement planning – over time, human capital is converted into physical capital through saving and investing

Simple concept:

A young person usually has:

High human capital
Low physical capital
An older or retired person usually has:
Low human capital
High physical capital

This relationship helps determine appropriate insurance, asset allocation, and retirement strategies.

Here are three practical examples of how Human Capital versus physical capital changes over a person’s life stages, and how a financial adviser can help.

1. Person in their 20s to 30s

Example:

A 28-year-old engineer earns $90,000 per year, has a small super balance, minimal savings, and a mortgage.

Human capital: High
Many future earning years ahead
Income likely to rise over time
Physical capital: Low
Limited savings/assets
Few investments accumulated

Adviser strategies:

A financial adviser would focus on protecting human capital because the person’s biggest asset is their future income.

The adviser may recommend:

Income Protection Insurance to protect earnings if illness/injury occurs
Life Insurance to cover debts and protect dependants
Starting superannuation contributions
A growth-focused investment strategy because the client has time to tolerate market fluctuations
Debt reduction planning

Why:

If the person loses the ability to work, their greatest asset - future income - is at risk.

2. Person in their 30s to 50s

Example:

A 42-year-old business owner earns $180,000 per year, has children, a mortgage, growing super, and some investments.

Human capital: Moderate to high
Strong earning power remains
Fewer working years than younger clients
Physical capital: Growing
Superannuation building
Home equity and investments increasing

Adviser strategies:

The adviser helps balance human capital protection with wealth accumulation.

The adviser may recommend:

Reviewing income protection, total and permanent disability (TPD), and life insurance
Increasing super contributions
Building diversified investments outside super
Education funding plans for children
Debt repayment strategies
Tax-effective wealth creation strategies

Why:

At this stage, the client still depends on income, but growing physical capital means the focus shifts toward building long-term wealth while still protecting earnings.

3. Person over 50

Example:

A 58-year-old executive earns $220,000, has substantial superannuation, owns their home, and has an investment portfolio.

Human capital: Lower
Fewer earning years remaining
Retirement approaching
Physical capital: High
Large accumulated assets
Investments can generate retirement income

Adviser strategies:

The adviser focuses on converting physical capital into retirement income.

The adviser may recommend:

Reducing unnecessary insurance cover
Maximising retirement contributions
Transition-to-retirement strategies
Asset allocation changes to preserve wealth
Retirement income modelling
Estate planning strategies

Why:

The client’s dependence on employment income declines, and their wealth becomes their primary financial resource.

Core financial planning principle

In financial planning, the adviser helps their client convert human capital into physical capital over time:

Early life: Protect income
Mid life: Protect income + build assets
Later life: Protect assets + generate retirement income

That lifecycle framework is central to strategic financial advice.

To book an appointment with one of our Financial Planners, who operate Australia wide, please visit: https://www.mgroup.partners/financial-planning-team

FS360 Podcast - #80 - Save money on your home loan with these great tips

Tue, 14 Apr 2026 02:50:34 GMT

Lending Partner in our Geelong office, Liam Nankervis talks about some topical subjects associated with Home Loans.

Reviewing your home loan every 12 months
Mortgage Myths
Pre-Approval
Case Study of one of Liam’s clients

Liam provides insight into these important subjects that could save you money on your home loan along with host Gavin Nash.

FULL ARTICLE:

Returning to the FS360 Podcast, M Group Geelong office Lending Partner Liam Nankervis outlined how clients can review their home loan , busted mortgage myths and explained the pre-approval process.

Speaking with host Gavin Nash, Nankervis also provided a case study of a client’s recent success story to see the process from start to finish.

Reviewing your home loan

Nankervis explained M Group’s free home loan review service for clients.

“To get a better interest rate, you don’t have to re-finance your loan to a different lender, you can actually try it with your bank first,” he said.

“A review process for us would often look at approaching the bank, saying ‘this is what our client can get elsewhere’, re-negotiate the interest rate and then give that result to our client.

“We have either confirmed that you’re on the most competitive rate that your bank can offer … or we’ve re-negotiated your interest rate and you have now saved 10 points on your home loan which could save you $500 in interest per year depending on the size of your loan.”

Mortgage myths

While bank statements are something that M Group review, Nankervis said they are not something that most lenders look into for home loan applications.

“Most lenders don’t actually look at your bank statements … but we do need to collect them for our compliance,” he said.

“Most lenders are relying on what you say your spending will be like moving forward, not what has it been over the last three to six months.

“For someone who’s got $250,000 sitting as a deposit in their bank account, they’re probably spending more week-to-week before they go and buy a $1 million property … because their repayments are going to be introduced.

“They’re spending behaviour is likely going to change and it’s not something that people need to be alarmed by, it may be a conversation we need to have, but you don’t need to be sending your bank statements to every lender with your application.”

Pre-approval

While pre-approval offers peace of mind, Nankervis said it is not a necessity.

“Your pre-approval usually lasts about three months, once that three months comes by and if you haven’t purchased a property, you either need to submit a brand-new application or extend the same application with your lender,” he said.

“It does tell them whether or not you’re a good borrower, but it does not guarantee that you will get formal approval on your application … sometimes banks don’t fully assess their pre-approvals and they’re just relying on the data to say everything stacks up … or the parameters could change where interest rates have moved up and you’re no longer pre-approved.

“If you do want to get pre-approval, ideally it is going to be a fully assessed pre-approval.

“You might get an immediate pre-approval … which means they haven’t actually looked at your documents, it’s just their computer says that based on the information you’ve provided, you are pre-approved, but we might find problems with that later on.”

Case study

A recent discussion with M Group saw a client’s property portfolio improve, allowing him to purchase another property on a tight deadline.

“Prior to Christmas, he’d been given the green light from his broker to purchase a property for around $1.8 million, so he did … subject to finance. He owned three other properties as well,” Nankervis said.

“Whilst his finance clause timeline was ticking along, the broker went through all of his data and borrowing capacity and his conclusion was that he could not qualify with a major lender for his finance.

“I took a review … understood the deals he was on and how his properties and loans had been structured with another lender at the time.

“I wasn’t really that satisfied with the way it had been set up by the other broker. Fortunately … we came in and produced a much better result for him where with over $4 million of lending, we dropped all of his interest rates.

“Not only did he not have to go to one of these more expensive lenders for the new property, we actually qualified for a major lender and dropped all the interest rates on all his existing lending.”

Payday Super is Coming

Wed, 08 Apr 2026 22:25:45 GMT

Important changes to superannuation from 1 July 2026

What is changing?

Super must be paid at the same time as wages (no more quarterly payments)
Super must be received by the employee’s super fund within 7 business days of payday
Super calculated at 12% of Qualifying Earnings (QE)
Super and earnings reported each pay run via Single Touch Payroll (STP)
Higher penalties apply if super is late or incorrect

ATO Small Business Super Clearing House is closing

Small Business Superannuation Clearing House (SBSCH) closes permanently on 1 July 2026
Existing users can only use the service until 30 June 2026
The SBSCH will not support Payday Super
All SBSCH records must be downloaded before 1 July 2026

What you should do now

Review your payroll software to ensure it supports Payday Super
Move to a compliant clearing house or payroll solution early
Check employee super fund details are correct
Plan for super to be paid every payday
Download and retain SBSCH records
Need help getting ready?

We can assist with:

Payroll system reviews and setup
Selecting a compliant clearing house or payroll solution
Cash-flow planning for Payday Super
Ongoing compliance support

Retaining Good People

Tue, 24 Mar 2026 05:26:49 GMT

The Real Financial Difference for Every Business

In the first article, ' The Employee Life Cycle ', we explored attraction, recruitment, and onboarding. Here, we examine the stages that determine long term success: development, retention, and learning from employee exits.

Development: Why Growth Drives Retention

Employee development is one of the strongest predictors of long‑term retention across all industries. Many employees leave roles not because of pay or conditions, but because they can’t see a future.

Development is broader than promotion. It includes:

Skill advancement and role depth
Cross‑functional exposure
Mentoring and coaching
Ownership of projects or systems
Gradual leadership responsibility

For employers, capability development reduces reliance on external hiring, strengthens internal resilience, and protects operational continuity.

Development works best when leaders provide regular feedback and align individual aspirations with business needs. When people can see progress, they are far less likely to look elsewhere.

Retention: What Actually Keeps Employees Staying

Retention is the cumulative result of every stage of the employee life cycle. While competitive pay matters, it is rarely the deciding factor in isolation.

The strongest drivers of retention include:

Quality of leadership and management
Clear communication and expectations
Psychological safety
Recognition and respect
Fair workload management

Employees most often leave managers—not organisations. Frontline leaders therefore have a disproportionate influence on turnover.

Simple, consistent practices deliver high impact:

Regular one‑on‑one conversations
Genuine acknowledgement of effort
Realistic workload planning
Flexibility during personal or family needs

Proactive engagement tools such as stay interviews and informal check‑ins allow leaders to address issues early—before resignation becomes the solution.

Separation and Offboarding: Learning From Exits

Employee exits are inevitable. Poorly managed departures, however, damage culture, knowledge continuity, and employer reputation.

Effective offboarding focuses on:

Respectful communication
Knowledge transfer
Insight capture through exit interviews
Maintaining positive relationships

Departing employees often provide the most honest feedback on leadership, workload pressures, and cultural gaps. Businesses that analyse and act on this data continuously improve earlier lifecycle stages.

Respectful exits also preserve employer brand and enable future re‑hires when skills are hard to replace.

The Real Cost of High Turnover

Turnover costs extend well beyond recruitment fees. Visible costs include advertising, training, onboarding time, and productivity loss.

Hidden costs are often greater:

Reduced output during vacancies
Overload and fatigue in remaining teams
Increased error and safety risk
Declining morale and engagement
Leadership distraction

Industry benchmarks consistently estimate total turnover costs at 100%–150% of annual salary , depending on role complexity and disruption.

Reducing turnover is therefore not an HR exercise—it is a strategic business priority. Organisations that invest in leadership capability, employee experience, and continuous improvement across the life cycle build more stable teams, stronger customer outcomes, and greater long‑term profitability.

Jodie Thompson

Director

M Group Accounting - Sunshine Coast

The Employee Life Cycle

Tue, 24 Mar 2026 05:20:57 GMT

Why People Management Is Now a Critical Profit Lever for Every Business

Running a successful business today requires far more than products, systems, and market demand. Across Australia, one of the strongest predictors of productivity stability and long term profitability is something many leaders still underestimate: people management.

Whether your organisation employs a handful of staff or operates across multiple teams and locations, the way employees experience your business—from the first interaction with your brand to their final day - has a direct, measurable impact on performance, safety, engagement, turnover, and culture.

This end to end journey is known as the Employee Life Cycle, and understanding it is one of the most practical competitive advantages a business can develop.

Why the Employee Life Cycle Matters for All Businesses

Australia’s labour market remains highly mobile, with over one million people changing jobs each year. This mobility affects organisations of every size and industry:

Productivity drops while new hires learn systems and processes
Errors and rework increase during transition periods
Experienced performers are difficult and costly to replace
High turnover erodes culture, morale, and consistency

What appears to be a retention issue often begins much earlier - with rushed hiring decisions, unclear role expectations, weak onboarding, or inconsistent leadership. The Employee Life Cycle provides a clear framework to identify where disengagement starts and how to address it before it becomes costly.

Attraction: Why People Apply (or Don’t)

Attraction shapes the quality and alignment of your applicant pool. Today’s job seekers are more selective and better informed than ever. Before applying, they assess leadership credibility, workplace culture, flexibility, learning opportunities, and organisational values.

Increasingly, people are not leaving roles solely for higher pay. Research consistently shows they prioritise stronger leadership, meaningful work, career progression, and work–life balance. When the reality of a role doesn’t match what was advertised, disengagement begins early.

A strong Employee Value Proposition (EVP) clearly explains what people can realistically expect: support, recognition, growth, flexibility, and culture. When your EVP reflects day‑to‑day experience, it builds trust and attracts candidates who are more likely to stay.

Effective attraction strategies across industries include:

Clearly communicating purpose and values
Highlighting leadership quality and team culture
Sharing authentic employee experiences
Promoting development and career pathways
Demonstrating commitment to wellbeing and flexibility
Building early‑career talent pipelines with education providers

Strong attraction leads to better recruitment outcomes, smoother onboarding, and improved long‑term retention.

Recruitment: The Highest‑Risk Stage to Get Wrong

Recruitment is one of the most expensive and risky stages of the employee life cycle for any business. While advertising and agency fees are visible, the true cost of a poor hire is far higher.

Across Australian industries, replacement costs commonly range from $23,000–$40,000 for mid‑level roles and can exceed $60,000 for specialist or leadership positions. In operationally busy environments, disruption can push the real cost closer to 1–1.5 times annual salary.

Culturally misaligned hires often cause more damage than under‑skilled ones. Poor communication, unreliable behaviour, or unsafe practices place pressure on teams and leaders alike.

Structured recruitment significantly reduces this risk:

Clear role expectations and performance standards
Behavioural interviews assessing judgement, teamwork, and accountability
Values alignment checks
Consistent shortlisting processes
Rigorous reference checks focused on past behaviour

Hiring well builds operational stability, reduces rework, and protects culture.

Onboarding: The First 90 Days Shape Retention

Onboarding is one of the most powerful yet undervalued stages of the employee life cycle. The first three months determine whether new employees feel supported, capable, and confident.

Poor onboarding remains a leading cause of early turnover. When people are left to “work it out,” even motivated hires can disengage quickly.

Effective onboarding includes:

Clear expectations and priorities
Structured training plans
Safety and compliance education
Regular manager check‑ins and feedback
Defined milestones for progress

Employees who receive structured onboarding reach productivity sooner and are far more likely to remain beyond their first year.

Onboarding should be viewed as a continuation of recruitment—not an administrative task. When done well, it reinforces trust, accelerates performance, and signals long‑term investment.

Jodie Thompson

Director

M Group Accounting - Sunshine Coast

FS360 Podcast - #79 - Australian Government 5% Deposit Scheme and the Australian Government Help to Buy Scheme

Tue, 17 Mar 2026 01:21:35 GMT

On episode 79 of the FS360 Podcast, M Group Geelong office Lending Partner Liam Nankervis discussed the Australian Government’s 5% Deposit Scheme and Help to Buy Scheme.

Chatting to Gavin Nash, Liam outlined what the schemes entail, eligibility and the positives and negatives of both schemes.

“Since 2020, the Federal Government have come in and said we’re going to help first home buyers to get back into the property market and we’re going to do that with a minimum 5% deposit,” Liam said.

“What it means is that you need to borrow up to 95% of the value of the property. You do need to cover your purchase cost as well… things like stamp duty and mortgage registrations.

“Depending on how much you purchase for, whether there’s any stamp duty related to your property, you might be putting in your 5% and then needing to cover that on top as well.

“The Federal Government have come in and said we’ll make it easier and get you a better loan so you can get into the property market easier. You are being guaranteed by the Federal Government and you don’t pay any Lenders Mortgage Insurance (LMI).”

There are three categories to determine those that are eligible for the scheme.

A first home buyer.
A single parent or guardian, so long as they don’t own any other property. Individuals in this category are able to borrow up to 98%.
If you haven’t owned property in over 10 years.

“The thing that people need to know is that not every lender actually uses this 5% Deposit Scheme, not every lender is approved, not even all the big four banks are engaging with this scheme,” Liam said.

“I can’t say that’s by their choice, it might be, but that’s where it’s really important to use a mortgage broker.

“The important thing with the scheme is that it is very personalised to where you might be buying because the limitations, the boundaries that are set out by the government in what you can purchase and how much for, are going to be different based on where you’re located.

“You might be in Geelong, that’s going to be totally different from Brisbane, Canberra or any regional town of any state. The price thresholds are going to be very different.”

The Help to Buy Scheme sees the government give buyers a percentage of the property value to assist with the purchase. This means the government owns that percentage of the property.

“For this one, it’s probably a little more loose than the 5% Deposit Scheme in terms of eligibility, almost anyone can quality for this version,” Nankervis said.

“It’s got some different limitations in the lenders that will act in it. As opposed to the 5% Deposit Scheme which has a broad number of lenders … there’s really only three lenders that can help you with the Help to Buy Scheme now.

“I think it’s still helpful and it’s worthwhile for a lot of people to consider doing it, the main difference being that it can either keep their repayments much lower, or they can enter in at a higher price point that they personally couldn’t achieve by themselves.”

While this can help buyers get into the market, there is also the option to buy back the government’s share as time progresses.

“In terms of getting out of this scheme as well, it’s not just when you sell the property and therefor the government’s going to take their portion of the sale proceeds,” Liam said.

“You can also buy back that from the government when you’re in a position to do so. Whether you’re building up money or because you’ve paid down you’re debt, building some equity in the property, borrowing against that equity, you can repay in portion or in whole, the government.

“It is still based on the time that you do want to make your next application to buy back from the government, they will re-value the property. If it’s gone up in value, maybe your attempt is to buy back another 5% of the share of the property, it’ll be 5% of today’s value, not the value of when you purchased it.”

January 2026 Victorian bushfires - Government relief packages

Fri, 16 Jan 2026 02:30:37 GMT

Recovery support for people and communities affected by the Victorian fires that started on 7 January 2026.

Victoria is facing severe bushfires throughout most of the state. A State of Disaster has been declared. Communities, farmers and businesses are facing heavy losses.

The Victorian and Australian Governments are providing essential support to communities hit by the January bushfires. This aid will help with both immediate and long-term recovery needs.

A summary of what if on offer is below:

Financial Help for families
Emergency Accommodation
Long Term Recovery Help
Clean-Up Help
Help for Primary Producers and Farmers
Counselling and Social Recovery
Roads and community asset support
Insurance Advice
General Support

Further information is available here: https://www.vic.gov.au/january-2026-victorian-bushfires

M Group Lending make nationwide Top 100 Broking Businesses list

Thu, 15 Jan 2026 22:40:31 GMT

M Group Lending make Top 100 Broking Businesses list - nationwide.

Our Lending team have been recognised in the Top 100 Mortgage Broking businesses through our aggregator LMG. This is an outstanding achievement as the list takes into account all mortgage broking businesses Australia wide.

Well done to all our home loan brokers and their support team for their hard work and ultimate dedication to their clients!

To chat to our team about your home loan, commercial loan or business loan needs - go to: www.mgroup.partners/lending-team

Mortgage Brokers win major VIC/TAS Awards

Mon, 01 Dec 2025 22:24:25 GMT

We’re thrilled to announce that five of our M Group brokers have made the Victorian Excellence List for 2025 for aggregator LMG.

This milestone puts our brokers in the top 10% of brokers in VIC and TAS , a reflection of their outstanding performance, and commitment to their clients, with over $50M in settlements or more than 150 loans written in 2025.

• Neil McCahon

• Warren Freeman

• Liam Nankervis

• Evette Turlan

• Chris Dwye r

They've all earned this through hard work, strong relationships, and a relentless focus on helping clients. We are all incredibly proud of their efforts and those of their support team inside our Lending division.

To talk to one of our award winning brokers about your home, commercial or business equipment loan, go to: https://www.mgroup.partners/lending-team

Click images below for larger versions.

Liam Nankervis announced as Partner

Wed, 12 Nov 2025 02:23:09 GMT

M Group Announcement - Partner Liam Nankervis

We are excited to announce that Liam Nankervis is now a partner with the M Group.

Liam works with our Lending team as a Finance Broker in our Geelong office and has been with M Group for over 6 years.

Liam joined in 2019 in our file processing area and commenced a Certificate IV Mortgage Broking in February of 2020 with the intention of moving into a Broking role in the future.

He became accredited and began interviews in September 2020 - undertaking both file processing and broking right into 2021 where he solely focused on broking.

Liam has won many awards since being a broker with us:

FY2021-22 finished with Top 20 PLAN Total Dollars Settled & Top 15 Number of Transactions settled - both were against a nationwide competition!

FY2022-23 finished 17th overall PLAN Total Dollars & 4 ^th in Number of transactions settled - nationwide.

FY2023-24 finished Top 200 Brokers LMG.

Liam attributes his family as having been incredibly supportive of what is a challenging industry - with time and expectations from engaging with clients, winning their trust, and being reliable for them.

The arrival of his first born in October 2022 was early in his broking career, but easily managed with a great business and team to support him and his clients, as well as in the early years of being a parent and having a young family.

Liams says ' Mentors like Warren Freeman have had a profound impact on my life and career, I do not expect that I would be in this position without the keen eye of potential and possibility that has been nurtured since 2019.

I'm excited to contribute in a new way to the business moving forward. I've always been excited about making a difference in people's lives, and hope to continue doing this for clients and the M Group.

I appreciate being presented this opportunity with a great deal of respect and admiration for everyone around me. With the chance to learn and grow in new ways that are outside of my day-to-day broking, not only seeing our business grow but creating a space where our team can come and grow personally and professionally.'

Neil McCahon, Director of M Group Lending says: 'Liam showed from his early days with us that he was motivated to succeed and has always put his client first in all dealings. His client-first mentality and drive to get his clients the best deal for their circumstances, is what has propelled him to Partner in our business.'

Welcome Liam to the partners team at M Group - we look forward to having your thoughts and insights into the direction we take as a leadership team into the future.

~ Jamie Mulcahy - M Group CEO

Introducing M Group - A New Chapter in Our Journey

Fri, 31 Oct 2025 06:27:52 GMT

3rd November 2025

After 27 years of dedicated service as Mulcahy & Co, we are proud to unveil the next evolution of our business: M Group.

This rebrand represents a significant and strategic step forward as we continue to grow, innovate, and expand our offering to meet the evolving needs of our clients and communities.

Jamie Mulcahy, M Group CEO explains:

“When I first started the business as a sole trader, I worked from small offices in Lowe Street, Ballarat, and Lawrence Street, Beaufort, providing purely Accounting and Taxation services. At the time, the name Mulcahy & Co was fitting.

But today, our business is much broader in scope and service offering, we’ve recognised for some time the need to adopt a name that truly reflects who we are,”

"We now proudly operate with 22 business owners and a team of 180 professionals, delivering a comprehensive suite of Financial Services."

These include Accounting and Taxation; Mortgage & Finance Broking for home, business and equipment lending; Investment and Financial Planning; Property and Business Advisory; Succession Planning; Wills and Estates through our Legal, Lending & Financial Planning divisions.

Additionally, our Marketing Division provides Website development, Graphic Design and Lead Generation & Automation services.

These offerings span our office network across Ballarat, Ararat, Mildura, Berri, Robinvale, Geelong, Melbourne, Sunshine Coast, and Toowoomba.

We remain incredibly optimistic about the future and are committed to delivering the highest standard of service. Our clients can continue to rely on the deep expertise, passion, and unwavering support of the M Group team.

Jamie Mulcahy

M Group CEO

Changes to How Super Earnings Are Taxed for Large Balances

adam@mulcahy.com.au (Adam Foale) — Wed, 15 Oct 2025 03:31:28 GMT

The government has announced it will make some practical changes to its proposed tax changes for people with large super balances (over $3 million) that will now take effect from 1 July 2026.

What’s changing?

Previously, the proposed tax calculations for high-balance super accounts were based on changes in your total super balance, which could include unrealised gains (increases in value that haven’t actually been sold or received as income). This sometimes meant you could be taxed on “paper profits.” The threshold for the new tax ($3 million) was also not proposed to be indexed, meaning more people would be impacted by the tax over time.

Under the new rules:

Tax will only apply to “realised earnings” - that is, actual income your super fund has received, such as interest, dividends, rent, and realised capital gains from assets that have been sold.
If your total super balance is above $3 million, the ATO will contact your super fund(s) for your share of these realised earnings.
The ATO will then apply the new higher tax rates (15% for balances between $3 million and $10 million, and 25% for balances above $10 million) to your share of these earnings
The $3m and $10m thresholds will also be indexed in line with the Consumer Price Index.

These tax rates will apply in addition to the fund’s concessional tax rate of 15 per cent on taxable income.

Why is this better?

This approach is considered fairer, as impacted super fund members will only be taxed on income their fund has actually earned - not on paper profits that may never be realised. It also brings these tax rules more in line with how other investment income is taxed, and also addresses the problem of more people becoming subject to the tax over time due to ‘bracket creep’.

What do you need to do? If your super balance never exceeds $3 million, these changes won’t affect you. If you’re above the threshold or likely to exceed it, we’ll work with you to understand your position and plan for any potential tax impacts from 2026 onwards.

If you have questions about how these changes might affect your retirement planning, please get in touch.

Lynde Adams

Financial Planner

Mildura/Robinvale

5 key things to know about new Aged Care fees

adam@mulcahy.com.au (Adam Foale) — Fri, 10 Oct 2025 06:42:46 GMT

Big changes are on the way for aged care, with new rules starting from 1 November 2025. While these changes aim to create a more sustainable and fairer system, they do bring added complexity — especially when it comes to understanding the fees and making the right financial decisions.

Here are the five key things you need to know:

1. Aged care will cost more - but is still subsidised
If you or a loved one is moving into residential aged care from 1 November 2025, the amount you’ll need to contribute will be higher. That said, the Government will continue to fund a large share of care costs - around 73% on average. But it will be important to consider your cashflow.

2. Expect new terminology and fee calculations
The language is changing. Instead of the current “means-tested care fee,” you’ll now see new names like Hotelling Contribution and Non-Clinical Care Contribution. How much you are asked to pay will still be based on your income and assets, but new formulae may result in higher contributions than under the current rules.

3. Lifetime caps remain – but at a higher level
A lifetime cap will continue to apply to limit how much you can be asked to pay as a non-clinical care contribution over your total stay in residential care. This cap is increasing to $130,000, but with a new safeguard, that no matter how much you pay, you will only need to pay this fee for a maximum of four years. This helps ensure fairness between residents with different levels of wealth.

4. Retention amounts are being reintroduced
If you choose to pay a lump sum for your room (known as a refundable accommodation deposit - RAD), aged care providers will deduct a “retention amount” of up to 2% per year (capped at 10% over five years). While this increases the cost slightly, it may still be better value than paying the daily accommodation payment.

5. Good advice can prevent costly mistakes
Navigating these new rules can be confusing - especially when you need to make major decisions about the family home, assets or pension entitlements. The cost of getting good advice is often small compared to the cost of getting it wrong. That’s why seeking qualified aged care financial advice is more important than ever.

If you're starting to think about aged care for yourself or a family member, now is the time to start planning and seek advice. As specialists in aged care advice, we can help you to make informed decisions with confidence and peace of mind.

Please contact Lynde via the link below to chat more about these changes.

Lynde Adams

Financial Planner

Mildura/Robinvale

Episode 68 FS360 Podcast - Victoria's Commercial and Industrial Property Tax Reform

adam@mulcahy.com.au (Adam Foale) — Thu, 19 Jun 2025 00:09:47 GMT

Episode 68

Victoria's 'Commercial and Industrial Property Tax Reform' and how this will affect Stamp Duty for these properties is discussed with Principal Solicitor Brad Matthews and host Gavin Nash. Changes are coming on July 1st 2024 in this area and Brad gives us great insight into how and what is changing - and when!

Also available on Spotify, Apple & Google Podcasts.

As of July 1 2024, the Victorian Government brought in a commercial and industrial property tax reform, “abolishing” stamp duty for commercial and industrial property owners.

Speaking on the FS360 Podcast with Gavin Nash, Mulcahy & Co principle solicitor Brad Matthews outlined what that means for commercial and industrial property owners moving forward.

“The Victorian Government announced this as an abolishing of stamp duty on commercial and industrial property,” Matthews said.

“People out there are thinking that if they sign a contract after the 1st of July there’s no stamp duty on commercial or industrial land. That’s not the case.

“If you enter into a contract on the 2nd of July, which settles on the 1st of September … there’ll be one last hurrah of stamp duty for that property.

“A 10-year period then starts before that property owner is subject to paying the tax on that. There’ll be one last final bit of stamp duty on all commercial and industrial properties and then it’ll be in the system.”

The government has introduced a loan scheme to pay that last lump of stamp duty over a 10-year period too, with interest to be applied at market rates.

Once that property’s 10-year period is up, the owner is subject to a 1% tax on the unimproved land value going forward each year.

While other taxes such as vacant residential property tax are calculated on the land’s capital improved value, this reform will only tax commercial and industrial property owners on the unimproved value.

“During that 10-year period, you can transact that property as many times as you like without stamp duty again,” Matthews said.

Property owners should be careful they don’t start the 10-year clock unknowingly, Matthews touching on two examples of where that can happen.

“Let’s say I own 100% of a commercial or industrial property in a company and I say ‘I want you to buy into the business and the freehold as well’,” Matthews said.

“I’m not selling you half of the title in that particular instance, but I may be selling you 50% or more of the shares in the company that owns the land.

“Certain types of sub-divisions or consolidations can also be considered a transaction, which will start the 10-year clock.

“Things that are exempt from stamp duty that won’t trigger the reform currently are deceased estates, transfers between spouses and things like that.”

Areas where clarification is needed are mixed use properties and change in use properties.

The former are those that include a mix of residential and commercial or industrial use. These properties will have to undergo a sole or primary use test to figure out what the percentage of residential and commercial use is at that particular property.

The latter is different, where somebody buys a property for one use, however decides to change that use down the line.

“Let’s say you have a property, you brought it as a commercial or industrial factory, used it for your business for a few years, then you realise I could redevelop this property into residential apartments,” Matthews said.

“If you convert a property to a non-qualifying use … and the property continues to be used for that use i.e residential, the person won’t be liable for the commercial and industrial property tax going forward, that 1% won’t start, or if it had already started, it wouldn’t continue.

“If they sold the property while it was a non-qualifying use, then stamp duty would be payable as if it was a residential property."

Episode 67 FS360 Podcast - Vacant Residential Property Tax

adam@mulcahy.com.au (Adam Foale) — Thu, 19 Jun 2025 00:06:33 GMT

Episode 67

Victoria's 'Vacant Residential Property Tax' is discussed with Principal Solicitor Brad Matthews and host Gavin Nash. Changes are coming on July 1st 2024 in this area and Brad gives us great insight into how and what is changing - and when!

Also available on Spotify, Apple & Google Podcasts.

As of July 1 2024, all Victorian residential properties are liable for vacant residential property tax if they don’t meet the state government’s requirements.

Speaking on the FS360 Podcast, Mulcahy & Co principal solicitor Brad Matthews outlined what the tax entailed, who could be liable for it and the exemptions available.

Initially charged to inner city Melbourne property owners when first introduced in 2018, the tax applied to properties that were vacant for at least six months over the previous 12 months.

“They would pay 1% of the land’s capital improved value, so if you had an apartment that was worth $1 million and you didn’t meet those requirements … you’d get your $10,000 bill,” Matthews said.

“Fast forward to now, what’s changed is, (since) the 1st of July, it has applied to all residential properties in Victoria.

“Will it impact anybody from the 1st of July? Not specifically, but when it will come home to roost is at the end of the year when the government looks back and says, ‘have these properties been occupied for six months in the last year?”

A secondary change to the tax is the percentage of the capital improved value owners would need to pay. Previously, it was fixed at 1%, however now that will grow to 2% if vacant for a second straight year and 3% if vacant for a third straight year. It will remain at 3% from then on.

“It needs to be occupied by someone. That can obviously be yourself … a permitted occupant (such as) your daughter while she’s at university … or alternatively a person under a lease or a short-term letting arrangement provided they’re not set up purely for avoiding payment,” Matthews said.

“Does that six months need to be continuous? No, it doesn’t at all.”

Different exemptions are available. The first of these is for those moving into a rental property while renovating their principal place of residence. Exemptions are available during that period.

Victorians who own a holiday home could also have an exemption available to them.

“You can apply for a holiday home exemption where the owner or their permitted occupants … use it for more than four weeks per year, they don’t need to be continuous weeks, but they need to be a genuine four weeks,” Matthews said.

“If you own more than one holiday home, then at the moment, it’s appearing that you’ll only be able to apply that once.

“Currently the legislation limits that to properties owned by individuals. If you own your holiday house in a company or a family trust, that holiday home exemption doesn’t apply.

“But in the most recent announcements with the latest Victorian budget, they’ve introduced legislation that will include companies and trusts in the exemption, with some rules around that.”

The final exemptions are available to those with deceased estates or for those living interstate or overseas. If property owners can prove the property was vacant for a short period while getting probate following a death, the exemption could apply.

For Victorians living interstate or overseas, they have to prove the property was their principal place of residence, for example providing pay slips to show they were flying in and out of Western Australia for work, etc.

Episode 78 FS360 Podcast - Hiring Employees

adam@mulcahy.com.au (Adam Foale) — Mon, 28 Apr 2025 00:44:41 GMT

Episode 78

Natalie from Evolve Online Bookkeeping is back to chat about 'What's involved in hiring employees?'. An interesting conversation that covers topics such as responsibilities, registering as an employer, recruitment, onboarding, payroll and evaluations.

Also available on Spotify, Apple & Google Podcasts.

Register as an employer

As an employer, you must register as such, with an ABN number required.

“You need your ABN number to register for PAYG withholding tax that you deduct … it’s money that you deduct on behalf of the employee and pay across to the ATO,” Grohn said.

“If you are anticipating employing working holiday makers … you need to register as an employer of working holiday makers.”

Write a job description

It is important to ensure that you and your applicants are aware of what the job entails and what responsibilities would be placed on the new employee.

“You don’t have to go into every little detail, but it’s just making sure that they’re very clear on their requirements … often they’re signed as well,” Grohn said.

The recruitment process

When it comes to the recruitment process, it is important to ensure the job profile is done first.

From there, using the right avenues to find your candidates, such as LinkedIn, Indeed, Seeketc, depending on what the role is, is imperative.

“I would very much suggest that you have your job profile done first and then make sure that you use relative avenues to make sure that you attract the right candidate,” Grohn said.

Employee onboarding

While an important step in the process, Grohn said that doing one thing correctly would ensure that this aspect is as smooth sailing as possible.

“It’s about being organised, making sure you’ve got the right information and using that information to feed into Xero. Valid tax file number, super guarantee details up front, whether there’s any student loans and so forth,” she said.

Run payroll for your employees

Paying your employees is essential and a legal requirement. A list of your employees and the total amount of money you pay them, payroll includes salaries and wages, bonuses, allowances, benefits and deductions such as tax.

There are three ways you can run your payroll for employees:

- Using handwritten spreadsheets

- Using timesheets that can be integrated with Xero

- Using Xero Me

“You need to pay an additional payroll tax to your state government and you need to report on it as an employer. It’s only if your wages exceed $1.3 million per year,” Grohn explained. (but can differ depending on which state you are based in).

“You need to register as an employer for payroll tax. It flags once you hit the threshold once.”

Manage employee evaluations

Once a member of your staff, communication and feedback is vital to ensure enjoyment in the role and fulfilment of the job’s requirements.

“It’s that need to give feedback and obviously as an employer you benefit from that as well because there might be a few issues that you’re not aware of that are causing difficulties for the employee to perform their duties,” Grohn said.

“Just make sure you touch base with them, make them feel wanted, review salaries where applicable and touch on any issues.”

Tools and guides for your business

The ATO contains resources, videos and training materials that cover the above areas.

“Right from engaging a worker, employing a worker, hiring, obligations, if the employee leaves your business and when you’re no longer hiring,” said Grohn.

“You can use the Fair Work Guide to double check on award wages if you need to. There’s a calculator that you can use to double check that what you’re paying an employee is correct.”

Short Stay Levy- Victoria

adam@mulcahy.com.au (Adam Foale) — Sat, 12 Apr 2025 01:04:31 GMT

The Victorian State Revenue Office (SRO) has introduced a 7.5% short stay levy on certain short-term accommodations in Victoria, effective 1 January 2025.

Key Details of the Short Stay Levy:

Applicability: The levy applies to stays of less than 28 consecutive days in various accommodations, including:
Entire homes or apartments.
Private rooms in properties that are not the owner’s or renter’s principal place of residence.
Separate dwellings like granny flats or tiny homes, even if located on the same land as the owner’s primary residence.
Exemptions: The levy does not apply to:
Properties that serve as the principal place of residence of the owner or renter. For instance, if you rent out your home while on vacation, the levy is not applicable.
Accommodations such as hotels, motels, and similar establishments
Calculation: The levy is 7.5% of the total booking fee, which includes charges like cleaning fees and Goods and Services Tax (GST). However, it excludes credit card surcharge fees.
Responsibility for Payment:
If bookings are made through a booking platform, the platform is responsible for registering, lodging, and paying the levy.
For direct bookings (without a platform), the property owner or tenant must handle these responsibilities.
Registration and Lodgement:
Entities collecting $75,000 or more in annual booking fees must lodge and pay quarterly.
Those collecting less than $75,000 annually are to lodge and pay annually.
Registration should occur before the end of the first period in which the levy is applicable.

The primary objective of this levy is to encourage property owners to make more properties available for long-term rentals, thereby addressing housing shortages. The revenue generated is intended to support social and affordable housing initiatives.

Any questions?

Please reach out to the team at Mulcahy & Co Legal using the details found here if you have any questions about the contents of this blog post.

Trump Tariffs

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Apr 2025 06:13:29 GMT

The Trump Administration's imposed tariffs have resulted in share market volatility and a lot of negative news.

One of our Senior Financial Planner's Danny Archer discusses this in detail, and most importantly, the proactive approach Mulcahy & Co Financial Planning apply when managing our clients' money.

Also - download the Tariff Explainer from our Research Partner InvestSense here:

Investsense seminar

adam@mulcahy.com.au (Adam Foale) — Fri, 07 Mar 2025 05:42:47 GMT

Tuesday March 25th 2025

Exclusive InvestSense Session

Tuesday 25th March, 2025, 4pm - 6pm

We’re delighted to invite you to an exclusive session with Andrew Hunt, InvestSense 's independent economist. Based in the UK, Andrew has a unique ability to read global economic trends and decipher what they mean for Australian investors.

He will be joined by Jonathan Tolub, InvestSense Director and Portfolio Manager, who will share insights into how we are navigating the current investment landscape and what it means for client portfolios.

Tuesday 25th March 4pm - 6pm
Mulcahy & Co Boardroom, 300B Gillies Street North, Wendouree
Drinks and nibbles provided

RSVP to Libby: libbym@mulcahy.com.au

Come along and hear it from the experts! Our planner will also be in attendance to chat and answer questions.

~ The Financial Planning Team

Episode 77 FS360 Podcast - Navigating Inheritances

adam@mulcahy.com.au (Adam Foale) — Fri, 17 Jan 2025 04:55:04 GMT

Episode 77

Navigating Inheritances. Nicholes Family Law Partners Nadine Udorovic and Bec Dahl chat to Danny Archer and Damian McMahon. Together, they delve into the complexities of inheritances, offering valuable insights from both legal and financial perspectives on how to navigate this important topic.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast – Episode 77 - Navigating Inheritances

Mulcahy & Co financial planning partner Danny Archer says an individual’s investment options with an inheritance will depend on their “personal and financial circumstances”.

Archer and accounting partner Damian McMahon joined Nicholes Family Law – Our Reality Podcast hosts Nadine Udorovic and Bec Dahl, where they discussed the different ways to navigate inheritances.

“Pretty much most or all standard options such as cash, property and shares - they’re the most common ones that we come across – are available,” Archer said.

“It doesn’t necessarily matter where the money’s come from, but in respect to what options are available to someone that’s received money, it’s basically the same that that person has the option to invest in with their own cash.

“The more relevant questions here that we might ask would be what are that person’s personal and financial circumstances? Also, what are their goals and objectives?

“The answers to those questions are going to determine which investment options that are available are actually most appropriate.”

These options may include:

- Paying off debt

- Investing for their children or grandchildren

- Investing the inheritance with the intent of generating a passive income

While the Australian taxation system does not have an inheritance or state tax, assets could incur tax implications further down the line.

“These inherited assets, if they’re sold, may have capital gains tax apply, or the inherited assets themselves, whether that be a property that generates rent or a share portfolio that has dividends, are likely to have tax implications on this income,” McMahon said.

“There’s sound planning that’s needed to factor in any possible tax implications at the time of transfer and also for the ongoing income that is generated from these assets.”

With inheritances could also come the deceased’s debts, which may affect what is left to the beneficiaries.

“Pending the wishes of the deceased and what’s in their will and estate plan, the most likely and also common outcome is that debt within the state are required to be cleared prior to anything being (given) to beneficiaries,” Archer said.

“It doesn’t always work out like that but most of the time it’s probably the cleanest way because then the net assets are distributed.”

While some people may have experience with possible inheritances like cash and property, other things left to beneficiaries may seem foreign.

This is the time when financial and accounting advice becomes especially important.

“What we can do in the financial services industry is help people break down exactly what it is that they’re inheriting, what kind of asset,” Archer said.

“Let’s assume that someone inherits a basket of assets where they get some cash, some property or some shares as well. A plan there could be to just use that cash part to maybe get rid of some debt that you’re carrying.

“If you do receive an investment property or a share portfolio, it may actually be within your best interests just to keep them where they are … rather than potentially selling something at a bad time … and then you may even incur some capital gains tax as well.”

Following these initial conversations, McMahon and his team’s role would be to ensure the asset is put in the best structure so that if it is moved on in the future, the capital gains tax is minimised as much as possible.

“Also just to plan out and plant the seed in their mind that if we’re going to sell this asset in five years’ time and realise a capital gain, what kind of money do we expect to need to be set aside from a tax perspective?” McMahon said.

“What other options can we do with that money we receive from the sale to possibly reduce tax even more?”

Financial Planning Wrap for 2024

adam@mulcahy.com.au (Adam Foale) — Wed, 18 Dec 2024 02:26:41 GMT

Watch the video above from Thayne.

As 2024 comes to a close I thought I'd take the opportunity and send a thank you note to you all as gratitude for your continued support and loyalty.

Throughout 2024 we have experienced;
1. Exceptional investment returns from all asset classes and sectors:
ASX 200 up 23%
S&P 500 up 30%
AUST. Bonds up ~4.5%

INTERNATIONAL Bonds up ~6%

Aust Retail Property Trust up 39%

2. This hopefully reminds you all that it's best to remain invested even when economic conditions are uncertain.

3. We are actively monitoring and keeping an eye on US economic data particularly to understand which direction inflation may head, how this will impact interest rates and currency valuations, will there be a resurgence of small companies, emerging markets and bond and property prices.

4. With our research team we are well positioned to keep on top of the ever changing landscape, making investment decisions to maximise returns and minimise risk with regular investment committee meetings and analysis of data.

5. For many of our actively managed investment portfolios we ranked in the top 5 if not top 10 of throughout the course of the year which is a testament to the structure of Mulcahy & Co offices, people, systems and processes that we continue to build on to provide a quality service and outcomes to you all.

6. Please remember here at Mulcahy & Co the Financial Planning team is a part of a bigger network incorporating Accounting, Lending and Legal to deliver Financial Security 360 to make sure all of your financial needs are met and complement each other to achieve your goals and objectives.

Once again I'd like to thank you for your support and wish you and your families a Merry Christmas and happy new year.

The Mulcahy & Co Financial Planning Team

Episode 76 FS360 Podcast - Toowoomba Office

adam@mulcahy.com.au (Adam Foale) — Fri, 01 Nov 2024 12:08:28 GMT

Episode 76

We meet Accounting Partner Eamon and Mark from Compass Business Accountants who has joined the Mulcahy & Co Group operating from our Toowoomba, Queensland office. Host Gavin Nash talks to the pair who are operating from this thriving inland city and what services they offer their clients.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast – Episode 76

A “holistic approach” is what Compass Business Accountants’ Mark Callaghan hopes to bring to the Mulcahy & Co Toowoomba office.

Speaking on the FS360 Podcast with Gavin Nash, Callaghan discussed his new partnership with Mulcahy & Co and the company’s newest accounting partner, Eamon Sullivan.

Prior to joining Mulcahy & Co, Callaghan was a partner in a firm along with three others, working with 35 staff. He stepped away from that in 2016 to form Compass Business Accountants.

“Thankfully my whole team of 12 came with me to Compass. We decided there just to specialise in small business and self-managed super funds,” Callaghan said.

“I’ve been lucky enough to work with some of my clients for a long time as well, so we brought our clients with us. Some of those clients for over 20 years.

“For some time now I’ve been giving some thought to my own succession, my kids are finishing school and uni.

“It’s a tough decision because I don’t necessarily want to stop what I do because I still enjoy what I do, but I guess I just wanted to set something in motion to allow more time outside of work to do other things … that’s hard to do when you’re a sole practitioner.

“When I had the Mulcahy proposal put to me and I could see the opportunity to no longer run the practice, that was fairly attractive.”

Sullivan heads up the Toowoomba office and works closely with Callaghan to continue forming strong relationships with clients.

With Mulcahy & Co offering a 360 financial security service to clients, Sullivan said it would benefit businesses in Toowoomba as well as staff members.

“I think some of the potential benefits are more around Mark’s holistic approach, but obviously some clients will have their existing financial planners and mortgage brokers which we’re happy to work with,” he said.

“If people don’t have access to that mortgage broker or that financial planner, we can say ‘we’ve got someone internally who you’d able to talk to’ and help them effectively achieve their financial security.

“From a staff point of view, you learn more about (not) just the accounting side because you’re exposed to more things … from a personal development point of view, the staff get a bit more knowledge about things that you’re not normally exposed to.”

The first steps have been taken to further enhance relationships with clients, something the pair will continue to work through.

“Eamon and I have been meeting with our clients progressively which has been great because Eamon’s been able to meet them face-to-face,” Callaghan said.

“We’ve done a road trip … the plan is we’re going to keep doing more of that, get around our clients, meet them face-to-face and get to know what they want from us as well.”

Episode 74 - FS360 Podcast - Assisting Small Business - Part 2

adam@mulcahy.com.au (Adam Foale) — Wed, 23 Oct 2024 02:54:48 GMT

Episode 74

Assisting Small Business - Part 2 of a 2 part series with Evolve Online Bookkeeping's Natalie. Host Gavin Nash and Natalie talk about how you can leverage Xero and other technology to run your small-medium business finances effectively for sustained success!

Also available on Spotify, Apple & Google Podcasts.

Modern small businesses have performance tools readily available to them, but for Evolve Online Bookkeeping’s Natalie Grohn, it’s about leveraging these tools for sustained success.

Speaking to Gavin Nash on the FS360 Podcast, Grohn explained the role that Evolve and Xero could play in a small business to ensure it is performing at an optimal level.

Low use of technology and a lack of young entrepreneurs mean that Australian small businesses rank last or near last in a host of vital indicators, according to a recent CPA Asia-Pacific (APAC) small business survey.

Last year, 40.9% of Australian small businesses enjoyed growth, compared to the APAC average pf 59.6%. Fewer small business are expected to enjoy growth in 2024 than any other captured nation.

Two factors are driving this, the first being that Australian small businesses lag behind in their adoption of new technologies and their want to adapt to the changing tech landscape.

The second is the lack of young Australians entering the business market. The survey found that Australia has the lowest proportion of businesses run or owned by people under the age of 40.

Where Evolve could help is through leveraging the use of these modern-day technologies to ensure businesses are thriving.

One key area is budgeting, with Xero’s budget variance report a strong tool to assist small business owners.

“You can easily download a template and then put in all your budget numbers and then easily load it back into Xero,” Grohn said.

“You can create different budgets to report against in your management accounts. The importance of this is that in preparing the budget itself you’d be able to have a look at your numbers and get to understand them a little bit more.

“That means you’ve got comparators month-on-month, year-on-year, to report your actuals against your budgeted projections.

“The various reports in Xero that you have available to you, number one being the budget variance report. A very simple set up so that you can actually run these reports at any time yourself.”

Xero offers charts and graphs to assist in tracking performance across gross profit, net profit on sales and debt to equity.

Through months of transactions in Xero, a range of graphs would be available on the business dashboard to assist in reviewing business performance.

“As part of our service, we provide all clients with a monthly management accounts pack. Within that pack can be various reports, they can be specialised like … a budget variance report,” Grohn said.

“Or it could be just simply a profit and loss and a balance sheet, your aged receivables listing and your aged payable listing and an executive summary.

“It’s sent out from Xero and it’s to all our clients, but it can be tailored to clients’ needs.”

Episode 73 - FS360 Podcast - Assisting Small Business

adam@mulcahy.com.au (Adam Foale) — Wed, 23 Oct 2024 02:51:01 GMT

Episode 73

Assisting Small Business - Part 1 of a 2 part series with Evolve Online Bookkeeping's Natalie. Host Gavin Nash and Natalie talk about how you can leverage Xero and other technology to run your small-medium business finances effectively for sustained success!

Also available on Spotify, Apple & Google Podcasts.

Evolve Online Bookkeeping’s Natalie Grohn says that in the current “fragile” Australian economy, a well-defined set of business analytics could assist small businesses in a tough period.

Speaking with Gavin Nash on the FS360 Podcast, Grohn outlined what Evolve could do to assist small businesses to ensure they ride out the storm.

Current predictions see small business failure rate increasing from 4.4% to 6% this year, with little respite from the operating challenges on the horizon.

According to the Australian Securities & Investments Commission, small businesses dominate the annual insolvency statistics and the risk of failure has increased 20% compared to last year thanks to high interest rates, rising costs and poor consumer spending.

“Costs are high and consumers are really thinking twice about whether or not they need to make any discretionary spends,” Grohn said.

“Small businesses in Australia are lucky to survive beyond their first five years in business. It’s also just concerning about finding the level of skills that they need to continue and support their business in the labor market as well.”

Evolve offers services such as monthly bookkeeping, bank reconciliations, business reports, preparation for activity statements, payroll, superannuation processing and Xero set up and conversion.

They also assist in cashflow management, one of the most important aspects of a small business during this period.

“There’s various software integrations that can turn your cash flow concerns into cash flow confidence. Utilising Xero to the best of its ability (helps) keep you on top of your cashflow,” Grohn said.

Strategies that could be implemented once slow payers have been identified include tracking of invoices, payment history monitoring, credit checks, looking at any customer red flags … and tracking software.

“Xero has some great features set up so that you can automatically remind the customer about the invoice,” Grohn said.

While these services help with the short-term, such as being paid on time, they could also assist in long-term thinking when it comes to decision making.

Xero assists in tracking profitability, where gross profit and net profit should be the focus of any small business. It’s here that they can compare performance with past periods, customise profit and loss reports to see the business’s performance compared to the past and monitor assets and liabilities.

“Two main areas of reporting would be looking at your aged receivables, which is obviously your debtors, then looking at your aged payables which is your creditors,” Grohn said.

“Keep an eye on those figures all the time and you might be able to identify a slowdown in customers paying yourself and keep an eye on aging balances. Also just to ensure you can plan when your own bills are going to be due.”

An extension of this is setting up tracking categories in Xero, which assists in the ability to track different areas of the business and seeing which areas need future investment or current investment.

“You can compare different locations in terms of sales … you just need to make sure that on the data entry side of things, that the tracking categories are included in all your transactions, whether that’s the accounts payable invoice or a journal that is being processed,” Grohn said.

“Then that can filter through to looking at the reporting side of it, like your profit and loss and reviewing that in terms of the categories.”

Mulcahy & Co Investment Options out-perform Top 10 funds in Australia

adam@mulcahy.com.au (Adam Foale) — Sun, 20 Oct 2024 22:30:08 GMT

��️ Mulcahy & Co Financial Planning are pleased to announce that we continue to deliver strong investment returns for our clients that have seen us out-perform the Top 10 Industry Funds in Australia.

The Mulcahy & Co High-Growth Investment Option is a particular stand out, with an average return over the last 3 years that sees it in the top 3 of its allocation. Our numbers for the year ending September 2024 were around 20%, which leads the top-10 Industry funds from a diversified High-Growth comparison.

A key driver for these positive outcomes is our tried and tested valuation-based investment philosophy, which sees us focus on ''need' companies, rather than 'want' companies. Additionally, a recent decision to add global infrastructure funds and to increase our exposure to listed property has proved highly beneficial for our clients.

If you would like to know more about our investment portfolios and how you can benefit from being a valued client of Mulcahy & Co Financial Planning, please do not hesitate to reach out.

��‍�� www.mulcahy.com.au/financial-planning

Market Update - October 2024

adam@mulcahy.com.au (Adam Foale) — Wed, 16 Oct 2024 06:06:12 GMT

Market Update

Recently we had a visit in our Ballarat office from Jonathan Tolub (Investsense) and Andrew Hunt (Hunt Economics, UK) to speak to our Financial Planners and give them an update on the global and local share markets and investment trends.

Video duration: 01:20:00

Payday Superannuation Payments

adam@mulcahy.com.au (Adam Foale) — Mon, 30 Sep 2024 04:44:42 GMT

Payday Super

Treasury has recently released its Payday Super factsheet which provides further details about the Government’s Payday Super measure – where superannuation will be paid with each payday.

Payday Super: A Comprehensive Overview

The Australian Government’s introduction of the Payday Super reform marks a significant shift in the Superannuation Guarantee (SG) system. This reform, part of the 2023-24 Budget’s Securing Australians’ Superannuation Package, aims to synchronize the payment of SG contributions with employees’ salary and wages, moving away from the current quarterly requirement. This change is set to take effect from 1 July 2026 .

Key Benefits for Employees

The Payday Super reform is designed to enhance the superannuation system, ensuring a more secure retirement for Australian workers. By receiving superannuation contributions more frequently, employees can better track their entitlements and reduce the risk of unpaid superannuation.

Enhanced Compliance and Enforcement

The reform introduces stricter compliance measures to deter superannuation theft. Employers will be required to make SG contributions at the same time as salary and wages, with contributions needing to be received by employees’ superannuation funds within seven days of payday . This change aims to ensure timely and accurate superannuation payments.

Potential Challenges and Concerns

While the Payday Super reform has clear benefits, it also presents challenges. One concern is the automatic counting of late contributions towards the earliest payday with an outstanding SG shortfall, which could create a series of SG charges until the point of catch-up payment . This places a significant onus on employers to promptly rectify any errors.

Additionally, the updated SG charge framework includes several deterrence components, such as a daily compounding interest rate and an administration uplift of up to 60% . These measures are designed to incentivise employers to quickly disclose and rectify unpaid superannuation but may also increase the administrative burden on businesses.

Compliance

Employers who fail to comply with the Payday Super requirements will face several penalties designed to ensure timely and accurate superannuation contributions:

1. Superannuation Guarantee (SG) Charge

The SG charge will be updated to reflect the seriousness of non-compliance in the Payday Super environment. It includes:

SG Shortfall Amount: The unpaid superannuation contributions.
Daily Interest: Calculated at the general interest charge rate on a compounding basis (currently 11.36% per annum) ¹ .
Administrative Uplift: An additional charge of up to 60% of the SG shortfall amount to cover enforcement costs ¹ .

2. Additional Penalties

3. Non-Deductibility of Penalties

While the SG charge itself is tax-deductible, any penalties and interest assessed by the ATO after the SG charge assessment are not deductible ¹ .

4. Increased Scrutiny and Compliance

The ATO will have increased visibility over payroll data and superannuation fund reporting, allowing for proactive compliance monitoring . Employers who repeatedly fail to comply may face escalating penalties.

5. Voluntary Disclosure Incentives

Employers who voluntarily disclose unpaid superannuation and take steps to rectify the shortfall may receive a reduction in the administrative uplift charge ¹ .

How can you prepare?

Employers can take several steps to prepare for the implementation of Payday Super:

1. Ensure that your payroll systems are capable of processing superannuation contributions on a more frequent basis. This might involve updating software or working with your payroll provider to ensure compliance with the new requirements. Xero has advised that it will be updating it’s software to accommodate these changes.

2. Provide training for your payroll and HR staff to ensure they understand the new requirements and processes. This will help prevent errors and ensure timely contributions.

3. Revise your internal policies and procedures to reflect the new Payday Super requirements. Ensure that all relevant documentation is updated and that employees are informed about the changes.

4. Establish clear communication channels with the superannuation funds you work with. This will help ensure that contributions are processed smoothly and any issues are quickly resolved.

5. Implement regular checks to ensure that superannuation contributions are being made on time and in the correct amounts. This can help identify and rectify any issues before they become significant problems.

6. Frequent superannuation payments may impact your cash flow. Plan accordingly to ensure that your business can meet these obligations without financial strain.

7. Consider consulting with us to ensure that your business is fully prepared for the changes.

By taking these steps, employers can ensure a smooth transition to the Payday Super system and avoid potential penalties or compliance issues. If you have any specific concerns or need further assistance, feel free to ask!

Article by Jodie Thompson - Director, Mulcahy & Co Sunshine Coast

Episode 72 - FS360 Podcast - Family Law Matters

adam@mulcahy.com.au (Adam Foale) — Tue, 10 Sep 2024 23:35:10 GMT

Episode 72

'Family Law Matters'

with Nicholes Family Lawyers (Melbourne and Geelong). Host Gavin Nash is joined by Nadine and Jordyn to chat about this important topic relevant to your financial security.

Covered are topics such as personal, business, trusts, inheritances, spousal maintenance and more.

Lots to unpack and learn from these two experts.

Q. What areas of work does Nicholes Family Lawyers work on and how does that interrelate with accounting and advisory?

A. We practice in all areas family law, including:

Property divisions;
Parenting arrangements;
Spousal maintenance;
Divorce;
Child support and Binding Child Support Agreements;
Child protection;
IVF and surrogacy;
Adoption.
International Family Law/relocation and child abduction.
Binding Financial Agreements.

Our area often interrelates with accounting and advisory in property divisions and spousal maintenance. Often we are advising clients on the division of trusts, companies or the transfer of businesses, which are areas accountants and advisors are often extremely experienced in. Whilst we have a good knowledge of those areas it is necessary to consult with our client's accountant to ascertain any anticipated tax payable on income or companies, any CGT that might crystalize in the future,

Q. Could you please explain the concept of how business, companies and trusts are treated in family law proceedings and its significance in family law proceedings in dividing companies and trusts?

A. The Federal Circuit and Family Court of Australia can divide assets irrespective of the name the asset, business, or shares, are registered in and the Court can ascertain what is occurring beyond the legal registration of the entity.

The Court can look beyond what is described in any corporate arrangements in making Orders that it considers just and equitable and will consider who has historically had control of a company/trust, who is the director/trustee/appointor and who began the company/trust;

The nature of the business, the assets it holds, the goodwill it possesses, the role each party has played in the business, are things the Court will consider in determining how it should be divided. A company will not be left directly to say a shareholder alone just because they hold the shares.

One of the more important considerations with companies, trusts, etc, is the value of the entity, as that is what the Court can divide. Companies and trusts are able to be valued by expert valuers and that information can be critical for the Court in determining how it is split and if relevant, how much one party needs to pay the other party out of their entitlements in the entity.

Q. What advice would you give to clients wanting to protect assets held in a trust or company from being considered part of the marital asset pool in family law disputes?

A. It is a common misconception that assets can be protected from your spouse by registering them in the name of a company or trust which you control;

The only substantive protection a party can have over their own assets is the appropriate drafting and execution of a Binding Financial Agreement. Any other measure does not provide appropriate protection.

A Binding Financial Agreement is a contract created pursuant to the Family Law legislation that excludes the jurisdiction of the Federal Circuit and Family Court of Australia. If prepared appropriately, it could determine how a house is divided and when it is sold, how superannuation should be treated, who keeps the family dog, family motor vehicle, etc. These documents are incredibly flexible and can be created before, during or after both a de facto relationship or marriage;

Any parties separating without the protection of a BFA are subject to the jurisdiction of the Federal Circuit and Family Court. A BFA is the only thing that can take that jurisdiction away.

Q. Please describe some of the various ways in which parties may attempt to transfer assets to avoid inclusion in property division proceedings and explain how the Family Law Act operates to prevent this from defeating family law proceedings?

A. Section 106B specifically empowers the Court to set aside, or restrain a party, from transferring assets to a third party.

This most often occurs with the transfer of business, controlling shares in a company, or the role of appointor or trustee of a trust.

There is a large amount of case law that shows Judges are prepared to essentially "undo" those transactions if it appears the transaction was not in the ordinary course of business (say a genuine and reasonable sale of assets) and if it is apparent that the transaction is being done to "defeat" or "undermine" their former partner's entitlements.

Parties should exercise significant caution before attempting to transfer any asset to another party without both family law and accounting advise.

Q. What is spousal maintenance in Australia and how does that work?

A. When parties separate there is no immediate right for alimony, or as our Court calls it, spousal maintenance;

A party might be entitled to spousal maintenance if they satisfy a few criteria.

First is that they need to establish that they do not have the capacity to maintain themselves by reason of having the care of a child of the marriage, by reason of physical or mental incapacity for appropriate gainful employment, or any other adequate reason.

Secondly, is that they need to establish that the other party is reasonably able to provide them maintenance based on their employment and income.

Spousal maintenance in practice, is difficult to obtain. It requires one party to be unable to financially provide (one example might be if the primary carer of a child keeps the family home post separation but cannot fully afford the mortgage) and if the other parent has a strong income with limited expenses of their own, then the Court is able to exercise their discretion and require that party to maintain the other.

Spousal maintenance is not usually ordered forever, more often than not it is for a few years, depending on the significance of the need for spousal maintenance. It is rare for spousal maintenance orders to exceed 5 years.

Q. How are inheritances treated in family law matters?

A. Inheritances are complex, the case law on it varies greatly and is highly discretionary and client's often struggle with this issue in family law due to the significant emotions associated with the inheritance;

At it's most basic, an inheritance, if received, can be divided by the Court as it meets the term "property" and is therefore able to be divided.

The Court can approach received inheritances generally in two ways. Firstly, by dividing the whole of the asset pool on a "global" basis where the entire balance of assets is divided (say by 50%, 57%, 63% to one party, whatever the Court deems appropriate) or it can assess the division on an "asset by asset" basis, which is where the Court can isolate the inheritance away from any other asset and determine how it should be divided. The first example is more common when an asset is received earlier in the relationship, say a house was inherited, or funds were given at the very beginning of the marriage, it is harder to isolate those types of assets, whereas if an inheritance is received very late in the relationship or even post separation, it is easier for the Court to isolate and review how that inheritance was received.

An inheritance that has not yet been received but is likely to be received in the near future is not by it's definition "property" and is more akin to a future financial resource, that they will receive, but at an unknown time in the future. Future financial resources cannot be divided and if a party had a substantial inheritance to be received in the future then that may result in their former partner receiving a greater share of the available assets, as the Court is obliged to consider future financial circumstances in deciding what division is appropriate.

Essentially, if an inheritance is received the timing is key, and the Court does not fully isolate any assets in that way, so once an inheritance is received it is property available for division. In saying that, Court's will often award a party that receives an inheritance a larger portion of the asset pool.

Episode 70 - FS360 Podcast - Exchange Traded Funds (ETFs)

adam@mulcahy.com.au (Adam Foale) — Mon, 09 Sep 2024 05:00:05 GMT

Episode 70

Exchange Traded Funds (ETFs)

Thayne Turley (Financial Planning Director) was joined by Jonathan Tolub from our research partner Investsense to chat about this topic and how Investsense operate as our official research partner to make sure we are always making decisions for the best results for our clients with the lowest amount of risk.

Investsense’s Jonathan Tolub says Exchange Trader Funds (ETFs) have “exploded in popularity” as a way for investors to access the market.

Speaking on the FS360 Podcast with Mulcahy & Co Financial Planning Director Thayne Turley, Tolub discussed the role that ETFs could play in client’s portfolios moving forward.

“It’s a tool, it’s a way in which to access the market. You can access the market via buying the right share, you can access it by buying an ETF or you can access the market by buying a fund,” he said.

“I think primarily we want to look at it as one potential tool that we want to use and we make use of all three of these tools … depending on the underlying exposure and what we actually want to invest in.

“ETFs have exploded in popularity, (one reason is) the cost aspect, which I think is a very big one. The second aspect is just ease of access.

“Let’s say you don’t want to pick your own stocks, you don’t want to decide between BHP and CBA … you just want to buy the whole market. An ETF allows you to buy an ASX 200 in one share, so you buy the whole market in one share.

“If you started off with world equities, then you have US, Europe, Asia, Japan, the UK etc.That’s really been a boom for us because it’s actually allowed us to be much more tactical about our exposure.

“Our process helps us identify where in the world we think there are attractive risk-reward relationships (4:10), where we think some equity marks have been beaten down and from a fundamental perspective are attractive and attractive to own on a long-term basis. An ETF is something that allows us to implement that in a very efficient way.”

The growth of Japan’s market across the past 10 years has provided an example of where ETFs could fit in an investor’s portfolio.

Japan’s market and real estate crashed in the late 1980s and early 90s. It took 20 years to overcome that, before 10 years ago they started implementing market reforms to make their economy more efficient and to make market and equity investing more efficient andprofitable.

“We can buy direct shares, we can go to the Japanese exchange and buy shares of Toyota, Mitsubishi etc, but that’s very clunky because we’re based in Australia, there’s exchange risk. Even if we get to that point, we can maybe buy two, three shares, but we’re not going to get the broad exposure that we desire,” Tolub said.

“We need something that’s well diversified, we don’t want to bet on Toyota, we want to bet on the Japanese equity market, a broad exposure is more profitable, so therefor you’re left with two choices which is a fund or an ETF.

“There’s not a lot of funds in Australia that specialise in Japanese investing and actually tothe best of my knowledge there’s only one. We looked at it, it’s not uninteresting, but also quite expensive.

“Then we looked at the ETF, it was a lot cheaper and provided us with the exposure that we wanted and we ended up going that way.”

Episode 69 - FS360 Podcast - Mulcahy Investment Options perform extremely well

adam@mulcahy.com.au (Adam Foale) — Tue, 13 Aug 2024 11:53:32 GMT

Episode 69

A “disciplined approach to allocation” has helped Mulcahy Investment Options perform well over the past three years and specifically the last financial year according to Jonathan Tolub from Investsense.

Tolub joined Mulcahy & Co financial planning director Thayne Turley on the FS360 Podcast, going into detail about Mulcahy & Co’s strategy when it comes to investment.

“We’ve always had a very disciplined approach to allocation, the way in which we manage those portfolios is to look at particular asset clauses, areas of the market where we think the investor may be better rewarded for the risk that they’re taking,” Tolub said.

“Those things can tend to work over the long term, but not necessarily in the short term.”

A new example of this has been Mulcahy & Co’s investment into Japanese equities across the past three years.

In the last 20 years these equities have commonly been laggards, however a structural shift in Japan has seen them become interesting options for investment.

“We’ve identified we think something’s changing structurally in Japan and from a price perspective it seems very attractive relative to a lot of other things, so might be a good time to initiate an allocation,” Tolub said.

“Those things are not going to turn around the minute that we invest in it and so it was probably the first six months to a year, nothing much happened with our Japanese equities.

“As it happened, about a year into it, the broader market came to the same realisation as us and Japanese equities ended up being one of the best performing equity markets in the world over a particular period of time and we benefited from that.”

The battle between wanting a short-term win versus a long-term vision on investments is a constant battle for investors.

While some short-term positions may not be fruitful, if they are the correct decision, they should pay off down the line.

“The last financial year we did well and a little bit above the industry, the financial year before that we did significantly below and the financial year before that we did significantly above,” Tolub said.

“We can’t control the short-term timing of our positions, but if they’re the right position then over time they will work and the three-year, five-year number will represent that.”

An area of focus for Mulcahy & Co portfolios and Investsense across the past five years has been property exposure.

“There are several ways you can create that exposure, our preferred way will always be through liquid assets, so you invest in a listed real estate investment trust in Australia,” Tolub said.

The impacts of Covid during the pandemic and the spike in interest rates post-Covid on large real estate holdings made them less attractive.

“The combination of those two things essentially created an opportunity for us (because) all those assets were really cheap,” Tolub said.

“We (introduced an exposure in the portfolios) and it’s been working very well over the last couple of years … to some extent the investment thesis has played out and it’s time to take some profits off the table. We did that and re-invested that into something new which is infostructure.”

Global infostructure allocation such as utility companies, airports and railways were the priority for Mulcahy & Co’s investment portfolios

“The market for those is very small in Australia … so purely Australian exposure is too concentrated. We’ve broadened that out and looked at opportunities everywhere in the world,” Tolub said.

“The story for those assets is essentially the rise of interest rates has really hurt them and they’ve become quite attractive as an outcome of that. That was the catalyst for us to sell down some of our property exposure and re-invest that into info-structure assets.”

Aged Care: Don't worry - get advice!

adam@mulcahy.com.au (Adam Foale) — Wed, 24 Jul 2024 03:11:42 GMT

When decisions are complicated and the stakes are high, it is likely that you will be worried. We see this occurring regularly with clients who need to access aged care and their families. Our experience shows that the main worries for older people and their families include:

Quality of care: and how to evaluate the service they choose
Cost and affordability: to ensure the care needed is affordable
Access and availability: with people encountering long waiting lists and lengthy delays
Transparency and accountability of service providers.

Legislative reforms have been helping to build a better and more effective aged care system, but it is important to plan ahead and ensure you make good decisions. And you don’t have to do this alone. Advice and help can be important for good decision-making.

Call us to make an appointment to discuss how we can help with your planning and connect you with resources and services to support your decision-making for aged care needs.

Federal Budget 2024 and what it may mean for you

adam@mulcahy.com.au (Adam Foale) — Tue, 21 May 2024 04:49:38 GMT

Below are some features of the Federal Budget that are particularly relevant to our clients – both individuals and businesses.

Note: Some features are pending a legislative change that must be passed through parliament. For all the detail directly from the Government, click here: www.budget.gov.au

Small Businesses

$20,000 Instant Tax Write-Off
The instant asset write-off scheme has been extended for another year, it allows small businesses with an annual turnover below $10m to claim a tax deduction on new equipment (such as a new ute, an oven, or a coffee machine) up to the value of $20,000.

Trades People:
The federal government has committed another $90 million to cover the education costs of 20,000 more people seeking to study programs related to housing and construction.

Payments up to $10,000 over the course of a person's study will also be on offer for people willing to learn clean energy skills under the revamped 'New Energy Apprentice Payment'.

Electricity Bills:
Eligible small businesses will receive a $325 rebate on their electricity bills.

To be eligible for the Energy Bill Relief payment, a small business must:

be registered on a separately metered business tariff
not exceed a total annual electricity consumption of 40MWh.

If a small business is run from home, the small business is not eligible for the small business bill relief unless the business’ energy consumption is separately metered (on a small business tariff). Other exclusions may also apply.

Small businesses in embedded networks are ineligible to receive a $325 Energy Bill Relief payment.

Individuals

Tax Cuts:
From July 1 every taxpayer will receive a tax cut following changes announced by the federal government earlier this year.

It means workers in every tax bracket will pay less income tax. You can use this calculator to find out exactly how big the tax cut will be for you.

https://www.abc.net.au/news/2024-01-25/stage-three-tax-cut-calculator/103387580

Student Debts Reduced:
People with HELP debts, VET student loans and Australian Apprenticeship Support Loans and other student loans will have their debts reduced as the federal government changes how the loans accrue interest.

Student debts will grow each year at the rate of either the consumer price index or the wage price index — whichever is lower.

This change will also be backdated to June last year, meaning loans for that year will grow at the lower wage index rate of 3.2 per cent instead of the 7.1 per cent inflation rate they were measured at.

Debt repayments won't change, but it means for someone with a $25,000 debt it will be $1,120 smaller than without the change.

Rent Assistance:
The maximum rate of money paid through the Commonwealth Rent Assistance payment will be increased by 10% from September this year.

The current maximum payment for a single person receiving rent assistance is $188.20 a fortnight, and $125.47 for a single person in a share house.

That means the payment would increase by about $19 a fortnight for a single person before accounting for indexation.

Parental Leave:
Superannuation will now be paid on top of Commonwealth-funded paid parental leave from July next year.
Superannuation has been raised as a key issue contributing to pay inequity between men and women, who typically access more parental leave, with the loss of the super payments during that time contributing to smaller savings on average at retirement.

The compulsory superannuation rate is currently 11%. It will increase by 0.5% on 1 July in 2024 and 2025 until it reaches 12%.

Electricity Bills:
Every Australian household will get a $300 rebate on their power bills, a partial extension of bill relief agreed in negotiations with states and territories last year.

From July, all households will have a $300 credit automatically applied to their electricity bills. $75 dollars will be credited per quarter.

Any questions?

Please reach out to the team at Mulcahy & Co if you have any questions about the contents of this article.

Episode 66 of the FS360 Podcast - EOFY contributions and how they can save you tax

adam@mulcahy.com.au (Adam Foale) — Tue, 07 May 2024 23:33:56 GMT

Financial Planners Jason Barnett and James Clough join host Gavin Nash to chat about this topic. The 'End of Financial Year' always poses an opportunity to act towards your best tax position. Hear from these 2 experts in this episode.

Episode 66

EOFY contributions and how they can save you tax!

Financial Planners Jason Barnett and James Clough join host Gavin Nash to chat about this topic. The 'End of Financial Year' always poses an opportunity to act towards your best tax position. Hear from these 2 experts in this episode.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast – Episode 66

With tax brackets set to change next financial year, the end of the 2023/24 financial year could be the best time to act on tax saving strategies.

Talking with Gavin Nash on the FS360 Podcast, Mulcahy & Co financial planners Jason Barnett and James Clough elaborated on some of the changes that will be introduced.

“Contribution caps are increasing as of the 1 ^st of July this year, so concessional contribution caps, which are our really tax friendly contributions, they’re increasing from $27,500 to $30,000 next financial year,” Barnett said.

“Then our non-concessional contributions are increasing from $110,000 to $120,000.

“The tax brackets are changing next financial year as well, so depending on where your taxable income does sit, potentially this year you may be paying quite a bit more tax than you would be next year.

“If you were thinking about different tax saving strategies, there might be more benefit doing it this year rather than next year.”

One potential path for those aged 60 or older is to withdraw money from their superannuation fund and contribute it back in.

This extends into unused concessional contributions which could save clients a significant amount of tax.

“At the age of 60, we can start to access a portion of our superannuation even if we are still working … you can actually access up to 10% of your superannuation every year,” Barnett said.

“Even if you’re not cutting back on work … what you can actually do is withdraw that 10% from your superannuation and use that money to contribute it straight back into your super.

“As silly as that sounds … potentially there’s quite a bit of tax to save by doing that.”

Example one: unused concessional contributions.

“What (unused concessional contributions) means is that if your (super) balance is less than $500,000, you can go back five years and use what’s known as unused contributions,” Clough said.

“Last year for example, if someone contributed $17,5000 out of a possible $27,500, their unused cap is about $10,000.

“If that has been the case over five years, they can go back and get $50,000 worth of unused contributions and dump them in (their super) this financial year.”

For Clough’s client who is aged 60 with $310,000 in their super and has a lot of unused contributions, he has been able to take out $30,000 from his super and put it back in and claim it as a tax deduction.

“They’re typically getting 32.5% of that $30,000 back in their tax but they’re paying 15% as it goes back in,” Clough said.

“There’s about a 17.5% net tax saving on that $30,000, approximately $5,000 that the client’s better off each year.”

Example two: selling an investment property

Clough discussed two of his clients who were selling their investment property and had a $300,000 gain that would be assessable. However, there were ways they could save on paying capital gains tax (CGT).

“It’s owned in joint names, so there’s a 50% discount … they’ve owned it longer than 12 months, so they get a 50% discount on that (CGT) as well,” Clough said.

“So, they’ve probably got about $75,000 going on top of their taxable incomes each … and they’ve gone pretty well within their business as well, they’re probably looking at heading towards that 45% tax bracket with this investment property.

“What we’ve discussed is contributing to super, they’re pretty close to 60 years of age, so they’ll be able to contribute a lot of that gain into the super fund … they’ve got those unused contributions because their balance is less than $500,000, so they’ll actually be able to put the full $75,000 in.

“(That will) change that going from probably what is going to be high 30-45% tax rate on that gain, down to 15%.”

Example three: buying a commercial property through your super

For those in the younger demographic looking to access their super in the short-term, one way is through contributing a gain to your super and using that money to purchase commercial property.

“(A client) had a fair gain on a property, we had the discussion around what he can contribute to super and he has a business, so the discussion revolved around potentially buying a commercial property that he can operate that business out of in future years,” Clough said.

“(Therefor the gain) wasn’t going to be locked away for good, he could use that money to then purchase a property to run his business through and then it goes from being what is now a cost to his business in terms of rent, whereas that rent (starts) going towards his retirement and building that nest egg.”

Welcoming Kym Vivian to our Financial Planning Team

adam@mulcahy.com.au (Adam Foale) — Mon, 06 May 2024 04:32:25 GMT

We’d like to welcome Kym Vivian to our Financial Planning and Sunshine Coast teams!

Kym has been working in financial planning since 1998 so has a wealth of knowledge to help him assist his clients on their journey to financial security.

Kym can assist clients with:

superannuation
personal insurance cover
retirement planning
aged care advice
active investment portfolio management

Kym works alongside Molly and Jack in our Financial Planning division to help their clients achieve financial security.

On a personal level, Kym is a previous SANFL player (Aussie Rules Football), he also coaches junior aussie rules football along with keeping fit and going to the gym. Being a Sunny Coast local, he also loves his water sports and fishing.

Please feel free to reach out to Kym, Molly and Jack for any of your financial planning needs.

Phone: (07) 5413 9300

Email: Kym.Vivian@mulcahy.com.au

Episode 65 - FS360 Podcast - Capital Gains Tax and Death

gavin@mulcahy.com.au (Gavin Nash) — Tue, 30 Apr 2024 22:32:43 GMT

Episode 65

Understanding Capital Gains Tax and death in relation to Small Business Assets.

Senior Accountant at our Ballarat office Nick Willowhite talks to host Gavin Nash about this topic - where CGT came from, who pays it and when!

Also available on Spotify, Apple & Google Podcasts.

Speaking with Gavin Nash on the FS360 Podcast, Mulcahy & Co Ballarat senior accountant Nick Willowhite spoke about capital gains tax (CGT) and death in relation to small business assets.

A concept introduced in Australia in September 1985, CGT is the tax paid on any profit from the sale of an asset after September 1985.

Using the example of a house brought for $300,000 and sold for $500,000, Willowhite touched on a discount that is available on the $200,000 that will incur CGT.

“$200,000 gain, being at an individual level, if you’ve held it for longer than 12 months you get a 50% discount, which brings that down to $100,000,” Willowhite said.

“That net gain then gets added on top of your general taxable income. If your wage was $80,000, that lifts your taxable income up to $180,000 and you pay tax on that.”

It is different when it comes to an asset held in a company as opposed to an asset held by an individual. That includes potential CGT concessions for businesses.

“If you hold any asset in a company, there’s no discount at all, so you pay tax on the full gain. The difference there is that the company tax rate, if it’s a business entity and you’re eligible … you’ll be taxed (the base rate) of 25%, otherwise it’s taxed at the flat 30%,” Willowhite said.

“If the business is active … and maybe you own a shed that the work’s done out of … those assets are deemed active assets. If you go to sell them … there are some (CGT) concessions which they may be eligible for to reduce that gain and possibly pay no tax at all.

“The main (eligibility test) is that their business has a turnover under $2 million and that their net assets are under $6 million … you only have to pass one of those tests, so if you own over $6 million in assets but your turnover is under $2 million, you still pass the test.”

When it comes to potential concessions, options vary depending on the individual situation.

“There’s one that’s a 50% asset reduction which is an extra 50% cut in the capital gain … so your capital gain is only really 25% of what it was before,” Willowhite said.

“There’s a thing called the retirement exemption; if you’re below 55 you could put the net gain into super and get it tax free.

“If you’re over 55, you don’t have to put the money into super, you can just reduce the net gain using that exemption. There is a (lifetime) cap on that exemption of $500,000 though.

“Then you move onto the 15-year exemption … the asset must have been held for longer than 15 years and the sale needs to be linked with your retirement. After you sell the asset, hours worked needs to reduce and things like that.”

When it comes to the death of someone who owns assets, there are paths the beneficiaries could take to save themselves CGT.

“We see it a little bit with farm land, someone will own farm land, they pass away and then that farm land forms part of their deceased estate,” Willowhite said.

“The beneficiaries … sometimes they want to farm it themselves, other times they want to cash it in (and) sell the property.

“Generally, there would be capital gains payable on that sale, however if the deceased has farmed it previously as an active asset … we can possibly use those concessions to reduce the gain to zero or reduce the CGT.

“The biggest key is that you have to get it sorted within two years of date of death. Anything after that two-year period, the concessions are gone, there’s no further eligibility for them.”

Episode 64 of the FS360 Podcast - Starting, Building and Exiting Your Business

adam@mulcahy.com.au (Adam Foale) — Wed, 10 Apr 2024 06:48:56 GMT

Guest podcast re-publish from Innovate Media's Coast + Commerce podcast on the Sunshine Coast.

Episode 64

In this conversation, Ben Amos interviews Jodie Thompson from Mulcahy & Co. They discuss various topics related to business growth and development, including the importance of planning, the challenges faced in different stages of business, the role of accountants and bookkeepers, and the options for succession planning and exit strategies.

Available on Apple & Google Podcasts, Spotify and our website.

A full transcript of this podcast can be found here .

Episode 62 of the FS360 Podcast - How's the market?

adam@mulcahy.com.au (Adam Foale) — Thu, 08 Feb 2024 00:24:43 GMT

Evette Turlan, Finance Broker in our Mildura office, is a guest on the 'How's The Market' podcast brought to you by Luke Pedder, a buyers advocate.

Episode 62

Tips on buying homes and what banks look for when you apply for a loan are covered here along with the current state of play with interest rates in Australia.

Also available on Spotify, Apple & Google Podcasts.

Summary of the podcast:

When it comes to buying a home, Mulcahy & Co Finance Broker Evette Turlan says there are three areas that need to be nailed down; your deposit, affordability and your credit score.

Speaking with Luke Pedder on the How’s the Market podcast, Turlan elaborated on what banks look for when you apply for a home loan, fixed interest rates versus variable and the current state of interest rates in Australia.

“Number one, deposit, 5% deposit is all you need to buy and occupy a home. It must be genuinely saved, that’s where we come into it with our expertise and to show you what that genuine savings means from a bank point of view,” said Turlan.

“Number two is your ability to repay that loan plus any existing finance. That can sometimes be a bit of a juggle where we might have to look at consolidating someone’s loans in order toimprove their affordability of the loan.

“Number three is your credit score … you need to look at your credit score. Google Equifax and ask for your free credit score. If you are in the red, we’ve got people that we refer our clients to who can get their credit score back in the orange and the green.”

For those looking to purchase a property, the choice of buying at an auction is one that Turlansaid people should not be afraid of.

Pedder explained that with property ‘days on market’ inching closer to 23 or 24 days compared to 11 or 12 during Covid, auctions could be a path that home owners take when trying to sell.

If it’s a path that potential buyers look at, Turlan said inspecting the house is key, as well as being sure what the deposit type is before auction day.

“Don’t be scared of auctions … you have your pre-approval in place, what you’re going to buy that property for at auction is going to be within your budget,” said Turlan.

“When banks assess home loans, they don’t assess your home loan on what the rates are now, they add a buffer, so you are well within your budget when we give you a pre-approval.”

For home owners currently paying off their loans, Turlan said “it's a really, really unique time in the market”.

She added that if possible within your budget, variable interest rates are the encouraged path to take.

“I’ve never seen them (interest rates) peak the way that they’ve peaked over the last 12 months, so many rate rises in such a short amount of time,” Turlan said.

“Commonwealth Bank have dropped their fixed rates recently, so that’s an indication that the market is coming back around to be a bit more stable.

“If they (banks) drop their one-year rates, that’s where they believe the variable rates are going to be below those rates in 12 months’ time.

“We’re not encouraging clients to lock away any longer than 12 months at the moment and … if you want to go fixed, it’s a budget decision.

“We’re saying that if your budget dictates that you can’t absorb one more rate rise or maybe two more … over the next six months, then you would lock away, besides that, variable all the way.”

For those coming off a fixed rate, their repayments could rise two to three times what they have previously been.

Turlan said rate reviews is a good next step for home owners in that position.

“We offer free rate reviews. If you are coming off a fixed rate and you want us to go in and bat for you to shop at your current lender, you just need to give us a call,” Turlan said.

“If you’re on a variable rate we can do it as well … my personal belief, if your home loan (interest rate) doesn’t start with a six, you’re getting ripped off.

“As we’ve seen in the last few years, as values have gone up, peoples’ home loans are coming down, so what they call the loan to value ratio might have reduced to a point where you’re getting charged interest unnecessarily.”

Inflation freefall, what will it do to interest rates?

adam@mulcahy.com.au (Adam Foale) — Wed, 17 Jan 2024 23:47:47 GMT

Inflation rates continue to fall towards the Reserve Bank of Australia’s (RBA) target of 2-3% following a significant drop in November’s annual figures last year. The inflation rate dropped to 4.3% in the year to November of 2023, falling further than the 8.4% figure at the end of 2022.

Attention is now on December’s monthly data, which will be released on 31 January. Managing director of Market Economics Stephen Koukoulas said if the month-on-month rise is 0.3%, annual inflation will be 3%, the RBA’s target.

“The inflation problem is over. The RBA was concerned about inflation and their subsequent tightening of interest rates has worked,” Koukoulas said. “If you hike interest rates aggressively and crunch the economy, then yes, it’s going to fall and it’s happened.”

The monthly Consumer Price Index (CPI) indicator rose 4.3% in the year to November last year according to the Australian Bureau of Statistics (ABS), the smallest annual increase since January 2022. This was down from October’s figure of 4.9%

One of the biggest reasons for these inflation figures was automotive fuel prices rising 2.3% in the 12 months to November 2023, down from 8.6% in the annual increase to October. It was as high as 19.7% in September.

Other contributors to the November annual increase were housing at +6.6%, food and non-alcoholic beverages at +4.6%, insurance and financial services at +8.8% and alcohol and tobacco at +6.4%.

"CPI inflation is often impacted by items with volatile price changes like automotive fuel, fruit and vegetables and holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation,” ABS head of price statistics Michelle Marquardt said.

“When excluding these volatile items from the monthly CPI indicator, the annual rise in November was 4.8%, lower than the annual rise of 5.1% in October.”

Housing and rent increased, the latter rising 7.1% in the 12 months to November with low vacancy rates and a tight rental market. Housing’s increase was up from the 6.1% annual increase in October as new dwelling prices rose 5.5%, reflecting higher material and labour costs.

“The increase in Commonwealth Rent Assistance has reduced out-of-pocket rent costs for eligible tenants since its introduction on September 20, 2023,” Marquardt said.

“Excluding these changes to rent assistance, rents would have increased 8.8% over the year to November 2023.”

Attention has now turned to the RBA avoiding a recession and a rise in unemployment rates.

“Now the debate has switched to can the RBA avoid a nasty recession, a weak economy and unemployment rising to above 5%. We will see in the coming months,” Koukoulas said.

“The way to do this is to start cutting interest rates – soon.”

This article is supplied by the Finance Brokers at Mulcahy & Co. To contact us about your next loan for any purpose, please visit https://www.mulcahy.com.au/lending

Investment Committee Update - November 2023

Fri, 03 Nov 2023 00:13:47 GMT

We recently held our quarterly investment committee meeting with our research team. Thayne provides an update which includes commentary on world events, inflation and interest rate rises. How are they effecting investments and how the Mulcahy & Co Portfolios are going when measured against the industry benchmarks.

Click below to hear from Thayne Turley, Director at Mulcahy & Co Financial Planning.

Valuable Tax Deduction Opportunity for Small Businesses

adam@mulcahy.com.au (Adam Foale) — Wed, 25 Oct 2023 22:08:06 GMT

Are you a small business owner with an annual turnover of less than $50 million? Great news! You might be eligible for a 20% bonus deduction on eligible training expenses for your employees. Here's what you need to know:

What is the Small Business Skills and Training Boost?

Small businesses can now claim an extra 20% tax deduction on top of their usual deductions for certain employee training expenses.
This applies to costs incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.

Are You Eligible?

Your business must have an aggregated annual turnover of less than $50 million.
Training must be for employees (not business owners or independent contractors).
Courses must be provided by registered training providers and already tax-deductible.
Expenses must be incurred within the specified period.

What Can You Claim?

Costs of external training courses for your employees provided by registered training providers.
Incidental costs, such as books and equipment needed for the course, if charged by the training provider.

Exclusions:

Training for non-employee business owners or independent contractors is not covered.
Costs added by intermediaries, such as commissions or fees, are not deductible under this boost.

Special Note for R&D:

Businesses claiming under the R&D tax incentive program can still claim the bonus deduction without affecting their R&D claims.

When Can You Claim?

Deductions are generally claimed in the year expenses are incurred.
For expenses from 7:30 pm AEDT 29 March 2022 to 30 June 2022, claim the full deduction in your 2021–22 return, and the 20% bonus in your 2022–23 return.
For expenses incurred in the 2022–23 and 2023–24 income years, claim both the regular and bonus deductions in the respective year's return.

FBT Reminder:

Keep in mind the potential Fringe Benefits Tax (FBT) consequences associated with training expenditure.

Action Needed:

Ensure you're choosing eligible training providers.
Keep detailed records of all relevant expenses.

Don't miss out on this valuable opportunity to invest in your employees' development while also receiving a tax benefit! Contact us today , and we can help you navigate the specifics and maximise your claims under this new initiative.

Behavioural Finance - Part 2 - Emotional Biases

Thu, 12 Oct 2023 06:41:53 GMT

Behavioural Finance - Emotional biases

Jesse Jury (Mulcahy & Co Financial Planning) sat down with host Gavin Nash and Danny Archer (Partner – Financial Planning) to chat about this interesting topic. This is part two of the two part podcast series about behavioural finance. You can listen to part one on Episode 58 of the FS360 podcast.

Jesse is currently completing a post graduate course as a Chartered Financial Analyst (CFA) and this topic has been an interest area of his during this study.

Emotional Biases:

○ Harder to correct because they stem from impulses and intuitions.

○ They arise spontaneously rather than through conscious effort and may even be undesired to the individual feeling them.

○ Often possible only to recognise and adapt, rather than overcome.

Four common Emotional Biases when investing.

1. Loss-aversion bias: the tendency to strongly prefer avoiding losses as opposed to achieving gains (particularly taking more risk in an attempt to prevent losses).

○ Consequences (investors may):

■ Hold investments in a loss position longer than justified by fundamental analysis, in the hope that they will return to breakeven.

■ Sell investments in a gain position earlier than justified by fundamental analysis, out of fear that the gains will erode.

■ End up with a sub-optimal portfolio on a risk-adjusted basis due to this disposition effect.

○ Detection and guidance:

■ Show discipline in analysis and consider probabilities objectively (i.e. detach emotion from analysis & decision-making).

2. Status quo: choosing to do nothing instead of making a change, even when change is warranted.

○ Consequences (investors may):

■ Unknowingly maintain portfolios with risk characteristics that are inappropriate for their circumstances.

■ Fail to explore other opportunities.

○ Detection and guidance:

■ Quantify the advantages of diversification and proper asset allocation.

● Regret aversion: avoiding making decisions out of fear that the decision will turn out poorly.

○ Consequences (investors may):

■ Be too conservative in their investment choices as a result of previous poor outcomes. Investors may wish to avoid the regret of making more bad investments and instead take on low-risk instruments, likely leading to long-term underperformance and failure to reach goals.

3. Engage in herding behaviour . Investors may feel safer in popular investments or by following other traders’ moves to limit regretting their own decisions (and instead blame others if a negative outcome occurs), or because they simply trust others more. Could also lead to choosing only familiar companies to invest in, despite unfamiliar companies potentially offering greater reward for risk taken.

○ Detection and guidance:

■ Quantify the risk-reducing and return-enhancing advantages of diversification and proper asset allocation.

■ Recognise that bubbles happen and keep long-term objectives and expected returns in mind.

4. Endowment: valuing an asset more when one owns it than when one does not.

○ May be the result of multiple other biases, such as loss aversion, anchoring and adjustment, and overconfidence.

○ Consequences (investors may):

■ Fail to replace assets when prudent to do so.

■ Prefer to hold classes of assets with which they are familiar. Investors may believe they understand the characteristics of the investments they already own and may be reluctant to purchase those with which they have less experience. Familiarity adds to owners’ perceived value.

○ Detection and guidance:

■ When bequeathed securities, investors often cite feelings of disloyalty associated with the prospect of selling inherited securities, general uncertainty in determining the right choice, and concerns about tax issues.

■ Consider what course of action would be taken if the investor instead inherited an equivalent sum of cash.

■ Explore the deceased’s intent in owning the investment and bequeathing it, “was it to leave a specific investment portfolio, or to provide general financial resources?”

■ Estimate a minimum price at which the investor would be willing to sell and a maximum price at which they’d be willing to buy more (at a current point in time). If these do not match, there may be endowment bias.

Episode 61

Behavioural Finance - Part 2 - Emotional Biases

Jesse Jury sat down with host Gavin Nash and Danny Archer to chat about this interesting topic. This is part two of the two part podcast series about behavioural finance. You can listen to part one on Episode 58 of the FS360 podcast.

Also available on Spotify, Apple & Google Podcasts.

Episode 60 of the FS360 Podcast - Interest Rates : Fixed or Variable?

adam@mulcahy.com.au (Adam Foale) — Sun, 08 Oct 2023 03:22:58 GMT

Episode 60 of the FS360 podcast introduces Finance Brokers in Geelong, Emily and Liam, to our listeners!

Episode 60

Interest Rates : Fixed or Variable? Episode 60 of the FS360 podcast introduces Finance Brokers in Geelong, Emily and Liam, to our listeners! Joined by host Gavin Nash and Lending Director Warren Freeman, this episode talks about this important topic and also the role of the broker when considering a home loan.

Also available on Spotify, Apple & Google Podcasts.

Summary of the podcast:

Fixed or variable home loan rates? It’s a question that every new home owner faces but it’s one that there is no simple answer to.

Sitting down to chat with Gavin Nash on the FS360 Podcast, Mulcahy & Co Director of Lending Warren Freeman and Finance Brokers Emily Geer-Smith and Liam Nankervis discussed how they help clients to decide what rate suits their circumstances best.

“If you were looking at a variable interest rate, this implies that your rate is subject to any movement and usually that’s dictated by the Reserve Bank of Australia (RBA),” Nankervis said.

“The other side of that is the fixed rate mortgage, where you will have a set rate for a period of time that is usually between one and five years, set by the lender.”

When it comes to the discussion of which rate is a better route to take when looking for a home loan, there’s no one size fits all.

As Freeman explained, the better choice of rate varies and it’s not until further down the line that it becomes clear which decision was best.

“There’s been many times when fixed have been cheaper than variable … and there’s been other periods where the fixed rates have been higher and that’s the way it is at the moment,” Freeman said.

“We’re negotiating for most of our home loan clients’ (variable) rates under the 6% mark from around about the 5.6 mark, but your fixed rates start with a 6.

“If you want to fix and get that security today, you’re going to pay a premium … we won’t know if it’s right until that crystal ball comes into more clarity in months to come.”

With every home loan decision comes an element of risk, but specialists such as Freeman, Geer-Smith and Nankervis are here to educate homeowners on the best choice for their circumstances.

“I think the most important thing for anyone who’d be listening … would be that it’s a conversation about their circumstances,” Nankervis said.

“People do need to understand that we can’t tell them what to do, it’s really going to come down to these pros and cons that you get from a variable, fixed rate mortgage or maybe even a combination of both of them.”

As Geer-Smith explained, a fixed and variable combined home loan is an option to consider.

“It sort of gives you the best of both worlds. If you’ve got a mortgage of, for example, $300,000, you could split that loan into two sections,” Geer-Smith said.

“Let’s say you wanted to fix for five years, over that five-year period what’s the maximum of extra repayments you think you can make?

“Let’s say you think you can pay down the loan by $50,000, we would keep that $50,000 portion of the loan variable, to allow you to make those extra repayments.

“We would fix the remainder of your loan … so that is secure, you know exactly what your repayments are going to be over the longer term.”

The extensive list of lenders that the Mulcahy & Co team have on their panel means they could find the ideal rate for every client’s circumstances.

This was required for one of Geer-Smith’s clients in 2023. She had purchased a town house block of land over 12 months ago, however when she contacted her bank in June, she was told they could not help and she was in danger of losing her deposits.

“She was self-employed, so we were relying on income that was almost 12 months old from her 2022 (tax) returns,” Geer-Smith said.

“We had a bit of a conversation … at the time we were talking about what her income would look like if we could get 2023 returns completed.

“I was able to narrow down the one lender who would allow us to use her tax returns the second that they were done, didn’t have to be lodged … we didn’t need her notice of assessment.

“They would let us use the value of the land now that had gone up since she signed her contract, even though it hadn’t been a full 12 months yet.

“The accountant had the returns drafted ready to go Monday 3 July … which was very lucky because we settled only two weeks later.”

Business Lending - Case Studies

adam@mulcahy.com.au (Adam Foale) — Fri, 06 Oct 2023 01:16:18 GMT

These two case studies are provided to help give you an understanding of the business lending landscape. Call our team today to discuss your individual needs.

Case Study 1: Cashflow Lend / Balance Sheet Lend

Scenario

Strong retail business within the region and has been operating for over 20 years in the retail industry

They needed some extra cash as they had been exposed to a situation where some of their debtors were late in payments which created a cash shortfall.

They have the ability to bulk buy stock at a discounted price meaning higher returns once the stock is sold to their extensive customer base.

Solution

We were able to put our application with a lender who accepted the circumstances of the business and were happy to support them.

The strength of the balance sheet, the business having a strong list of debtors along with strong tangible assets allowed us to borrow against this to support the business in their need for extra shorter-term cash. This was in the range of $2 million dollars.

Outcome

Once we had the finance approved, it allowed the business to keep supporting itself, whilst taking advantage of a bulk stock order. This really propelled the business into success and a growth period along with allowing them to continue to meet their obligations such as wages during a time where they were struggling with cash

-------------------

Case Study 2: New Business Purchase

Scenario

Husband and Wife with two young children wanted to open a new clothing store. They required $850,000 for stock purchase, fit out, etc.

The challenge here was the fact that the wife was going to quit working and she was going to run the new business, the husband was going to remain at work, therefore they only had the one income at the moment.

Solution

They had an existing mortgage of $600,000 on their family home which was worth $1.2 million.

We found a bank who were happy with the available equity in their home to use as security for the business loan.

The bank also allowed the use of cashflow forecasts to service both the business loan and the home loan. The cashflow forecasts were compared to industry averages and able to service both loans comfortably along with the husbands full time wage being able to support the home loan also.

The wife had a strong background of management in the industry which aided in the success of the application. We helped prepare the paperwork to prove to the lender that they were a good candidate.

Outcome

We were able to find the best solution for the clients and they are now operating a really strong retail business along with them having the freedom of running their own business also and realising their dreams.

Contact our Business Finance Team today to chat about your needs.

Episode 59

Business and Commercial Lending with newly appointed Finance Broker Trent Dimitropoulos from COSIMFREE (part of the Mulcahy & Co Group) located at our Geelong office. Trent and Warren Freeman chat to us about some interesting case studies relating to loans for businesses, SMSFs and commercial property.

Also available on Spotify, Apple & Google Podcasts.

Buying Commercial Property - Case Studies

adam@mulcahy.com.au (Adam Foale) — Fri, 06 Oct 2023 01:10:05 GMT

These two case studies are provided to help give you an understanding of the commercial lending landscape. Call our team today to discuss your individual needs.

Case Study 1: Commercial Property Purchase

Scenario

A local Geelong Plumber was looking to purchase a Commercial Property instead of continuing to rent his existing property. He was paying $60,000 per annum in rent and instead of continuing to pay this he decided to purchase a property which will not only benefit his business now but also create a property portfolio for him.

He did not have enough cash to contribute to the purchase without impacting onto the cashflow of the business.

Solution

We were able to find a lender which allowed the cross collateralisation between the family home and the commercial property. Most lenders will only offer a max lending of 65%-70% of the commercial property value but we were able to find a lender to offer 80% plus the remaining 20% to come from the remaining equity in the home.

This is not cashed out against the house but instead the house is used as additional security for the bank against the commercial loan.

Outcome

This has enabled him to essentially continue to pay the “rent” to himself, whilst being able to build his wealth. Instead of paying rent and not getting anything in return, he now has an asset to build on.

He is paying less in repayments than in rent. Rent on the building was $5,000 per month and the repayments on the commercial loan only came to $4,200 per month. This boosted the cashflow and growth of the business.

-------------------------

Case Study 2: Commercial Property purchase in Self Managed Superannuation Fund (SMSF).

Scenario

Husband and Wife team, both receiving wages from their respective employers with around $400,000 in their SMSF.

Their wish was to diversify their SMSF and opted for an industrial property purchase.

Solution

We found a lender which would accept Commercial Property security within a SMSF.

They had enough cash in the SMSF to cover the 25% they had to contribute to the purchase.

Their own super contributions from their employers and the rent paid by the tenant will all go into paying the property down over time. They also have potential tax benefits when selling the property in retirement.

Outcome

Some advantages of the property when compared to a residential property purchase were:

Less outgoings compared to residential property – the commercial tenant typically pays the council rates and utility bills etc.

Less maintenance on an industrial shed compared to a residential house which was one of the other reasons they wanted to go down the industrial property pathway.

Contact our Business Finance Team today to chat about your needs.

Episode 59

Also available on Spotify, Apple & Google Podcasts.

Episode 59 of the FS360 Podcast - Commercial and Business Finance with Trent Dimitropoulos

adam@mulcahy.com.au (Adam Foale) — Fri, 06 Oct 2023 01:00:24 GMT

Commercial and Business Finance discussion with Trent Dimitropoulos, Warren Freeman and Gavin Nash on the FS3560 Podcast.

Episode 59

Also available on Spotify, Apple & Google Podcasts.

Contact Trent Dimitropoulos via Email or phone below.

trent.dim@mulcahy.com.au

0447 251 983

Summary of the podcast:

Mulcahy & Co Finance Broker Trent Dimitropoulos says not “one size fits all” when it comes to commercial finance, a concept he sat down to explain on the FS360 Podcast.

Joining host Gavin Nash and Director of Lending Warren Freeman, Dimitropoulos explained how commercial financial could benefit existing and new businesses or those looking for investment opportunities.

Where residential finance does not allow much flexibility, commercial finance gives clients the chance to tell their story to possible lenders.

“I think when it comes to the commercial space there’s no one size fits all scenario and there’s always judgemental opinions,” Dimitropoulos said.

“You might have a business that may be … cash flow poor … but if you tell the story and the wider picture to the bank, they might be more than happy to help out.

“If you’re a person looking to purchase a business or start up a business from scratch … give me a business plan, see how we can structure that and tell that story to the bank and say ‘this is how we’re going to be successful, this is what we need the money for and this is how we’re going to pay you back.”

This pertains to a range of different industries, such as agriculture. As someone who grew up on a farm, Dimitropoulos understands the highs and lows that can come with farm work.

This is where the team at Mulcahy & Co come in, as the team of experts can assist in telling your story and choosing the right lender to tell that story to.

“We might not have rain for a couple of years, you might have flooding … it can definitely show on your financials,” Dimitropoulos said.

“It’s about telling that story to the bank and for us, trying to get banks to support you in your end goals.”

Case study one – Commercial property outside self-managed super fund

A plumber came to Dimitropoulos looking to purchase a commercial property outside his self-managed super fund (SMSF).

He had been paying $5000 per month rent, however through buying a property, his repayments came down to $4200 per month.

“We actually allowed him to borrow 100% of the funds for that property purchase. It was around $600,000-$700,000,” Dimitropoulos said.

“What we did was use (his) residential property as top up security, so we were able to find a lender that was able to lend 80% against the commercial property.

“It protected the client’s cash flow in the end and helped support his business going forward.”

Case study two – Commercial property inside SMSF

A husband and wife who worked separate jobs had $400,000 in their SMSF and wanted Dimitropoulos’ help to diversify. They had a residential property in the past, however had a bad experience with tenants.

They went down the commercial property path, borrowing 80% of the purchase price inside their SMSF.

“They just bought an industrial shed essentially, four walls, less maintenance and all the outgoings were paid for in this instance too, (by the tenant)” Dimitropoulos said.

“They decided to purchase inside their SMSF … they had enough contributions going in to support the loan, the rent was paying the loan off anyway.”

Case study three – Borrowing for cash flow

A local retail business of over 20 years came to Dimitropoulos needing extra cash, as they had found themselves in a small hole and had the chance to bulk buy stock from overseas.

“They gave me a call and said ‘we need a couple million dollars … to purchase all this stock, we don’t have it here but we’re going to get it for you,” Dimitropoulos said.

“It’s just that conversation, I go back to that storytelling and that relationship with the banks and us and how we are facilitating that relationship with the banks.

“It helped purchase stock but it also helped pay wages for the business too … we were able to keep that company flowing through those hard times.”

Case study four – Starting a new business

A couple came to Dimitropoulos wanting to open a new clothing store. She had over 10 years’ experience in the industry with a major retailer.

They had a home loan of $600,000 and needed an additional $850,000 to start up the business. She had quit her job to run it, while her husband continued to work.

“Within that business space, it was more about telling the story with your cashflow forecast, business plan … including her experience,” Dimitropoulos said.

“Even something as simple as I got her resume to show the bank ‘this is her experience, she’s qualified, she knows the industry’.

“With that … we were able to use the income from the cash flow to support not only the business loan but the home loan itself.”

Rental Property V Shares

adam@mulcahy.com.au (Adam Foale) — Thu, 07 Sep 2023 06:08:33 GMT

A summary of the potential performance differences of an Investment Property to a Share Portfolio. Cashflow and asset valuation comparisons for each year over the next 30 years.

Investment Property Scenario:

• $750,000 - purchase price + stamp duty, legal costs etc

o ~$800,000 – total purchase price
• $500,000 – borrowing
• $300,000 – capital required for a deposit, stamp duty etc
• 5% gross income yield
o $37,500 per annum or $721 per week
• 2.1% annual capital growth
• Estimated total annual returns of 7.10%
• Mortgage borrowing rate of 7%
o Interest of $35,000 year 1
o Principle repayments of $31,700 in year 1
o Loan repaid after 10 years
• Jointly owned property
o Personal marginal tax rate of 47%
o Spouse personal marginal tax rate of 34.5%
• Rental expenses of $9,000 per annum (rates, insurance, maintenance etc)
• $65,287 year 1 net capital/ cashflow contribution required to cover the shortfall of rent and making principal loan repayments

Share Portfolio Scenario:
• Starting investing balance of $250,000
• Additional annual contribution of $60,000
• Annual re-invested dividend yield of 3.29%
• Annual capital growth of 3.55%
• Estimated total annual returns of 6.84%

The comparable portfolio using the same metrics would derive the same results with a property of higher value.

Conclusion:
The share portfolio provides a higher capital balance at the end of each year with a lower starting portfolio balance ($250k vs ~$300k) and a slightly lower annual contribution.

For the investment portfolio, it could be owned via an investment bond which would provide additional benefits of capping the annual tax rate at 30% which would be significantly lower than the personal marginal tax rate of 47% which would reduce to 0% after 10 years.

For more information, contact us today to arrange an appointment.

IMPORTANT DISCLAIMER: This blog article does not constitute advice. Clients should not act solely on the basis of the material contained in this blog article. Items herein are general comments only and do not constititue or convey advice per se. Also changes in legislation may occur quickly and we therefore recommend that our formal advice be sought before acting in any of these areas. This blog article is issued as a helpful guide to clients and for their private information.

Behavioural Finance - Part 1 - Cognitive Biases

Tue, 05 Sep 2023 05:21:14 GMT

Behavioural Bias Categories

This article and accompanying podcast is Part #1 in a 2 Part series on this interesting topic. Enjoy!

Cognitive biases: Faulty cognitive reasoning. (Part #1 of our 2-part podcast series)

Can often be corrected or eliminated through better information, education and advice.

Emotional biases (Part #2 of our 2-part podcast series)

Harder to correct because they stem from impulses and intuitions.
They arise spontaneously rather than through conscious effort and may even be undesired to the individual feeling them.
Often possible only to recognise and adapt, rather than overcome.

Cognitive Biases

Belief perseverance biases

Belief perseverance biases stem from cognitive dissonance (the mental discomfort experienced when a person holds conflicting beliefs, particularly when newly acquired information contradicts an existing understanding).

Confirmation: the tendency to look for and notice information that confirms prior beliefs, and to ignore or undervalue whatever contradicts them.

Consequences (investors may):
Consider only the positive information about an existing investment, while ignoring any negative information.
Develop screening criteria while ignoring information that either refutes the validity of such criteria or supports other criteria.
Under-diversify portfolios. Investors may become convinced of the value of a single stock or asset class and build a larger position than appropriate.
Detection and guidance:
Actively seek out information that challenges existing beliefs.
Corroborate investment decisions (i.e. look for other information that supports the decision, not the belief).

Representativeness: the tendency to classify new information based on past experiences and classifications (i.e. incorrectly assuming that small sample sizes are representative of populations).

Consequences (investors may):
Adopt a view or forecast based almost exclusively on individual, specific information or a small sample.
Update beliefs using simple classifications rather than deal with the mental stress of complex data.
Detection and guidance:
Ask yourself - “what is the probability that X (the investment under consideration) belongs to Group A (the group it resembles) or Group B (the group it is statistically more likely to belong to)?”

Illusion of control: the tendency to believe that one can control or influence outcomes when one cannot (e.g. choosing lottery numbers over random ones)

Consequences (investors may):
Trade more than is prudent.
Construct financial models and forecasts that are overly detailed seeking to control the inherent risk and uncertainty of investment outcomes.
Inadequately diversify their portfolio (i.e. preferring to hold a large allocation of employer’s stock because of a false sense of control).
Detection and guidance:
Seek contrary viewpoints.
Recognize that investing is a probabilistic activity.

Hindsight: believing past events as having been predictable and reasonable to expect (poorly reasoned decisions with positive results may be remembered as brilliant tactical moves, while poor results of well-reasoned decisions may be described as avoidable mistakes).

Consequences (investors may):
Overestimate the degree to which they correctly predicted an investment outcome, or the predictability of an outcome in general.
Unfairly assess an investment manager or security’s performance.
Detection and guidance:
Carefully record investment decisions and reasoning and consult records rather than memory when assessing the validity of past decisions.

Processing errors

Illogical or irrational processing and use of information in financial decision-making.

Anchoring and adjustment: relying on an initial piece of information to make subsequent estimates, judgments, and decisions (often an initial estimate is “anchored” and not adjusted appropriately).
Consequences (investors may):
Stick too closely to their original estimates when learning new information.
Detection and guidance:
Consciously asking questions that may reveal an anchoring and adjustment bias - “Am I holding onto this stock based on rational analysis, or trying to attain a price that I am anchored to (i.e. purchase price or a high water mark)?”
Remember that a company’s revenues and expenses (or a portfolio manager’s returns) for a given period reflect conditions in that period

Please make contact with our Financial Planning Team to chat about this topic and your other investment needs.

Stay tuned for Part #2 where we chat about Emotional Biases.

Episode 58

This is a 2-parter! There is a lot to chat about within this topic. Joining host Gavin Nash is Partner Danny Archer and Client Service Manager Jesse Jury both from our Geelong office. The conversation is around the biases we all face when making financial decisions.

This podcast is Part 1 and covers Cognitive Biases, with Part 2 coming soon to discuss Behavioural Biases.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast - Episode 57: Home Loan Reviews

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Aug 2023 05:47:41 GMT

Our Home Loan Review team save our clients $2,000,000 in interest payments!

Mulcahy & Co Lending (Geelong) Director - Warren Freeman and Reviews Team member Alisha Steven join host Gavin Nash to unveil this exciting news and to explain how their yearly home loan reviews have saved their client serious money that would normally be paid to their lenders in interest.

Every home loan is reviewed every 12 months to ensure our clients are receiving the lowest interest rate and the best finance structure for their loans. Taking into account personal changes, future plans for investments and their current cash flow, Alisha and her Review Team of 3 have been hard at work.

They are thrilled to announce they have saved their clients $2M in interest paid on loans since they started to record the savings in October 2020. Even though they had been reviewing loans for many years before this.

To find out more and to listen to the full podcast, click the player on this page or listen on Apple, Google and Spotify Podcasts.

Contact the Mulcahy & Co Lending team here >>

Episode 57

Our Home Loan Review team save our clients $2,000,000 in interest payments!

You read that right... Alisha and Warren join host Gavin to unveil this exciting news and to explain how their yearly home loan reviews have saved their client serious money that would normally be paid to their lenders in interest.

Also available on Spotify, Apple & Google Podcasts.

A summary of the podcast is included below:

Since October 2020, Alisha Steven and her COSIMFREE loans review team at Mulcahy & Co Geelong have saved clients $2 million in interest savings.

Chatting with Gavin Nash and Director of Lending Warren Freeman on the FS360 Podcast, Steven discussed the role she and her team play in ensuring clients are consistently given the best interest rate for the duration of their home loans.

“We have a team of three of us and after settlement we touch base with our clients just to check in … check their rates (and) ensure they’re on the lowest interest rates possible,” Steven said.

“Then we just continue to keep an eye on our clients and their loans, we review their loans annually. We like to have that communication with our clients that’s ongoing for the life of their loan.

“We’ve been reviewing clients’ home loans for many years to make sure everyone has a sharp rate and it’s only been approximately two years ago that we started adding up the savings … we’ve actually hit $2 million in interest savings for our clients.”

Freeman and his team of brokers play an important role in securing the best rate for their clients’ home loans at settlement, a service that he said nearly 70% of Australians use now, compared to 5% 25 years ago.

The ongoing review of each clients’ home loan is then handed over to Steven and her team.

“Our first review actually begins nine months after settlement and then one year and nine months, two years and nine months,” Freeman said.

“The reason we want to do that is if you’ve got a fixed rate, you don’t want us to call you on the anniversary of your loan and say ‘your fixed rate ended today, what are we going to do now?’

“We’re always 12 weeks ahead of the anniversary, that gives us time to plan with the customer and strategize what to do next.”

This communication could then expand into other aspects of clients’ financial portfolios, which other departments under the Mulcahy & Co banner could assist with.

“Those conversations can lead into ‘my son’s about to turn 18, do you guys do car loans?’ and then we help with the car finance,” Freeman said.

“It’s very personalised … when Alisha rings a client for their review, there’s notes on last year’s review, so it’s not just a start from scratch.

“Somebody might say ‘I’d really like to get an investment property in the next couple of years’, so notes are taken and that becomes the script for the following reviews. Have you got the equity? Have you got the income? … Is it time to make an appointment with the broker to discuss that need?”

While this is a practice that could be done yourself in conversations with your bank, it’s Steven and Freeman’s teams that have the experience and expertise to secure the best rate for their clients, as the latter did for a client recently.

“I’d helped him get his first home loan … and he then made an appointment to talk about his first investment property,” Freeman said.

“He said ‘I knew I was coming in tonight but the other day I was in the (bank) branch … and they offered to do a health check on my loan and they dropped my interest rate for me’.

“They took about a quarter of a percent off his rate. Whilst he and I had our appointment … my staff went to work and got his rate dropped a further 0.2% at that same bank.

“Yes, you can do it yourself, you probably just can’t do it as well as we can.”

FS360 Podcast - Episode 56: Working at Mulcahy & Co

adam@mulcahy.com.au (Adam Foale) — Fri, 11 Aug 2023 08:33:05 GMT

If you’ve ever hoped to work in your field of study before you graduate from university, working at Mulcahy & Co could be your ideal next step.

Jumping on the FS360 podcast with Gavin Nash, Mulcahy & Co Geelong Graduate Accountants Lochie Hosking and Zach Rockett discussed their transition from study into working at Mulcahy & Co.

Hosking joined the business in the final year of his Commerce degree, working part-time before taking on a full-time role the following year.

“(I went) up the highway (to Ballarat) three or four times a week to sort of learn the ins and outs of what we were going to be doing once the Geelong office was set up the way it is now,” Hosking said.

“There’s obviously a fair few more staff in the Ballarat office than there is in Geelong, so there was a lot of people to pick the brains of.”

Financial Planner Danny Archer said working at Mulcahy & Co while still studying had benefits for the business but also the individual.

“For the person or for the student, it’s a good opportunity for them to try the business on for size a little bit. What’s the culture like? Do they feel like they fit in?,” he said.

“Do they have potentially working from home arrangements or flexible working arrangements?”

For Rockett, he applied for a job through Seek once he had graduated, the multi-divisional aspect of Mulcahy & Co attracting him to the role.

“I definitely liked how there were multiple avenues … the different aspects of Mulcahy whether that’s accounting, lending, legal, finance, all that sort of stuff,” he said.

“I felt like I wasn’t going to be shoe boxed into one area … you get broad access to all these different services.”

That ties in with the Financial Security 360 process at Mulcahy & Co, a 12-step process to help clients go from the start of their financial life through to financial security.

“On a real basic level here, if I’m doing a tax return and someone has an investment portfolio and I know that Danny and the finance team can help provide that statement … (so) I don’t have to go back to the client, that’s one of the examples,” Rockett said of his role in the process.

Hosking added that any questions a client has could be answered by someone in the Mulcahy team.

“We get a lot of questions from clients and we don’t know the answer to all of those questions … if it’s a financial planning question, we’ll go and seek Danny, if it’s a legal query we’ll go and see Rhylee (Hanrahan),” he said.

Rockett and Hosking are both completing their Chartered Accountant course, something Mulcahy has assisted them in.

“Having two accounting partners that have already gone through (it) … it’s really easy to, if we have any questions … we can sort of pick their brains,” Hosking said.

“We’ve got study leave that’s set up, two days per unit that we do … to be able to prioritise that study … I’m really, really grateful that Mulcahy offer that.”

For more information on work life at Mulcahy & Co and to see our current positions available, click here: www.mulcahy.com.au/careers

Episode 56

Working at Mulcahy & Co - What's it like? Are the managers helpful? Can you study? Is it flexible?

All these questions and more are answered here when Hosts Gavin Nash and Danny Archer chat with young Accountants Lochie and Zach from our Geelong office.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast - Episode 53: The value of financial advice

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Aug 2023 01:20:47 GMT

A 2022 Russell Investments report found that value of financial advice could equate to a 5.2% increase in value for their clients.

Speaking on the FS360 podcast with Gavin Nash, Mulcahy & Co Geelong Financial Planner Danny Archer explained the five services from The Value of an Advisor report ; appropriate asset allocation, behavioural mistakes/finance, cost of cash, expertise and tax effective investing.

Asset allocation

According to the report, 65% of people that were part of the research didn’t know where their funds were invested.

“The role of the advisor in this case is to help our clients actually articulate what their goals are, translate this into an investment objective, and then design the best possible strategy and also portfolio recommendations that do come with a level of risk that’s appropriate for the client,” he said.

“An example I always use is the Australian market’s fantastic … but the reality is (it) only represents 2 or 3% of the world’s market, so if you had all of your money just in Australian equities or … property, there are some pros to that, but you’re also forgoing diversification to 98% of the world.”

Behavioural mistakes/finance

There are generally four types of investor behaviour observations, two of which were prevalent during COVID-19.

“During that period there were two observations of behaviour, one of them was the loss averse investor and what that means is investors … focus on trying to avoid loss (more) than they do making a gain,” Archer said.

“The other one is the over confident investor … they don’t actually take into account the actual risk … of a short-term decision that can have on their long-term future.”

Herd mentality describes those who mimic the actions of larger groups, while familiarity is those who tend to prefer what’s familiar or well known.

“Asset allocation can very much mitigate against all four of these risks,” Archer said.

“The total value out of the five steps here equates to 5.2%, of (that), behavioural finance represents 2.2%.”

Cost of cash

While cash can provide a level of certainty for people, holding too much could provide a negative outcome.

“As an example, investors who require cashflow in retirement can develop strategies to allocate and maintain levels of cash to meet expected spending,” Archer said.

“If a client says ‘Danny I want to retire in two years’ time and I’d like to spend $50,000 per year’, we might say ‘okay, as a worst case we’ll keep $50,000 in cold hard cash’.

“There can be a cost to holding too much cash, which is what we call a cash drag.”

Expertise

The report could not quantify the value of expertise, however Archer said the value would vary depending on multiple factors.

”The quantification of the value of financial planning expertise is variable depending on the advisor’s practice (and) service offered,” he said.

“Some financial advisors only do risk insurance … their service offering is quite limited.

“What it includes is things like engagement and education … we educate our clients as well as telling them what to do.

“Some of the key benefits include disciplined decision making ... it can also increase confidence as a result of ongoing education … another one is perspective too.”

Tax effective investing

This area represents 1.5% of the 5.2% total value of the five steps.

“The concept of tax investing … can also have an impact on the asset value or portfolio return, even though it may not always be seen,” Archer said.

An example of this is the difference in what accumulation fund and pension fund returns are, the latter generally being higher.

“The reason for that is, when you convert your super to pension, the tax rate reduces from 15% to 0%. They might have the same investments … but all the funds that are in the pension side of things, don’t need to pay tax,” Archer said.

“A common strategy might be for us to actually advise a client to use superannuation to invest.

“When you’ve retired, if you’ve got $1,000,000,000 balance and it returns 10% … that $100,000 return is tax free. Whereas if that’s in your personal name and you earn $100,000, the tax on that could be $25,000-30,000.”

For more information on this topic please contact one of our professionals .

Episode 53

The Value of Financial Advice. Host Gavin Nash chairs with Financial Planner Danny Archer about this important topic. Behavioural investing, tax strategies, asset allocation and the cost of cash are all topics covered in this informative episode. Gav also announces an innovative change in how websites are delivered by his Marketing team at Mulcahy & Co.

Also available on Spotify, Apple & Google Podcasts.

Marketing for small to medium businesses - what's important to get right?

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Aug 2023 01:11:19 GMT

If you’re a small business looking to invest in marketing, priority one is a strong digital footprint.

Gavin Nash, Marketing Director at Mulcahy & Co, said on Episode 52 of the FS360 podcast with Danny Archer that consistency is key when establishing your digital footprint.

“How is your business shown and communicated online? That’s on Google search, on your website, on your social media accounts,” he said.

“The key to that digital footprint is to get it consistent … the logo’s the same on everything, the photos are the same, your business description and what your services and products are the same.”

When it comes to marketing your business, however, Nash said that establishing an identity is key to how you attack marketing.

“(Marketing is) the action … marketing can be an ad campaign in a newspaper, tv, radio … it could be a Google ad these days, it could be an article on your website, maybe it’s social media posting,” he said.

“The branding is your business identity, so that’s the things that customers remember after they’ve dealt with your company. It’s important for all businesses to develop a brand identity over time, this is central to what you do with your marketing efforts.”

Next is advertising, which could include radio or Google ad campaigns or paying an Instagram influencer to promote your service or product.

“The trick is to find the thing that works best for your business and then stick with it,” Nash said.

“We’ve got a couple of clients who are on Google ads now and that’s all they do … because that works for them. On the flip side, I’ve also had clients that have taken up a Google ads campaign for three to six months (and it) hasn’t worked.”

The same could be said for social media marketing, it’s not a one size fits all platform. The key, however, is to build followers with knowledgeable, regular content.

“Facebook … it’s really an older demographic now … TikTok, much younger demographic. LinkedIn allows you to add links into your posts in more of a professional network … Instagram doesn’t allow you to do that,” Nash said.

“You can actually pay to have some ads that push out to a whole lot of people … Facebook, Instagram, LinkedIn, they’re (some) of the few where you can say ‘I’m going to target Avoca, plus 20km’ … and you can just market to females or males or both, in an age group.

“The key is planning … commit to it.”

Social media marketing transitions into content creation, which is suitable for service-based businesses and could help them in what Nash describes as a “trust economy”.

He said written articles, videos, social media posts and more help yourself become a trusted expert in your field.

“Google’s algorithm used to be all keywords … now the algorithms’s all about trust and rewarding content. We’ve got a refrigeration mechanic … we’ve got him writing articles about … his services because that positions him as expert. Google likes the fact that he’s constantly putting these articles up … when someone searches for that service, his website’s more likely to come to the top,” Nash said.

To listen to the episode - search 'FS360' on Spotify, Apple Podcasts or listen here on our website: https://www.mulcahy.com.au/fs360-podcast

For more information on this topic please contact one of our professionals.

Episode 52

Host Danny Archer chats with Marketer Gavin Nash about what Business Marketing will look like going into 2023. Get the insights from the experts at Mulcahy & Co Marketing and what works well for small-medium business marketing especially in the online space.

Also available on Spotify, Apple & Google Podcasts.

FS360 Podcast - Episode 47

adam@mulcahy.com.au (Adam Foale) — Fri, 04 Aug 2023 02:23:29 GMT

David Villarosa & borrowing for real estate purchases

Mulcahy & Co Loans and Finance Director Warren Freeman says pre-approvals for home loans could help potential buyers be taken “more seriously” when they look to purchase property.

Joining Gavin Nash and David Villarosa from Villarosa Real Estate on the FS360 podcast, Freeman outlined the positives to starting a pre-approval process through a bank or lending institution.

“The benefit of the pre-approval, David’s going to take those buyers more seriously than someone who hasn’t even commenced ascertaining their borrowing capacity,” he said. “In the buyer’s best interest, they need to be pre-assessed or pre-approved. “Before they fall in love with the property, they need to know are they looking in the right price range, can they afford the repayments, are they credit worthy. “It’ll strengthen their negotiations.”

Villarosa said pre-approval helps to give him, as an agent, a “degree of confidence”.

“We certainly do vet people … and we do it as respectfully as we can, but ultimately we’re trying to risk assess, if they are wanting to make an offer on the property, whether that’s going to go through,” he said.

“Some people haven’t thought about it, they’re just like ‘well I’ve got a $900,000 house, I’ve got equity’, but they don’t have a job or they’re on (maternity) leave.

“If they’ve got it, great, but if they haven’t got it and I can get them in front of Warren Freeman from Mulcahy & Co Geelong Loans & Finance, then I can get that degree of confidence.” During the next step of the process, making an offer, Freeman highlighted the importance of making that offer subject to finance in order to have the property valued.

This is an important step as a buyer’s borrowing capacity is only one piece of the puzzle, the other being a bank’s suitability to the property. “We had one client … they were initially knocked back by their bank (for their property) in Marshall because it was too close to the train line,” Freeman said.

“One of the first loans I ever wrote, a young couple wanted to buy a property and there was a petrol tank buried in the backyard. “Doesn’t happen often, but if the valuation falls down (and) it’s an unconditional contract, the consequences are immense.”

Freeman and Villarosa touched on the dangers that come with unconditional offers, however added that too many conditions, such as subject to sale on your current property, could affect the strength of an offer for a new property.

“Clearly the least number of conditions in their offer, the stronger their offer,” Freeman said.

“My role will be to help the clients make their strongest offer possible, which would hopefully be one condition; subject to finance.”

Villarosa added that a building inspection is an important box to tick too.

“That quite often is how people miss out, if they need to be subject to x, y or z and the other guy’s not, well you’re just not going to win,” he said. “Doing a building inspection is a really good idea, whether it’s two-years-old or 20-years-old, you want to know what you’re buying.”

For more information on this topic please contact one of our professionals .

Episode 47

Warren Freeman is joined by special guest David Villarosa from Geelong Real Estate firm Villarosa Real Estate to chat with host Gavin Nash about a few great topics.
Pre-Approvals for home loans and conditions of your offer when buying a property are covered here along with some commentary on the Geelong Property market.

Also available on Spotify, Apple & Google Podcasts.

Tailored Investments at Mulcahy & Co

adam@mulcahy.com.au (Adam Foale) — Wed, 28 Jun 2023 05:03:16 GMT

The secret to clever investing is individualised

Lately a lot of other larger investment companies have been advertising high return rates on their investments recently. It is when you dig deeper into why, it becomes interesting. Markets 12 months ago were at a low point, however they have recovered now and this is why these companies are claiming large returns. The key is to look at investment returns over a longer period, let's say 3, 5 or 10 years to get a better idea of how these are performing.

Remember your return on investment is dependant on when you purchased the investment, was it in a high or low market? Markets will go up and down over time, we know that. The key is to invest at the right time to get your best returns.

Our investment options (with the help of our extensive research team) are tailored to the individual, your particular needs are taken into account. Are you close to retirement, so prefer lower risk? Are you 30 years from retirement and willing to take some risks on board with your investments? What income do you need every year throughout retirement?

If you'd like to understand your investments better, please reach out to a Mulcahy & Co Financial Planner today to make a FREE, no obligation appointment. We have planners in Melbourne, Ballarat, Geelong, Sunshine Coast and Mildura with video meetings also available Australia wide.

Ethical Investments

adam@mulcahy.com.au (Adam Foale) — Thu, 22 Jun 2023 03:34:02 GMT

Director of Mulcahy & Co Financial Planning Thayne Turley discusses Ethical Investments.

Ethical Investments - currently an important part of many client portfolios.

We can tailor your investments to only invest in companies who share your ethical standards/beliefs. All while delivering favourable returns!

Talk to our Financial Planners today about how we can tailor a solution that aligns with your beliefs.

5 Digital Marketing Trends of 2023

adam@mulcahy.com.au (Adam Foale) — Mon, 05 Jun 2023 01:32:40 GMT

In an ever-changing digital landscape, sometimes it can feel like a daunting task to navigate the constant changes in trends and technologies within the realm of digital marketing.

I’m sure that many working in digital marketing, wake up every morning wondering how they are going to stay ahead of the curve with what is happening on their feeds and what new tools that are available to them.

Despite the challenges, staying up to date with the latest trends and tools is easier than you might think, especially when you have a dependable marketing team actively seeking current and future advancements.

To assist you, we have developed a list of noteworthy suggestions of trends that are worth considering when creating your need digital marketing strategy:

1. Artificial Intelligence is here to stay but needs to be used correctly

When speaking with clients about the future outlook of Artificial Intelligence being a part of their digital marketing strategies, many are hesitant and unsure about this technology, whilst others are optimistic. Some believe it has immense value for businesses and also being beneficial in improving our daily lives.

Artificial Intelligence for digital marketers provides new opportunities for reaching out to new and existing customers providing them with an enhanced customer experience, while also understanding consumer behaviour and preferences.

It's important to acknowledge that as AI progresses, ethical and privacy concerns arise. The European Union is closely monitoring these issues. However, as more policies and legislation are being put into place, it can help assure those who are currently unsure about this technology to understand artificial intelligence can be utilized for enhancing communication, not for monitoring it.

2. Get your digital footprint in order

Your digital footprint is everything findable on the internet about your business. Website, Google listing, Bing listing, social media channels, YouTube channel etc. It is anywhere your business can be found.

2023 is the year to get this sorted out! Review your content – your services, your offerings, make sure they are consistent across all platforms. Ensure they tell the story of your business well so that whenever anyone sees your business online – they know all about it right away.

This also includes photos and videos. Old and outdated photos and videos showing old products or services are likely turning potential customers away from your business, not turn them into customers!

3. Sales and Marketing teams working together

Considered the “secret to stronger brand building”, despite sales and marketing teams being traditionally considered separate entities. Recognizing the synergy between these departments can lead to more effective brand building.

While marketing teams focus on creating materials like social media content, brochures, advertisements, and websites, it is the sales team that actively engages with customers daily. Their invaluable insights into customer trends and purchasing patterns can greatly inform marketing strategies and help optimize customer acquisition efforts.

4. User Generated Content (UGC) and Influencer Marketing

In today's digital landscape, producing captivating digital media content that drives awareness, conversation, and engagement doesn't have to break the bank. Gone are the days of producing expensive high-quality television advertisements to promote your brand. With social media platforms like Instagram and TikTok leaning more towards short videos, anyone can produce content that can be seen by large audiences.

User-generated content (UGC) is an ever-increasing way to reach new audiences through customers creating original, brand-specific content for the brand rather than the brand simply pushing their content onto customers – at no cost to the brand! It comes in many forms, including images, videos, reviews, and testimonials.

Influencer Marketing plays a pivotal role in reaching new audiences by encouraging customers to relate their brand to someone social media famous. This type of content often resonates more authentically with audiences compared to overt brand advertising. By hiring an influencer to showcase your brand, businesses can establish a genuine connection with their target market and showcase new services or products.

5. Social Media

Something that is a key theme in modern digital marketing when it comes to engaging with customers is that users seek to interact with brands in a humanized way. Including Social Media campaigns in your digital marketing strategy can help to achieve personalized communication with customers. It can also make your brand exciting and relatable. You can also use tags and text on these posts to help potential customers to find your brand.

Additionally, social media can also help drive user interactions with your brand but also obtain user-generated content as well. You can add call-to-action messaging to get users to repost your content. Combining this with features like polls, questions, quizzes, and links, can influence positive customer opinions and experiences when interacting with your brand.

Summary

Embrace these digital marketing trends, harness their potential, and propel your strategies to new heights. Remember, staying ahead in our dynamic digital world is not only achievable but also essential for sustained success.

Mulcahy & Co Marketing are here to assist you in these services and more. Contact us today for a chat about your business marketing needs.

Brendan Hovey & Associates joins Mulcahy & Co Geelong

adam@mulcahy.com.au (Adam Foale) — Fri, 02 Jun 2023 07:38:17 GMT

Brendan Hovey, leading Geelong Accountant, joins Mulcahy & Co Geelong.

We are delighted to announce that Brendan Hovey will be joining the team at Mulcahy & Co Geelong.

Brendan has been a leading figure in the Geelong Accounting sector for 37 years and will continue to deliver great outcomes for Geelong families through Mulcahy & Co.

“Having such a trusted and reputable expert join our Geelong team is incredibly exciting. Brendan had many options and his selection of Mulcahy & Co as his partner was a true endorsement of our exciting business model”. said Scott Kitchin, Director at Mulcahy & Co Geelong.

Brendan and Sharon will continue to service their wonderful and loyal clients from the Mulcahy & Co offices at Level 1, 35-37 Gordon Avenue Geelong West. We have wonderful resources and opportunities for the clients of Brendan Hovey & Associates and we look forward to exciting times ahead.

To find out more about Mulcahy & Co, please visit the website on www.mulcahy.com.au/geelong or simply call Brendan, Sharon or the team on 03 5222 6962.

Episode 55

Brendan Hovey talks with Scott Kitchin and Gavin Nash about the amalgamation of his business into the Mulcahy & Co Geelong office.
Brendan has a 38 year working history in Geelong and is well known in business circles. His knowledge and expertise is profound - we hope you enjoy this episode.

Also available on Spotify, Apple & Google Podcasts.

Victorian State Budget Response 2023

adam@mulcahy.com.au (Adam Foale) — Tue, 30 May 2023 05:43:28 GMT

The Andrews government has handed down the Victoria state budget and aims to reduce its debt accumulated during the height of Covid, while funding its election promises.

Big businesses will be taxed further to help repay the state’s debt, but the government has also introduced some relief, including employer insurance and shielding more from payroll tax.

Here’s a breakdown of the key points in this year’s Victorian State Budget.

Small business:

Victoria will scrap business insurance duty over a 10-year period. The government estimates businesses will save about $3,200 on professional indemnity insurance or $2400 on fire and other special risk insurance over a decade.

The tax-free threshold for payroll tax will also be lifted from $700,000 to $900,000, benefiting 4,200 businesses. A further 22,000 businesses will pay a reduced amount of payroll tax. From 1 July 2025, the payroll tax-free threshold will increase again to $1m.

FREE Kindergartens:

The government will provide $1.4bn for its free kindergarten program and $1.6bn for its new three-year-old kindergarten scheme.

Environment: Victoria will ban native forest logging from the start of next year, bringing forward a commitment to phase it out by the end of the decade. It comes amid a court challenge against the state-owned timber agency VicForests over the protection of endangered species, which the treasurer, Tim Pallas, cited when explaining the decision to bring forward the end of the industry.

The S.E.C.

The government will spend $1bn to revitalise the state-owned State Electricity Commission to boost jobs in renewable energy, as promised in Labor’s election campaign.

Larger businesses:

From 1 July, large businesses with a national payroll above $10m year will pay additional payroll tax. A rate of 0.5% will apply for businesses with a national payroll above $10m and businesses with a national payroll above $100m will pay an additional 0.5%. The additional rates will be paid on the Victorian share of wages above the relevant threshold and are estimated to raise $3.9bn.

Property Investors:

From January 2024, Victorians who currently pay land tax will be hit with an additional annual fee of $500 for landholdings worth between $50,000 and $100,000 and $975 for land worth between $100,000 and $300,000. For land worth more than $300,000, the $975 fee plus an additional increase of 0.1% will be charged. Family homes will remain exempt from land tax.

860,000 Victorian landowners will be affected, who will pay an average of $1,300 in additional taxes. Some reasoning behind these decisions were: Land values have increased by 84% in the past decade. Rents have also increased by 25% over five years.

Private Schools:

From July 2024, high-fee private schools will no longer be exempt from payroll tax, which will raise $422.2m over three years. Budget papers estimate this will affect about 110 of the state’s most exclusive schools – or the top 15% by fee level. They currently don’t receive capital funding from the government.

End of Financial Year Update 2023

adam@mulcahy.com.au (Adam Foale) — Thu, 25 May 2023 02:28:22 GMT

One of our financial plannings experts, James Clough, discusses how you can be prepared approaching the End of the 2022-23 Financial Year.

Federal Budget 2023 and what it means for Mulcahy & Co clients

gavin@mulcahy.com.au (Gavin Nash) — Thu, 18 May 2023 05:37:02 GMT

The 2023 Federal Budget was announced on Tuesday 9 May 2023, with a focus on cost-of-living relief and modernising our economy. Below is a summary of the key aspects of the budget and how they will affect Mulcahy & Co clients.

Changes for Businesses

Small Business Instant Asset Write-Off

Small businesses, with a turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 inc. GST that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

Note: This replaces the current asset write off that is unlimited until June 30 ^th 2023.

Small Business Energy Incentive

The Government is introducing a tax break to help small businesses electrify and save on your energy bills. Businesses with annual turnover of less than $50 million will have access to a bonus 20% tax deduction for eligible assets supporting electrification and more efficient use of energy, from 1 July 2023 until 30 June 2024.

Small Business Tax Lodgement Penalty Amnesty

This new amnesty will apply to small businesses with a turnover of less than $10 million to encourage them to re-engage with the tax system. No Penalties for Certain Overdue Tax Lodgements. A small business will not be charged failure-to-lodge penalties for outstanding tax lodgements that are lodged between 1 June 2023 and 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.

Cost of living relief for small business

A big focus of the budget has been measures to ease the cost of living pressures. Some relief in this area has also been offered to small businesses in the form of an energy rebate of up to $650 per annum. This will be delivered as a reduction in electricity bills to eligible businesses.

Fringe Benefits Tax (FBT) exemption for plug-in hybrid electric cars

The FBT exemption for plug-in hybrid electric cars will end on 1 April 2025. Any arrangements entered into between 1 July 2022 and 31 March 2025 will continue to remain eligible for the FBT exemption. The current FBT exemption for Hydrogen and Battery Electric Vehicles is expected to remain in place.

Changes for Individuals

There have been no changes made to the individual tax rates for the 2023/2024 income year. All rates will remain unchanged.

Minor personal tax changes

Although no changes to the headline personal tax rates themselves were announced, some minor changes surfaced that may impact personal tax positions for some Australians.

These include: Increases in the Medicare Levy low-income thresholds for singles, families and pensioners from 1 July 2022.

• For singles the threshold will be increased from $23,365 to $24,276

• For families the threshold will be increased from $39,402 to $40,939

• For single seniors and pensioners the threshold will be increased from $36,925 to $38,365

• For family seniors and pensioners the threshold will be increased from $51,401 to $53,406

• For each dependent child or student, the family income thresholds will increase by a further $3,760 instead of the previous amount of $3,619

From 1 July 2024, the Government will also exempt eligible lump sum payments in arrears from the Medicare levy for low-income taxpayers. This measure aims to ensure the low-income taxpayers do not pay higher amounts of the Medicare levy as a result of receiving an eligible lump sum payment, for example, as compensation for underpaid wages.

Cost of living relief measures for individuals

A range of other measures were announced to provide cost of living relief to individuals including:

• A $40 per fortnight increase to various income support payments such as JobSeeker, Youth Allowance, Parent Payment (Partnered), and Austudy.

• Reducing the minimum age for which older people qualify for the higher JobSeeker Payment rate from 60 to 55 years. Eligible recipients will receive an increase in their base rate payment of $92.10 per fortnight.

• A 6 month extension to 31 December 2023 to the workforce participation incentive measures to support pensioners who want to enter the workforce, or work more hours, without impacting their pension payments. Under this measure, pensioners can earn up to $11,800 before their pension is reduced.

Home ownership

As previously announced, eligibility for the First Home Guarantee and Regional First Home Guarantee will be expanded to any two eligible borrowers beyond married and de facto couples, and non-first home buyers who have not owned a property in Australia in the preceding 10 years. Australian Permanent Residents, in addition to Australian citizens, will also be eligible for the Home Guarantee Scheme. This is the scheme that allows aspiring home owners to buy a home with a deposit as low as 5% without paying lenders mortgage insurance.

For existing homeowners, an extensive range of energy saving initiatives such as electrification, energy saving appliances and solar panels will be eligible for low rate loans.

Family support

From 1 July this year, Parental Leave Pay and Dad and Partner Pay will combine into a single 20-week payment. A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year. The Government has also committed to increase Paid Parental Leave to 26 weeks by 2026.

Changes for Agriculture and Primary Producers

Broad-based biosecurity levy introduced

The Budget introduces a new biosecurity levy on all agricultural, forestry and fishery products from 1 July 2024, providing much needed financial support to the Department of Agriculture, Fisheries and Forestry.

The plan is to add 10% on top of the 2020-21 agricultural produce levies. For example, where the total levies per tonne of rice is $6, the additional biosecurity levy is anticipated to add $0.60 per tonne. The levy not commencing until 1st July 2024 ensures there is time to plan and negotiate new arrangements.

For producers, some of these increases based on levy rates as of 1 July 2020, are as follows:

• A cattle (grass fed) producer will pay an extra 50 cents per head (cattle and livestock producers charge)

• A cotton producer will pay an extra 22.5 cents per 227kg bale (cotton levy)

• An egg producer will pay an extra 3.25 cents per chick (eggs promotion levy)

Australian Carbon Credit Units (ACCU)

$18.1m has been allocated over two years to implement priority reforms to the operation of the Australian Carbon Credit Unit (ACCU) scheme as part of the Government’s initial response to the Independent Review of Australian Carbon Credit Units.

Heavy Vehicles

With the agricultural sector relying on the movement of produce by road, there will be some impact for the transportation costs incurred in these road movements. The Heavy Vehicle Road User Charge rate will be increasing from a rate of 27.2 cents per litre in 2023-24 to 32.4 cents per litre in 2025-26.

Changes for Superannuation

Extra Tax on Super Account Balances Above $3 million

The Budget confirmed the Government’s intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025. If your super member balance is less than $3 million, then this won’t affect you. If it is more than $3 million from 1 July 2025, then your super will be taxed 30% on its earnings, up from the current rate of 15%.

Super Payable by Employers on Pay Day

Currently, employers must make employee superannuation payments quarterly.

From 1 July 2026, employers will be required to pay their employee’s superannuation at the same time as they pay their salary and wages. While this won’t begin for 3 years, you need to be aware of this and factor this into your future cashflow planning.

Prepared for you by the professionals at Mulcahy & Co.

This information does not constitute financial advice. Please seek individualised advice on all matters mentioned here from a Mulcahy & Co qualified expert.

May 2023.

Mulcahy & Co celebrate turning 25 in 2023

adam@mulcahy.com.au (Adam Foale) — Tue, 09 May 2023 06:19:04 GMT

Local Ballarat business institution Mulcahy & Co celebrate their 25-year birthday in April 2023.

The business was established in 1998 by brothers Jamie and Chris Mulcahy. Their goal was to provide a specialised range of personalised taxation and business services for small and medium-size businesses, farmers, wage and salary earners and retirees.

Mulcahy & Co now offer a range of services extending well beyond what is offered by traditional firms of public accountants. The current services have been developed through a solid understanding of the needs and environments in which their clients operate and have been tailored to help their clients make the most of every opportunity while minimising risk.

Mulcahy & Co offer their range of services to individuals, families, businesses, self managed super funds and trusts.

The business has seen an amazing amount of growth through opening new offices and acquisitions in recent years. Seven business divisions now operate across five offices in both Victoria and Queensland.

The current staff count is 200 with 90 of these working out of the Ballarat office. They are a large employer in our region and with a client base of up to 20,000, the business also has far and wide reach within our community.

Current business services include:

Accounting
Agri Business
Bookkeeping
Financial Planning
Loans & Finance
Legal
Marketing

Mulcahy & Co are an exceptional example of a local success story for Ballarat. The business has been built from two people to 200 in its history. A great example of hard work, persistence, and customer centric business practices.

Increase Your Market Presence Without Using Social Media

adam@mulcahy.com.au (Adam Foale) — Tue, 18 Apr 2023 07:19:29 GMT

In today's digital age, social media has become an integral part of marketing strategies for businesses.

However , not all businesses may have the resources or desire to maintain a strong social media presence.

Here are some ways to increase your market presence without using social media.

Utilise Email Marketing

Email Marketing can be a powerful marketing tool when communicating with your existing client base. A well designed and formatted email, aimed at the right audience segment at the right time can be hugely successful. They are also a great way to communicate your business expertise to your current customers - to encourage them to use your business more (turn current customers into larger customers) or to encourage word of mouth amongst your biggest advocates. Many of our clients make direct sales from these EDMs (Electronic Direct Mail) when sent regularly and strategically.

Collaborate with Other Businesses

Collaborating with other businesses in your industry can be a powerful way to increase your market presence. Look for complementary businesses that you can work with to create joint promotions or packages. For example, a florist and a wedding planner could collaborate to offer a wedding package that includes flowers and planning services. This can help you reach new customers and build relationships with other businesses.

Get Involved in the Community

Getting involved in your local community is a great way to increase your visibility and show your commitment to the area. Sponsor local events or sports teams, participate in charity events, or volunteer your time. This can help build a positive reputation for your business and attract customers who value community involvement.

Offer Referral Incentives

Word of mouth is still one of the most powerful marketing tools out there. Encourage your customers to refer their friends and family by offering referral incentives such as discounts or free products. This can help you reach new customers without relying on social media advertising.

Invest in Print Advertising

Print advertising may seem outdated, but it can still be an effective way to reach your target audience. Consider placing ads in local newspapers or magazines, or distributing flyers and brochures in your community. We offer full design services and can organise distribution and ad space.

In conclusion, social media may be a powerful marketing tool, but it's not the only way to increase your market presence. By engaging in other marketing techniques described above, you can reach potential customers and build your brand without relying on social media.

Mulcahy & Co Marketing are here to assist you in these services and more. Contact us today for a chat about your business marketing needs.

Dan Schweinzer

Marketing Coodinator

dans@mulcahy.com.au

The latest news in Personal Insurance - what you should know in 2023

adam@mulcahy.com.au (Adam Foale) — Mon, 27 Mar 2023 05:24:06 GMT

At Mulcahy & Co we’ve been working on more personal insurance claims in the past 6-12 months than in previous years.

On that note, we want to stress the importance of getting regular health checks. Lots of our clients with claims such as cancer, were found during routine health checks, others were not so lucky. We also want to ensure clients get health checks before cancelling or reducing their insurance cover.

We realise people are sometimes hesitant about claiming, we have no sense of allegiance towards any particular insurer, we work for our clients. The average rate of success for claims is above 80% for TPD & Trauma, and above 90% for Death and IP. Some insurances are easier to claim on though, for example, default cover within an industry super fund is often more difficult and time consuming, whilst retail insures are simpler.

We want clients to remember that the insurer isn’t there to fight you, if your injury or condition aligns with those set out in the product PDS, they will pay you, and we are here to help that process.

We recently had a mother of two diagnosed with breast cancer, found in a routine check-up. She luckily was able to remove this before it spread, we were still able to claim on the Trauma insurance the client had that was originally recommended by us. She was awarded over $100k and we helped her invest this. As there are often financial planning benefits associated with Trauma insurance, we were able to do this free of charge to the client as their insurer reimbursed the costs of advice.

We’ve had various tradesmen clients able to claim on their income protection policy when injured, so they can still receive income whilst unable to work. If the condition or injury is more severe, they have been able to claim on TPD.

Insurance covers off on and helps with:

Supporting recovery
Supporting family
Time off work
Debt repayment
School expenses

We are here for our clients throughout the whole process. Insurance is important, whilst many people think it won’t happen to them, you can’t predict these things sadly. We want our clients to be adequately covered to protect them if the worst were to happen, get health checks regularly to ensure they are of good health, and to know that we are here for them throughout the whole process and beyond. We can not only help you complete the insurance claim, but we can also offer financial advice regarding the claim payout if successful.

For more information regarding personal insurance cover, visit our website: https://www.mulcahy.com.au/personal-and-business-insurance

Changes to FBT on car parking

adam@mulcahy.com.au (Adam Foale) — Thu, 23 Mar 2023 01:39:18 GMT

Taxation Ruling TR2021/2 Fringe Benefits tax: car parking benefits was updated to provide that from 1 April 2022 car parking facilities that charge penalty rates higher than commercial rates are now considered to be commercial parking stations for FBT purposes.

The change is significant because historically employers have been able to exclude car parking benefits from FBT where the only car parking facilities within a one-kilometre radius of a work car park were special purpose car parks i.e they offered a low or free rate, then a penalty rate to discourage all day parking (such as suburban shopping centres, universities, or hospitals). However, these car parks are no longer excluded from the definition of a commercial parking station and now must be considered for the purposes of assessing and calculating FBT.

The car parking threshold for the FBT year ending 31 March 2023 is $9.72

Small businesses are exempt from paying FBT on car parking benefits if all the following conditions are met:

The parking is not provided in a commercial car park.
For the last income year ending before the start of the relevant FBT year, the business’s gross total income was less than $10 million or aggregated turnover was less than $50 million.

Please speak with us if you have any queries on FBT so that we can assist you in determining if you have any liability.

FBT Exemption for Electric Vehicles

Thu, 23 Mar 2023 01:37:17 GMT

Electric vehicle FBT exemption legislation is now law.

Certain zero or low emission vehicles provided as a car benefit on or after 1 July 2022, can be exempt from FBT. The car needs to have been both held and used for the first time by the employer on or after 1 July 2022 and it cannot have been subject to the luxury car tax of $84,916.

A vehicle is a zero or low emissions vehicle if it satisfies two conditions:

1. It is a:
- battery electric vehicle; or
- hydrogen fuel cell electric vehicle; or
- plug-in hybrid electric vehicle.

2. It is a car designed to carry a load of less than 1 tonne and fewer than 9 passengers (including the driver).

Motorcycles and scooters are not cars for FBT purposes and do not qualify for the exemption, even if they are electric.

Please note that in relation to plug-in hybrid electric vehicles, there is a specific limitation on the FBT exemption. From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle under FBT law.

Where these conditions are met, the FBT exemption will extend to the associated car expenses for that vehicle, e.g., insurance, registration, repairs and maintenance, and fuel costs. Fuel costs will include the cost of electricity to charge and run the vehicle.

Note that a home charging station is not a car expense associated with providing a car fringe benefit for electric cars. However, depending upon how an employer sets up a charging station for their employee, it may be a property fringe benefit or an expense payment fringe benefit.

Although the private use of an eligible electric car is exempt from FBT, an employer still needs to include the notional value of the benefit when working out whether an employee has a reportable fringe benefits amount (‘RFBA’). This is not added to the employee’s taxable income but is used to determine Medicare levy surcharge and income tests for family assistance, child support and some other government benefits.

Developing or cutting off a block of land? Make sure you know where you stand with the ATO.

adam@mulcahy.com.au (Adam Foale) — Thu, 23 Mar 2023 01:35:14 GMT

After a period of growth in the property market, many people have aimed to take advantage of this to grow their wealth. Some people have taken on additional risk and decided to develop a small parcel of land or purchase a block of land to cut into 2 or more blocks. For those who have done this, you should be rewarded for your risk, right? The ATO wants to be rewarded too and may want a bigger slice of your profits.

Depending on the circumstances, the land subdivision may fall within any one of the following categories:

Carrying on a business of land development – this is your ordinary income and you entered the transaction as part of carrying out a business operation. Income is taxed at ordinary rates. You would obtain an ABN and most likely register for GST.
Undertaking a one-off profit-making scheme – your intention when entering the transaction was to make a profit or gain. It is still on revenue account and is ordinary income. Income is taxed at ordinary rates.
Merely realising property on capital account. This is where the sale will be treated as a capital gain as opposed to ordinary income. Assets held longer than 12 months will be eligible for capital gains tax (CGT) discount or CGT exempt if the property was purchased prior to 20 September 1985.

Many people assume they fall into the 3 ^rd category and can access the 50% CGT discount. Unfortunately, a lot of people fall into category 2 and are not eligible for the CGT discounts. Why is this?

Taxation Ruling TR 92/3 – Income Tax: whether profits on isolated transactions are income remains the leading exposition of the ATO view on the revenue v capital distinction. The ruling specially addresses that the view of the ATO that profits arising from an isolated transaction will be assessed as ordinary income.

TR92/3 states that in, general terms, a transaction or operation has the character of a business operation or commercial transaction if the transaction or operation would constitute the carrying on of a business. Some key indicators that may be relevant in considering whether an isolated transaction amounts to a business operation or commercial transaction are:

the nature of the entity undertaking the operation or transaction;
the nature and scale of other activities undertaken by the taxpayer;
the amount of money involved in the operation or transaction;
the magnitude of the profit sought or obtained;
the nature, scale and complexity of the operation or transaction;
the manner in which the operation or transaction was carried out;
the nature of any connection between the taxpayer and any other party to the operation or transaction;
the nature of the property sold;
the timing of the transaction or the various steps in the transaction;

To provide some examples:

Example 1:

A couple nearing retirement decide to cut off a few blocks of land to help fund their retirement. They have never farmed the land, just had some cows on it to keep the grass down. They don’t have any superannuation, and the land is what they have always considered as their retirement fund. They speak with a town planner and decide they will cut off 10 blocks from their primary residence. They borrow money and need to construct a road and a small park to meet council requirements. They have been liaising with council themselves and hired civil contractors to do the work. Unfortunately for this couple, their intention changed from ‘mere realisation’ of an asset under capital gains to ordinary income. Some area’s that would push this couple into ordinary income instead of capital would be size of the project and the fact that they borrowed money to undertake the project. The value of the development compared to the value of the land is also high. In this case, the ATO would most likely deem the profit to be ordinary income and they would be taxed on the full profits and not be entitled to the 50% discount available on a capital gain.

Example 2:

A savvy investor purchases a property in her own name and decides to cut off a block. She spoke to the town planner as soon as she purchased the property and application for development approval was lodged soon after. She borrowed money to pay for the subdivision. No roads or civil works had to be completed. The property had a tenant on purchase and the lease was not renewed on expiry. In this case, the intention of the investor was to enter a profit-making scheme. She purchased the property for the sole purpose of maximising her profit. As a result, it would also be taxed as ordinary income as a one-off profit-making venture. She would not be entitled to the 50% discount available on a capital gain.

Example 3:

A taxpayer has lived in their property, which was his principal place of residence for 10 years and has decided to cut off a block to help fund his retirement. He spoke to the town planner and lodged an application for development approval. He used his savings to pay the council fees and did not borrow any money. No roads or civil works had to be completed. This would be treated on capital account as the intention initially was for the property to be a principal place of residence and would be ‘mere realisation’ of the asset and the 50% CGT discount on any gain but would most likely have no gain as it would be exempt under the principal place of residence exemption.

The big difference between Example 2 and 3 is the taxpayers intention. In example 2, the evidence shows that it was their intention to enter the transaction to make a profit. The timing of the meeting with the town planner and lodging the development approval evidences this. The taxpayer also borrowed money to complete the project. In example 3, their intention when purchasing the property was to live in it and was of a personal nature. They did not enter the transaction to make a profit.

Your intention on entering a transaction is the key with these situations and your evidence will need to back this up. The best thing you can do is get some advice before doing anything, so you understand the tax implications and if you trigger any GST implications.

Unfortunately, there is not much we can do after the fact, but we can provide advice on how to best structure things before you put yourself in tax hot water.

If property is of interest to you, please speak with our property experts at Mulcahy & Co .

Brokers make up nearly 70% of all new home loans in Australia

gavin@mulcahy.com.au (Gavin Nash) — Thu, 02 Mar 2023 21:19:27 GMT

With many Australians looking for expert advice with their home loan situation, M Group Home Loan Brokers can assist you with your new mortgage.

Mortgage brokers facilitated 69.3% of all new residential home loans between October and December 2022, according to the latest data released by research group Comparator, a CoreLogic business, and commissioned by the MFAA.

The result is the highest mortgage broker market share for a December quarter on record. It represents a 2.8 percentage point increase compared to the 66.5% achieved in the same quarter in 2021 and a 9.9 percentage point increase on the 59.4% from the December 2020 quarter.

MFAA CEO Anja Pannek commented that the results showed that Australian homebuyers continue to demonstrate their confidence and trust in mortgage brokers, particularly in the current environment of rising interest rates and cost of living pressures.

“With many Australians looking for guidance as their fixed rate mortgage reverts to a higher variable rate this year, mortgage brokers offer an invaluable service to their clients. They provide their clients with options based on their individual needs – whether that be staying with their existing lender or accessing competitive offers in market if the client chooses to refinance,” said Ms Pannek.

“The reforms implemented over the past two years including the unrivalled Best Interests Duty, have served to increase the trust Australian homebuyers have in mortgage brokers, whether they be purchasing their first home, refinancing their existing loan or buying an investment property ”

~ Article and statistics courtesy of the MFAA (Mortgage & Finance Association of Australia)

Branding Delivered for Ballarat Land Development

adam@mulcahy.com.au (Adam Foale) — Mon, 27 Feb 2023 23:00:42 GMT

Our Marketing Team recently completed this branding for a local Ballarat land developer.

This project included:

logo/brand design
photography of local attractions and services
a full site plan showing dimensions of all lots
individual plans of each lot available
images formatted for use on web portals such as www.realestate.com.au
a large on-site sign (6m x 3m)
social media setup (Facebook and Instagram), post and boost
A4 flyer design and mailout organised to the surrounding suburbs

A great result for the developer and estate agent, who our team worked with closely to finalise all items on time and on budget.

To speak to our Marketing experts about how we can help your business, or to see more of our services, please visit our page mulcahymarketing.com.au

Building a healthy relationship with money from a young age

adam@mulcahy.com.au (Adam Foale) — Thu, 09 Feb 2023 03:05:52 GMT

While it can be daunting to know what to teach your children, by educating your children to have a healthy relationship with money can help construct a lifetime of good financial decisions.

There are many ways to help grow this relationship such as:

Talk to them openly about money
Allow them to make their own decisions about their own money, don’t make them feel guilty about buying something
Allow them to work to earn money for example chores around the home
Teach the value of setting themselves a goal, whether it be as simple as saving their money for a new toy they want
If you are investing money for their future, let them be involved

A common conversation I have with clients is about concern on how their children are going to be able to purchase a house for themselves when they older knowing how expensive property is and how difficult it can be to save up a deposit.

Many parents want to help their children and that’s where I can come in to assist. It’s never too early to start savings for your child’s future and honestly the earlier you start the more you will have to gift them when the time is right.

Take the scenario if you were to start investing $100 a month and receiving 5% return together with compounding interest, at the end of 20 years you would have $41,103 to gift your child.

There are certain things that need to be considered when starting to invest for your kids (or even for yourself), some being whose name should the investment be in, what are the tax implications, how long is the investment for and probably the most important question what should you invest in.

Our team would love to get you started on your investment journey so please reach out to our office and book an appointment with one of our Financial Planners.

Tamara Vawdrey

Financial Planner

Ball arat

Is your home loan interest rate skyrocketing?

adam@mulcahy.com.au (Adam Foale) — Mon, 12 Dec 2022 04:15:39 GMT

We are currently experiencing never before seen interest rate rises from the RBA, which is having an impact on almost everyone with a home loan.

Has your bank reached out to you to offer a free interest rate review?
Has your bank done anything to help you throughout these rises? (we are guessing no…)

Whether you're an existing Mulcahy & Co Lending client or not, we are here to ensure that you have the best home loan deal available to suit your individual circumstances.

We are having great success lowering home loan interest rates and you could potentially save thousands of dollars each year. Our loan review is FREE with no obligations . You've got nothing to lose, other than your high interest rate!

Please book your free home loan review now and our lending team will be in touch to see what we can save you.

FS360 Episode 50

Matt Egan (Partner Mulcahy & Co Lending) and host Gavin Nash chat about the current state of play in the home loan market in Australia. What you need to know coming into Christmas and 2023.

Matt gives useful insights into the world of lending and some great tips on how to save hundreds of dollars a month off your home loan.

Also available on Spotify, Apple & Google Podcasts.

Is there a hidden risk in your super fund?

adam@mulcahy.com.au (Adam Foale) — Fri, 02 Dec 2022 05:22:52 GMT

How did so many super funds manage to shoulder such a volatile market period?

James Thompson’s opinion piece “Is there a hidden risk in your superfund?” (Australian Financial Review 2022) calls to light some dark behaviour happening under investors noses within the superannuation industry. Thompson begins by highlighting the “impressive resilience” of the performance of many Australian super funds, given the strong market downturn that investors have experienced this year. He compares the average return (negative 5.7%) in the default ‘MySuper’ balanced options from the 12 months ending September 2022, against that of a “tried-and-true 60/40 portfolio” (approximately negative 12%).

So how did so many super funds manage to shoulder such a volatile market period?

Almost 50% of Aussie super funds hold significant investments in “unlisted assets” (i.e. direct property & infrastructure, credit and private equity). Thompson strongly believes that most Australians don’t know what their super fund actually holds, let alone the risks that can be associated with these unlisted assets.

Unlike direct shares or managed funds, the day-to-day price of unlisted assets are not reported. As such, these assets are often utilised by superannuation funds to smooth a trend line and bolster results when required. Thomson elaborates on the risk associated with this lack of transparency – he believes that many super funds are underquoting the associated risk of their unlisted assets, in order to chase headline returns, while continuing to associate their investment options with terms like balanced or conservative. To further his point, he refers to the illiquid nature of these holdings, and the inability to move them off the books quickly if cash was required (i.e. for member withdrawals). In times of need, such assets can often be sold off for heavily discounted prices.

Thompson concludes that many Australians could be over-exposed to illiquidity risk, which is particularly important for those relying on superannuation to pay for their retirement. He believes that super funds must be held more accountable with their asset allocation and calls for a more uniform measure of risk measurement.

Here at Mulcahy & Co, our suite of portfolios provides a level of transparency that we believe is top tier. Not only do we hold little to no unlisted assets, but our clients have the ability to view the exact (to the cent) allocation of their funds. We wholeheartedly concur that liquidity and appropriate risk exposure are incredibly important factors to consider when deciding where your money is invested.

Click here to read the full article (a subscription to the Australian Financial Review is required)

If you have any queries or concerns about your super fund or other investments, please get in contact with your financial ad viser at Mulcahy & Co.

Jesse Jury

Financial Planning - Mulcahy & Co Geelong

ATO out in force

adam@mulcahy.com.au (Adam Foale) — Wed, 30 Nov 2022 04:18:42 GMT

The ATO are focusing on several areas:

For individual tax returns, the ATO will be focusing on:

record-keeping
work-related expenses
rental property income and deductions, and
capital gains from crypto assets, property, and shares.

For Businesses the ATO is contacting business regarding any superannuation unpaid or paid late.

ATO has also stepped up its efforts to reclaim debts.

Small business account for the majority of ATO debt, which is over $32 billion. Following a series of natural disasters and COVID-19, the ATO granted almost 13 million extensions for lodgements and payments.

The ATO have started taking recovery action and are also being more stringent on granting payment arrangements. The ATO are now issuing Director Penalty Notices, which had been on hold over the COVID-19 period.

It is important that businesses with outstanding GST and more importantly PAYG and SGC, seek resolution strategies immediately.

Now with Single Touch Payroll, any late super is monitored by the ATO and they have started sending out letters to businesses that fall into this category. If you pay superannuation late, you cannot claim a tax deduction for the late payment and a Super Guarantee Charge form must be completed and lodged.

The best thing you can do if you have ATO debts is to keep up the communication and ensure you continue to lodge all tax returns and activity statements on time.

If you need assistance with the above, please do not hesitate to contact us .

Reminder: QBCC Lodgement Requirement 31 December 2022

adam@mulcahy.com.au (Adam Foale) — Wed, 30 Nov 2022 04:12:47 GMT

Licensees are required to provide the QBCC with financial information annually. For most category 1-7 licensees the information is due by 31 December each year.

You can submit your information online via the myQBCC portal or via paper. We can assist you with this process and lodge the information based on your financial statements on your behalf.

To retain your licencing, you need to ensure that your current ratio, Net Tangible Asset position and Maximum Revenue meet the requirements of your licence. If you need to adjust your Maximum Revenue, you will need to lodge this request separately.

Whilst it’s not a requirement to use an accountant to assist with the lodgement of your Annual Reporting information, the QBCC has made the process a minefield (especially if you operate your business through a trust). Therefore, as always, if you need assistance with meeting this upcoming deadline, please call our office for help.

The impact of inflation on small businesses

adam@mulcahy.com.au (Adam Foale) — Wed, 30 Nov 2022 04:09:49 GMT

Inflation can hit small business hard, but there is things you can do to prepare and minimise the impact of tough economic conditions.

Every quarter, the Australian Bureau of Statistics (ABS) announces what’s known as the Consumer Price Index (CPI). This is how we measure price rises, otherwise known as inflation.

It’s calculated by looking at the total cost of an average Australian household’s shopping basket compared to the same quarter in the previous year. In September, price rises climbed to 7.3 percent year-on-year. This is particularly high, as the Reserve Bank of Australia (RBA) is trying to set interest rates to see inflation sit between 2 and 3 percent.

Inflation largely impacts small business in two ways:

Business costs rise
Customers spend less as they tighten their wallets.

What can you do to minimise the impact of this?

Understand your cashflow

To make informed decisions on spending and price changes, you need to have a clear understanding of your incoming and outgoings funds. You need to know your numbers.

Create a plan

Creating a budget and having a plan to keep your business running through a disruptive time is important. Xero has some guides and templates on their support website and we can help you in a variety of ways dependent on your time and budget.

Make it easy to collect payment

Look at automating invoice payments and reminders using your accounting software and payment platforms such as Stripe or GoCardless.

Stay close to your advisor

Keep in touch with your accountant who can assist you with all things numbers related as well as systems or processes that will help you run your business more efficiently.

The cost of education – and how to plan for it

adam@mulcahy.com.au (Adam Foale) — Mon, 24 Oct 2022 04:27:06 GMT

65% of children entering primary school will ultimately end up working in completely new jobs that don’t yet exist; this caught my eye from a fascinating analytics report. There is so much change ahead.

McCrindle Social Research Agency and Futurity Investment Group research offers further interesting data:

1 in 2 of today’s students will gain a university degree and are expected to have 18 jobs over 6 careers in their lifetime. Just thinking about how to move across 6 careers indicates to me that adult learning will be on the increase to support such activity.
University debt is one of the most significant costs in equipping students for this future. The most common amount of HECS-HELP debts now is currently $20,000-$30,000; additional lifelong learning will further add to this as they move through their 6 careers!
How long are we holding onto that HECS-HELP debt?

20's

90% who attended Uni have a
HECS-HELP debt in their twenties

30's

72% who attended Uni have a
HECS-HELP debt in their thirties

40's

48% who attended Uni have a
HECS-HELP debt in their forties

This data supports strategies for establishing an education savings plan. The definition of education is quite broad and include university, higher education, TAFE, VET, adult learning and personal development. While expenses associated to education including tuition costs, travel, accommodation, stationary, computer, tools and many more.

Depending on the age of those to educate and source of funds, this will determine which provider and nominations to set up this strategy for the best outcome as you access funds. There is a lotm to consider.

If you would like to consider saving for the education for yourself or someone important to you, speak to a Mulcahy & Co Financial Planner to set this up and ensure you optimise the tax effectiveness available to your situation.

Antonia Grapes

Financial Planner

Sunshine Coast

InvestSense October Market Update

adam@mulcahy.com.au (Adam Foale) — Fri, 07 Oct 2022 04:19:11 GMT

Introduction

Jonathan Tolub is a Director at InvestSense. He has over 20 years of experience in financial services, spending the first chunk in New York (10+ years) in Investment Banks, and the last 12 years in Australia looking after client portfolios. InvestSense was formed for the purpose of assisting firms like Mulcahy & Co to better manage client portfolios.

In light of recent share market volatility, we sat down with Jonathan (affectionately known as JT) to give clients reassurance as to what we do when managing your portfolios. We appreciate that current market conditions can create unease and that no one likes to see drops in portfolio value.

Q&A

Q: What role does InvestSense play in the building and constant reviewal/rebalancing of portfolios?

A: If you can try and imagine a day at InvestSense, it’s one never-ending investment committee, where every day we look at markets and financial news, and we analyse stuff. From that perspective - thinking about portfolios is not something we do once every quarter. It is really an ongoing enterprise, and whenever we come up with a good idea, or something that has to be done, we give you guys a call, discuss it, and implement. Through what is called ‘managed accounts’, every time we make a decision, it gets implemented instantly to all client accounts at the push of a button. This is important if we want to buy or sell something, so that it can be done in a timely manner.

Q: What is valuation investing and what are the key benefits?

A: Without getting too technical right away – essentially, valuation analysis means that we’re looking at the information that is currently available to all participants (and that's important because it's an objective methodology, it’s not our view of what’s going to happen, it's really just taking the information at hand and deriving a view of future expected returns). Just to bInvete clear, we don’t have a crystal ball. Especially in the short-term. We have no idea what's going to happen tomorrow, next month or even what's going to happen next year, but the valuation methodology allows us to have a pretty accurate view of what’s going to happen over the next 10 years. And that is essentially everything that we are trying to achieve. By looking at all of the available investments; Australian shares, US shares, European shares, bonds here and overseas, and saying, “how much are we likely to get paid for that? Is that a good return relative to other available investments? And most importantly, what risk am I incurring by taking that venture. If something goes wrong, how much might I lose?” And then therefore everything becomes a risk-return analysis. “Here's my expected return, here’s my expected risk, and is that a good trade-off?”

Q: How do the fixed interest and cash positions help in a situation such as this?

A: That's probably the most difficult question I’ll have to answer today. The interesting thing about valuation investing is that you can be wrong in the short-term in order to be right in the long-term. As I said, we don't know what's going to happen in the near future, and therefore the decision we make may or may not work right away, but there's a high likelihood of it working in the long-term. What this means for us now is that as things are getting uncomfortable for investors, and as share prices are going down, paradoxically for us, things are actually becoming more attractive. That means that the future expected returns from this point onwards are actually higher. Years like these are spent trying to find attractive investments that have popped up. We don't spend most of our time thinking about how to get more defensive, because again that's quite short term. We cannot predict if markets are going to rebound here or continue to go down. However, we can observe that over the next 10 years some things are starting to look a little bit more attractive, and that's really where we’re focusing our efforts. Overtime, as things are getting cheaper and cheaper, the plan is to actually increase risk and start buying more. Now, we haven't reached that stage yet. We're still positioned fairly neutral across the portfolios, so the usual balance of growth assets (i.e. shares) and defensive assets (i.e. bonds or cash). But, at one point in that process, there will come a time where we will probably feel the most uncomfortable, and that is when we will start adding risk to the portfolios.

Q: How do the fixed interest and cash positions help in a situation such as we’re currently seeing?

A: Normally that would be a fairly simple question to answer, but so far this year, it's become a bit more difficult. Typically, what I would answer is that cash, and especially bonds, are there to provide a counterweight to equities. So in normal times, from bonds you’re collecting a coupon (like a dividend that gets paid for holding the bond) and the value of the bond is fairly stable. Typically, they are defensive instruments because when equities go down, the price of bonds tend to go up. In normal times they grow slowly, and in bad times they kind of protect the downsides a little bit. What’s been happening this year is different and unusual. Equities have gone down, and one of the reasons they’ve been going down is because interest rates are going up, again not trying to get too technical here, but interest rates going up means the price of bonds also go down. So, we have this very unusual situation where both equities and bonds have gone down at the same time, and that is a challenge for people like us who are building portfolios. In that instance, the only true defensive asset is cash, and we hold a fair amount of cash. Probably one of the things that we have been most successful at is investing in bonds that actually have turned out to be defensive, even in this environment. We had to think a little bit outside of the box here and make a few calls that were a little bit off the beaten path and invest in non-traditional bonds. That has been probably the most helpful decision we made over the last few years.

Q: What are the primary causes of the international inflation hike?

A: We could spend hours talking and debating that. It all starts with COVID, in that governments in Australia and almost everywhere in the developed world stepped in to help the population financially. Here in Australia, we had JobKeeper and JobSeeker. The rest of world had similar intentions which was to divide cash in the hands of consumers and to help them through this difficult period. So you have incomes around the developed world going up. Everybody had more money, and were therefore able to spend more money. At the same time, you had a disruption in the production of goods. A lot of the goods manufactured in China, for example, were not being manufactured anymore. A lot of businesses stopped producing because of lockdowns. So we’re in a situation everybody has more money to spend, but there’s actually less goods available. That's a very simple supply and demand imbalance. If you have more money but there’s less goods, the price of those goods has to go up in order to meet that demand. That's what’s started to happen and we continue to see the ripple effect of that. That's probably the primary factor, I would say.

The second, which is slightly related, is the supply chain disruptions of COVID and of geo-political tension that have caused the contraction in the amount of available goods, shipping, etc. Everyone thought that this supply-chain disruption was a fairly short-term thing. As it happened, once the genie was out of the box, it was really hard to put it back in, and it's taking months and years for those disruptions to be fixed. We are starting to see signs now of things improving. The third major factor is obviously the war in Ukraine, which has disrupted a lot of commodity markets, but especially the price of gas and oil. Energy prices feed into pretty much everything that has to be manufactured. Even services use energy. And therefore, if energy prices are going up, everybody else has to increase their prices, and that's had a big effect on inflation. Finally, the last thing that I would mention is ‘inflation expectations’. When people expect inflation to occur (as is the case today), people change their behaviours around that. If I know that I need to buy a TV and I’m worried that TVs are going to be more expensive in 3 months’ time, then I'm purchasing it now. So actually, people are bringing forward their purchases. If I know that my cost of living, because of rent, energy, etc. is going up, I'm going to go to my boss and ask for a raise. In order to pay for the raise, my boss is going to have to increase the prices of whatever goods or services they are selling. All of these things combined are lifting inflation.

Q: In light of the inflation hike, why are central banks increasing interest rates, and what is the difference between a potential recession or a ‘soft landing’?

A: Remembering what I said about inflation, there is an imbalance between high demand and low supply, and that is the case for goods and manufacturing, but also for services. Everybody is experiencing shortages of staff, and the price of services is going up as well, because employers need to pay their staff more. Central banks cannot easily solve the supply problem. If there is a shortage of energy, the central bank cannot pump more oil out of the ground. They cannot easily encourage people to come out of retirement and start working, nor manufacture more goods. The supply-side is very hard to solve. It instead has to be solved by governments and private enterprises, and usually happens over a number of years. What the central banks can easily do is solve the demand issue. “If I can’t bring up the supply, then I can only bring down the demand”. And that’s what the purpose of increasing interest rates is. So by increasing interest rates, the central bank is essentially making our lives more difficult on purpose. It means mortgage payments are going to go up, and therefore we’re going to have less money to spend on other things. And that is what the central banks in Australia and pretty much all of the developed world want to do at the moment, is to make us consume less, in order to lower demand and inflation. To the second part of your question, they’re trying to fine-tune that, so trying to lower demand and in essence slow down the economy (inflation is a sign of an ‘overheating’ economy), it's very hard for them to get it perfectly right. The problem is that if you slow down the economy too much, you end up in a recession. A ‘soft landing’ is the scenario where they lower economic growth just enough that it lowers inflation, but doesn't push the economy into a recession. That's the ideal scenario that everybody is striving for. The other scenario is where they have a conscious choice to make. They are very worried about inflation, and that becomes an even bigger threat than a recession. And therefore, they are almost willingly pushing the economy over into a recession because it's the lesser of two evils.

I find the first part of your answer to our question quite interesting in relation to the valuation-based model and philosophy, in that when they do ‘pull the handbrake’ on the economy, you spend a little bit less, but you do have to spend money on the needs in life, and then you obviously sacrifice the wants. It's no surprise that on the back of that, we don't have a lot of tech and consumer discretionary exposure in our portfolios, particularly in a time like this. So, if you looked at our portfolio, there a lot of companies that you more or less need to spend your money on; petrol, utilities, supermarkets, those kinds of things, versus a tech stock or retail store.

A few words on that. I think for the first part of the year, the focus was on companies that can pass on inflation. (i.e. “Who’s got the pricing power to pass on inflation to consumers and therefore protect their level of earnings?”) Whereas, I think increasingly as you mentioned, the focus is going to be on “which are the companies that are more likely to do well in a recessionary environment?”. And as you mentioned, it tends to be those defensive companies; consumer staples, etc.

Q: The war in Ukraine has been going on for a while now, and we were talking earlier this week about how it kind of feels like “yesterday’s news”. It’s obviously still very much ongoing and seems to really be ramping up in recent weeks. Do we expect its significance in the world’s economy, and particularly share markets, to continue to dwindle away like it has felt, or could we still see some significant market consequences to come form that?

A: When we discuss those things, I think it’s important to make it clear that although we do spend quite a bit of time reading about the geo-political events, and we definitely take those into consideration in our investment decisions, at the end of the day, we are very much guided by the valuation framework that we described earlier, long-term views, objectives analysis, etc. And having said that, I think the major impact that the Ukraine war has had on markets so far has been in energy markets. There has been others, but that’s really the essential one. That hasn't gone away, and I think given recent developments it seems that it is unlikely to go away anytime soon. The recent events I am referring to is there was a gas pipeline connecting Russia to the rest of Europe called Nord Stream. There has been an incident where something in the pipe has broken (or exploded, depending on your interpretation). The outcome of that is definitely going to be even less energy flowing from Russia to the rest of Europe. And therefore, the disruptions that we have seen seem likely to sustain. It doesn't seem like we're nearing a resolution anytime soon. At the same time, other energy producers haven't been willing to increase their production, and are maybe unable to increase their production, so we still have exactly the same dilemma that we had at the beginning of the conflict, which was that the price of energy is expected to be relatively high for the foreseeable future. And that flows through the rest of the economy. I think that's the major takeaway, but as I said, that's more a subjective opinion.

Q: Does the share market volatility have a direct correlation/influence on the chances of a recession? If share markets are falling, does this directly affect GDP?

A: That’s almost a deep philosophical question, but if I can answer at a headline level, I think it’s the other way around. Basically, the share market is forward-looking. Investors collectively don't just look at what happened in the recent past, or what’s likely to happen in the future, but everybody thinks for the long-term. Especially equity markets (i.e. “whatever is likely to happen in the next few years, I'm going to bring into the price today. Even if I'm worried about a recession in a year or two-years’ time”). And this is why shares are going down today. It’s almost as if the share market is a thermometer, if you will. The fact that the share market is going down today isn’t what’s going to cause GPD to go down, it isn't what's going to cause a recession, it’s actually a reflection of the fact that investors are worried about GPD going down in the future. At a deeper level, I think there’s definitely a psychological effect where the share market is going down and people are pulling their horns in. There is less liquidity available, meaning less money to investments. If a firm is looking to invest into a new production plant or whatever it is, they need to raise money for that, but that’s going to be more difficult to achieve in an environment where shares are going down, where investors aren’t willing to lend money, so you can see that that definitely has a flow-on psychological impact, and that impact can last for a while.

Q: Why is the UK buying up so many bonds this week?

A: That is a very unusual thing that happened in the UK. As you probably know, there was a new government that was sworn in with a new Prime Minister and Treasurer, and the new Treasurer almost immediately implemented a revised budget that was not exactly what markets had expected, or maybe contrary to what markets wanted. The key aspect was cutting taxes. But, they’ve not reduced expenses. This essentially means that the government ‘deficit’ is going to grow. There is already quite a large deficit; a lot of government debt on their books. So they’re saying they’re just going to add a lot more debt to that. That’s going to have to be financed by a lot of bonds; they’re going to have to issue a lot of bonds which they’ll have to pay for. Essentially, the market started losing faith in the UK government, and therefore in their government bonds. The price of UK government bonds went down close to 25% in a matter of days, which is something we’ve never seen before, at least not in developed markets. That has essentially almost forced the central bank in the UK to intervene, to say “we can’t allow that to happen, that’s too much of a disruption to the normal-function of markets and the economy, and therefore we need to support the price of our bonds.” And therefore, the central bank does what it can do, which is to step into markets and start buying bonds. And we have seen the price of bonds come back almost all the way up to where it was before. The implication is that when the central bank buys bonds, it essentially injects liquidity (i.e. money) into the economy. That's a ‘stimulative’ measure. That's usually what the central banks do in times of a recession. It's what the central banks did during COVID. The problem now is that the central bank, as we discussed earlier, is actually wanting to do the opposite. They’re not trying to stimulate the economy, they're trying to slow down the economy. That puts a few question marks on what the outlook for inflation is going to be in the UK. We haven't seen anything like that from the central bank here in Australia, just to reassure investors here. We don’t have anywhere near the same debt levels and we haven’t seen anything like those kinds of disruptions to our bond markets that would force the central bank to do what they did in the UK.

Q: In light of everything that we've discussed today, and the things that have happened in the global economic environment, not just in the last 12 months but probably the last two or three years, the obvious question is: are you at all surprised about the market volatility both domestically and abroad that we've experienced?

A: That’s more of a personal question, which I’m very happy to answer. As I mentioned, I started my career over 20 years ago. I started back around 2000-2001. I've been through the NASDAQ tech crash, the GFC (and I was actually still working in New York, very much in the heart of it at the time) and through COVID, so in a relatively short period of 22-23 years, I’ve lived through three major crises. And especially when you start with a crises, you kind of grow to expect the crises almost at every turn. A lot of people say that the year people start their investment career usually defines whether they going to be always optimistic or always pessimistic. I guess I fall in the slightly pessimistic camp. That’s also part of what we do at InvestSense. We’re trying to think about what might go wrong. Not necessarily what will go wrong, but what are the risks. So I haven't been surprised, to some extent I think it was fairly assumed that COVID represented such a disruption in so many different ways, that the impact and the ripple effects were going to last a few years. Probably the most important part is that while these periods of time are scary and unsettling, they also represent opportunities over the long-term.

I think what’s important to keep in mind is that most of your clients are relying on that money for retirement. And for younger clients, that is the good news, in that your Super money is not something you’re going to need to pay your rent. It is something that you will need in your later years in life. And there's good news there which is that you are today buying assets every time that you have a Super contribution. Today you're buying assets at a 20-30% discount to what you bought them 9 months ago. That's a great deal for investors. It doesn't matter if things continue to go down because you've already been buying at a great price. So I think looking forward, this should actually be interesting or even exciting times for investors, even if it doesn’t feel that way.

If you have any additional questions or would like to know more, reach out to one of our friendly and qualified financial planners here.

The Outlook is Bleak, Should I Stay Invested?

adam@mulcahy.com.au (Adam Foale) — Tue, 06 Sep 2022 06:49:11 GMT

A story of three charts

Many investors are understandably feeling wary from the dizzying roller-coaster ride of the last three or so years. The unbridled optimism of 2019 was cut short by the pandemic-induced market crash in 2020, which was itself followed by a lightning-fast recovery that surprised even the most optimistic analysts. By the time we caught our breath in 2021, we were greeted in 2022 by news of out-of-control inflation, and almost just as quickly, by a looming recession. The RBA is now intent on increasing cash rates further, which could potentially aggravate losses in shares, bonds, and real estate. With an outlook so bleak, many investors are legitimately wondering whether they would be better off sitting out the next few months or even years.

It may sound counterintuitive, but the very fact that markets have fallen so far this year is actually a positive sign. There is a rational explanation for this: markets are comprised of millions of savvy investors who project into the future. Prices adjust as soon as clouds are on the horizon, rather than when it starts raining. If it’s in the news, it’s already in the price, and there’s therefore much less of a reason to worry about it from this point onward.

However, one could still argue that there’s ample room for the situation to worsen, or to stretch the metaphor, for the rain to linger much longer than originally expected (a bit like a third La Nina summer in a row…). Only in hindsight will it become obvious that we had reached the bottom, but at this stage we could be only half-way through.

Faced with a similar question a number of years back, Warren Buffet answered as follows: ““In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497”. In other words, the bad news eventually fades away and markets resume their march up. The biggest risk for long-term investors is therefore not the downturn but rather missing out on the recovery. The chart below makes this case even more obvious than the Oracle:

$100 invested in international or Australian shares in 1992 would have grown to $534 and $419 today, despite the tech-bubble crash of 2000-2001, the GFC, COVID etc.

But the news gets even better. Not only should investors not fear losses, they should see them as opportunities. Time and again, bouts of extreme pessimism have often marked the starting point for the next market rally (and vice-versa). Think about the depth of the GFC in January 2009 or COVID in March 2020. Additional money invested during these downturns (like regular super contributions) would have benefited from the higher return rates of the recoveries. The 2 charts below illustrate this point: $100 invested in international shares at the beginning of 2005, a period that can be described as “mid-cycle” (neither very bullish nor very bearish) would have grown to $226 today. But an additional $100 invested a few years later during the depth of the GFC would have grown to $328!

Here too, the depth of the GFC is only obvious with the benefit of hindsight. But regardless of where markets head to in the short-term, the fact is that investors today can buy shares at a 10-15% discount to the price they happily paid only a few months ago! Market falls bring out irrational behaviour but educated investors can use it to their benefit.

Jesse Jury

Financial Planner

Approaching Retirement? Are you ready?

adam@mulcahy.com.au (Adam Foale) — Fri, 02 Sep 2022 01:18:01 GMT

Given the pace of our hectic lives, saying goodbye to working life may be here before you’re good and ready!

If you are in a position to put your plans for retirement into action then health, wealth and happiness are all up there as things to think about. From finances to feelings about leaving work, this article is all about the things to keep in mind when planning for life beyond work.

Ready for change?

A job can be more than a way to get paid. When colleagues and career mean more to you than the money, moving on can be tough. If you’re expecting retirement to leave a big gap in your life, planning new routines, rewards and friendships will boost your sense of optimism and wellbeing. By thinking about this ahead of time and taking steps to explore options, you can feel like you’re swapping a positive experience of working life for something even better.

The right choice for your health

Whether you love your job or can’t wait to retire, your health could force the issue. Depending on the type of work you do, retiring early may become the only option when health problems are in the picture. The same may be true if you need more time to care for a partner or elderly parent in poor health. The ABS reports personal health as the second most common reason for retiring (ABS Retirement Intentions, June 2017).

50% of Australians were influenced by work availability or health reasons when considering when to retire (Your LifeChoices Retirement Income and Financial Literacy Survey 2019)

Financially fit for retirement?

The same ABS figures show wealth as even more common that health when it comes to reasons for making the move into retirement. Knowing what you’ll spend in retirement where that money will come from will give you confidence that you’re financially ready to make the change.

41% of men and 34% of women said financial security had the biggest influence on their decision.

Is part-time work an option?

Continuing with paid work in retirement can be a way to stick with a routine you’re comfortable with and make your super last longer. If you’re eligible for the Age pension, it’s good to know you can still earn some income without your payments being affected up to a certain level (this is called the income test threshold). There is also the Work Bonus that allows you to earn income without reducing your Age pension. And if you take a break, you can build up your Work Bonus balance and earn more when you start working again.

The Work Bonus eligible income is currently up to $300 a fortnight ($7,800 per year)

The time when you want to retire and when it actually happens can be quite different. According to the ABS, 70% of those intending to retire from the workforce indicated that they intend to retire after reaching age 65. But whilst you might be prepared to keep working well into your 60s, there’s a significant gap between that expectation and reality. For many people it’s a case of being pushed into retirement by circumstance rather than making a carefully planned choice.

If we look at when people are actually retiring, the average age at retirement in the last five years was just under 63. Almost half of Australians are making this earlier than anticipated moved into retirement due to health issues or redundancy.

How long will you spend in retirement?

Freedom from working life can be a positive, even if it happens sooner than expected. But it can create problems for your finances when your time in retirement stretches into several decades. Australians are living longer due to improvements in medical care and living standards. The average life expectancy has risen in recent years and continues to increase, particularly for people over the age of 65. And, unless living longer runs in the family, most people tend to underestimate just how long they’ll live.

A National Seniors Australia survey (2015) found that those aged 55-64 underestimated their life expectancy by almost 5 years

How many more years are you likely to need to plan for?

An Australian male aged 65 could expect to live to 88, while a female aged 65 could expect to live to 90.

There is a 50% chance of living for this number of years at these ages.

Of course, this is great news for all the plans you have for life beyond work. But it can put real pressure on your finances. Once you’ve stopped earning a wage from work, you’ll need a different kind of income to cover living costs and turn your plans for retirement into reality. Speak to your financial adviser about income strategies and investments available to help protect against the risk of running out of savings later in life.

Lynde Adams

Financial Planner

Mildura

Queensland Land tax is changing from 30 June 2023

adam@mulcahy.com.au (Adam Foale) — Thu, 01 Sep 2022 05:12:08 GMT

Update to this article: Queensland government shelves plans for tax regime:
https://www.canberratimes.com.au/story/7924742/qld-shelves-changes-to-land-tax-regime/

From 30 June 2023, when calculating land tax in Queenland, the state government will consider all the land you own in Australia. Currently, land tax is based on land held in Queensland only.

The total value of your Australian land will be used to determine:

Whether the tax-free threshold has been exceeded
The rate of land tax that will be applied to the Queensland proportion of the value of your landholdings.

The current tax free thresholds are $600,000 for individuals and $350,000 for other entities such as companies and trusts.

If you only own land in Queensland, you are not affected by this change.

If you own land in Queensland and in another state, you will need to declare any landholdings you own outside of Queensland. You will need to set up a QRO Online account and complete the declaration, including land description, value and percentage of ownership.

From 30 June 2023, you will need to complete this declaration by the earlier of the following:

Within 30 days of receiving a land tax assessment notice
On or before 31 October

Land tax will only apply to the Queensland portion of the value of land tax. The Office of State Revenue provide an example on how tax will be calculated as follows:

Example

On 30 June 2022, Lena owns land in Queensland with a taxable value of $745,000. Her land tax is calculated using the rates for individuals .

Taxable value of land: $745,000

Calculation
= $500 + (1 cent × $145,000)
= $500 + $1,450
= $1,950

We will issue an assessment notice for $1,950 for the 2022–23 financial year.

On 30 June 2023, the value of Lena’s land in Queensland has not changed. But Lena now also owns land in Victoria valued at $1,565,000. The total value of Australian land owned by Lena is $2,310,000, which means the land tax is calculated using a higher rate for individuals.

This is how Lena’s land tax will be calculated:

Taxable value of Australian land: $2,310,000

Calculation
= $4,500 + (1.65 cents × $1,310,000)
= $4,500 + $21,615
= $26,115

This amount is applied to the Queensland portion of Lena’s land (i.e. ($745,000 ÷ $2,310,000) × $26,115)).

We will issue an assessment notice for $8,422.37.

If you have any questions about how these changes will affect you, please do not hesitate to contact us .

How can automated budgeting help?

adam@mulcahy.com.au (Adam Foale) — Mon, 29 Aug 2022 04:12:02 GMT

The biggest issue humans have with saving their money and adopting savvy savings habits is the human part of the equation.

We are wired to want “more” of everything and to live as comfortable a life as we can. This is not the case for each individual, but is certainly the general rule across most people. When it comes to budgeting, the best example of this trait is when we receive a pay rise, how much of that increase is saved? Think about your most recent pay rise and ask yourself if you saved any of it. If you did, well done, you are in the minority of people!

Behavioural finance is a modern phenomenon in the finance industry and at its most basic level, it refers to the psychological influences on our decisions about money. Why are we influenced to use our money in certain ways? What triggered us to make a call to spend money one way, when we probably should have spent it another? Was is greed, fear, guilt, a splurge?

This plays a huge role in the core aspect of a decent financial plan, which is to start with a sound budgeting strategy. Behavioural finance dictates that we make emotionally-charged decisions that are prohibitive to long-term financial success. When you read in the newspaper or see on the 6pm news bulletin that inflation is ~9% in the U.S. and the share markets around the world are experience 10%+ sell offs, the emotional reaction to that is to either sell, or not buy. Whereas, the complete opposite behaviour may have been more prudent.

The same effect happens when we budget manually. You get paid into an account, and then you have 100% control over where your money goes from here. A person who manually calculates how much money they would need for each expense or savings goal, is less likely to actually allocate the desired amount of money needed compared to someone who automatically budgets. It is easy to get distracted with an emotionally-charged decision to go and buy that item you have wanted for a while, but certainly don’t need, or go out for that expensive dinner for the second time that week.

An automated budgeting system works a lot differently, and does not rely on the human element. With this strategy, you get paid into an account, and then have automatic direct debits set up that allocate a specified amount of cash into as many sub-accounts as you need. Commonly, a sub-account per goal (car, holiday, new bed, presents, school fees, etc) is used as it enables the accounts to be completely separate and not blend into each other. Having the direct debits set up to occur the day after you are paid, reduces the time you have to make those irrational spending decisions that you might regret straight away.

Further, if you are one of many Australian’s with a mortgage, there are plenty of lenders out there that offer multiple offset accounts which are perfect for automated budgeting. You can view it all very simply on your phone with full transparency.

Budgeting should not be a dirty word and it is something that each household should embrace as it is normally the first real step on the road to financial freedom. The key is automation and simplicity; if you cannot write down yours and your families budgeting strategy on one page, it is too complex and should be revised. Why not take the time to review your budget and see how much of your next pay rise you will be able to save?

Danny Archer

Financial Planner

Ballarat and Geelong

Mulcahy & Co Team win multiple PLAN National Awards

adam@mulcahy.com.au (Adam Foale) — Mon, 22 Aug 2022 06:17:56 GMT

Mulcahy & Co inclusive of COSIMFREE Home Loans have swept the National PLAN Awards held in Cairns recently.

PLAN Australia was established in 1999 and is one of Australia's largest mortgage aggregation groups, with over 1,600 members. Their National Awards are a chance to spotlight excellence amongst their brokers – nationwide.

Our team are all rated in the top 300 brokers (of 1,600) Australia-wide and won the following awards:

Warren Freeman (COSIMFREE Geelong) won ‘ Broker of the Year (Volume) VIC/TAS’ and also 2 ^nd place in the National Award of the same name. He also won the Diamond Award for being in the Top 20 nationally.
Liam Nankervis (COSIMFREE Geelong) won a DIAMOND Award for being in the top 20 brokers nationally (18 ^th ). He also won the ‘Excellence in Finance’ Award for total transactions (recognises the Top 15 nationally) - he was 6 ^th.
COSIMFREE Home Loans Geelong won both the VIC/TAS and National Awards for the ‘Business of the Year (2-5 Loan Writers)’.
Neil McCahon, Matt Egan, Chris Dwyer & Evette Turlan (Mulcahy & Co) all won GOLD Awards for being in the top 200 brokers nationally.

A big congratulations to all our experts in the Loans & Finance area. Call the Ballarat , Geelong or Mildura office for your next Home Loan, Commercial Loan or any Equipment Finance needs.

Debt recycling: how to unlock equity

adam@mulcahy.com.au (Adam Foale) — Mon, 01 Aug 2022 06:02:15 GMT

The recent decade-or-so-long boom in the residential property market in Australia has resulted in more untapped home equity than this country has ever had. The question is: how can we take advantage of it?

Let’s start with understanding exactly what equity is. In its simplest form, home equity is the value of your home, less any associated debt. If your home is worth $1 million, and you owe $400,000 to the bank, your equity is $600,000. The issue with equity is that unless you tap into it and use it wisely, it is almost worthless. In fact, your home can easily be argued as being a liability, rather than an asset.

This is where debt recycling can provide you with a fantastic opportunity. Debt recycling is a strategy that converts “bad debt” into “good debt”. What we mean by “bad” and “good” debt is that bad debt is non-tax deductible, whereas good debt is. You cannot claim the interest you pay on your mortgage as a tax deduction, however, you can claim the interest paid on an investment loan. There are 3 key benefits this strategy provides: you pay off your bad debt quicker than you otherwise would, you can reduce your overall tax as the strategy is highly tax-effective, and you can build your wealth sooner, reducing the risk of opportunity cost.

Let’s look at an example using figures mentioned above. Bill’s home is worth $1 million, and he owes $400,000 against it. Subject to bank servicing requirements, Bill could potentially borrow up to 80% of the properties value, or $800,000. His current loan is $400,000; therefore, Bill potentially has access to $400,000 of equity in his home that he can use to invest. Bill decides to borrow a further $200,000 against his home and invests this in a diversified portfolio of shares and ETF’s. Instantly the interest charged on the $200,000 investment loan is tax-deductible, which makes it good debt.

To get the “recycling” part of the strategy working, Bill continues to focus on paying his mortgage with his own money, and also directs the income produced from the share portfolio to his mortgage as well. This sees the mortgage reduce quickly down to $200,000, at which point Bill draws another $100,000 of equity and invests this into the share portfolio, increasing his investment loan to $300,000. As the amount of shares Bill owns has increased, so to should the income they generate, which accelerates Bill’s mortgage repayment further still. Bill continues this process until his mortgage is reduced to $0, and the investment loan has reached $400,000. Assuming the share portfolio has grown in value, Bill has been able to use purely borrowed funds to build his wealth.

The above has firstly allowed Bill to pay off his bad debt quickly, reduce his tax per year due to the investment loan and franking credits, and has allowed Bill to build his portfolio earlier in his life, rather than waiting until he has paid his mortgage off and then begun investing.

If the above strategy sounds appealing to you please reach out to one of the friendly Mulcahy & Co Financial Planner’s today for a complimentary discussion.

Episode 46

Debt recycling: how to unlock equity. Danny Archer (Financial Planner) and Warren Freeman (Home Loan Broker) talk with host Gavin Nash about this interesting topic and how it can allow you to achieve your financial goals faster - like owning your own home.

Available on Google and Apple Podcasts, Spotify and also our website along with an accompanying article to help explain the details.

Danny Archer

Financial Planner

Ballarat and Geelong

Volatility - Everybody is feeling it.

adam@mulcahy.com.au (Adam Foale) — Tue, 12 Jul 2022 01:13:05 GMT

Volatility is a measure of speed and degree in which price changes; either up or down.

There is so much volatility globally considering interest rates, inflation and share markets. Some investors can be spooked in this environment with news feeds only adding to this. Here is where understanding your investment strategy and risk profile are imperative. The markets globally are in the negatives with the S&P 500 over the past year down 11.07% and the All Ords down 9.57%, it is a crystal ball question to ask when we will see the bottom of the fall. This is a testing time for risk tolerance.

All Ordinaries 1 year chart ASX XAO viewed 11 July 2022

Listed and trading companies (unlike in the GFC) are still solvent and trading, therefore for investors such as myself this is a buy opportunity of quality holdings at a discount (or on sale!). Understanding that the investment horizon is an average over 5 years, not 12 months. Industry funds will be releasing performance results for 2022 and just like the markets, portfolios will not see the previous year’s 2021 stellar ~20% results, which the market knew was not sustainable as it followed the COVID funds that left the market being re-introduced.

Below is an example of an industry super fund’s performance table (2022 not yet released by the fund) that highlights that not every year provides 6-7% returns, however aggregates of 5yr periods provide this for the investor. With 2016-2020 average of 6.97%, 2012-2016 9.2% or 2013-2017 11.64%. This highlights Sequencing risk, which is a whole other risk factor for another article!

Hostplus mysuper product dashboard investment return on balanced portfolio viewed 11 July 2022

Investors stay calm, review your investment strategy, confirm you hold quality investments and hold on for the ride, remember it is about the averages. Reach out to an adviser if you would like to review your investment strategy and investments.

Investment Trends of Tomorrow

adam@mulcahy.com.au (Adam Foale) — Tue, 07 Jun 2022 00:23:22 GMT

The combined team at Mulcahy & Co Geelong and COSIMFREE Home Loans held our first client networking event since our recent merger on Tuesday, May 31st.

Highlights ( 1m30s )

Full Video (1h 30m )

The event was held at the Captain’s Room at GMHBA Stadium and was titled: “Investment Trends of Tomorrow”.

The purpose of the event was to launch our new team in Geelong and to provide our clients, and general public, with an insightful and informative evening.

The event included talks from AFL great Nathan Buckley, Jonathon Tolub from InvestSense and Dean Kitchin and Jennifer Bell from Opteon. Despite the blizzard-like conditions in what is normally sunny Geelong, we had around 250 guests attend as well as members of the Mulcahy & Co Geelong and Ballarat offices.

I would like to share a brief summary of each speaker, what they discussed and some of their key messages.

As an unashamed and very passionate Collingwood supporter, I was personally quite happy when I heard rumours that “Bucks” was the front runner to be the keynote speaker at our event. I have heard Bucks speak a few times, and follow his media opinion quite closely, but I did wonder what relevance his background and expertise would have at a networking event hosted by a Financial Services firm.

Danny Archer

Financial Planner

Bucks spoke at length (he went around 20 minutes over his allotted time) and had the whole rooms undivided attention from his first word. My key takeaway was the message he started with which was asking the attendees to think about a person in their life that is influential, and how much of their feedback is either positive or negative. We heard a range of answers and Bucks revealed the purpose of the exercise was for people in the workplace, and life in general, to focus their attention on the positive feedback rather than the negative.

This was perhaps surprising to a lot in the room who followed the notion that while it is nice to hear positive feedback, you should focus on negative feedback, or constructive criticism, to get better and improve. He gave an example where he had a lightbulb moment early in his role as Captain of Collingwood. The moment was when he realised that focusing on what people are not quite good enough at, or need improvement on, only spreads negativity and dints confidence levels. Rather, focusing and celebrating what people do well regularly and often, improves the overall environment of the organisation and by default, motivates those within it to better themselves naturally.

During his Q & A time, I asked him what he was most proud of about his time as Coach of the Pies that might not be publicly obvious, and if he could do it all again, what would he do differently? His answer centred around his starting message in that his proudest achievement was the positive influence he had on the off-field growth and development of the players during his time, and the cultural shift to celebrate small wins often. The key thing Bucks said he would do differently would be to simply take himself less seriously and have more fun. An example if this would be to have the ultimate goal of a Premiership in mind, but stop and smell the roses when smaller goals and objectives are achieved along the way. This shift is what helps change the environment and culture of the organisation to an employer of choice, which results in the longer-term goal being more likely achieved.

Changing gears to the finance side of the evening was Jonathon Tolub from InvestSense. The Financial Planning team know “JT” quite well, as he heads InvestSense which is the firm we work alongside with to build our investment portfolio’s that we recommend to our clients. JT is a very well-renowned investment analyst and is regularly on the money with his opinions and projections of the local and international economic environment.

JT’s talk included comparing the local and US share markets, which asset classes currently appear to have the most value to investors and which are most concerning, the impact of rising interest rates on portfolio’s and dividends, the long-term appeal of ethical and sustainable investments, plus everybody’s favourite: Bitcoin and Crypto.

The focus was on Australia, the US, Europe and Emerging Market’s as JT compared long-term dividend yields and growth rates to the asking price for investors to place their money in these asset classes. Currently, the US seems what JT calls “expensive” for investors, whereas Emerging Markets present an opportunity.

Rising interest rates will have some effect on the performance of share portfolios and property alike. How much effect depends on your investment strategy and what asset allocation you have. JT tends to follow the “valuation based” investment philosophy, which theoretically is one that performs well in a high inflationary and interest rate environment.

This was followed by Dean and Jennifer from Opteon who gave a strong talk about the current state of the property market around Geelong, and some factors that will be key to the mid and long-term success of it moving forward. This focused on the demand of property and also the supply and what is driving these around the area.

The sheer dollar-amount of infrastructure investment in the area over the next 10 or so years is mind-boggling, but also very reassuring as the economic and population growth outlook seems positive. There are projects in schooling, housing developments, hospitals, railroads, prisons and everything in between that are all helping make the Geelong area a prosperous place to live and raise a family. A key stat that helps prove this was that the projected population increase of Australia over the next decade is ~24%, whereas the projected increase in the Geelong area over the same timeframe was ~44%. This was quite surprising to myself and reinforced my confidence that in an environment with a lot of unknowns at the moment, Geelong is not a bad place to be.

Another point made by the Opteon team was comparing living in Geelong versus Sandringham. As the crow flies, Geelong is almost double the distance from the Melbourne CBD as Sandringham is, however, via public transport is takes around the same time. Dean spoke about the hobbies and activities and timeframe it takes to get around them all in both areas, which made the Geelong area seem more attractive. Then he revealed the median property price in Geelong is ~$850,000, and Sandringham is ~$1,650,000. He asked after considering the lifestyles on offer, and cost of entry differences, where would you rather live?

This rounded out the event for some networking time and the overall flavour of the feedback received was that the night was very enjoyable and educational and an overall success.

If reading this has prompted any questions about finance and investing, accounting, lending or legal services, please do not hesitate reaching out to a Mulcahy & Co team member to see how we can help.

Single Touch Payroll Phase 2

adam@mulcahy.com.au (Adam Foale) — Mon, 06 Jun 2022 23:42:06 GMT

Single Touch Payroll Phase 2 (STP 2) employer reporting guidelines & overview

STP is the way you report your employee’s tax and super information to the ATO.

We have been operating STP Phase 1 for a couple of years. The mandatory start date for STP Phase 2 reporting was 1 January 2022. However, an extension was automatically applied to users of MYOB, XERO, QuickBooks and other Software Providers to 1 January 2023.

The expansion of STP Phase 2 is to streamline employers reporting obligations. This will provide additional information including reducing the reporting burden for employers who need to report information about their employees to more than one government agency and support the administration of Social Security system.

However, if you are ready to make the transition to STP Phase 2 now is the time to get organised and it can commence on 1 July 2022 therefore a voiding having a hybrid year (Part year STP 1 and part year STP 2) Being in just STP Phase 2 for the full financial year should allow for less possible issues. The payroll for 2022 should be set as final, and then transition to STP Phase 2.

At Mulcahy & Co, we have tax professionals to assist you with this transition. We are only a phone call away to step you through this process.

Steps for the changes in STP Phase 2

Check your business details are correct
Check your employee’s details are correct
Employee Income Type:
SAW Salary & Wages
CHP Closely Held Employees
WHM Working Holiday Makers
SWP Seasonal Worker Program
LH Labour Hire
ATO Reporting Categories:
There is a table to show the components of tax treatment code, as this is a little more complex within the software program. The areas for these ATO reporting categories are:
Wages
Superannuation
Deductions
Taxes
Lump Sum E Payments

All software programs will step you through this process. The programs will not allow the transition to be completed if you have not answered all the categories correctly.

It is time to get prepared and plan for this transition. If you are unsure and need help the team at Mulcahy & Co are more than happy to guide you through the process and take the burden away…. please contact us if you need our assistance.

Changes to Superannuation Guarantee 2022

adam@mulcahy.com.au (Adam Foale) — Wed, 25 May 2022 01:43:35 GMT

From 1 July 2022, two important super guarantee (SG) changes will apply to your business.

These are:

the rate of SG is increasing from 10% to 10.5%
the $450 per month eligibility threshold for when SG is paid is being removed.

What this means for you

These changes mean that from 1 July 2022:

you'll need to make SG contributions at the new rate of 10.5%
employees can be eligible for SG, regardless of how much they earn. You may have to pay SG for the first time for some or all of your employees.

We're working with digital service providers (DSPs) to make sure payroll software is updated in time. If you use a tax agent, they'll also be aware of these changes and able to assist you.

Our updated online tools and calculators will be available to help you from 1 July 2022.

What you need to do

Check that your software is updated to correctly calculate your employees' SG entitlement from 1 July 2022.

If the removal of the $450 threshold means you'll be paying SG for one or more employees for the first time, you'll need to give them a Standard Choice Form.

If your employee does not provide you with a choice of super fund, review the Stapled Super Fund information on our website for guidance on what you need to do next. A stapled super fund is an existing super account linked to an individual employee.

FS360 Podcast - Episode 44

adam@mulcahy.com.au (Adam Foale) — Mon, 16 May 2022 04:59:49 GMT

Transition to Retirement

If you’re not quite at retirement age but are thinking of that next phase of your life, a transition to retirement (TTR) plan at Mulcahy & Co could be a way to set yourself up for the future.

Mulcahy & Co financial planner Tamara Vawdrey says her team generally look to implement TTR plans at age 60, however it could be done at the preservation age of 57.

“It’s an income stream (for) a person that has reached their preservation age, which is 57 now, they get limited access to their superannuation while they’re still working,” she said on episode 44 of the FS360 podcast. ”You can start a TTR income stream by transferring some, most of the time the majority of your super balance, into an income stream pension.

”You still need to retain a balance in your accumulation account because … you’re still getting your employer contributions going in there. ”You can withdraw between 2-10% of your pension balance each year.”

Vawdrey touched on the numerous benefits of a TTR plan, including being able to work less while still earning the same income thanks to your super fund topping up your active income. TTR plans could help pay outstanding debts you have before retirement, such as a home loan.

People 57 years of age and older are able to withdraw up to 10% of their pension account per year, meaning if you have, for example, a $100,000 home loan outstanding that you want to pay off before retirement and $200,000 in your pension fund, you could take out $20,000 per year to pay off your home loan.

Between the ages of 57-59, any money taken from your super fund becomes part of your taxable income, however this isn’t the case once you turn 60. Vawdrey explained the tax benefits to implementing a TTR plan. If, for example, you take out $20,000 and use those funds to make a re-contribution to your super fund, this is called a re-contribution strategy. You would earn a tax deduction on that lump sum, paying at the super tax rate, 15%, instead of the marginal tax rate.

There is a contribution cap, however, which is $27,500, which does include your employer contributions.

Salary sacrificing is another tax benefit, where you could use your pre-tax income and put it into your super fund, to save paying tax on that amount. For example, if you salary sacrifice $10,000, that comes off your income, prior to charging tax on it. So, if you earn $100,000 per year and salary sacrifice $10,000, you’ll only pay tax at $90,000.

In good news for employees, employers’ mandatory superannuation contribution are increasing. This figure is set to rise 0.5% each year until it hits 12%.

For more information on this topic please contact one of our professionals .

Transition to Retirement case study.

Recently, clients engaged us at Mulcahy & Co because they are in their mid-late 50’s, with a mortgage, and want to retire without one.

Having worked hard their entire lives, their plan is to reduce their work hours at age 60, and permanently retire with an eye to a life on the caravanning circuit at 65. Based on their calculations, they couldn’t see how this could be achieved with the pesky mortgage in the background. Enter: TTR

To find out more about TTR, you can read the full article her e . You can also read the case study below.

Case Study

Gary is 60 and earns $75,000 a year and he has $250,000 in his super. He wants to cut back from 35 hours a week down to 25 hours, which will reduce his salary from $75,000 to $53,500. By using a TTR strategy and withdrawing $13,885, he can maintain his after-tax income, despite reducing his work hours.

But it does come at a price – his super will dwindle more quickly as he continues to draw down on his pension payments and there is a smaller amount going into his super from his employer because employer contributions are based on salary.

Other benefits

Recontribution strategy – by setting up a TTR between the age of 60 and 65 and withdrawing the maximum pension payment of 10% you can recontribution this pension payment back into your super account and claim a tax deduction in your own name
Once you hit the age of 60 and if you fully retire then you can have full access to your super balance, there is no maximum pension payment

Tamara Vawdrey

Financial Planner

Ballarat Office

Episode 44

Tamara Vawdrey from our Financial Planning division joins again - this time to talk about 'Transition to Retirement' or TTR with host Gavin Nash. A great episode specifically if you are in your late 50s or above in age. Lots is changing in this space with new laws and rules so this episode is of great value.

Available on Google and Apple Podcasts, Spotify and also our website along with an accompanying article to help explain the details.

Tax Planning in 2022

adam@mulcahy.com.au (Adam Foale) — Wed, 11 May 2022 00:07:53 GMT

With the end of the financial year fast approaching, engaging in one of our Tax Planning sessions is a great way to address future planning, cashflow management and preparing for tax liabilities.

To ensure you are in the best position possible, please find below some tax planning tips and tricks.

Immediate Tax Deduction for Asset Purchases

Take advantage of the immediate tax deduction available for depreciating assets acquired and first used by 30 June 2023, with no threshold limit on the cost of the asset. Small and medium businesses, with turnover less than $50 million, are also able to immediately write-off second-hand assets.

Small Business Tax Concessions, Available to Businesses With Turnover $50 million Turnover

Tax concessions available to Small Businesses include:

Immediate deduction for prepaid expenditure when payment covers a period of less than 12 months.
Immediate deduction for certain costs incurred in relation to establishing a business.
Simplified rules for trading stock.
A Small Business tax offset for individuals up to a maximum of $1,000, calculated as 16% of the tax payable on any Small Business net income (turnover under $5 million).

Prepay Interest on Loans

Taxpayers who have borrowed money for investments can check with their lenders to see if they can prepay interest to gain an early tax-deduction by paying 12 month’s of interest in advance as a one-off tax benefit. This is an option for investment loans on properties, margin loans on shares and business loans.

Interest Deductibility on Financing Business Expenses

Interest on the financing of business expenses is tax-deductible in most circumstances. If you are maintaining a line of credit or overdraft to finance your day to day business expenses, the interest will be tax-deductible except in the following cases:

Payments from the account are for personal purposes,
Payments made for the payment of personal income tax (including PAYG instalments),
Payments made for personal superannuation contribution.

Consideration should be given to external finance if you are currently using your personal funds to finance your business activities and would prefer to use your personal funds elsewhere.

Small Business Technology Investment Boost

Small businesses with less than $50 million annual turnover, will be able to deduct $1.20 for every $1 spent on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems and subscriptions to cloud-based services).

For eligible expenditure incurred between 7:30 pm AEDT 29 March 2022 until 30 June 2022:

claim the expenditure as usual in your 2021–22 tax return, and
claim the additional 20% bonus deduction for this period in your 2022–23 tax return.

An annual cap of $100,000 of expenditure applies, so those who expect to maximise their claim will benefit from spreading their expenditure between the 2022 & 2023 financial years.

Small Business Skills & Training Boost

Small businesses with less than $50 million annual turnover, will be able to deduct $1.20 for every $1 spent on external training courses for employees provided in Australia or online by registered training organisations.

For eligible expenditure incurred between 7:30 pm AEDT 29 March 2022 until 30 June 2022:

claim the expenditure as usual in your 2021–22 tax return, and
claim the additional 20% bonus deduction for this period in your 2022–23 tax return.

|
For eligible expenditure incurred from 1 July 2022 until 30 June 2023:

you can deduct the entire 120% in your 2022–23 tax return.

For eligible expenditure incurred from 1 July 2023 until 30 June 2024:

you can deduct the entire 120% in your 2023–24 tax return

There is no cap on the amount of boost which can be claimed.

The Small Business Boosts were announced in the 2022 Federal Budget, however are yet to be enacted. We will monitor for updates.

Superannuation Contributions

Maximise your superannuation deductions before 30 June 2022 by:

Ensuring superannuation contributions for employees are paid and cleared by 30 June 2022;
If your superannuation balance is less than $500,000 and you’ve made concessional contributions of less than the concessional contributions cap of $27,500, you may be able to make additional concessional contributions in subsequent financial years for any unused amounts. Unused cap amounts can be carried forward for up to five years.
If you earn less than $56,112 p.a., you could be eligible for the government co-contribution. The government will contribute 50 cents for every dollar of after-tax contributions you make to your superannuation fund up to a maximum of $500. The full benefit is available for income earners under $41,112 and phases out where adjusted taxable income is between $41,112—$56,112.

Bad Debts

Review your aged debtors and determine if any debts are bad debts (i.e. not recoverable). If they are, write them off before 30 June 2022 to receive a tax deduction this year. For a debt to be bad, there must be little or no likelihood of recovery, such as when the debtor is in receivership or cannot be traced. Records should be kept to show you have taken reasonable steps to recover the debt prior to writing off. If circumstances later change, you can recommence pursuing the debtor.

Stock Management

Review your stock and identify any obsolete or unusable stock. Write off these stock items prior to 30 June 2022.

Farm Management Deposits (FMDs)

Investing in Farm Management Deposits (FMDs) can help primary producers to reduce fluctuations in taxable earnings caused by economic and seasonal changes to primary production income. Interest is paid on such FMDs, and they must be held for at least 12 months; otherwise, the tax benefit of investing in an FMD will not be retained. The maximum limit for deposits is $800,000 per person. Consider whether FMDs would be useful to reduce this year’s taxable income or whether you have any FMDs to withdraw if your income is lower than average.

Capital Gains Tax (CGT)

If you have derived any capital gains from the sale of your investments or business assets this year, consider whether you can offset them by crystallising any capital losses on the sale of other assets (where possible), or be able to use the CGT Small Business concessions. Please contact us to discuss prior to 30 June 2022 to minimise or eliminate any potential CGT.

Private Health Insurance Rebate Changes

Entitlements to the private health insurance rebate are income-tested, which means that if you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to receive any rebate at all.

Division 293 Tax on Super Contributions

Division 293 tax is an additional tax of 15% on concessional super contributions, if you earn over $250,000.

Income for the purposes of Div 293 tax includes:

Your Taxable Income
Reportable Superannuation Contributions
Reportable Fringe Benefits
Total Net Investment Loss (these are added back to your taxable income)

Concessional contributions include employer contributions, salary sacrifice, personal deductible contributions.

Company Loss Carry-Back

A temporary tax relief allows eligible companies, with an aggregated turnover of less than $5 billion, to carry back tax losses incurred in the 2020 to 2023 financial years, to be used against profits taxed in a previous year, 2019 or later.

These companies will receive a refundable tax offset in the year they made a loss, if they elect to use this mechanism when they lodge their 2022-23 tax return. The losses carried back must not be more than earlier taxes profits and must not result in a franking account deficit.

Any tax losses that are not fully offset against previous taxed profits, or not elected to be used, will be carried forward as normal.

Contact one of our offices to discuss your circumstances and options available to save on tax.

FS360 Podcast - Episode 43

adam@mulcahy.com.au (Adam Foale) — Mon, 02 May 2022 01:57:05 GMT

End of Financial Year Opportunities – Superannuation, Deductions and more

Yes, contributing more money to it now means you do not have instant access to it until you meet a condition of release. However, as you near retirement, you will likely be thankful for every extra dollar you put into Super through your working years.

Remember, there are different ways to get money into superannuation and each have their own form of rules and restrictions, so contact one of our advisers for more information. There are a few recent podcasts online that discuss some changes to Superannuation coming into force from July 1 for more info.

Let’s look at a case study:

Fred is 35 with a superannuation balance of $150,000;
Fred earns $90,000 per year and his employer pays $9,000 into superannuation;
Fred typically does not voluntarily contribute any extra money into super;
In the 2022 Financial year, Fred sold an investment property for a $100,000 taxable gain;
Fred owned the property for more than 12 months, so he is eligible to apply the full 50% CGT discount to that gain, meaning only $50,000 is taxable;
Fred has the option of simply accepting this money and would then pay tax on that 50k at his MTR (pretty much 32.5%);
Fred also has the option of contributing the $50,000 into superannuation, which would provide a large tax benefit;
Fred’s concessional contribution limit is $27,500 per annum;
Work is putting in $9,000, which means Fred has $18,500 of cap space remaining. If Fred were to use $18,500 of the property sale and contribute this to super as a concessional contribution, the tax on this would be 15%, rather than 32.5%;
This is a difference of around $3,200;
What is more is a rule called the ‘carry-forward of unused concessional contributions’ rule. This allows a person to access previously unused concessional contributions from the last 5 financial years, starting from FY2019, on a rolling period;
Assuming Fred has earned $90,000 since 2019, he could have around $48,000 of unused CC cap space available to him to use;
This means Fred could use the remaining taxable amount of $31,500 from his property sale and contribute this to super at 15% tax, rather than paying hit MTR of 32.5%, another $5,500 saving for Fred;
In the one transaction, Fred could use his superannuation opportunities to save around $8,700 in tax from the property sale and boost his retirement savings;
This does not have a lifetime cap – a person can do this as often as they like, or can, subject to their respective rolling 5 year cap space is.
There are certain conditions needing to be met to ensure the above is done correctly, so speak with your adviser before doing so.

You don’t need to have sold a property to make the most of superannuation. There are plenty of other options available, which include:

Salary sacrificing a portion of your wage each pay cycle;
Making what is called a personal deductible contribution from savings before 30 June;
Making a spousal contribution, which can result in a $540 tax offset to the contributing spouse (income less than $37k);
Making a $1,000 non-concessional contribution to super and receiving a $500 government co-contribution (a 50% rate of return) income less than $41k; and
Making larger non-cons if you have met your CC cap

The EOFY opportunities do not stop with those still working. Our retired friends can also benefit. One of the more recent podcasts and blogs, written by Lynde, focuses on this strategy with particular focus on super.

The Government has also recently announced additional means to get money into superannuation after you have sold your home. These opportunities are on top of normal concessional and non-concessional contribution caps and can be hugely beneficial. As the EOFY approaches, it is time to consider your options.

Further, there are other ways of increasing your tax deductions or tax opportunities, before 30 June, which can help lead to an increased tax return and also provide other benefits;

Taking out income protection insurance personally owned
Pre-paying interest on an investment loan
Investing for franking credits
Increasing the amount of work- or business-related expenses you have
Join professional bodies
Make donations

There are plenty of EOFY opportunities available to almost anybody, so it certainly pays to contact your adviser to see if any, or all of the topics discussed today, are applicable to you.

Danny Archer

Financial Planner (Geelong)

The following steps of the FS360 program are touched on during this podcast and article.

3. Risk Plan
5. Tax Plan
6. Debt Plan
7. Retirement Plan
11. Superannuation Plan
12. Investment Plan

More info on the FS360 program at Mulcahy & Co can be viewed here: https://www.mulcahy.com.au/are-you-financially-secur e

Episode 43

End of Financial Year is approaching and now is a great time to consider Superannuation, Deductions for Tax and more... Danny Archer, Financial Planner (Geelong) joins host Gavin Nash to chat about some options to consider coming into June 30th 2022. An informative episode with real case studies to help our listeners understand this topic.

Hosted by Gavin Nash and available now on Apple and Google Podcasts, Spotify and our website.

Choosing how to invest

adam@mulcahy.com.au (Adam Foale) — Wed, 20 Apr 2022 01:28:33 GMT

It can be daunting to know where to start when investing. Low value balances for investible funds can take the pressure off for some, while others simply procrastinate, unable to make any decisions! I have seen investors sit on cash with wonderful intentions to invest funds…. over years!

When meeting with clients we ‘risk profile’ investors to understand their tolerance levels and attitudes. It also helps to understand the risk/reward sweet spot on an individual basis. The conversation that shakes out from profiling provides valuable information to advisers such as sentiment towards certain asset classes like shares and property and where this stems from. Eg parents or grandparents investment experience and influences.

Antonia Gapes

Financial Planner
Sunshine Coast Office

Next step is to understand the features a client values; namely active or passive investment style. Active has management that seeks to attempt to outperform the market with a fee to do so, passive will simply follow a market index and is often low cost. Does the investor want to make portfolio decisions themselves or have someone with investment expertise make those decisions? What preference to approach – strategic or dynamic? This will determine the parameters of asset allocations across Australian and international equities, property, cash and fixed interest. Advisers find this out through conversations and explain the differences with clients.

Many clients favour active management as they want someone overseeing their portfolios. In selecting a fund manager, the need to delve deeper to understand the methodology, fees and performance and if the fund manger adopts a value or growth style, or both.

Simply having this conversation with clients allows an investment path to present itself and is very collaborative between adviser and client. Most importantly, we understand that this may be the first time our clients are having this conversation, skilfully enquiring and educating along the way. I encourage anyone to reach out if you have not had this conversation already or are not sure how to start making investment selections.

FS360 Podcast - Episode 40

adam@mulcahy.com.au (Adam Foale) — Thu, 31 Mar 2022 02:07:42 GMT

FS360 Podcast Episode 40

Values Based Advice in a modern business world.

Gavin Nash introduced Scott Kitchin, Accounting Director at Mulcahy’s Geelong office. Scott began practising Accounting in his hometown of Horsham, before moving to Geelong in 1998, where he became a partner in a multi-partner firm.

In 2014 Scott started his own practice, launching his vision of a different way of running an accounting business. He proceeded to recruit others who shared his vision, won awards, and built a client base of professionals and business owners in the Geelong Area. When a client introduced him to Mulcahy & Co, he found that there was a shared mindset, and in 2021 he moved his business into the Mulcahy & Co Group. Whilst Scott was initially concerned that he might lose his point of difference, he very quickly realised that Mulcahy & Co had the same approach and values as himself.

The move also gave Scott the opportunity to provide his young and energetic team with a dynamic career path. The multi-disciplinary nature of the Mulcahy & Co company structure provides Scott’s team with the valuable experience of collaborating with other professionals to create strategies for their clients.

Scott Kitchin

Accounting Director

Mulcahy & Co Geelong

Scott explained his Values Based Advice system – he and his team spend time with clients in order to get into their hearts and minds; from there he can provide relevant, tailored and sustainable advice in line with his clients’ values. Clients have dreams and goals but don’t always know how to achieve them.

Helping clients in this way is not only rewarding and relevant, but also builds sustainable relationships with clients which carry through generations of families and businesses. Scott finds it rewarding to see someone able to bring their retirement plans to life, or to assist their children to build their dream home – this point of difference is what adds value to a relationship which could otherwise be just transactional.

Scott cited the example of a client whose retirement plan was to sell his business for an expected sum. His plan was, however, severely flawed as he had overestimated the value of his business - Scott worked with the client to review his plans.

Being part of the Mulcahy & Co Group has provided Scott with the opportunity to work with financial planners, other accountants, the legal team, and other professionals to obtain powerful outcomes for clients in a short time frame. With a broad spectrum of clients in the Geelong area, including doctors and other professionals, tradies, and small businesses, as well as a number of agribusinesses in the Western District, Scott finds that he has diversity in his client base without the risk of losing focus on particular trends in specific industries. The Mulcahy & Co model also provides referrals to new clients which are very welcome.

Responding to a question about “pain points” in his client community, Scott cited liquidity as the leading problem at this time. Covid has slowed down the cash cycle – businesses are carrying more debtors, so they are slower to pay creditors. Scott can apply various remedies depending on the type and size of the business e.g. accessing equity in assets due to the growth in property values, varying trading terms, as well as borrowing, although this does not need to be the first solution. Accessing equity needs to be used with a disciplined approach. Some clients take steps to educate themselves regarding finance. Whilst others prefer to leave the decision making to Scott and his team, he stressed that he always insists on taking the time to clearly explain the chosen strategy - this is in the best interest of the client who needs to understand the strategy and agree that it is the right way to proceed.

Scott offers a free and non-conditional discovery session for new clients; these sessions are connected to the Value Based Advice system. Topics covered in the discovery session include where do you want to be, what are you trying to achieve, how much can you afford to invest after your bills are paid, how much tax are you paying, is the structure of your retirement plan correct, are your wills in order, legacy and family values, and children’s education. This free session determines whether a client is a good fit for Scott and his team , and that the team is a good fit for the potential client. Not all clients take up this opportunity , but fortunately many do, allowing Scott to meet them and introduce them to the multi-disciplinary offerings of the Mulcahy Group. Even if clients don’t proceed with Mulcahy & Co, Scott is happy to provide this free service to the community.

For more information, contact us here.

Episode 40

Host Gavin Nash chats to Scott Kitchin from Mulcahy & Co Geelong about his journey in business and how his company IWS joined Mulcahy & Co recently.

Scott also talks in depth about 'Value Based Advice' and how this can be the catalyst for a secure financial future for his clients.

Available on Apple, Google Podcasts, Spotify and on our website.

ATO crack down on Trusts

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Mar 2022 23:31:58 GMT

The ATO has announced a major crackdown on the taxation of family trusts. In a long-awaited series of draft rulings, the ATO has focused on common tax planning strategies involving distributions to private companies and family members. This crackdown means that family groups will urgently need to reconsider how they are using their family trust.

What is the ATO focusing on?

The ATO is focusing its attention on section 100A of the tax law. Where 100A applies, the trust distribution will be taxed to the trustee of the trust at the top marginal tax rate (currently 47% including medicare levy) rather than the beneficiary to whom it was to be taxed to. This beneficiary would have likely paid less tax than the trustee.

Section 100A can apply where:

A Beneficiary is presently entitled to a share of income of a trust
There is an ‘reimbursement’ agreement (whether formal or informal, written or unwritten) whereby a person other than the beneficiary will benefit from the amount; and
A purpose of the agreement is that less income tax will be paid.

What type of distributions are an issue?

The draft rulings are quite wide and the ATO have released guidance in their draft rulings using a colour coded risk zones – White, Green, Blue and Red. Red is the highest risk.

Distributions that fall into the ordinary family or commercial dealing

For example, a trust which distributes all its income to a husband and wife, who uses that money to pay for their household expenses, will fall into the green zone and unlikely to be problematic.

If the trust is distributing to adult children, but the funds from that distributions end up back with the parents, then this is likely to be an issue and fall into the higher risk blue or red zones. An example of this is where an adult child at university is earning no other income and the trust distributes $180,000 of income to them. The family could save around $30,000 in distributing to them, but do not want to pay the $180,000 into the young adult’s bank account.

Unpaid distributions to companies are also a focus of the ATO crack down.

Is this the end of distributing to children or other family members?

Not necessarily, but it does mean that you need to strongly consider what distributions are made, as the ATO will be scrutinising them. If the distributions generally take place and the family or commercial basis can be explained, then it may fit into the ‘ordinary family or commercial dealing’ exclusion.

Just because you have done the distribution before, or it is common practice, does not mean it is an ‘ordinary family or commercial dealing’.

What do I have to do with my trust now?

If you have a family trust, it is important to consider whether any of the new ATO views could be problematic for you. While some of the views of the ATO do not apply until 1 July, other parts apply retrospectively.

Trusts will continue to be an effective structure, but the tax planning aspect will become more complex and tailored.

To discuss how these changes impact you, and the best way to manage your situation going forward, please contact your Mulcahy & Co Advisor .

Fringe Benefits Tax year ends 31 March 2022

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Mar 2022 23:07:36 GMT

The Fringe Benefits Tax (FBT) year ends 31 March 2022, business owners should ensure they have all their FBT obligations in order.

The ATO monitors this area closely and it is an area that most of us find confusing and complicated. Below is a list of things to consider each year:

Should my business be registered for FBT?

If you have directors, employees, or family members of the that are provided with benefits such as car parking, cars, loans, entertainment (food and/or drink); discounts etc, then it is likely you may need to be registered for FBT. Please speak with us if you are in this category.

If you do need to lodge a FBT Return, we will ensure you have all the correct documentation required to support your return. For lodgement of your return via a tax agent, such as Mulcahy & Co, the due date is 25 June 2022. If you lodge your own via paper, the due date is 21st May 2022.

Exemptions from FBT

There are items that are exempt from FBT such as work-related electronic devices (mobile phones, laptops, tablets), computers, tools of trade and some minor and infrequent benefits that are less than $300 in value. You can only provide one portal electronic device, unless you are a small business, where you can provide multiple work related portable electronic devices.

Common misconceptions with FBT

Often business owners believe they can claim a multiple of expenses, only to find they are not deductible or incur fringe benefits tax. Examples of these are as follows:

A ‘business lunch’ out with a client
Business vehicles garaged at employee’s residences
All vehicles are treated the same – in fact in majority of cases, a logbook is required to be maintained for a continuous period of at least 12 weeks.
Business meals, Christmas, and other social functions
Friday night drinks or similar events

We can provide further clarity about your situation and what records you need to be keeping.

Ways to reduce your FBT liability

Below are some ways in which you can reduce your FBT liability:

Replace your fringe benefits with cash salary
Consider whether you should be purchasing vehicles that have some private use in your personal names instead of your company or trust.
Provide benefits that your employees would be entitled to claim as a tax deduction if they had paid for it themselves.
Provide benefits that are exempt from FBT
Use employee contributions - an employee reimbursing for the private portion of the costs. Please note, this is assessable income to you and subject to GST.
Prepare logbooks on vehicles where required and keep odometer records as at 31 March 2022 each year on all vehicles.
Keep a record of entertainment expenses including who attended and what food and drink was provided.

If you have any questions regarding FBT or require any assistance, please contact your Mulcahy & Co Advisor .

Renting vs buying, which is the best option?

adam@mulcahy.com.au (Adam Foale) — Thu, 24 Mar 2022 06:49:22 GMT

Becoming a home owner has always been the dream of most Australians and what most people strive towards, however as property prices increase that dream is becoming more and more out of reach for a lot of people. There is about 67% (or 5.4 million) households being owner-occupied, the remaining 33% being renters which is either by choice or out of necessity.

Back in the mid-1990’s housing values were less than 3 times the disposable household income compared to now where it is more than 5.5 times disposable household incomes. With property prices continuing to grow compared to low wage growth, it is expected for the gap to continue to widen.

Tamara Vawdrey
Financial Planner

With property prices growing at such a remarkable rate it is going to be more challenging than ever before for first home owners to enter into the market without having the equity of other property supporting them and, in some cases, even with access to the “Bank of Mum and Dad” it is still difficult to enter into the market.

With property prices growing, potential buyers are needing to have an even higher deposit to avoid Lenders Mortgage Insurance (LMI). This is made even more difficult with low interest rates in savings accounts so savers are just relying on their own contributions if they aren’t willing to risk their savings in options such as the share-market.

On the other hand there are definitely upsides to renting, it is generally more affordable without having to pay the extra costs such as council rates or house insurance and it also gives you more flexibility in being able to locate from area to area.

Other upsides are that it frees up your savings to do things you enjoy such as traveling or even gives you the option to diversify your investment portfolio by not having all your wealth in the family home.

It’s not a simple yes/no answer to whether buying a home is the best option for yourself, every person has a different situation and are in a different stage of their lives so if you are questioning what you should be doing and what your next move is, please contact our office and book an appointment with one of our Financial Planners to discuss your individual situation.

New Superannuation opportunities from July 2022

adam@mulcahy.com.au (Adam Foale) — Thu, 10 Mar 2022 04:36:01 GMT

New Super rules passed recently that were proposed in the 2021 Federal Budget which will provide significant opportunities, particularly for those already retired or over 66 years old.

Two of these changes include:

Removal of the work-test requirement to make personal contributions and salary sacrifice contributions for those aged between 67 and 75
Extending eligibility to make personal contributions (also known as non-concessional contributions or NCCs) under the bring-forward rule to individuals aged under 75.

Lynde Adams

FINANCIAL PLANNER

What does this mean?

Currently, those who are over 67 must meet a ‘work-test’ to enable them to contribute funds to super. This means you had to be ‘gainfully employed’ (not a volunteer) for at least 40 hours during a 30-day period.
The maximum amount currently allowed to be contributed to super personally (non-concessional or NCC) is generally $110,000 per year. The bring-forward rule enables individuals to make additional contributions without having to pay extra tax. You may be able to make three times the annual cap (i.e. $330,000) in one financial year – however this was previously limited only to those 65 years or younger. The new rules mean that from 1 July 2022 this bring-forward rule can also be to be used by those up to age 75.

You could save your family and beneficiaries thousands of dollars of death tax!

Do you have a high taxable component in super and aged over 65 but under 76?
Many individuals may not be aware that a large part of their super may be taxable if paid to a non-tax dependent on your death.
Individuals who are aged over 60 do not pay tax on super income streams regardless of the components (taxable or tax free). However, should an individual pass away, the taxable component of the benefit paid on death may incur tax if they are classified as non-dependent for tax purposes (for example your adult children).
This change of legislation to enable contributions up to age 75 means that individuals can withdraw super and re-contribute as a personal contribution which can increase the tax-free component. We have saved our clients’ families thousands of dollars in death tax using this strategy and the extension of this strategy to those over 65 will further enable us to do this.
Depending on the total amount held in super, a recontribution strategy could completely eliminate death benefit tax over a number of years, making superannuation even more attractive as an estate planning investment.

Who else is this good for? How can our clients benefit?

You no longer have to be working to make contributions to super up until age 75
Are you selling another investment or asset? – This change enables clients to use super contributions to reduce other taxable income such as a capital gain from sale of property or shares
Have you received a lump sum to invest such as an inheritance? - Enables clients to invest funds into super which is a tax-free environment which can be used to generate tax-free income in retirement
Do you have funds in investments outside super, such as a term deposit or bank account, that has minimal earnings potential? – Opens the ability to invest funds into existing or new super funds with an extensive range of investment options to suit your need and comfort level when it comes to risk v’s return
Have you sold a business or asset that qualifies for small business CGT cap exemptions? – This change enables older clients to use CGT exemptions cap to place even higher levels of funds into super to generate a tax-effective investment from which to draw tax-free income
Individuals aged less than 75 at the prior 1 July will be eligible to access the NCC bring forward arrangement, subject to meeting all relevant eligibility criteria:
Are you a couple that has one member with high super balance and one lower? – Using the bring-forward provisions, you may be able to cash out and recontribute to a spouse’s account to manage your Total Super Balance (as there is a maximum level you can transfer to a tax-free income stream)
Funds to invest after sale of shares, investment property or receipt of an inheritance? – This change may enable you to invest up to $330,000 into super in one financial year
Selling your family home? – Contributing proceeds to super along with the Downsizer contribution opportunity means a much larger sum can be invested into the super environment, or can be used as an alternative option if you don’t qualify for the Downsizer strategy

Case Study

Bill, aged 69 has $500,000 in his super fund, which consists of the following components:

Tax free component: $175,000 (35%)
Taxable component: $325,000 (65%)

Bill’s wife sadly passed away suddenly last year and therefore he has nominated his adult children to inherit his superannuation upon his own death. In the current scenario, his children would pay $55,250 in tax (15% plus medicare on taxable component).

If he;

Withdraws $330,000 from super and re-contributes as a personal (non-concessional) contribution
Bill will now be able to do this as he has met a condition of release (over 65) and the bring forward provisions have been extended up to Age 75
Tax components change to:
Tax free component: $389,500 (78%)
Taxable component: $110,500 (22%)
Reduces Death benefit tax to $18,785 thus saving $36,465
Bill will have the option to again repeat this strategy in 3 years if he wishes to completely eliminate his taxable component (depending on his super balance at that time)

As always, there are conditions and criteria to meet to enable these contributions and strategies and what works for some, may be different for others!

Speak to an adviser to explain and see if the above options are suitable for you – it is important to seek professional advice on your own specific circumstances.

Episode 42

Avoid the Death Tax! 'New Superannuation opportunities from July 2022' is this week's topic and we are joined by Financial Planners Lynde Adams (Mildura) and Danny Archer (Geelong) to chat about the huge tax savings opening up for retirees from July 1st 2022. An informative episode with real case studies to help our listeners understand this topic.

Hosted by Gavin Nash and available now on Apple and Google Podcasts, Spotify and our website.

International Women’s Day at Mulcahy & Co

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Mar 2022 06:12:36 GMT

Solicitor Renee Debono gathered 40 Mulcahy & Co Ballarat office staff today for a lunch and guest speakers at Oscars Hotel in Ballarat.

The lunch purpose was to celebrate International Women’s Day with this year’s theme being:

#BreaktheBias “Whether deliberate or unconscious, bias makes it difficult for women to move ahead.”

This year’s theme spotlights the individual and collective biases against women that fuel gender inequality.

Guest speakers on the day were Leah Clark (Director of Inception Planning), Tess Griffin (Host of Podcast ‘The Innerview’) and Ruchi Page (Indian Australian columnist for centennial beauty and advocate for confidence and inclusion).

Thanks to everyone who attended and well done to Adele and Renee for their organisation skills!

A look into Interest Rates in 2022 & Investing Going Forward

adam@mulcahy.com.au (Adam Foale) — Tue, 22 Feb 2022 00:15:26 GMT

Two weeks ago, the Reserve Bank of Australia made the decision to keep the cash rate at 0.1% highlighting that they intend for rates to remain stagnant until inflation falls between 2-3% proving to be transitory (it currently sits at 3.5% according to the RBA’s inflation data from December 2021).

The question regarding the rise of interest rates has become quite common from clients over the past few months, with a strong theme around whether they will increase rates this year and what it means for their savings that are exposed to the market if they do. For an indication of what it means, we first have to look at why interest rates have reached historic lows and what has transpired in the time since.

February 2022 marked two years since the beginning of the economic crash that saw markets around the globe experience massive sell offs with billions of dollars wiped off them following built up instability as a result of fear of the coronavirus and how it might impact on economies, businesses and the typical way life was conducted. Since the initial month of the correction two years ago there have been significant measures in the form of interest rate cuts and bond buying programs implemented by central banks to stabilise economies and to give consumers greater spending confidence to strengthen markets.

James Clough

Financial Planner

The measures saw a strong rebound and seemed to have been an efficient measure by the central banks; the last two years the Standard and Poor’s 500 has averaged 21% return. This has been driven largely by growth companies that have been able to take advantage of low interest rates meaning that their future cash flows become extremely valuable and in turn their market cap has grown significantly making investors a lot of money in the process. The top eight companies of the S&P 500 equate for 28% of the total market cap of the 500 companies within the index, and throughout this time those eight companies averaged around a 45% return, meaning that they’re responsible for a large portion of the strong return that the 500 has generated – as previously mentioned a lot of this return was a result of the cheap money on offer and the ability to use this efficiently within their businesses.

During this time, for many investors, making money in the share market throughout this period has been relatively easy. However, the wave of enthusiasm and sense of confidence in the market has started to slow – just last month markets experienced a 10% correction which may have been a warning for what’s to come – this has been mainly due to fears of inflation getting too high in the United States.

Over the past 12 months inflation has started to rise far more than broadly expected with inflation in the U.S reaching 7.5%. There have been a number of factors that have contributed to this inflation increase but to simplify it has been supply and demand. The supply shortages have contributed to price increases and huge economic stimulus packages in the US have given household’s their strongest balance sheet across the board in sometime which has seen the demand for goods increase. Our research team had first raised inflation risks in our investment committee meetings in December of 2020 – the stimulus package of $1.9 trillion in March 2021 has been a decision that some pundits are saying wasn’t required in hindsight. To avoid hyperinflation, it is inevitable that the Fed (The US Central Bank) will raise interest rates sooner or later.

Here in Australia, we aren’t quite in the same situation that our counterparts over in the US are, with inflation less than half of the US and within sight on the 2-3% band that the Reserve Bank of Australia is aiming to have inflation average over a 5-year period. The probability of rates rising is increasing as we move forward in time, but it would be expected that our raises aren’t going to be as soon as the US nor as much as what the US interest rates might potentially increase by (In the short-term anyway), however, the RBA does borrow from the Fed so it is likely that the decision made by the Fed is going to have some impact on the RBA’s interest rate decisions going forward.

The RBA has given constant commentary that there won’t be any rate rises in 2022, however, the banks are projecting a different story; the Commonwealth Bank recently announced that it was projecting that interest rate rises would begin in July this year, WestPac projecting August, which creates a conflicting story. The central banks have quite a bit of pressure on their decisions going forward; the speed at which interest rates increase is going to be key. If the banks continue to hold back from raising rates, inflation could continue to increase, and if it does the RBA would be caught needing to increase rates at a quicker rate to avoid a hyperinflationary environment. This creates a difficult scenario to manage and is a decision that would slow growth, potentially resulting in a recession for the Australian economy.

The second scenario is the banks increase interest rates too soon which could cause the wheels of the economy to slow significantly and growth assets such as stocks, and property to realise the impacts of this. The ideal scenario is that the RBA time the interest rate adjustments to near perfection and that inflation and the economy normalise and increase in line with each other within the 2-3% band previously mentioned which creates a manageable scenario for the Australian consumers.

The inevitable is that rates begin to rise at some point. The growth that we have seen the past two years is unlikely to be seen for some time and the importance of careful portfolio construction will be of significant importance in finding good returns in the market going forward. As briefly touched on earlier in the article, our research team had raised inflationary pressures as a concern late into 2020 and the possible need to raise interest rates quicker than what many were predicting, as such,

Mulcahy & Co clients can rest assured that the impacts on their portfolios won’t be affected by interest rate hikes as much as others – particularly those with large growth company exposure - as they have been positioned to handle an environment with rising interest rates for some time now.

James Clough

Financial Planner

Ballarat & Melbourne

FS360 Podcast - Episode 38

adam@mulcahy.com.au (Adam Foale) — Sun, 13 Feb 2022 22:28:55 GMT

Gavin Nash introduced Warren Freeman of Cosimfree Home Loans, who has recently brought his Geelong business into the Mulcahy Group, and is now operating at Mulcahy’s offices at 35 Gordon Avenue, Geelong.

Warren’s well established and award-winning mortgage broking business has seen significant annual growth of up to 80% since 2012. He is now one of the biggest independent mortgage brokers in Australia, recently winning the prestigious “Broker of the Year – Growth (Individual) Award” at the 2021 Plan Australia awards, a major achievement for the team at Cosimfree.

The business has attracted clients not only from the Geelong area, but also from across Australia and overseas.

Warren Freeman

Realising that the business needed more space, Warren saw the opportunity of joining with Mulcahy & Co as the perfect way to benefit both his business and especially his clients; the onsite access to Mulcahy’s other group services, such as Financial Planning, Accountancy and Legal Services, means that everything that the client needs is now seamlessly and conveniently available at one address. The business will retain the name “Cosimfree” for the time being.

Warren’s topic for this episode was the Federal Government’s New Home Guarantee, which Warren rated as one of the best schemes he has seen during his 20 plus years as a mortgage broker. Under this scheme the Federal Government guarantees eligible first home buyers’ home loans, thereby enabling borrowers to avoid paying lenders mortgage insurance (LMI) if they are not able to pay a minimum 20% deposit. LMI is paid by the borrower, but it protects the bank or lender, not the borrower. Warren stated that in his 25 years in the business, most of his clients have not had the minimum 20% deposit, have had to pay an average $15,000 for LMI, but none of them have defaulted on their mortgage repayments, which means that every one of those LMI premiums has been a donation to the bank! Warren provided a recent example of clients purchasing a home for approx. $600,000, who were able to save the LMI premium of $24,000 by accessing the New Home Guarantee scheme.

Eligible first home buyers can use the scheme to assist them in buying a new home or land and building, and now also an established home (from 31 January 2022). They can borrow over 80% and up to 95% of the purchase price without having to pay LMI. The minimum 5% deposit will be subject to lenders’ requirements that it is genuine savings, although Warren stated that there may be a possibility, depending on lenders’ rules, for the lender to accept proof of regular rent payments to meet the criterion of “genuine savings”.

With the wide variety of fees and conditions imposed by banks and other lenders, applying for a home loan is especially confusing for first home buyers. Add to this the range of government schemes, and the home loan application becomes both time consuming and difficult to navigate for the first timer. A mortgage broker such as Warren has the experience, expertise and time to research the options for the client, and assist them in selecting the best product. Warren has also enabled clients to stay with their existing bank, if that is their preference, whilst also negotiating a favourable loan.

Whilst the headlines are announcing that interest rates are climbing, Warren explained that it is fixed rates that have gone up, whereas variable home loan rates have actually come down. He also talked about one of the banks which has extended the lower interest rate, usually only offered to new clients, to existing clients, for example those looking to refinance.

“Best interest duty” is a new piece of legislation, introduced in 2021, which requires mortgage brokers to demonstrate that they are acting at all times in their client’s best interest, with steep fines applying for non-compliance. Warren said that he has always acted in his clients’ best interests, but interestingly this legislation does not apply to banks!

Warren closed by stating his goals for Cosimfree in 2022: making sure that his staff are comfortable and secure in their new space and that his client base are comfortable with the move. He works with fellow broker Liam, and seven loan processors who work as a cohesive team to carry out all the essential background work on applications and documentation for the clients. The whole team celebrate every time a loan is approved, by hitting a Nepalese Singing Ball with a gong!

Readers can find clients’ reviews on the Cosimfree Facebook page .

Episode 38

Warren Freeman from COSIMFREE Home Loans joins the Mulcahy & Co Group and chats to host Gavin Nash about the move. Warren also sheds some light on the federal government's New Home Guarantee.

A wealth of knowledge, Warren's business COSIMFREE is an award winning brokerage based out of our Geelong office. He gives down to earth examples that are easy to understand for everyone.

Available on Apple, Google Podcasts, Spotify and on our website.

Is the Building Industry Doomed and Taking Us With It?

adam@mulcahy.com.au (Adam Foale) — Fri, 11 Feb 2022 03:33:12 GMT

The most common question I hear from clients is concerned with tradespeople and the building industry.

It is no secret we have seen building materials costs increase dramatically, whether that be first hand at retailers or hearing whispers of builders struggling to stay afloat or having to requote jobs they have already quoted.

This isn’t isolated to the building industry, you may have noticed things increasing at the supermarket or the lifesaving staple of your take away coffee!

This brings concerns of hyper-inflation. This is essentially when things increase in cost and wages/income don’t increase with it. If these all increase together there is less reason for concern because the general public can afford the higher cost of everything as their wages have increased with it.

Arlan Davine

Financial Planner

Without using a crystal ball, we can rely on what we are observing, at the moment, and it is still possible for it to go either way. It does seem that wages are experiencing growth alongside the cost of living thus far (which is what we are also seeing in the United States). What makes it really hard to predict is the simple fact that this can change very quickly.

Most economic commentators are predicting a slowdown/stagnation in housing prices, but that doesn’t mean construction will cease all of a sudden and it’s to be expected after such incredible growth.

It is expected we will see the central banks raise rates enough to reduce economic growth. Creating a recession (which is preferable to hyper-inflation), but still seems to be quite some time off.

As it stands, there isn’t a huge need for concern and you don’t need to take all your savings and hide them under your bed, but it is always worth talking to an adviser if you have any questions and to stay up to date!

For more information visit our financial planning page or contact one of our financial planning team members .

Arlan Davine

Financial Planner

Ballarat

Upgrade your old website...Why?

adam@mulcahy.com.au (Adam Foale) — Fri, 04 Feb 2022 01:48:32 GMT

It’s been some time since you built your website, now may be a good time to update it. Here are some reason’s why it’s a good idea:

1. Google’s algorithm has changed many times since we made your website live. Google rewards different things than they used to. Things that can help get your business back near the top or organic Google searches for your industry.

2. The web is faster now - we can design with full screen images and also full screen video sections on your site to give it that wow factor.

3. Your photography and offers may well be out of date - a new site design will update your potential customers with your business and where it is today.

4. Video is now huge - most people when faced with paragraphs of text to read or a short video will choose the video. We can film and edit a video or a series of videos to help explain your products or services.

5. Your website has never been seen on so many different devices - desktop and laptop computers, tablets and smartphones. Making sure your site is optimised for all of these devices is key.

Your website is a tool within your business, from time to time it needs attention just like a builder wouldn’t expect their favourite saw to last forever without sharpening or replacement - the same goes for your business website.

Give me a call today and we can organise a time to meet up and discuss what your site could be going into the next few years of business.

Payment options:

1. No up front cost - a low monthly fee

2. 4 equal monthly payments

3. 50% at the start, 50% at completion

0448 686 560

gavin.nash@mulcahy.com.au

Gavin Nash

Director of Marketing

Investment Bonds: What are they and how can they be useful?

adam@mulcahy.com.au (Adam Foale) — Wed, 19 Jan 2022 22:31:09 GMT

A common question the Financial Adviser’s at Mulcahy & Co receive is “I want to invest for my child’s future, what is the best way to do so?”

Investment Bonds are a type of life insurance contract in that they have a bond owner (the investor) and a life insured (the investor, or a beneficiary the investor nominates). Similar to Superannuation, the beneficiaries are nominated to receive the benefits held in the Bond on either the event of the death of the bond owner, or a future nominated date.

Bond’s are becoming more and more popular and offer access to a wide range of investment options and strategies that can be tailored to an individual’s personal needs and circumstances, as well as their personal risk tolerance.

Danny Archer

Another similarity to Superannuation, the income and growth is not distributed to investors , and instead remains invested inside the Bond environment. With a maximum tax rate of 30%, this can be particularly attractive with those on marginal tax rates of 30% and above. Contrary to Superannuation, however, Investment Bonds effectively do not have a contribution cap which creates more investable opportunity in the early days, as long as the 125% rule is met. Your Adviser at Mulcahy & Co can help explain this to you.

A key benefit of a Bond is that they have been designed to be held for greater than a 10-year period to provide the optimal tax advantage. The pro here is that all funds held within the bond that are withdrawn after 10 years are treated as completely tax-free income to the investor . I will give an example:

Harry starts an Investment Bond in Jan 2022 and contributes $100,000. If, by Jan 2032, the Bond value has increased to $200,000, representing a $100,000 capital gain, Harry can withdraw the full balance tax-free. Also, Harry has not had to declare any of the income from the Bond in any of his tax returns, which is handy to him as his marginal tax rate is 45%. While the maximum rate of tax payable inside a Bond is 30%, the underlying asset structure inside Harry’s Bond meant the average annual tax rate was 15%, highlighting further benefit to Harry.

If a Bond is used wisely, it can help with estate planning and providing for the next generation including children and grandchildren. This opportunity is available due to the ability to transfer the Bond to a nominated beneficiary at a specified date in the future completely free of capital gains tax.

Using the above information to circle back to the original question around investing for children, a Bond is a great option. The investor (parent) can invest as much or as little as they like in the Bond with the intention of either withdrawing the funds altogether to gift to their child at a specified date in the future, or they can simply transfer the ownership of the Bond to their child; both outcomes can be 100% tax free. Some common examples are to help with school fees, and at age 18 to assist in buying a first car, or age 21 to help with a house deposit. Further, the investor will not pay any additional tax in their personal name through the duration of the investment timeframe.

Comparing using a bond to alternative strategies such as saving in the parents own name through shares, ETF’s, cash or term deposits, or even through a Trust, the Bond offers far more tax and flexibility advantages that cannot be ignored.

If you would like to commence an investment plan for your child (or yourself), please do not hesitate getting into contact with an Adviser at Mulcahy & Co today.

Danny Archer

Financial Planner

Ballarat and Geelong

Episode 39

Investment Bonds: What are they and how can they be useful? Host Gavin Nash is joined by Financial Planner Danny Archer to chat about this important investment topic.

Available on Apple, Google Podcasts, Spotify and on our website.

Case Study – McMeekins Cleaning

adam@mulcahy.com.au (Adam Foale) — Thu, 16 Dec 2021 04:47:09 GMT

Client:

McMeekins Cleaning

Industry:

Residential and Commercial Cleaning, End of Lease, Oven Cleaning, Window Cleaning

Goals with the site:

From our first appointment our client highlighted their need for a website as well as some graphic design work including vehicle signage, a promotional flyer and some work on their social media pages.

A website build was particularly important for the client as they wanted to promote their cleaning services and the areas they service in and around the Sunraysia district.

We also identified the need for both Google My Business & Bing Business Listings.

The process:

Once we identified the work to be done, we created a plan with the client so that Marketing could be done in stages across a couple of months and in a progressive order.

We started by assessing and doing works on the existing Facebook page including design of a new coverpic, post with cartoon character announcing services and updating logo and business description.

This was followed by vehicle signage design with print ready files sent to the signwriter.

Website works started with a clear plan of pages and sections that were identified during talks with the client.

Copy writing - Basic terminology was provided and then text expanded upon by Marketing Manager Rachel.

A new flyer has also been designed in line with branding to promote business services and includes the new website address with print ready artwork sent to the local printer.

Our graphic design team were able to re-create the client’s logo as well as design of cartoon characters that would form the basis of the design work. The team collaborated to create a consistent and clever design to match in with the clients existing brand and colours.

Following this, the marketing team designed and developed the website with an easy to find dropdown section to the types of cleaning services offered by McMeekins Cleaning.

Our team were able to obtain professional images for use on the website without needing to use private photos. These photos are generic but clearly align with the purpose of each cleaning page and section.

We also created both Google My Business and Bing Business listings so that McMeekins Cleaning can be found easily in the online world and called directly from a Google search on a mobile phone.

Visit the website at www.mcmeekinscleaning.com.au

To find out more, contact any of our friendly Marketing team today.

Grain for Hope

adam@mulcahy.com.au (Adam Foale) — Fri, 10 Dec 2021 02:44:25 GMT

Mulcahy & Co Marketing donate creative work for important fundraiser.

Our Marketing division are proud to be involved with the Fiona Elsey Cancer Research Institute , providing graphic design and website design services at no cost to ensure their important cancer research work can continue. Our team work closely with the Marketing team at FECRI to help organise their 4 major fundraisers for the year.

The latest is an initiative between FECRI and CHS Broadbent called ‘ Grain for Hope ’ where farmers can donate some of their grain from the harvest to the institute with the money going directly to FECRI in order to assist in their research efforts.

Please see the press release PDF below from FECRI that announces the initiative and for more information on Grain for Hope and how you can help support a cancer free future, visit www.grainforhope.com.au

*Image courtesy of The Courier

Stock of the Month: MFG

adam@mulcahy.com.au (Adam Foale) — Thu, 09 Dec 2021 00:09:43 GMT

About

Magellan Financial Group is a funds management firm that specialises in global equities and global listed infrastructure strategies for both retail and institutional clients. The company has also acquired Airlie Funds Management which is a boutique Australian equity investment company.

Long term thesis: Why is it in the portfolio

Magellan has experienced a strong run of funds under management (FUM) growth and more recently announced a range of growth strategies that aim to support the company further. This includes a highly anticipated retirement income product and giving guidance that there is more capacity in both their infrastructure and sustainable products. Magellan is likely to experience continued increase in flows, driven in part by the superannuation guarantee.

What could go wrong

Similar to other investment management peers, Magellan is subject to broad thematic risks, including decreasing FUM flows that lead to lower revenue, adverse movements in equity and foreign exchange markets that would in turn impact FUM, and periods of underperformance that can diminish Magellan’s ability to earn performance fees.

Current Situation

Since mid-2021, Magellan Financial Group has fallen out of favour with investors, declining from a yearly high of $56 per share on the 2 ^nd of July to around ~$33 today. More recently, Magellan announced the resignation of CEO Brett Cairns who had been responsible for Magellan’s product innovation and overall business strategy. The string of negative news coupled with such a large drop in the share price (around -40%) is understandably alarming to even the most unwavering investors. However, once the full picture is revealed its easy to see why we’re sticking around.

Magellan’s Global Equities strategy is the company’s biggest offering, both by FUM and revenue generated. The strategy was started at the beginning of 2007 and its main fund, the Magellan Global Fund, quickly became a marquee product in the Australian fund’s universe following a strong outperformance over the global financial crisis and ensuing years. However, the 2020 market correction brought on by COVID-19 turned out differently. Although the strategy minimized its downside during the crash, it failed to recover as fast as the index and has been lagging ever since.

The funds’ underperformance has resulted in modest outflows (circa $1.5bn) relative to their total FUM (over $110bn), but enough to stall revenue growth over the last few months. Investors being mainly concerned about future growth prospects; have revised down their expectations and consequently adapted their share price valuations.

Although this thesis is logical, it is predicated on the notion that Magellan will continue to have modest FUM growth in the future, and thus struggle to grow revenue at a pace reminiscent of its past success. While this is certainly a possibility, we believe the company is much more likely to return to high revenue growth levels for a variety of reasons.

For one, our experience has taught us that outperformance by fund managers tends to be cyclical. It is not surprising that after many years of beating the market, Hamish Douglas and his team are going through a more challenging time. Yet they remain a high calibre investment team (of which the departing CEO was not part of) and are as well placed as any to outperform over the coming years. If and when that happens, Magellan will start generating copious amounts of performance fees, none of which are currently priced in.

New potential sources of revenue are also not being accounted for. The aforementioned retirement income product is a creative solution to a problem that has so far baffled the funds management industry. Alongside Barclays, Magellan has also invested in Barrenjoey, a new investment bank venture. Taken together, these actions point to the ambition to grow Magellan into a sizable diversified financial services company, but none of this potential upside is reflected in the current share price.

On the other hand, the downside risk seems small. Even without FUM and revenue growth, Magellan is an extremely profitable business, with practically no debt, generating huge amounts of cash. The stock’s dividend yield has already ballooned up to an alluring 6.9%, giving investors a great source of income in an extremely low yield environment.

MFG currently trades at 13 times its future estimated earnings, down from about 30 times at its peak. We believe this constitutes a strong buying opportunity where the upside potential far outweighs the downside risk.

~ The Mulcahy & Co Financial Planning Team

Disclaimer: The information on this website is for general information only.

It should not be taken as constituting professional advice from the website owner – Mulcahy & Co Financial Planning. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances.

Budgeting for Business Success

adam@mulcahy.com.au (Adam Foale) — Tue, 07 Dec 2021 22:35:57 GMT

We believe that every business should have a financial budget to plan where you want to be heading.

This provides direction to you to what the business is trying to achieve so you are all working in the same direction. We’ll create a 12 month forecast of budgeted profit & loss and cashflow so you always know what the future financial performance and position of the business looks like, based on what we already know today (committed sales and costs).

This is about bringing the future into the present so you can do something about it.

Depending on what industry you are in, the lead up to Christmas can be many things. Some of us are counting down to holidays, and for others, it is their busiest time of the year. For most business owners though, the end of the year means ensuring you are in a good cashflow position so that you can get through the slower cashflow months in the new year. February, especially can be a difficult time.

Carefully managing your business finances is a key step to success for any business new or old.

Successful businesses invest time to create and manage budgets, prepare and review business plans, and regularly monitor finance and performance.

Creating a budgeting process is a very effective way to ensure good management of the cashflow and finances of your business. It also provides you with the sound financial information required for effective decision making and planning.

Successful businesses have several things in common:

They invest time to create and manage budgets

They prepare and review business plans and

They regularly monitor the financial and operational performance of their business

Where to Start?

Creating a budget & cashflow helps you allocate resources where they are most needed, and includes a projection of revenues and expenditures for a given period, usually 12 months. To get started, you will need to forecast the following:

Projected Revenue: Forecast your revenue based on a month by month analysis of each revenue stream, adjusting for contractual changes, new contracts and anticipated growth. Your business and marketing plans, along with past performance will assist with this.

Direct Costs: Understand the level of direct costs, such as materials, direct labour or contractors, required to produce your outputs. This gives you the opportunity to analyse your gross profit on sales, examine ways to increase your margins and gain efficiencies.

Fixed Costs: Understand the ratio of fixed costs to revenue, including the minimum gross profit and revenue required to cover fixed overheads. Look at how fixed costs can be rationalised or reduced, and if appropriate how fixed costs should be allocated across different revenue streams.

Key Steps

There are a number of key steps that should be taken to ensure that your budget is as effective as possible:

Make time for budgeting

Treat your time as an investment in the business and you will reap the rewards as you track your progress throughout the year and monitor performance.

Use last year’s figures, but only as a guide

In a competitive environment change is inevitable and will impact your forecasted input and outputs. Use prior year figures as a base to start from, adjusting for anticipated fluctuations and escalations.

Create realistic budgets

Work out the drivers of your business including the relationship between variable costs and sales. Look at cashflow and understand blockages such as debtors which put pressure on resources. Use stretch targets but try not to overreach.

Involve the right people

Staff with key responsibilities should provide estimates and forecasts that can be built into your budget. Their knowledge of the business and its operations can be invaluable in the budgeting process in setting targets and driving productivity.

The Review Process

Once you have a budget in place, it is essential that you review actual progress against the budget regularly.

Benchmark your performance in key areas such as sales, cost of goods sold and cashflow, against the prior year performance and budgeted forecasts. Benchmarking against industry averages can also be useful and can highlight efficient or inefficient sections of the business.

Highlight your Key Performance Indicators such that you understand the drivers of your business. Some drivers can be internally managed such as direct labour or materials, whereas other drivers such as external commodity prices, seasonal demand and foreign currency fluctuations may require more complex solutions for management.

How Mulcahy & Co can help

Our team at Mulcahy & Co have extensive experience in assisting and preparing budgets and cashflows for our clients.

Our projections can then be transferred into accounting software such that actual results can be compared to budget on a monthly basis.

Budgeting is an essential business tool for every business, and it will assist in answering many of the difficult questions that arise in day to day business decision making. We can also meet with you regularly to monitor your business against budget from $250/month

If you do not have an up to date budget, and would like to get started, contact Mulcahy & Co and speak to our professional staff who will be happy to assist you in planning for your business success.

Insurance: Can You Afford Not To Have It?

adam@mulcahy.com.au (Adam Foale) — Wed, 24 Nov 2021 03:47:38 GMT

I am similar to most people in that I look at each insurance policy and associated premium and initially think ‘gee, I wish I did not have to spend this’.

However, doing what I do for a job I have seen what life looks like when an insurable event occurs, and I certainly know the side which includes decent insurances is far greater in terms of financial and emotional impact.

Most people reading this would have things like their house, contents, car, boat, trailer and even wedding ring insured, but how many would have their lives insured? How many would have their income insured? The answer to that question is startling when you think that ones most important asset, their ability to earn income, is quite often the asset that is either last to be insured, or not insured at all.

Danny Archer

When we sit down with clients and plan out their goals over a 10 or 20-year period, it is an enjoyable and motivating conversation filled with opportunity. As Financial Planner’s, we take great pride and enjoyment out of being able to clearly map out a plan that enables our clients to achieve whatever they wish; it is why we come to work. The one constant throughout these kinds of chats is the assumption that the client’s income will always be there. Which, in theory, it is… until it’s not. You can insure your income in the form of Income Protection (IP) insurance, which effectively pays you a portion of your pre-illness or injury income, or you can protect it in the form of Life, TPD and Trauma insurance.

Take a moment to think about how your family would pay for the things mentioned above, if you did not have adequate insurances in place.

Life, TPD and Trauma insurance are what we call ‘lump sum’ cover as they are paid out in the event of a successful claim, rather than incremental monthly payments like IP. Typically, one would cover their mortgage, future school fees, expenses such as renovations, rehab and medical costs and also future income that would have otherwise been earned.

What’s more is that through clever planning and strategy, you can have each insurance work in conjunction with another. We recently had a client (who I will refer to as Bill) diagnosed with Parkinson’s Disease, which is obviously horrible. However, under our advice, Bill took out Trauma and TPD insurance policies that include Parkinson’s as something they cover. Therefore, Bill was able to claim on his Trauma policy, which recently paid out a healthy six-figure sum that will enable Bill and his family to pay for early treatment without the need to worry about how they are going to pay for it.

Furthermore, in the future the TPD cover will be claimed, further reducing any stress around the financial cost to treatment. This will allow Bill and has family to focus their efforts on enjoying life with each other, knowing that they are financially secure. For us, this result is another reason why we come to work.

While a bittersweet situation, the role of Bill’s personal insurances cannot be underestimated and I now ask if insuring your life insured is worth the cost?

Please do not hesitate reaching out to a Mulcahy & Co Financial Planner if insuring your life is important to you.

Episode 36

Can you afford not to insure yourself? Danny Archer (Financial Planner) takes host Gavin Nash through the ins and outs of Personal Insurances and why they are very important to consider for your peace of mind and financial security.

Danny also runs through some real case studies to help our listeners understand these important matters.

Available on Apple, Google Podcasts, Spotify and on our website.

Danny Archer

Financial Planner

Ballarat and Geelong

Sunraysia Outdoor Blinds: Case Study

adam@mulcahy.com.au (Adam Foale) — Mon, 22 Nov 2021 04:19:52 GMT

Client:

Sunraysia Outdoor Blinds

Industry:

Indoor and Outdoor Blinds. Mobile Service. No Storefront. They travel to their client for appointments.

Goals with the site:

Mark and Tricia contacted Rachel at Mulcahy & Co as their original website was very old (2007) and outdated. They wanted to bring it up to date with current information and in line with new technology.

Their aim was to be more findable online, have more people making enquiries and to showcase their work in a more modern way that worked well on a mobile phone.

The process:

Text partially provided by the client. Further copywriting was done by Adam from Marketing.

Photography was provided by the client.

The Marketing team designed and developed a new website with separate pages showcasing Indoor and Outdoor Blinds.

Each section displays the types of blinds and options available. We were provided with brochures and images that we added to the site from the manufacturers – these are now downloadable also.

On the home page we created a Project Gallery which provides information about the project they were appointed to do with results and images.

We added a photo gallery page to showcase images of their work and the types of blinds. We find that pictures can be the best way to sell and inform rather than long explanations in text.

The Mulcahy & Co IT department created a new email address and this was added to the site so that Mark and Tricia can now receive and respond to emails.

We also created both Google My Business and Bing Business listings so that Sunraysia Outdoor blinds can be found easily and called directly from a Google search on a mobile phone.

Both Mark and Tricia are very happy with their new website and plan to regularly update it with recently completed projects. View the new website here www.sunraysiaoutdoorblinds.com.au

To find out more, contact any of our friendly Marketing team today.

A conversation about Marketing for your business – Gavin Nash and Danny Archer

adam@mulcahy.com.au (Adam Foale) — Wed, 17 Nov 2021 05:27:19 GMT

Danny turned the tables on our Podcast this week when he became the host and the regular host, Gavin was interviewed about Marketing for small-medium businesses.

Below is their conversation. Also listen to the conversation below on our FS360 Podcast.

Gavin Nash

Marketing Director

Danny Archer

Financial Planner

Danny: Marketing seems like a broad term – what does it mean for most small-medium businesses?

Gavin: Marketing is the action, Branding is the identity

For example: Marketing can be an ad campaign in a newspaper, radio or TV – it can be a Google Ad, an article on your website, your social media, your signage, and of course your Marketing Plan (Step 10 of the FS360 process).

Branding is your businesses identity – the thing customers remember after dealing with your company.

For example: Apple is known for high quality tech products that innovate – the iPod, the iPhone etc. They aren’t known for low prices! Netflix is known for high tech and convenience at an affordable price, Aldi Supermarkets are known for low prices but not the full range, McDonalds is known for low prices and convenience.

For small – medium businesses it’s important to develop your own brand identity over time – this ‘brand identity’ is then central to all your Marketing efforts.

Danny: What is the first thing that a small business should do to get their marketing and branding going?

Gavin: Develop a solid Digital Footprint – how your business is found and identified online.

This is the first place people will go to look for a business they need.

A Digital Footprint usually encompasses:

Google My Business listing
Bing Business listing
Website including SEO
Social Media accounts/pages

Listings on other directories such as Yellow Pages or if you’re a franchisee, the head office website.
The key is to make your digital footprint consistent with what you are offering. Logo, photos, Opening Hours, services, products, your company history and experience – all should appear the same on all these platforms.

Danny: OK so if you have your digital footprint in order, and need more customers what would you recommend?

Gavin: Then it is time to advertise and actively market your business.

The options are endless from taking out a radio campaign to Google Ads to paying an influencer to use your product and tell their following about it. All can work but the trick is to find the thing that works best for your business, then stick with it over a period of time.

For example: A client of mine who run a Tractor dealership – we currently undertake website updates, listing their gear for sale on other websites, ads in country newsletters in the district , eNews to client base monthly – no newspaper, radio, TV at all. They get all the enquiry and new clients they need!

Danny: I’ve heard that it is much cheaper to turn your current clients into higher yield clients than it is to attract new clients – is that right?

Gavin: Correct – if your business is up and going and has already got a list of customers who visit to buy from you (product or service) then it can be a lot easier to communicate with them to turn them into customers who visit more often and spend more.

This is where loyalty programs come into the marketing equation. Eg. Bakers Delight ‘Dough Getters’ reward $5 for every $50 spent (that’s 10% off) but the strategy is to get people to always buy their bread from you instead of someone else.

eNews to your client-base – a cheap and easy way to email your client-base regularly. Tell them about the latest deals, new staff members, new opening hours or a community group you are sponsoring.

Offer them a reward for referring a friend / family member to your business – this can be financial or a discount.

The trick here is to collect information from every customer – name, email, mobile phone number and address if you can so then you have that detail to market to. Not too much! Then you own that information and can use it.

Danny: How does Social Media work into all this?

Gavin: There are many platforms you can use and again it depends on your business as to which ones to choose. Facebook has an older demographic – TikTok has a younger demographic. LinkedIn allows you to add links to your posts to link back to your website, Instagram does not allows links in their posts.

So you really need to understand the platform before committing to it.

The trick with Socials is the planning. It’ easy to get overwhelmed by ‘having to post something’ syndrome.
Planning on a calendar is key – most businesses do not need a post a day – a post a week might be enough to remind your customers who you are.

Danny: What is Content Creation? And why is it important for Marketing?

Gavin: Creating content is another term for writing articles, recording videos, posting on social media etc. It has become key to a lot of marketing in the current day marketplace.

Marketing used to be about broad brushstroke ads to convince you to buy or make contact for services. These days we are in the ‘trust economy’ – customers may only use you if they think you are expert, qualified, knowledgeable on the product or service.

Think AirBnB and Trip Advisor – Google Reviews and Facebook Reviews – Trust Pilot and good old Word of Mouth – there are lots of ways now that potential customers can check on your business before making contact with you or even considering your business for their custom.

Google even reward it these days in their algorithm – they want to reward those who are giving great content and establishing themselves as experts. It’s the best way to get your website to the top of the search on page 1 of Google! ~~

For more information on any of the services available at Mulcahy & Co Marketing, contact any of our friendly marketing professionals today .

Episode 35

Roles are reversed for this special edition based around Marketing your Business. Host Gavin Nash is the guest and regular guest Danny Archer is the host! The topic is Marketing and what you need to focus on if you are a small-medium business in today's digital world.

Listen on our website or on Apple Podcasts, Google Podcasts or Spotify.

Woady Yaloak Primary School Website Case Study

adam@mulcahy.com.au (Adam Foale) — Mon, 15 Nov 2021 23:50:14 GMT

Client:

Woady Yaloak Primary School

Industry:

Primary School (Education)

Goals with the site:

Principal Corey and Lead Staff member Nathan met with Gavin about the aims of the site.

Their aim was to be more findable online, have more people making enquiries and to showcase their school in a more modern way that worked well on a mobile phone.

They wanted to show curriculum focusses and also facilities as they are spread across 4 campuses.

The process:

Text was provided by the client. Photography was provided by Mulcahy Marketing and was booked in for 2 visits (with and without children) to showcase the facilities only and another gallery to show the day to day workings of the school with children in the shots.

Photos were then supplied to the school to keep and use inside the school and used throughout the website.

The Marketing team designed and developed a new website with separate pages to communicate the schools 4 campuses, key staff with photos and titles,

a video including drone footage and curriculum focus.

The site is 100% mobile friendly and accessible with alternate tags on photos to help those with a disability access the site content.

Admin staff at the school have been given training and passwords to be able to upload weekly newsletters and also to update words and images throughout the site.

Even the Parent Events calendar and link to the schools Sentral and ClassDojo systems were included so the site becomes central to the workings of the school.

Visit the website at www.woadyyaloak.vic.edu.au

To find out more, contact any of our friendly Marketing team today.

How Your Super Can Help You Buy Your First Home

adam@mulcahy.com.au (Adam Foale) — Thu, 11 Nov 2021 04:18:42 GMT

Considering the housing boom over the past 18 months, it can be a daunting thought to first home owners; ‘How are we ever going to afford to purchase our first home with the current house prices?’

A strategy that could help save for that deposit (and also save you tax) is the First home super saver scheme (FHSS). The FHSS was first introduced by the Australian Federal Budget 2017-2018 and it was introduced to allow first home buyers to save for their deposit inside their super fund. The idea behind it is to help buyers save faster with the concessional tax treatment of superannuation.

Currently under the FHSS, first home buyers can use up to $15,000 of voluntary super contributions each financial year (up to a total of $30,000) to assist them with purchasing their first home. From 1 July 2022 the maximum amount that can be released from super will be increased up to $50,000.

Tamara Vawdrey

A key advantage of FHSS is you could potentially end up paying less tax than you would compared to saving for a deposit in a regular savings account.

An important thing to remember is that you can only release the money you have contributed (plus the earnings on those contributions), the contributions from your employer can not be released.

Three things to keep in mind about making voluntary super contributions are:

Voluntary contributions can be made by entering into a salary sacrifice arrangement with your employer;
You can make a voluntary contribution from your after-tax income and then submit a notice of intent with your super fund and claim a tax deduction when you complete your tax return;
There are caps on the amount of concessional contributions for each financial year, for the 2021/2022 financial year the cap is $27,500. Please note that this cap includes contributions from your employer.

Some important things to take note of are:

You must apply for and receive an FHSS determination from the ATO prior to signing a contract for your new home – you can make this application through your MyGov account.
To be eligible you must never have owned a house in Australia and not previously applied for a FHSS release of funds from superannuation.
Once your FHSS have been released you have up to 12 months from the date you requested the release of FHSS to sign the contract for your new home.

If you would like to discuss how this strategy can benefit you directly, please contact our office and book an appointment with one of our Financial Planners.

Episode 37

Using your Superannuation to buy your first home? Sounds good doesn’t it? Tamara Vawdrey (Financial Planner) is joined by Danny Archer (Financial Planner) and Gavin Nash (Host) as they chat about the FHSS scheme designed to help first home buyers enter the property ownership market.

Available on Apple, Google Podcasts, Spotify and on our website.

Tamara Vawdrey

Financial Planner

Ballarat

Guide to QBCC Financial Requirements and Reporting

adam@mulcahy.com.au (Adam Foale) — Tue, 09 Nov 2021 00:38:39 GMT

As a QBCC licence holder, you need to report financial information to QBCC annually to maintain your licence.

The QBCC financial requirements can be confusing. At Mulcahy & Co, we can help you determine if you are meeting your financial requirements.

There are three aspects to your licence:

Licence renewal – the payment of a renewal fee to keep your licence current. This can be paid for one year or three years.
Annual Reporting – is a once-a-year submission based on the information that is required for each licensee’s maximum revenue. These will be assessed to confirm licensees are meeting the Minimum Financial Requirements (MFR) of the regulation.
MFR Reporting – applies when you apply for a new licence or when certain events occur.

Jodie Thompson

Annual Financial Reporting

Annual financial reports were introduced to check the financial strength of contractor-grade licensees in Queensland. Annual reporting is mandatory. When you submit your financial information, QBCC checks the financial health of your business to assess whether you meet the MFRs. The goal of these requirements is to reduce financial failure, liquidations and bankruptcy in the industry and ensure that people are paid for their work.

Annual reporting is a once-a-year submission. The information you’ll need to submit and reporting date differs for each QBCC financial category. How do you know what financial category you fit into? Your financial category is based on your maximum allowable revenue ranging from self-certifying category 1 at the lowest end to Category 7 at the highest end.

QBCC Annual Reporting:

If you don’t submit your annual report, the QBCC can cancel your licence. Make sure you provide your information to your accountant as early as possible so they can prepare your financial reports and ensure you meet the financial requirements.

Minimum Financial Requirements

To maintain your licence, you need to demonstrate annually that you have an appropriate level of working capital by meeting the Net Tangible Assets position and minimum Current Ratio.

MFR Report

At times, you may be required to demonstrate that you meet the Minimum Financial Requirements by supplying an MFR Report. This report is different to an Annual Report and is only required when:

you apply for a new licence (Category 1 or above);
your Net Tangible Asset position decreases by more than 20% for Categories 4-7 licensees and 30% for all other licensees;
you no longer meet the minimum Current Ratio of at least 1:1;
your Maximum Revenue (MR) requires adjusting (only for Categories 1-7);
there is a significant change to your business structure (e.g. change of ownership or executive officers);
there is a restructure of a partnership; or
QBCC requests it.

MFR reports can only be prepared by a qualified accountant and must be accompanied by signed financial statements. The accountant must be independent of you as the licensee (i.e. not an employee, company officeholder, investor, shareholder, partner or an immediate family member). Accountants can be excluded by the QBCC if they have given false or misleading information within the previous 3 years so it’s worth checking the register of excluded accountants to make sure your accountant is allowed to prepare your reports.

Meeting the QBCC Minimum Financial Requirements

1.Current Ratio

Current ratio is worked out by comparing a licensee’s current assets to their current liabilities. This helps to determine the business’s financial viability. The current ratio is your current assets divided by your current liabilities and must be at least 1:1. This means that for every dollar of current liabilities, you must have at least a dollar in current assets.

What are current assets?

A Current asset is an amount owing to you by someone else that you expect to receive within the next 12 months, or that you can convert into cash within the next 12 months. For example, accounts receivable (debtors), stock (or work in progress) and obviously cash.

What are current liabilities?

A current liability is an amount owing by you to someone else that you expect to pay within the next 12 months such as; accounts payable (creditors), credit cards, GST, BAS and also repayments of loans and leases.

For example, if the business has a car loan, then 12 months of repayments are current liabilities.

As you can see, you need to be careful about how you buy assets and finance them to ensure that you do not fail the ratio by having too many current liabilities. The simple act of financing a new car for the business may have an unintended knock-on effect.

The Current Ratio must be met every single day. It’s not an end of year calculation, it’s an everyday calculation.

2. Net Tangible Assets

The other financial requirement for a QBCC licence is maintaining a minimum level of Net Tangible Assets (NTA). The required NTA differs for each of the QBCC financial categories and is calculated on that category’s Maximum Revenue (turnover). For example, for a sales turnover of $1.2m you need to have $66,000 in NTA.

Maximum Revenue is the turnover that your business is allowed to do over a 12-month period. The 12-month period is a rolling 12 months and not based upon a financial year. For example, the period can be 1/10/21 to 30/9/22 or 15/3/21 to 14/4/22.

Why does QBCC put a limit on the revenue a licensee can earn? This is to ensure that it has sufficient working capital to be financially sustainable.

QBCC Net Tangible Assets Requirements:

Calculating NTA:

Your NTA is an adjusted amount based upon your assets (everything you own) less your liabilities (everything you owe). If you have a company structure, this means everything the company owns and owes.

NTA = [Entity’s Assets] – [Entity’s Liabilities] – [Entity’s Intangible Assets*] – [Entity’s Disallowed Assets**]

* Examples of intangible assets are goodwill, borrowing costs, patents and trademarks.

** Examples of disallowed assets are boats, collector items, personal furniture, superannuation, jet skis etc.

Your NTA cannot decrease by more than 30 per cent (or 20 per cent if you are a category 4-7 licensee) from the amount previously stated to the QBCC.

Just like the Current Ratio, the NTA calculation is per day (not an end of year calculation), so you need to ensure you always comply.

For sole traders, calculating NTA is simple: Personal assets less personal liabilities.

For companies, partnerships, and especially trusts, calculating NTA becomes more complex and therefore, more prone to errors. This is where a lot of licensees find themselves in trouble. Having the right business structure and keeping a watchful eye on who owns what is vital.

Frequently Asked Questions

How can Mulcahy & Co help you?

It is important to review your financial situation to ensure you can meet these financial requirements. We can assist you with this before periodically, tax planning time before financial year end and when we complete your 30 June financial year end statements. It gives you the opportunity to identify and solve any problems well before you lodge your annual report. This is particularly important if you are worried about:

Exceeding your Maximum Revenue;
A decrease in your Net Tangible Assets; or
Not meeting the Current Ratio (1:1 ratio of current assets to current liabilities) requirements.

Come and speak with one of our QBCC advisors who will be able to make sure that you are meeting your QBCC financial requirements for your licence. You can contact us on (07) 5413 9300 or at queensland@mulcahy.com.au

Jodie Thompson

Director

Sunshine Coast

New ID Requirement for Directors

adam@mulcahy.com.au (Adam Foale) — Fri, 05 Nov 2021 02:48:59 GMT

Company directors need to verify their identity as part of a new director identification number (director ID) requirement.

A director ID is a unique identifier that a director will apply for once and keep forever - which will help prevent the use of false or fraudulent director identities. When you must apply depends on when you were appointed as a director.

When you must apply depends on when you were appointed as a director:

Existing directors have until 30 November 2022 to apply.
Directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
From 5 April 2022, intending directors must apply before being appointed.
The new Australian Business Registry Services (ABRS) is responsible for administering the director ID initiative.

ASIC is responsible for enforcing director ID offences set out in the Corporations Act 2001. It is a criminal offence if you do not apply on time.

How to apply:

The Australian Business Registry Services are responsible for administering the new Director ID Number (“DIN”) scheme for all Australian companies.

You can apply or manage your DIN at https://www.abrs.gov.au/director-identification-number but requires you to have already completed the

Verifying ID:

Note: The application process is relatively simple, but will require you to have a myGovID already setup. If you don’t already have that, you will need to follow the steps here: https://www.myid.gov.au/ (you will need a smart phone and 100 points of ID documents).

Once you’ve confirmed your ID, you are directed to the Australian Tax Office website. Here you:

Confirm you agree to their terms and conditions are carefully reading these;
Confirm your full name and date of birth, and include your:
current residential address as held by the ATO;
Tax File Number.
This should verify your ATO Record.

Obtaining the DIN:

You must be eliglible for a DIN, meaning you must be eligible to be a Director or intend to become eligible in the coming 12 months. Don’t apply for a DIN if you’re not a director or becoming a director. Tick the first box to confirm this.

You must also confirm you’re an individual, over 18 years of age and not disqualified from being Managing Corporations. Tick the second box to confirm this.
You need to confirm your ASIC personal details, such as any previous names, birth place, residential address and postal address. You will be asked to confirm by ticking a box that all is correct before moving ahead.
Assuming the above steps are completed correctly, you will receive your Director ID immediately online. Keep this safe – print and save it carefully. We are unable to retrieve it easily for you if you do not correctly record the details. Please also provide Mulcahy & Co with your new DIN for our records.

You’re done. Over time, entities will be added to your ABRS portal page.

If you need any assistance with completing this process, please contact our offices.

Stock of the Month: WPL

adam@mulcahy.com.au (Adam Foale) — Thu, 04 Nov 2021 22:59:58 GMT

About

Woodside Petroleum is an Australian-based oil and gas company involved predominately in the exploration, production and shipping of oil and liquified natural gas (LNG).

Why is it in the portfolio

Woodside provides exposure to the oil and gas sector and is one of Australia’s largest listed companies. The company has a good mix of stable extraction facilities which deliver sustained income and exploration that offer potential growth in the future. Furthermore, we believe these growth prospects associated with specific projects are not being fully priced in and represent further upside potential.

What could go wrong

In recent years oil and gas prices have experienced drastic fluctuations, greatly impacting the profitability of companies like Woodside, and hence their share price. The price of oil, off of which many natural gas contracts are priced, is greatly influenced by OPEC+, a cartel of major producers whose decisions may be guided by geopolitical concerns rather than economic ones.

Furthermore, while Woodside has some high-quality assets, production is centred around large key projects; therefore, investors must be aware of operational risks that may potentially occur at any one of these key sites and which could have large impacts on cash flows.

Current Situation

The price of oil is currently trading around US$84/barrel, marking an appreciation of 154% since the beginning of 2019, and an almost 4x increase from its COVID lows. Analysts point towards a combination of lingering supply restrictions in place by OPEC+, increasing global demand as economies rebound from COVID-19 and short-term supply disruptions following hurricanes in the Gulf of Mexico.

Source: Bloomberg, InvestSense

While the price of oil has climbed, WPL has stayed relatively flat after its COVID drawdown, moving more in-line with the S&P 500 energy sector. An odd occurrence given an increase in the oil price directly results in an increase in WPL’s earnings. The disconnect started in 2020, coinciding with the explosion of interest in ESG investing which has resulted in capital that would otherwise have been invested in WPL, going elsewhere. Accordingly, as WPL’s expected earnings have moved mostly in-line with the price of oil while its stock price has stayed flat, WPL’s expected earnings yield has greatly risen and the stock is trading at a very attractive valuation.

Although the world has begun to transition off fossil fuels, two factors could shield Woodside from being negatively impacted. For one, oil is predicted to be transitioned out first while natural gas will continue to be used as a cheap but not-too-dirty fuel source, to complement renewable energy sources and solve for the intermittent nature of their supply (i.e. when the sun doesn’t shine and the wind doesn’t blow). Second, experts agree that this transition will take many years to play out, and effects on demand are unlikely to be felt in the next 5 to 10 years.

Nevertheless, the focus on ESG and the threat of “stranded assets” has disincentivised Oil & Gas companies from re-investing in long-term, capital-intensive projects, with the result that global supply is now set to fall gradually over the coming years. By contrast, demand for oil and gas is predicted to continue to rise in the short-term as society continues to normalise and activities such as international travel rebound. This imbalance between rising or even flat demand and falling supply should logically lead to higher oil and gas prices, as has occurred so far this year.

Even if we disregard this positive outlook, at current levels, WPL’s high earnings will generate a high free cash flow yield that can either be reinvested to induce capital growth or paid out as dividends, either way benefitting investors. It is this “asymmetric payoff” that makes WPL particularly attractive in our opinion: even if oil prices stagnate or fall a bit, WPL’s high earnings should lead to a higher share price. But if oil prices continue to increase, the share price could experience even greater upside from current levels.

~ The Mulcahy & Co Financial Planning Team

Disclaimer: The information on this website is for general information only.

Balance sheet or Income Statement?

adam@mulcahy.com.au (Adam Foale) — Thu, 28 Oct 2021 01:55:16 GMT

A common statement we in the Financial Planning game hear is “I am worth XXXX, so I am wealthy”.

Firstly, wealthy is a relative term and can mean different things to different people. I like to think a person is wealthy when they have achieved true financial peace of mind and are in a position where their passive income stream enables them to do whatever it is they wish to do with their time. The key part there is whatever they wish to do with their time, not what anybody else is doing.

The ambiguous definition of wealth is deliberate. If what one person wishes to do with their time costs $50k per annum, and for another person the annual cost is $95k, and both have the passive income to match it, I would consider them both wealthy. However, if the person needing $95k only has $60k, I would not consider them as wealthy as our $50k friend. The peace of mind factor is big.

Circling back to the opening sentence, it is not your net worth that is important, rather it is your passive income. There are 3 main asset classes that we can use to derive an income from: cash, property and shares. So, let’s compare these now using our $50k friend.

The income we derive from cash is the interest rate. At current times, this amount is almost zero, and is, in-fact, lower than inflation. Using a more realistic interest rate figure of 3%, our $50k friend would need $1,666,666 sitting in a cash account in order to derive their ideal income stream per annum. Cash is the simplest asset to analyse and has little to no costs associated with it.

Property gives us income in the form of rent cheques. Using a gross rental yield of 4%, our $50k friend would need $1,250,000 worth of investment properties to match their need. With today’s property prices and recent boom, that would likely be 2 or 3 different properties. However, with investment property investing comes costs. So out of that 4% yield, property management, insurance, rates, taxes and maintenance costs would need to be considered, as would some provision for empty periods. Therefore, our $50k friend would likely fall short and need another source of income. There is not doubt residential property holds great capital growth opportunity for investors; be mindful if your strategy is to enter retirement purely using this asset as a form of income.

The last asset we have is shares. The income we get here is via dividends, which is nothing more than a share of profits of the company you own shares in. When you account for franking credits, a realistic average yield from a share portfolio is 5%. Only $1 million invested in shares would be needed to generate the $50k our friend needs, and what is more, there are no added costs associated like property. I do acknowledge volatility with share investing is far greater than the other 2 asset classes, however, if your focus is on the income return, you can accept this.

So, if one were to try and get their $50k from either asset class, they would need $1.6 million, $1.25 million or $1 million, respectively, to do so. Out of the 3 figures mentioned, which do you believe is most achievable? This is why when I hear the statement I mentioned in opening, I counter with “how much passive income do you have?”

If you would like to know what kind of balance sheet you need, to get the income you need, please do not hesitate to reach out to a Mulcahy & Co Financial Planner today.

Danny Archer

Financial Planner

Ballarat and Geelong

Episode 34

'A common statement we in the Financial Planning game hear is “I am worth XXXX, so I am wealthy”.

'Wealthy' is a relative term and can mean different things to different people. I like to think a person is wealthy when they have achieved true financial peace of mind and are in a position where their passive income stream enables them to do whatever it is they wish to do with their time. The key part there is whatever they wish to do with their time, not what anybody else is doing.

Join Danny Archer (Financial Planner) and Gavin Nash (Host) in this episode available on our website, Spotify & Apple Podcasts.

Employing an Apprentice? The real costs you should know about…

adam@mulcahy.com.au (Adam Foale) — Tue, 19 Oct 2021 02:05:14 GMT

With school finishing up for another year there are school leavers looking for apprenticeships.

Before you hire an apprentice it is a good idea to analyse what the actual cost of hiring an employee is.

This image shows the total cost employing an apprentice, the example is for an apprentice plumber who has completed Year 12. The award payrate for an apprentice plumber is $14.61 per hour. After taking into account the additional employment expenses such as Superannuation & Workcover the real hourly rate is $16.68.

When the annual leave and trade school hours are taken into account and assuming that the employees are spending 80% of their time on chargeable work the real hourly cost of employing an apprentice is $31.88.

If you are thinking of hiring an apprentice and would like to discuss this please contact the Accounting division at Mulcahy & Co for assistance.

Eamon Sullivan

Accountant

Ballarat

Agriculture Resilience and Recovery Program Victoria

adam@mulcahy.com.au (Adam Foale) — Thu, 14 Oct 2021 03:57:51 GMT

The Victorian Government is fast-tracking recovery for businesses from the past 18 months of COVID-19 restrictions.

The Government has announced funding available to businesses in the industries of primary producing, food processing and accommodation providers located in regional Victoria to deliver financial support to assist with the implantation of COVIDSafe standards for employees.

In particular, the funding has been designed to provide on-farm infrastructure, accommodation, business upgrades or new facilities, support and training. This is a great opportunity for eligible businesses to upgrade workers accommodation, staff kitchens, lunchrooms, make modifications to processing, packaging and manufacturing lines for a COVIDSafe work place.

The aim of this grant is to provide businesses with the support needed to prepare for the upcoming peak seasons of spring shearing & harvesting. Whilst also implementing COVIDSafe guidelines within the work place through training and education.

To be eligible to apply applicants must be one of the following:

Employ staff and have a primary producer or food processing operation located in rural or regional Victoria; or
Be a local Government Authority, a not for profit organisation; or an accommodation provider.

The program provides three types of business support:

Business Resilience and Recovery – to support businesses to adapt their operations to maintain production and manage risks.

Place-based Worker Support – to support the development of COVIDSafe worker accommodation.
Training and Education – to provide support for farm and food processing workers to access information and services and ensure businesses are providing COVIDSafe work practices.

The grant, which was announced on the 4 ^th October, allows for individual businesses to receive funds between $10,000 and $300,000 and successful applicants will be given up to 50% of the total cost of the project.

Applications close 31st December, 2021.

Contact M Group today for more information and to confirm your businesses eligibility.

More information: https://agriculture.vic.gov.au/farm-management/prepare/farm-business-resilience-program

Megg Owen

Accountant

Ballarat

FS360 Podcast - Episode 33

adam@mulcahy.com.au (Adam Foale) — Mon, 11 Oct 2021 04:41:21 GMT

Lifecycle of the Employee

The Proven Group offer tailored HR solutions to clients, depending on size, industry and complexity around the employment relationship. We read awards, speak to Fair Work, advise on terminations and everything in between. Our Phone a Friend Service offers peace of mind that you can pick up the phone at any time and speak with an expert who knows your industry, your business and your team. Personal Service is a cornerstone value, so you’ll never get an answering machine with us – always a human being.

Join Belinda Fyffe and Gavin Nash for Episode 33 of the FS360 Podcast where they discuss all things compliance around Human Resources, employment and subcontractors.

Episode 33

'Lifecycle of the Employee' - Human Resources focussed episode with special guest and HR expert Belinda Fyffe.
Join Belinda and host Gavin Nash where they discuss all things compliance around Human Resources, employment and subcontractors.

Available on Apple, Spotify or right here!

Saving for School Fees

adam@mulcahy.com.au (Adam Foale) — Tue, 28 Sep 2021 01:33:33 GMT

One thing that is often over looked when it comes to planning for your children’s future is the cost of schooling.

More often than not we find that people are struggling to allocate money for the school they want to send their kids to. This could have easily been put into savings and invested earlier to increase the amount that you have before the kids even start school.

I can speak from experience as I have recently done this for myself and wish I had of been more proactive myself and started this when my first was born, or even earlier!

If I was to put my children through catholic private schools I have estimated I need to start putting away $130 per week with a deposit of $2,000, with an assumed return of a conservative 2%. If you are looking at more expensive private schools this could easily be well in excess of double this amount.

The decision between private and public school has a large influence on what preparations need to be done, but there are always costs involved and it is better to be prepared rather than surprised. Never under estimate the cost of uniforms, laptops, books, excursions, camps etc.

A Financial Planner will be able to sit down with you and work through the projected school fees contrasted with savings (and the project interest on those savings). This will help to work out an amount that you should be putting away each week to see them all the way through to university.

Call one of our Financial Planners today to book an appointment in person, over the phone or via video call.

Arlan Davine

Financial Planne r

Ballarat

FS360 Podcast - Episode 31

adam@mulcahy.com.au (Adam Foale) — Wed, 22 Sep 2021 06:12:27 GMT

Buy-Sell Agreements for businesses

A buy/sell agreement is worth the awkward conversation. A critical agreement that sets out how ownership is transferred to other business partners should tragedy strike, it ensures that beneficiaries of the deceased person’s will – usually their family – will be paid for their share of the business, saving them additional trauma at a very difficult time.

Surprisingly, many businesses do not have one, which can lead to all sorts of unforeseen problems. There are three main ways a buy/sell agreement can help:

Valuation
Succession
Insurance

Three tips for a solid buy/sell agreement

Start early and review often
A buy/sell agreement should be put in place at the beginning or in the early stages of the business partnership, and regularly updated.
Get good advice
While a lawyer will ultimately put the document together, the complexity of the situation means it’s often best to get all your advisers across the agreement.
Decide how much insurance you need
Insurance doesn’t have to cover the entire value of the business, instead think about how much payout you need. For example, if you received a payout of two-thirds of the value of the business, would you be able to manage the rest?

Episode 31

Even the closest business partnership needs a buy/sell agreement in place. It can help protect everything you and your partners have built. Businesses between friends and family can work great, but if someone dies or acquires a permanent injury, the lack of a formal agreement can lead to a painful dispute and eventual financial ruin.

Available on Apple, Spotify or right here!

Cryptocurrency and your tax

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Sep 2021 00:21:00 GMT

It’s pretty safe to say we all know someone who claims to be the cryptocurrency expert, with an inside word on the next big trade and the coin that is going to the moon. They may know how to pick the next big thing, but do they know what to do with all those gains when it comes to tax time?

Do I need to pay tax on any Crypto gains/profit?

What many people fail to recognise are the tax consequences that arise with the buying & selling of crypto currencies.

How is it taxed?

In the eyes of the ATO for most individuals, Cryptocurrencies are treated the same way as if you hold or trade shares on the stock market. From a tax perspective any gain on a trade will be subject to Capital Gains tax. What this means, is that any gain made is added to your taxable income and then taxed at your marginal rate.

If you are in the business of trading cryptocurrencies, the way you report your gains and losses will be different. Instead of reporting your gains on a capital basis, you are required to recognise your cryptocurrency as trading stock. What this means is that all your sales & purchases get pooled and the profit or loss is reported.

What about other sources of Cryptocurrency income?

Just as you would be required to pay tax on dividends from shares, stake pool income also constitutes taxable income. Any staking rewards received, as well as proceeds from airdrops, are added to your taxable income and subsequently taxed at the marginal rate.

If I’ve made a loss what happens?

For most individuals, if you have made a loss this loss will be offset against any gains that you have made. If you have not made any gains, then this loss will be carried forward indefinitely until a gain has occurred in future years.

Once again, this varies if you are operating a business trading cryptocurrency. Depending on how your business is structured (Company, Trust, Sole Trader etc), will be key in determining how your loss is treated for tax purposes. This can get quite complicated due to the tax rules surrounding the possible different structures, so it is important that you seek advice relevant to your situation.

I haven’t converted any of my Crypto back to AUD, do I still need to pay tax?

In short, the answer to this is yes. No matter what currency you are trading, as long as any of your disposal or sale of your crypto is made, you will be required to report this on your tax return in Australian Dollars (AUD).

What records do you need to keep?

Having a good record keeping system is essential to accurately determine your tax obligations. We recommend ensuring you keep accurate records of the date of transactions, number of units purchased/sold, and the price these units were purchased/sold. You should be able to obtain all these details from the transaction reports supplied by your exchange.

Mulcahy & Co can assist you with all taxation including calculating your tax liability and future tax minimisation strategies. If you are interested, contact one of our offices today.

Watch the guys discuss all the ins and outs of tax when it comes to cryptocurrency investments.

Episode 32

Cryptocurrency and your Tax payable. Our special Accounting team of Luke, Daniel and Harry discuss with host Gavin Nash. Key topics are discussed in detail to assist you with your Crypto Investing.

Available on Apple, Spotify or right here!

Luke Noether

Accountant

Ballarat

Daniel Tadros

Accountan t
Ballarat

Harry Mulcahy

Accountant

Ballarat

Budgeting – The Small Things Add Up

adam@mulcahy.com.au (Adam Foale) — Fri, 17 Sep 2021 01:05:34 GMT

Many people these days are trying to budget and save a portion of their money whether it be saving for a house deposit, that overseas holiday (once borders reopen) or just saving for a rainy day.

There are many tips and tricks on how much you should be saving every pay day but I want to discuss the little things that might be passed over and not really considered. These can add up to a substantial amount of money for your savings.

Cancel unused subscriptions

It’s estimated that Australians spend $3.9 billion a year on unused subscriptions.

How many of you are signed up for Netflix, Stan, Disney + (the list goes on)? And how many of you are watching content of each one? I’m someone who is guilty of paying for multiple streaming subscriptions at the same time, at one stage I was paying for 5 different stream providers and was only actually watching one of them. By cancelling even just a couple of those subscriptions you could be saving yourself hundreds of dollars a year.

Other subscriptions to check if you are paying for and not using are gym memberships, gaming subscriptions or multiple music streaming platforms.

Review your bank account

Not too long ago it was normal to expect monthly bank fees to be deducted from your account or paying $2 to use other banks ATM machines. This is not the norm anymore but there are still a lot of bank accounts out there that will still charge you those fees.

If this is you and you’re seeing these fees being deducted from your account then it may be time to swap banks or even call your bank and they might be able to change your account to a fee free account.

Most banks offer everyday accounts with no monthly account keeping fees as long as there is a minimum deposit being paid in each month like your salary/wages (generally around the $1,000 mark).

Rent that dress or suit

How many of us are guilty of going and buying a new outfit for every function because the last thing we want is to be seen in the same outfit twice. Imagine if you have 3 weddings in the one year to attend and you buy a new outfit for each one spending $300 on each, that’s a whopping $900 for clothes you will probably never wear again.

There are so many options out there now to rent outfits, so rather than spending $300 you could spend $50-100 by renting saving yourself $600.

Takeaway coffee

Many households have their own coffee machine at home but will still buy a takeaway coffee every morning before work, the average coffee is around the $5 mark and if you are buying one every day before work you are spending over $1,000 on coffees each year.

It’s time to bust your take away coffee mug and make your coffee at home and take it into work and treat yourself once a week on your favourite takeaway coffee and save yourself up to $1,000 per year.

Tamara Vawdrey

Financial Planne r

Ballarat

Off-the-plan Duty Concession

adam@mulcahy.com.au (Adam Foale) — Tue, 24 Aug 2021 03:58:31 GMT

Buying a home before any buildings works have started or have finished is commonly known as ‘buying off-the-plan’. When you buy off-the-plan, you may be eligible for the off-the-plan duty concession.

The Off-the-plan Concession can apply to contracts for:

Land and building packages.
Lots in vertical developments (such as residential towers).
Lots in horizontal developments (such as low-rise apartments and unit complexes).
Refurbished lots.

These properties may or may not involve a new subdivision.

The date of the contract is important as it affects the scope of the off-the-plan concession.

How does the concession work?

You pay duty on the dutiable value of your property. This is usually the price paid for the property or its market value, whichever is greater. However, when the off-the-plan concession applies, the dutiable value is the contract price minus the construction or refurbishment costs incurred on or after the contract date. This reduces the amount of duty you pay.

Example: An off-the-plan apartment

Paige buys an apartment off-the-plan as her future home for $620,000. She signs the contract before any construction has started. The vendor advises Paige that $465,000 of her contract price will be spent on constructing her apartment.

This means that the dutiable value of Paige’s apartment, after applying the off-the-plan concession, is $155,000 ($620,000 - $465,000).

Am I eligible?

Eligibility depends on a number of factors, with the most important being when you signed your contract.

You must pay at least the market value for your property. If your contract price is less than market value, duty will be assessed on the property's value at the time you entered into the contract.

There are certain requirements you must satisfy to receive the off-the-plan concession.

Purchaser requirement

You must be eligible for the principal place of residence concession or the first home buyer exemption or concession.

All purchasers must be over 18 years old, except where a purchaser is the guardian of a person with a legal disability.

The concession is not available to a company or a trustee of a trust buying a property off-the-plan.

Residence requirement

At least one purchaser must use the property as their home for a continuous period of 12 months, starting within 12 months of possession of the property, which is normally settlement.

If the residence requirement is not met, duty will be reassessed and all concessions or exemptions removed. You must notify us within 30 days of any change in circumstances that may result in you failing to meet the residence requirement.

On request, and after being satisfied there is good reason, we may vary the residence requirement.

Dutiable value requirement

The dutiable value of your property is usually the greater of the price paid for the property or its market value except when the off-the-plan concession applies. In these circumstances, the dutiable value of your property is the contract price minus the construction costs incurred on or after the contract date.

Generally, the dutiable value of your home after applying the concession cannot be more than $550,000, and $750,000 for first home buyers.

However, the Victorian Government has temporarily increased these thresholds for all home buyers to $1,000,000, for contracts entered into on or after 1 July 2021 and before 1 July 2023.

Talk to our Loans & Finance Team at Mulchy & Co for more information or to apply.

Neil McCahon

DIRECTOR - L OANS & FINANCE

Ballarat

FS360 Podcast - Episode 30

adam@mulcahy.com.au (Adam Foale) — Mon, 23 Aug 2021 03:12:00 GMT

Behavioural Investing with Danny Archer

Episode 30

Behavioural Investing - Financial Planner Danny Archer talks with host Gavin Nash about this interesting topic and shows some 30 year summaries of the worldwide market results to help illustrate the topic. Recorded as a video and available on our website.

Available on Apple, Spotify or right here!

Self-Managed Super Fund (SMSF) – The right thing for you?

adam@mulcahy.com.au (Adam Foale) — Tue, 10 Aug 2021 01:18:53 GMT

Chances are most of you reading this either know someone who has an SMSF or have even considered opening one yourself.

It is important to not follow the crowd when making this decision and to spend the time needed to critically analyse one question: is a SMSF the right thing for you?

I have had a lot of conversations of late with people who have floated the idea of opening an SMSF for themselves and their partner. Almost every time the main reason for wanting to do this is to be able to invest directly in residential property. However, there is more to consider.

It goes without saying that there are benefits of using a SMSF. Common ones are complete investment control and the ability to invest in direct property (commercial and residential).

Consider the following scenario we often see:

Jack and Jill own and operate a Mechanic business. For the most part, Jack runs the workshop and Jill runs the office. Jack and Jill have a SMSF which owns the commercial shed their business runs out of. The business pays rent to occupy the shed, effectively meaning the business is the tenant and the SMSF the landlord.

The ways Jack and Jill benefit from this arrangement is that the business has long-term security that it will have a commercial shed to operate from, the SMSF will also have a long-term tenant that pays rent on time and the capital value of the shed should appreciate in value over time. Also, the business needs to pay rent at commercial rates rather than Jack and Jill deciding to let the shed out for free, however, the added benefit is that the SMSF will only pay tax on the rent at 15%. As Jack and Jill control the business and the SMSF, the rent flows from the business to the SMSF as income and incurs the 15% tax, rather than it being paid to another landlord and being lost completely.

In this situation Jack and Jill’s total portfolio is connected and can benefit strongly through commercial transactions occurring, therefore it is clear that the SMSF is the right thing for them considering their circumstances. Jack and Jill also have additional investments inside their fund that provide them with solid diversification and liquidity, which spreads their overall risk and should help their long-term return.

However, an SMSF can also be inappropriate.

A key reason there has been an influx in enquiries about owning property inside an SMSF is due to the affect COVID-19 has had on regional property prices. The idea of owning a property inside your SMSF and watching its price continue to go up and up is hugely appealing and worth considering. What people tend not to think about are the risks and costs involved and the minimum balance they should have to make it worthwhile. Not to mention the administration and legal responsibilities.

The main purpose of superannuation is to provide income in your retirement. Therefore, investing all of your super into one asset increases your risk. What happens if there is a large downturn in the property market? What happens if your tenants do not pay rent on time? What happens if your tenants don’t maintain the property? Even if your tenants do pay on time and look after it, there are going to be periods where the house is empty and the dishwasher and hot water service are going to need replacing at some point. Your property manager will ask for a fee and you will need to pay certain rates and insurances. Further, if you are required to borrow funds for the project, the rates on loans inside an SMSF are more expensive than you may think.

It pays to do your research and focus on areas that have higher rental yields to ensure your costs are going to be covered; you do not want the balance of your SMSF going backwards. An inexperienced property investor may be best served waiting until they have some decent understanding of what being a landlord is like before opening an SMSF for this purpose.

After taking into account the potential pros and cons, it is important to know that not everybody’s situation and circumstances are the same, therefore their financial plan and strategy shouldn’t be either. Having your assets allocated appropriately is key to long-term wealth creation; superannuation is merely a vehicle people use.

If you have been thinking of opening an SMSF to invest in property, precious metals, shares or even artwork, reach out to an adviser at Mulcahy & Co today so we can help determine if one is, in fact, the right thing for you.

Danny Acrher

Financial Planner

Ballarat and Geelong

Your Business Marketing

adam@mulcahy.com.au (Adam Foale) — Tue, 27 Jul 2021 05:11:23 GMT

Is internal or outsourcing the best way to go?

Marketing your business is an important part of any small, medium or large business. It drives sales, new customers, enquiry and is intrinsically linked to your business success.

But what is the best way to spend your marketing budget? Is it to employ internally and then hand over the reigns to that person? Is it to hire an agency to handle all marketing on your businesses behalf?

The answer is dependant on your business, industry and your previous experience.

Internal Marketing Function:

This approach means finding the right person to work within your business
to manage and organise marketing activity.

This could be on a part or full-time basis and may not include additional costs such as graphic design, video production, media buying or website design etc that your internal marketing person may not be

able to execute.

You may also be hoping this person gets an intimate understanding of your business and can get to a stage in the future where they come to you with great ideas to market your product or service.

Depending on your management style and knowledge of marketing in your industry, an internal person may be the way to go.

Outsourcing your marketing:

This normally means appointing an agency to look after the marketing for your business. They are external to your staff and can come in with new and fresh ideas that have worked for their clients in the past.

Agencies normally have multiple team members who specialise in the different areas that need execution. Graphic Design, Web Design, Advertising, Media Booking, Sponsorships and Social Media to name a few.

As an agency is external they won’t add to your payroll, superannuation or workcover commitments, their services are invoiced separately like any other supplier.

Further to this, costs for an agency like computers, software, cameras, audio equipment, etc, are all their cost not yours so their fee covers these items unlike an internal staff member where you may need to purchase these items.

An agency may also have lots of experience in your industry with other clients of theirs, ideas they can bring to the table to help your business.

Things to think about before deciding:

Do you have time to work with an internal person or an external agency- allocate that time each week/month so you can effectively market your business.

Decide if you want to invest in an internal person or external provider- talk to peers in your industry or who are in their own businesses about their preference.

Whatever you do, the idea is to track success with your marketing. Whether that is new customers through the door, visits to your website, followers on your social media or purchases in your onine store. Be sure to set expectations with your internal staff member or your agency.

Having a ‘Marketing Plan’ for your business is Step 10 in the Mulcahy & Co FS360 process. Helping you achieve financial security is at the centre of what we do for all clients.

FS360 is a step by step process we use to achieve this with you over time.

Service Based Business Marketing

adam@mulcahy.com.au (Adam Foale) — Tue, 27 Jul 2021 04:49:06 GMT

How do I attract new clients? It all starts with Content Marketing...

You work hard everyday to make sure your clients are happy with the hope they will refer you to their colleagues.

Word of mouth is very important for attracting customers but so is your expertise. If you are in a service delivery business - your knowledge is your best asset.

Leveraging that with a Content Marketing Strategy can be invaluable in making sure you have a pipeline of new clients coming your way.

Positioning you as the expert in your area is a combination of digital assets these days. You need to reach your target audience or ideal client as effectively as possible so when they are ready to use a service like yours you are top of mind to them.

Content Marketing is a term which means you write or record your expertise and place it in the right digital channels so you can come up when those keywords are searched. Google’s algorithm rewards rich and valuable content- if Google thinks you are providing regular, quality content, they will reward your website with a better position in the search for your services.

Making it to the top 3 businesses listed in Google for your service and location can be a challenge but starts with good content.

Regular articles posted to your website and social media accounts is a great way of making sure Google sees your site as a valuable resource for its search results.

Writing and publishing articles:

What if you aren’t a confident writer? There are lots of ways to get your content into your website and socials- you could:

Record your content as an audio file (podcast) and have it transcribed to your website.
Hire a content writer to convert your notes or dot points into a well written, grammatically correct article.
Have a team member write an article - even better ask your staff to write articles in rotation so not all the pressure is on you.

Publish to other platforms:

Once you are regularly writing and publishing articles to your website, the next step is to spread those across other platforms:

Your social media accounts
Emailed to your customers/clients via a regular eNews
Send your article to local news outlets like Radio, Newspapers & other Publications for inclusion in their content delivery.

All of this is designed to position you as the expert in your field. This helps customers or clients coming to your business rather than you pushing advertising to them in the hope they may make the decision to come to you.

For service based businesses it’s all about ‘Content Marketing’!

Having a ‘ Marketing Plan’ for your business is Step 10 in the Mulcahy & Co FS360 process. Helping you achieve financial security is at the centre of what we do for all clients.

FS360 is a step by step process we use to achieve this with you over time.

Changes to Superannuation from 1 July 2021

adam@mulcahy.com.au (Adam Foale) — Tue, 27 Jul 2021 03:17:28 GMT

There has been quite a few changes to super which can be quite beneficial in helping you boost your retirement funds. Below is a summary of the changes.

1. The employer contribution rate increased to 10%

The Superannuation Guarantee Contribution (SGC) by employers has increased from 9.5% to 10%. This year’s increase is part of the Government’s long term plan to increase the rate to 12% by 2025.

2. Contribution Caps have increased

Caps for both concessional (before-tax) and non-concessional (after-tax) contributions have been increased for the 2021/22 financial year – as shown in the table below.

These cap increases can also benefit you if you are accessing bring forward arrangements (non-concessional contributions) or carry forward rules (concessional contributions).

If you have a salary sacrifice agreement with your employer whereby you sacrifice up to the concessional cap, you may need to review the agreement in light of these changes.

If you are insure on how this affects you, please do not hesitate to contact us.

3. The age limit for bring forward arrangements has increased to 67 years

The bring forward arrangements we mention above has increased the age limit from 65 to 67 years.

4. The excess contributions charge has been removed

From 1 July, individuals who exceed the contributions cap will no longer be charged with an excess contributions charged. They will still be issued with a determination and charged at their marginal rate on any excess concessional contributions amount less a 15% tax offset to account for the contributions tax already paid by their super fund.

5. Recontribution of COVID early release of super

Individuals who received a COVID-19 early release of super (for 2019/20 and 2020/21) will be able to re-contribute up to the amount their received without the contributions counting towards their non-concessional cap.

6. Changes to the transfer balance cap

The transfer balance cap has been increased from $1.6 million to $1.7 million. This affects the maximum amount of super an individual can transfer into retirement phase income streams during their lifetime (pensions)

As you can see above, there is quite a few changes from 1 July. To help you understand how this may affect you, or help you maximise these opportunities, please do not hesitate to speak with our team.

ATO Focuses on Lifestyle Assets

adam@mulcahy.com.au (Adam Foale) — Tue, 27 Jul 2021 03:00:23 GMT

The ATO has extended its lifestyle assets data matching program to allow it to acquire insurance policy information for certain asset classes.

The ATO will acquire the data from 25 insurance providers, with approximately 300,000 individuals expected to be identified each year.

Insurers will be required to provide the ATO with detailed policy information where the value of assets is equal to or exceeds the following thresholds:

Marine vessels $100,000
Motor vehicles $65,000
Thoroughbred horses $65,000
Fine art $100,000 per item
Aircraft $150,000

This information helps the ATO identify those who may have been untruthfully declaring insufficient income in their tax returns despite accumulating assets. It also helps the ATO identify taxpayers who dispose assets and do not declare the revenue or capital gains on those disposals.

The ATO currently matches a variety of information including vehicle registrations, share economy accommodation, government grant information and contractor payments just to name a few.

It is important that you declare all income when preparing your income tax returns. If you are unsure, please do not hesitate to speak with our team.

Audit Insurance

adam@mulcahy.com.au (Adam Foale) — Tue, 27 Jul 2021 01:09:46 GMT

We will be shortly sending out emails offering audit insurance. This is an optional service that we offer to all our clients.

The ATO and other government revenue authorities are consistently active in conducting audits, inquiries, investigations and reviews in response to lodged returns. The insurance covers the cost of your accounting fees in the event of this happening. Some of the area’s covered are:

BAS/GST
FBT
Jobkeeper & Cashflow Boost
Income Tax
Payroll Tax
Record Keeping
SMSFs
Superannuation Guarantee Charge
Workcover

The cover is retrospective. To be covered, the audit must be instigated while you have the insurance cover.

We have found that an audit or review can be a costly and time consuming experience, which is why we offer you this service.

If you have any questions, please do not hesitate in contacting the Mulcahy & Co Sunshine Coast team .

Financial Planning July 2021 Update

adam@mulcahy.com.au (Adam Foale) — Fri, 23 Jul 2021 04:13:32 GMT

Below is a video from Director Thayne Turley updating you with the latest in regard to investment markets and to touch on the benefits of super contributions throughout the year to assist with cash flow.

During the lockdowns our phone and email are always available. We are also happy to setup a Zoom or Skype video call as necessary.

As always, if you have any questions please reach out to your advisor within our team for further clarification or potential options.

The Mulcahy & Co Financial Planning team

When is it Time to Stop Investing in Super?

adam@mulcahy.com.au (Adam Foale) — Fri, 23 Jul 2021 00:04:31 GMT

Director of Financial Planning Thayne Turley outlines why we should all invest in super, as soon as we can, as much as we can, for as long as we can.

We all know there are benefits to be gained by investing within the superannuation environment. Surprisingly few, however, realise that from 1 July 2021, a tax break of up to 24 per cent (based on the marginal tax rate applicable to taxable income of up to $180,000) is available on the maximum Concessional Contribution (CC) of $27,500.

In addition, from 1 July 2021, up to $330,000 can be contributed to super in ‘after tax’ Non-Concessional Contributions (NCC) for those eligible to use the three year bring-forward rule.

The benefits are obvious. If your marginal tax rate is 39 per cent, you will pay just 15 per cent on the earnings, making it a 24 per cent ‘tax gift’ from the government (net of the 15 per cent contributions tax that the super fund pays).

If you contribute to super at the maximum CC of $27,500 per annum, you will save up to $6,600 in net tax every year. Compounded at a conservative 5 per cent per annum over a decade, twenty and thirty years, this will yield respectively, an extra $81,869, $205,999 and $394,207 which otherwise would have gone to the ATO.

In addition, you will have contributed a net $23,375 per annum into your super pool, which, compounded at 5 per cent per annum over a decade, twenty and thirty years, will grow respectively, to $289,951, $729,579 or $1,396,150.

Nevertheless, many will still struggle to get their heads around contributing beyond the Super Guarantee (SG) level of approximately 10 per cent. If earning $150,000 per annum, they will be happy just to see this $15,000 put away by their employer, on their behalf. That may leave a $12,500 opportunity sitting on the table – an opportunity which would be significantly wasted.

For example, if you were to choose instead to invest those dollars not contributed to super in a share portfolio outside of the super environment, you would be buying fewer shares from after-tax dollars ($23,375 per annum net within super versus $16,775 per annum outside of super).

Furthermore, any proceeds on shares realised within the first 12 months will also be subject to Capital Gains Tax (CGT) at your personal tax rate of 39 per cent (or a personal CGT rate of 19.5 per cent if the shares have been held for more than 12 months).

However, for share proceeds realised within the first 12 months of purchase inside super, the CGT rate is 15 per cent, and 10 per cent if realised outside 12 months. In other words, you get to purchase more shares with your net CC inside super than your net salary outside super - that is, $23,375 per annum vs $16,637.50 per annum.

In addition, due to the reduced CGT and tax rates on earnings inside super, you get to keep more of the income and capital gains received. The more you get to keep after tax, the more your portfolio benefits from compound interest.

Some people can become disillusioned with the changes “the government keeps changing the rules” and “superannuation is too complicated”.

As per this year’s May 11 budget, we saw more super changes announced, which, if legislated, will actually help us contribute more to super, for longer.

As a case in point, here is a summary of the main super indexation changes to apply from 1 July 2021:

Concessional super cap (CC) indexed to $27,500 (inclusive of ALL employer contributions such as Super Guarantee)

Non-concessional super cap (NCC) indexed to $110,000 Maximum ‘Three Year Bring-Forward’ rule cap indexed to $330,000

Transfer balance cap indexed to $1.7m for new ‘unrestricted non-preserved’ Account Based Pensions commenced post 1 July 2021

Total Super balance cap indexed to $1.7m for everyone.

Over time, the government will change the rules around superannuation to cap the massive tax-advantages. Nevertheless, super has still grown to the incredible $3 trillion sovereign wealth fund it is today.

We think the super rule changes will only cease if the government has eliminated all the tax benefits of investing in it, and we are nowhere near that point in time.

In the meantime:

We should all invest in super, as soon as we can, as much as we can, for as long as we can; and

The time to stop investing in super is when the rules stop changing!

Starting a business? What Marketing do you need and in what order...

adam@mulcahy.com.au (Adam Foale) — Wed, 21 Jul 2021 01:11:29 GMT

It’s exciting right? Starting your own business may have been a dream you’ve had for some time - we get it!

Although it can be overwhelming there are some simple steps you can put in place that will give your business a really good grounding in presence especially online.

Step 1: Develop a brand

More than a logo, a brand is what your business stands for - it is also the memory someone has after an interaction with your business.

But a great place to start is a logo - it helps identify you to customers, separates you from competitors and also gives your business an identity it can have for many years to come.

Step 2: Google My Business and Bing Business listings.
These are business listings provided on the Google and Bing search engines. They contain all contact details, opening hours, business descriptions and images of your business. They’re inexpensive and a great first step before investing in a website.

Step 3: Marketing Plan

It can be exciting to get your brand ‘out there’ by advertising right away but you need to be careful to plan it out. Establish a target audience (your ideal customer), then work advertising and marketing toward that customer.

A good place to start is to get a 12 month calendar and add to it action items like advertising, website build, social media posts etc to enure you give yourself a to-do list you can refer back to.

Step 4: Social Media

Developing a social presence is becoming more and more important. But which platform is best for your business? Facebook, Instagram, Twitter, LinkedIn, YouTube, TikTok or SnapChat? Each have their audiences and each have differing ways to advertise on them.

Once you choose, posting regularly is key - good quailty information that can help your customers understand your business offering, not just ads.

Step 5: Website

Likley the first place someone will go when looking for your service or product is online. 85% of word-of-mouth referrals check your business out online before contacting you. So your website is really the front door of your business to potential customers.

Websites have a lot of moving parts, like SEO, Call-to-Action, Product Offering - so it is important to get the site designed by someone who has lots of experience.

Step 6: Advertising

The last step and with good reason - it can be expensive, so you want to make sure you have the first steps in place first. No good attacting a customer to your website if it isn’t ready to accept enquiry - or getting them to follow your business on socials and having no content to show them.

Lots of options here from TV to Radio to Newspaper to Social Boosts and Google Ads. All have their own ways of reaching your ‘ideal customer’ from Step 3 in the plan. Keep this customer in mind at all times and you should get good results.

Our Marketing Team offer assistance in all of the items mentioned above. Contact us today for a FREE initial consultation to step you through what is possible for your business.

The Family Home Guarantee

adam@mulcahy.com.au (Adam Foale) — Tue, 20 Jul 2021 00:12:49 GMT

The Family Home Guarantee is an Australian Government initiative that aims to support eligible single parents with at least one dependent child in purchasing a family home.

From 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years to 30 June 2025, to eligible single parents with at least one dependent child, subject to their ability to service a loan.

The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2% regardless of whether that single parent is a first home buyer or a previous home owner. Investment properties are not supported by the Family Home Guarantee.

The team at Mulcahy & Co Loans & Finance can assist you with claiming this guarantee – call today to make an appointment.

Dennis Comer Retires

adam@mulcahy.com.au (Adam Foale) — Thu, 15 Jul 2021 06:52:53 GMT

It is with pleasure that we congratulate Dennis Comer (Accountant) on his recent retirement from public practice.

Dennis joined the Mulcahy & Co Group in July 202 and has now transitioned to retirement.

Dennis worked for 36 years as a sole practitioner in Geelong and was much loved and respected by his hundreds of clients over that time.

Joanne Taylor and Jenny Comer were staff with Dennis before his retirement.

We wish Dennis all the best on the golf course and for his well-earned retirement.

If any of Dennis’ clients need to speak with us our details are below:

Mulcahy & Co Geelong

Suite 3/35 Gordon Avenue, Geelong West, Victoria

Ph: 03 5222 6962

Email: geelong@mulcahy.com.au

Mulcahy & Co Marketing eNews July 2021

adam@mulcahy.com.au (Adam Foale) — Thu, 08 Jul 2021 04:47:42 GMT

We hope you have all survived and thrived over these past 18 months… they have been challenging to say the least. We are proud to have helped our clients with Marketing and Communication throughout this time.

This eNews shows some of our latest work as well as some new offerings from our Marketing team.

Branded QR Codes

Check these out!

With customers very used to scanning QR Codes these days, it is a great time to launch a campaign or re-design your company brochures, stationery and flyers with some customised QR Codes.

Here are some we are using for Mulcahy & Co which direct to different pages within the website. Give them a go right off your screen!

Recent project

Recent Online Stores launched!

The world is changing and your business needs to change with it.
We can offer complete online stores for your business with a quick turnaround time. We handle product listings, setting up secure payments and assist with auto-emails for shipping fulfilment.

See our latest stores here

Google Ads services

Mulcahy & Co Marketing are an accredited Google Ads provider.

We can place your brand and products right where people are searching for them:

In Google search
On YouTube
In many online spaces using re-marketing
On one of the 2 million websites that are part of the Google Display Network

These placements are handled by our experts in house and get you the best value for money in this new area of digital advertising.

Outsource your business marketing.

Is your business growing?

Have you tried a part time Marketing employee without success? We can help.

If you crunch the numbers, having your own internal marketing resource may not stack up financially.
Why not outsource your marketing tasks and save money in the process?

Outsource your business marketing to us for a fraction of the cost of a staff member. Don’t pay for Super, Workcover, Software, Hardware, Cameras or Payroll tax!

Our service is invoiced like any other supplier and we offer a full suite of marketing and design services. We develop strong brand identity and marketing strategies to cost effectively engage your customers.

Talk to your target audience and create enquiries through regular, planned marketing. Our staff are qualified and experienced and ready to assist you and your business.

Watch the video below to find out more.

A full folio outlining the types of our work we do, including examples, can be found here: www.mulcahy.com.au/marketing

If you’ve got an upcoming project or looking for some general marketing advice, please contact us below. We would love to help.

Gavin Nash

0448 686 560
gavin.nash@mulcahy.com.au

Rachel Turlan (Mildura)

0428 391 880
rachel.turlan@mulcahy.com.au

Contributions to superannuation

adam@mulcahy.com.au (Adam Foale) — Tue, 06 Jul 2021 07:06:00 GMT

Quite a common misconception I come across with clients is that they don’t need to worry about making additional contributions to super until later in their working lives, if you want to take control of your retirement then it is never to early to be thinking about making that extra contribution.

Kelly is 25 years old and working full time and earning $65,000 per annum, her superannuation balance is $20,000. If she continues just to receive her compulsory employers’ contributions paid into her superannuation, at retirement she will have a super balance of $483,000.

If Kelly starts salary sacrificing $5,000 per annum into super this will increase her super balance at retirement to $777,000 which is a massive increase of $294,000.

By making a $5,000 contribution to super, this will also serve as a tax deduction for Kelly by reducing her income tax payable by $1,800.

As of the 1 ^st of July 2021, there were the following changes to superannuation:

Employers must now contribute 10% of their employee’s salary to superannuation (as long as the employee is eligible to receive employer contributions)
The before-tax (concessional) contributions cap has increased to $27,500 per year (this includes employer contributions)
The after-tax (non-concessional) contributions cap has increased to $110,000 per year (or $330,000 over 3 years if certain conditions are met

To make an additional payment to super and be eligible to claim a tax deduction on the contribution, there is a couple of different ways this can be done, have your employer make the additional payments on your behalf by paying an additional amount from your wage every pay period. Alternatively, you can make a payment directly from your bank account and lodge a form to your super fund to claim a tax deduction.

If you would like to discuss how contributing to super will benefit you directly, please contact our office and book an appointment with one of our Financial Planners.

Succession and Farm Wealth

adam@mulcahy.com.au (Adam Foale) — Wed, 30 Jun 2021 01:06:15 GMT

Farm balance sheets are looking as healthy as they have ever been. With strong commodity prices and low interest rates, farm land prices have continued to sky rocket in most areas.

According to the Australian Farm Values Report 2021 prepared by Rural Bank,

Farm land values grew in all Australian states for the first time since 2005;
Australian farmland compound annual growth rate is 7.6 per cent over 20 years;
The median price per hectare of Australian farmland increased by 12.9 per cent in 2020, the seventh consecutive year of growth.

An essential ingredient to an effective succession plan is a viable business. A business that generates sufficient profits to fund two or more families within the family business, whilst continuing to grow. This has not always been the case and the more typical situation was for the younger generation to live on ‘bugger all’ with the promise of getting the farm after 30 years or so!

For the first time we have seen consistent strong returns and is a reason why more and more people can see a viable and bright future in farming and want to be part of it.

How does this increased wealth and bright outlook impact a succession plan?

We recently reviewed a farming clients succession plan and succession deed. It was an interesting case study to see how in a relatively short time the business of farming has changed. There had been a lot of ‘chatter’ amongst the non farming siblings as to how many more millions the farm was now worth, how easy farming is - the shearing contractor turns up and the shearing is done, cropping and harvest is completed effortlessly with big machines and they get to go on 2 holidays per year!

It was almost as if the parents and farming children felt guilty for what they and the industry has achieved in a relatively short time frame. They are all still working long hours but the hours are ‘better spent’, are much more productive, and there is a focus on timeliness.

From a succession planning perspective nothing had changed. Yes the net assets had increased considerably, but a key requirement of the succession deed was to pass the farm land and business through to the next generation. So, whether the land was worth $10 million or $30 million, the current generation of farmers were the custodians of the land for future generations.

The succession deed was reviewed with a few minor administrative changes made and a frank realisation that despite the positive outlook, this is possibly as good as it gets in farming and preparing for what might be around the corner is essential. Operationally there are still a few areas to keep improving and if the opportunity to purchase additional land does not become available other investments will be considered.

Whether you have already implemented a succession plan and review regularly or are about to embark on this journey, there are a number of key fundamentals that are relevant irrespective of the value of assets.

Contact our Mulcahy & Co Agribusiness professionals to find out more.

A Good Logo – The Face of Your Business

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Jun 2021 02:33:42 GMT

A good logo is one of the most important, and often most overlooked, part of a new customer experience with your business.

Having an effective logo can be the difference between a client enquiring about your business or walking straight past (both physically and online!)

While it is true th at most people won’t think twice about the design of a logo, a good logo will serve its purpose without having a conscious impact on most customers. The primary goal of a logo is to inform customers – who you are and what you are bringing to the table. Without accomplishing this, any attempts to market the business are often futile.

As the branding is most often the first impression of your business by a customer, a logo should also be interesting. It is your best opportunity to separate yourself from competitors and stand out.

There are many different types of logos, each with varying levels of effectiveness in different mediums and different demographics. Some businesses may need a “grabby” logo which gets attention urgently and informs quickly, whereas some demographics may respond more to a clever logo which inspires thought and entertains the audience.

Consistency is also a major element of logo/brand design. Keeping the same colours, fonts, shapes and style are all elements which, when repeated across all business items, can make for a really strong brand. We are talking stationery, signage, website, advertising and digital footprint – if all are consistent, then your potential customers can never mistake you for a competitor or get confused by your business visuals.

In the field of professional services, it is important to enlist the help of experts who have studied and worked in the industry. The Mulcahy & Co Marketing graphic design professionals have experience in creating effective and thoughtful branding packages. Contact us today to find out more.

Summary of Due Dates for Lodgement

adam@mulcahy.com.au (Adam Foale) — Wed, 23 Jun 2021 00:18:39 GMT

We have compiled a list of key dates coming up that you can easily reference for your needs.

~ from the Accounting division at the Sunshine Coast office

Planning for the New Financial Year

adam@mulcahy.com.au (Adam Foale) — Wed, 23 Jun 2021 00:12:27 GMT

The new financial year brings a fresh opportunity to look at your business. What profits do you want to achieve this year? Are you building up your business for sale? Do you want to cut back your working hours? There are many reasons why planning for the new year is beneficial.

Firstly, it is important that you take some time to think about what your business will look like in 12 months’ time. Imagine that you are reporting to your shareholders one year from now. What will you tell them? Some things you may report are:

What goals did you set?
What profit/turnover/KPI’s did you make?
What staffing decisions did you make?
What strategies did you implement and what was the result?

Once you know what you want your business to look like, the next step is to put this into a plan and document it. The aim of this is that your business objectives will be clear, and you will be able to keep your team on track. Once you know what your goals are:

Create strategies to achieve your goals
Identify what you need to achieve goals – marketing, training, performance management, cost cutting etc
Set timeframes for achieving goals
Divide your goals into short-term and long-term – quick wins vs key projects

Budget

Once you know what you are aiming for and your strategies for achieving this, it is beneficial to create a budget to see what the outcome will be.

Effective budgeting identifies current available capital, anticipates incoming revenue, and provides a forecast of upcoming expenditure. By having a formulated budget and referring to it, businesses can measure their performance against expenditure and make sure that resources are available towards business growth and development.

Just remember no budget will ever be 100% accurate (it is always a work in progress) however it is an essential tool for keeping track of sales and costs and knowing what the business needs to focus on (e.g., whether to trim costs that are too high, whether an increase in marketing is needing to boost sales etc). A well thought out budget works as a framework for any business where it acts as a control mechanism for the finances and cash flows of the operation.

Now that you have your plan and budget, we recommend that you communicate this with your team, so everyone is clear on what the goal is. Regular check ins to keep this a focus is also important.

Develop a template to review actual performance against targets
Provide a platform to develop financial forecasts
Use your plan as a basis for you to set team members’ individual goals/targets
Eliminate procrastination and inaction

At Mulcahy & Co Sunshine Coast , we can assist you with your business planning and budgeting as well as provide a regular accountability session to ensure you achieve your goals this coming financial year. Please contact us to discuss how we can be of assistance to you.

ATO’s Focus for 2020-2021

adam@mulcahy.com.au (Adam Foale) — Tue, 22 Jun 2021 23:59:29 GMT

What will the ATO be focusing on when you lodge your 2021 tax returns this coming year? We list some of the key areas.

Individual Work-Related Expenses

The ATO are continuing to focus on work related expenses, especially given the changes in work patterns COVID-19 caused during 2020. The ATO saw an increase in claims for working from home, while claims for car travel and work specific clothing decreased.

The government has extended its temporary shortcut method for calculating working from home expenses that was implemented due to COVID. You simply need to keep a record (through diary entries, timesheets, or roster) of the number of hours per week worked form home. The method is all inclusive, so it covers all your running costs, cleaning, cooling, heating, lighting, internet, telephone, and depreciation of home office equipment like laptops.

With April 2021 ABS figures show 36% of people working at least one day a week from home, it looks like this trend will continue.

The ATO’s scrutiny of work-related expenses has been beneficial as claims fall by $1bn as a result of this focus. They will continue to look at individuals who have deductions much higher than others with a similar job and income and also those who simply copy and past previous year’s claims without evidence. In short, if you have evidence for your claim, you have nothing to fear.

The ATO have an app called ‘My Deductions’ which can be used to track expenses throughout the year and can be shared with tax agents.

Cryptocurrency Trading

The explosion of cryptocurrency trading has prompted the ATO to run a ruler over any capital gains tax (CGT) omissions in the 2020-2021 tax year.

Cryptocurrency investment joins property and share trading as a key CGT area on which the ATO focus.

The concern is many taxpayers think cryptocurrency gains are tax-free, above the law, or only taxable when converted to Australian dollars. If you are buying, gifting, or trading between cryptocurrencies, we recommend discussing this with us as this may need to be included in your tax return.

The Australian Taxation Office (ATO) cryptocurrency data-matching program has been in place since April 2019. Under the program, we have collected data on cryptocurrency transactions for the 2014-15 to 2019-20 financial years. The ATO are now collecting data up to and including the 2022-2023 financial year.

This year the ATO will write to 100,000 taxpayers with cryptocurrency assets to explain their tax obligations and ask them to review previous returns. Some 300,000 taxpayers will also be prompted to report CGT gains and losses.

Airbnb

Investment properties are still under scrutiny by the ATO, so you need to ensure you are including all rental income including Airbnb. Airbnb and similar accommodation websites report data to the ATO, so therefore it is important that this income is not omitted, even if it is only minor and for your principal place of residence.

You also need to ensure you are only claiming deductions that are permissible. You cannot claim for interest during periods when the property is not available for rent, or when redrawing on loans for personal expenditure. You also need to be careful on renovation and general upkeep costs.

ATO data matching

The ATO receives data from a rate of organisations such as banks, state revenue offices, motor vehicle and share registries, land title offices, accommodation sharing platforms and cryptocurrency platforms.

They match this income to your individual tax return to ensure you are declaring all your income. If the ATO identify a mistake, they will write to you. It is important that if you realise you have omitted information or made an error that you speak with us to rectify this as soon as possible.

~ from the Accounting division at the Sunshine Coast office

What Should I Be Invested In?

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Jun 2021 01:26:11 GMT

What a big, beautiful question! Take my no.1 son for instance, for a solid month asking me why I won’t invest in bitcoin, honestly a daily interrogation!

I would try to encourage his critical thinking with “Tell me son, do you know anyone who is buying crypto that intends to use it as a currency, are you intending to be able to purchase items with your crypto? Do you see how tweets drive the crypto price? What do you think about that?”. Well, the lads all decided to have a shot at crypto’s and I heard all the wins “its up blah blah blah % and I have made blah blah blah $”.

Right about here Elon tweeting was about to serve these boys a life lesson; can you handle the risk?

Turns out these punks couldn’t! They backed out so fast trying to exit the trade when it hit the skids. Meanwhile I backed my personal investment strategy of 1) I don’t invest in certain investments 2) this doesn’t feel right to me 3) massive price swings concerns 4) belief FOMO driving demand 5) Quality investments for ease of trading.

Love the crypto success stories yet happy to sit it out until it meets my selection criteria.

Behaviour finance is fascinating and important to consider. In the above I saw my son focus on a specific investment and he found resources that confirmed his thinking. He suffered herd mentality and wanted to get on the wagon while it was on the rise and listened to all the noise. He believed he invested only what he could lose yet struggled with the volatility. Had I done a risk profile before and after he may have slightly different answers based on this experience.

As an adviser I see different versions of this with clients, instead of crypto it can be property. Instead of high appetite for risk, you fear losses and avoid growth investments. Instead of personal experience it may be a parent’s experience. Instead of a confident investor you may feel you don’t have enough knowledge on financial markets. Instead of maintaining your portfolio across growth and defensive assets you focus on yields and expose yourself to more risk.

A skilled adviser should discover this about you and challenge any biases, find palatable solutions to have you well invested with your own personal investment strategy that serves your goals and risk profile. The benefits of working with such an adviser can be seen particularly over COVID when many Australians panicking and reacting to the market volatility vs clients that have developed an investment strategy taking the time to review investments and respond based on their plan.

End of Financial Year Opportunities – Superannuation

adam@mulcahy.com.au (Adam Foale) — Thu, 03 Jun 2021 01:19:24 GMT

As we draw near the end of financial year (EOFY), most of us tend to start thinking about ‘tax time’.

The time of year you pop in to see your trusted accountant in the hope of getting a bigger tax refund than last year. Yes, a cash injection is nice, however did you know there are more opportunities at the end of the financial year than just your tax?

Superannuation is the thing each flavour of Government like to fiddle with in each May Budget. They simply cannot resist the urge to slightly tinker with the rules. How much can you put into Superannuation? How much can you take out? At what age am I allowed to do this? How much am I allowed to have in Superannuation? These are all questions Adviser’s receive regularly and they are all completely fair.

One thing about Superannuation that hasn’t changed much over the years is its tax effective nature; a tax haven some call it. In June of each year working people should really consider the opportunity of putting more money into Superannuation. There are multiple benefits, depending on your age and income of course. Firstly, you can potentially save up to 32% in tax. Further, Superannuation is a great way to save for your retirement. Yes, contributing more money to it now means you do not have instant access to it until you meet a condition of release. However, as you near retirement, you will likely be thankful for every extra dollar you put into Super through your working years. Remember, there are different ways to get money into superannuation and each have their own form of rules and restrictions, so contact one of our advisers for more information.

The EOFY opportunities do not stop with those still working. Our retired friends can also benefit. I will use a common example called a Cash Out, Recontribution strategy.

Roberta is 60 with a superannuation balance of $600,000 and has 2 adult children. Roberta’s taxable portion of her balance is 100% and for the purpose of this illustration we will assume the fund does not grow. This would mean in the event of Roberta’s untimely passing; her Superannuation proceeds could be taxed at up to 17% as they are passed to her two adult children. This is around $102,000 going to the tax man. As the EOFY is getting close, Roberta has time to potentially withdraw $300,000 from her Super fund, and then recontribute these funds as a non-concessional contribution back to Superannuation. The taxable portion of the recontributed amount is now 0%. As Roberta has used the bring forward rule, she cannot complete this strategy for another three years.

However, when the time comes, Roberta can complete another Cash Out, Recontribution strategy and reduce her total taxable portion of Superannuation to 0%, not just half of it. This strategy could save the family a tax bill of over $100,000 with little disruption to Roberta’s well-deserved retirement.

The Government has also recently announced additional means to get money into superannuation after you have sold a home, and in the most recent Budget, they have also increased the age of which you can get money into Super and relaxed the eligibility. As the EOFY approaches, it is time to consider your options.

If you have recently checked your Super statement and wonder what the high taxable portion might mean, or have just sold your house to downsize, please do not hesitate to reach out to an Adviser from Mulcahy & Co to see how they can help you make the most of the EOFY opportunities available to you.

Contact our Financial Planning experts here

Danny Archer

Financial Planner

Geelong & Ballarat Office

M: 0409 096 680

Episode 29

End of Financial Year Opportunities – Superannuation.

Financial Planner Danny Archer talks to us about some benefits you can take advantage of right now in time for the June 30th end of financial year. You can lower your tax bill and contribute to your superannuation. Danny does a great job of relating his thoughts into bite sized pieces making it easy to understand including an interesting case study - enjoy!

Available on Apple, Spotify or right here!

Power Saving Bonus

adam@mulcahy.com.au (Adam Foale) — Thu, 20 May 2021 01:10:06 GMT

The state government has recently announced that they have made available a new Power Saving Bonus to eligible Victorians.

This is a one-off payment of $250 per household to provide direct support to vulnerable Victorians experiencing energy bill stress due to the coronavirus (COVID-19) pandemic.

Who is eligible for the $250 Power Saving Bonus?

To be eligible to apply for the $250 Power Saving Bonus, you must be able to meet the following eligibility requirements:

You must be a Victorian residential energy consumer (i.e. have a residential electricity account). 
You must be receiving payments under one of the following concession programs:
Centrelink Pensioner Concession
JobSeeker, Youth Allowance, Austudy or Abstudy
Department of Veterans Affairs Pensioner Concession
Or hold a Department of Veterans Affairs Gold Card

Health Care Cards holder who are not recipients of Youth Allowance, JobSeeker, Austudy or Abstudy are not eligible.

What will I need to provide to apply for the $250 Bonus?

To apply for the Bonus, you must provide the following documentation:

Electricity bill: Applicants must provide evidence they are a Victorian residential energy consumer by providing a copy of their household electricity bill. The applicant is not required to be the account holder named on the electricity bill.
Centrelink CRN: Applicants must provide evidence they have an active eligible Centrelink payment by providing their Centrelink Customer Reference Number (CRN). The applicant’s residential address associated with the CRN must match the service address listed on the electricity bill.

How do I apply for the $250 Power Saving Bonus?

To apply for the $250 Power Saving Bonus, eligible households must apply on this website or through a participating community organisation from 1 February 2021 until 31 January 2022.

You can access the Power Saving Bonus in two ways:

1. Do it yourself by applying online at https://compare.energy.vic.gov.au/

2. If you would like assistance claiming the bonus, call us on 1300 204 781

For more information, contact one of our Financial Planning experts today.

Are you ready for the 30th of June 2021?

adam@mulcahy.com.au (Adam Foale) — Thu, 13 May 2021 01:03:25 GMT

The end of the 2021 Financial Year is soon approaching, we have shared below our list with the steps to be best prepared.

Contributions to Superannuation

Superannuation does impose restrictions on access to your money as it is intended to provide for your retirement. So why would you lock up more of your money? Because superannuation remains one of the most tax-favoured environments to build wealth with a maximum tax rate 15%. Not only will contributing to super help to boost your retirement savings, you could also be reducing tax payable on your income, helping to cover some of your insurance premium costs and getting a bonus top-up payment from the government.

Considering the immediate tax incentives of contributing to super and the ability to access the funds tax-free after age 60 and long-term investments rates of return typically being higher than mortgage rates it’s a good idea to consider contributing more to super. We have listed a few different options below to discuss with your adviser-

Concessional Contributions (Pre-Tax)

You no longer need to be self-employed to claim your contributions as a tax deduction (up to certain limits) –

Spouse Contributions – Making a spouse contribution may entitle you to a tax offset of up to $540 (depending on your spouse’s income and age).
Salary Sacrifice – Setting up a Salary Sacrifice arrangement with your employer can help boost your retirement savings throughout the year at the same time as reducing tax payable on your income.
Catch-up Concessional Contributions – ‘Catch-up’ contributions aim to give people the same opportunity to save for retirement. You may be able to take advantage of catch-ups if you haven’t used your entire pre-tax (concessional) contribution cap since the 2018-19 financial year, by contributing the remainder in future financial years (subject to super balance requirements).

Personal Contributions (After-Tax)

Government Co-Contributions – Making a personal contribution not only boosts your tax-free savings for retirement, you may be eligible for the government co-contribution of up to $500 (depending on your income)
Lump sum After Tax Contribution – If you are nearing retirement, there may be advantages of boosting your super to create a tax-free income stream. You may be eligible to bring forward 3 years of after-tax contributions (subject to age and super balance requirements).

Income Protection Insurance

Income Protection insurance pays out up to 75% of your pre-tax income for a specified period that you are unable to work due to partial or total disability. If you already or even if you are currently not covered you may consider taking out a policy and may want to pay your annual premiums up front to obtain the tax benefits in the current Financial Year. Several changes coming in to place in October 2021 so the time to review income protection is now.

Pensioners considering Gifting

Are you considering to provide financial assistance to your family members?

Each Financial Year you are able to gift $10,000 to family members, but being so close to the end of the Financial year this gives you the opportunity to gift up to $20,000 in a short space of time (for example $10,000 in June 2021 and $10,000 in July 2021). These amounts are unable to be carried over and are only valid for the Financial Year and may help to increase your Age pension entitlement.

Transition to Retirement Pensions

If you're aged 58 to 65 and still working, you may be able to use a Transition to Retirement (TTR) strategy through your superannuation to help supplement your income if you reduce your work hours, or boost your superannuation balance and save on tax while you keep working full time.

Temporary reduction in pension minimums ending soon

In early 2020, the Government temporarily reduced the minimum drawdown amounts for account-based pensions for the 2019-20 and 2020-21 financial years in response to COVID-19's impact on investment markets. This temporary measure ends on 30 June 2021.

From 1 July 2021, the Government's default minimum drawdown amounts for the 2021-22 financial year apply to all account-based pensions, with no reductions. If you hold an existing pension within your superannuation fund, you can discuss with your adviser if your payment amount may increase automatically or stay the same. This will depend on what your default minimum drawdown amount is for the 2021-22 financial year.

To discuss any of the above options, please contact to arrange a meeting with one of our Financial Planners on 1300 204 781 .

Direct insurance vs Retail insurance: What does it mean for you?

adam@mulcahy.com.au (Adam Foale) — Wed, 28 Apr 2021 02:11:24 GMT

As a financial planner, a situation we commonly come across is seeing clients who have purchased Life insurance or Income Protection insurance over the phone from an insurer who has advertised on TV.

It is always an interesting conversation to have to find out why they chose to go down that avenue rather than getting advice from a Financial Planner and generally the answer is the same, time and cost.

The questions that I ask my clients are the following:

Did you read the fine print to understand if there are any exclusions?
Why did you choose that level of cover?
Did you consider any other types of insurance cover ie: Life, Total & Permanent Disability Critical Illness or Income Protection cover?
Did you consider cover for your partner/significant other? Who will look after your children if something was to happen to them?

Income Protection is the insurance that clients make the biggest mistakes when purchasing through direct insurance because they don’t understand what the features and benefits mean. They might finish their 30 minute phone call and be set up on an income protection policy that is paid out for 2 years with a 90 day waiting period without understanding that this means if they are off work with an injury or illness they need to be able to self-fund for 120 days before they receive their first payment from the insurer.

Where clients really lose out with direct insurance is by not reading the fine print. When initially applying for direct insurance off the TV, the insurer will go through far less questions than if the client was applying for retail insurance through their Financial Planner and this is where the problem begins. You can ask any client that has been through underwriting with a retail insurer and they will tell you that they poked and prodded in all aspects of their medical history compared to a direct insurer who will only ask you around 10 questions.

Retail insurers are upfront and will tell you about any exclusions upfront whereas direct insurers have a “pre-existing health conditions” warning in their fine print that advises any medical condition that existed 5 years before you took the policy out will be automatically excluded.

While it is great to have some form of insurance, it is important to be covered in all instances for example you may take Income Protection but have you considered Critical Illness cover? A Financial Planner will be able review your entire circumstance and make sure you have the correct insurance with the correct amount of cover.

To protect your and your family’s future and ensure the correct amount of coverage in any situation, please book in a time to speak to us. One of most satisfying feelings as a Financial Planner is knowing you’re able to remove some of the burden from your client’s shoulders by processing claims for them and they can focus on their recovery.

Financial Planning April 2021 Update

adam@mulcahy.com.au (Adam Foale) — Thu, 22 Apr 2021 04:08:19 GMT

Below is a video from Director Thayne Turley updating you with the latest in regard to investment markets, personal insurance and to touch on the benefits of super contributions with the end of the financial year only 8 weeks away.

Here is a great article which talks about super contributions. Don't miss another opportunity to claim your tax deduction prior to June. 30th 2021:

https://www.moneymanagement.com.au/news/superannuation/67-super-members-do-not-top

As always, if you have any questions please reach out to your advisor within our team for further clarification or potential options.

Changes to Casual Employment

adam@mulcahy.com.au (Adam Foale) — Wed, 21 Apr 2021 23:16:49 GMT

Industrial Relations Reforms March 2021

The Fair Work Act 2009 was amended on 26 March 2021 to change workplace rights & obligations for casual employees. These changes came into effect on Saturday 27 March 2021.

What Has Changed?

The introduction of the Casual Employment Information Statement (CEIS)

To accompany the Fair Work Information Statement which already needs to be provided to all new employees, employers must now also provide every new casual employee a CEIS, before, or as soon as possible after, they start their new job.

Small Business employers need to give their existing casual employees a copy as soon as possible after the 27th March 2021. Other employers need to provide this to all of their existing casuals as soon as possible after 27th September 2021.

The definition of casual employment:

Under the new definition, a person is a casual employee if they accept a job offer from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work.

Once employed, an employee will continue to be a casual employee until they either:

become a permanent employee through casual conversion or, are offered & accept a full-time or part-time position or;
stop being employed by the employer.

The pathway for casual employees to move to fulltime or part-time employment

The Amendment Act provides for a new entitlement to the NES giving casual employees a pathway to become permanent employees. An employer (excluding Small Business) now has to offer their casual employees a conversion to permanent employment when the employee:

Has worked for their employer for 12 months
Has a regular pattern of hours for at least 6 of those 12 months, on an ongoing basis
Could continue working those hours as a permanent employee without significant changes.

The exceptions to this rule are:

Small Business employers
If an employer has ‘reasonable grounds’ not to make an offer to convert

For more information in regards to casual employees, or to download the Fair Work Information Statement or the Casual Employment Information Statement, please head to the Fair Work Ombudsman website : https://www.fairwork.gov.au/employee-entitlements/types-of-employees/casual-part-time-and-full-time/casual-employees

If you would like Mulcahy & Co to assist you in processing your payroll, please contact us .

The benefits of outsourcing in a post-COVID world

adam@mulcahy.com.au (Adam Foale) — Mon, 19 Apr 2021 05:27:01 GMT

Since the onset of the pandemic, the overall operation of businesses has changed dramatically. From the introduction of working from home, to the need to digitise processes and update systems to facilitate remote work, companies have had to adapt to these new realities anticipated to affect workplace practices post-COVID19.

Now more than ever, organisations are seeking out ways to reduce costs and overheads wherever they can. To thrive in a post-pandemic world, both businesses hit hard by the pandemic's economic impact, along with those who made it through unscathed will need to renew their focus on cost to position themselves for continued success . It's not just managing costs that need to be a business focus, but areas such as staff satisfaction, quality control and improving efficiencies are all important to establishing business continuity.

Outsourcing is a business solution that can help businesses achieve these goals and also remain viable long-term. In this blog, we will address how the new norm of remote work and outsourcing go hand in hand to improve business efficiency and the overall benefits an organisation can expect to receive from engaging an outsourcing provider.

The new 'remote work norm' and the effects on employee output

88% of organisations worldwide made it mandatory or encouraged their employees to work from home when COVID-19 became a pandemic. During this time, many organisations were concerned about how employee productivity would be impacted by remote work. What surprised many businesses was that productivity levels actually increase 47% .

Remote working is now an accepted workplace norm, and will continue to be even after the pandemic. A study conducted by Swinburne University identified that three out of four managers believe that their employees will perform more remote work post-COVID-19 if productivity levels continue at this rate. From an employee perspective, 90% of them within the study believed they would continue to work remotely in the future. To add to this, in a survey conducted by Gartner , 80% of company leaders plan to allow employees to work remotely, at least part-time after the pandemic, with 47% allowing them to work from home full-time.

To sustain these productivity increases, businesses need to seriously consider that perhaps not all employees would be better off returning to the pre-pandemic office work routine. In fact, forcing these pre-COVID-19 workplace practices could be detrimental to businesses from an employee satisfaction perspective. Flexjob's survey found that 65% of respondents want to be full-time remote employees post-pandemic, with 31% indicating they’d prefer a hybrid remote work environment: a total of 96% wanting some form of remote work lifestyle.

To add to this, 27% of employees within the same study found that remote work practices are now so important to them that they are even willing to take a 10-20% reduction in their pay to remain working from home. A further 81% believe their loyalty to their employers would increase if their work options were more flexible towards remote work.

So how can outsourcing help sustain these productivity levels, keep staff satisfaction high while reducing employment costs and overheads? Outsourcing is a smarter resourcing strategy where a business engages a third-party organisation to take care of time-consuming and transactional tasks - in another location. For example, a businesses outsourcing provider could be located down the road or in a different country, but both circumstances work around the same function: a remote work model.

As businesses currently have their in-house employees working from home or remotely, it is fair to say that most internal processes, technology and systems are already set up to well-accommodate introducing outsourcing into the business. It's just a matter of managers identifying what tasks can be easily delegated to an outsourced team.

What are the key benefits of outsourcing for businesses?

Outsourcing benefits can differ from organisation to organisation as each business will have a different reason to engage an outsourcing provider.

However, some top-level benefits can be applied to most organisations that engage in outsourcing.

Cost-savings & business scalability

Employment costs can average anywhere between 20-50% or more of a business's gross sales , which vary by industry. Depending on your outsourcing provider, outsourcing can significantly reduce these costs by up to 70%. However, this really comes down to the outsourcing provider you choose to engage with. These cost reductions can be a mix of:

Overhead cost savings as your outsourced provider will take care of the IT, infrastructure and facilities required for your outsourced team.
The lower cost of living depending on the location of your outsourcing provider. For example, the cost of living in some overseas countries compared to, say, Australia could be significantly lower, leading to lower employment costs. Keep in mind, this doesn't necessarily mean the quality of work is jeopardised.

These cost savings mean that businesses free up funds to reinvest back into business growth initiatives.

Business efficiency gains & an increase in staff job satisfaction

How much more value-add work could be done by your local team if the time-consuming and repetitive tasks were essentially not there for them to do? How familiar is the statement "if I didn't have to do this, I'd have more time to do that" or "I'd rather be working on this than spending my time doing that"? Here is where outsourcing comes in.

Suppose you were to 'get rid' of those tasks causing capacity issues in your existing team. The impact to staff satisfaction and productivity would be immediate. The 'get rid' aspect is to delegate those tasks to an outsourced team that thrive on supporting your local team by taking on those transactional tasks.

What next?

Considering outsourcing? Not sure where to start?

Download this ultimate outsourcing toolkit that takes you through, step-by-step, what outsourcing is, what to expect from it, how to choose the right provider and the many benefits your business could receive from outsourcing it’s services.

Behavioural Finance: Why we do what we do with money.

adam@mulcahy.com.au (Adam Foale) — Fri, 09 Apr 2021 03:25:35 GMT

Have you ever made a very short-term, impulsive decision and then found you regretted it a day or two later? Of course, you have; my partner and I do it each time we visit K-Mart.

In the world of finance and share trading, psychological influences, emotions and biases affect our behaviour, and this behaviour is not often rational or logical. This is called behavioural finance and is a very popular topic in the finance world currently. Behavioural finance indicates that emotionally charged and irrational investment decisions are made without consideration to any monetary theory or financial analysis.

During COVID-19, sharemarkets around the world dropped by unprecedented amounts. There was obvious angst and an element of the unknown in respect to the world economy and just how significant an effect COVID would have across the globe.

As a result, people reacted to the fear and anxiety and made emotionally charged decisions to sell out of their share portfolios or superannuation accounts, without giving serious thought to the long-term consequences this behaviour would bring. Humans have a natural psychological make up to protect and survive, which transcends to our finances.

There are numerous reasons why people make irrational decisions with their money, or invest the way they do. One is confirmation bias. This is a mental belief or opinion someone holds where they already firmly believe something to be true, and try and find information and proof that supports this theory. They deliberately fail to look for any evidence to the contrary in a bid to convince themselves their idea is the best one and there are no suitable alternatives. With investing, this bias is riddled with risks as there are always alternative options and things to be wary of. Confirmation bias can lead to investors making an irrational decision to buy a stock at the wrong time, or sell a stock prematurely, if they have a pre-perceived idea that there are better options out there, without conducting their due diligence.

Another mental bias that is very topical at present and is somewhat less scientific than most, is what is known as FOMO, or a fear of missing out. This bias sees people watching a certain stock or asset class continually increase in value regardless of the reason, and believe they need to buy into it as soon as possible in an attempt to not miss out on the potential gains on offer. One of the most effective biases out there, the more people that buy in due to FOMO, are actually magnifying the issue at hand. FOMO makes people make irrational decisions that are purely focused on the short term, and these decisions tend to go against any long-term strategy and end up costing money rather than making it.

Two good examples of this are Afterpay and Bitcoin. Both are assets out there that have no doubt made a lot of people a lot of money. However, most financial analysis out there suggests neither asset should have performed as it has based on the profitability of the asset overall. People experiencing FOMO have driven up the prices of these assets, and at times, these people have been burned by profit takers who sell large stakes and cause the price to plummet. At the time of writing, Afterpay is trading at around $105, which is down from its peak of around $159 earlier this year, and up from its COVID bottom of around $8. What is fascinating, and also alarming from my point of view, is that the company is yet to post a profit. The share price performance has almost purely been driven by people making irrational, short term decisions by reacting to the FOMO they feel.

As a financial planner, I believe one of my main purposes is to coach and hold my clients accountable for their decision making and to make sure my clients know exactly why they are investing the way they are. We recommend our clients invest their money in certain ways based on numerous factors, one of which is sound financial analysis and research. We ensure our clients do not make short-sighted decisions influenced by emotions or FOMO, and help them with their self-control. The qualitative factors that influence financial decision making can be just as, if not more, important than the quantitative factors. Clients of financial planners tend to not suffer losses based on qualitative reasons and do not invest with their emotions. If this kind of financial future sounds appealing to you, please do not hesitate reaching out.

Danny Archer

Financial Planner

Geelong & Ballarat Office

M: 0409 096 680

Tax Savings In Your Super Contributions

adam@mulcahy.com.au (Adam Foale) — Thu, 11 Mar 2021 00:00:13 GMT

As we are fast approaching the end of the financial year, now is a good time to take stock of your potential tax savings by utilising ‘concessional contributions’ made to your superannuation.

As an added bonus the money invested inside your superannuation is taxed at 15% rather than your individual tax rate (which would be 32.5% for someone earning $60,000 per annum).

If you are lucky enough to be over 60, and still working, you also have access to a Transition to Retirement pension, where you have access to up to 10% of your pension tax free. Which you can in turn recontribute back into superannuation and claim as a tax deduction.

To maximise you tax savings it isn’t always best to utilise your full catch up contribute amount in one year, you are best to seek financial advice to plan around whether to do it in one or more years.

Please call one of our advisors to chat about how we can help with the concessional contributions or your super in general.

Transition to Retirement: TTR and how it can work for you.

adam@mulcahy.com.au (Adam Foale) — Thu, 04 Mar 2021 00:26:27 GMT

Recently, clients engaged us at Mulcahy & Co because they are in their mid-late 50’s, with a mortgage, and want to retire without one.

A ‘transition to retirement’ income stream allows a person who has reached their preservation age limited access to their superannuation, while they are still working. You start a TTR income stream by transferring some (most of the time, the majority) of your superannuation balance to an account-based pension, and retain a balance in your accumulation account to continue receiving your employer’s compulsory contributions, plus any voluntary contributions you make. As per legislation, you are required to draw between 4-10% of your account-based pension balance each year, and the same concessional and non-concessional contribution rules apply.

There are a few reasons why one would adopt a TTR strategy: to reduce work hours, to save on tax and to help pay lump sums.

Using a TTR to reduce work hours looks like the following: a person who has just turned 60 opts to reduce their output down to 3 days a week, but they still need the 5 day a week income equivalent. The TTR will give them access to a bulk of their superannuation funds, allowing them to draw a tax-free pension commensurate with the earned income they have lost.

You can use a TTR to save on tax by salary sacrificing into your accumulation account, say $15,000, and then drawing the same $15,000 from your account-based pension. The salary sacrificed amount receives a 15% tax-offset, and depending on your age, the amount you draw as a pension will also receive a 15% tax-offset. If you are over 60, you will pay no tax on this amount. Effectively, you are earning the $15,000 at a 15% or 0% tax rate and this is a great way to bolster your superannuation before retirement.

Finally, TTR strategies are a great way of accessing large amounts of funds to pay off debts. This brings me to our clients looking at retiring in a few years’ debt free. We helped them by suggesting a TTR plan where they transfer the bulk of their superannuation to an account-based pension and max out their annual concessional contribution cap of $25,000 each, resulting in the 15% tax-offset. As strong income earners, this was particularly appealing. We are then drawing the full 10% allowable from their respective pension accounts and directing this lump sum towards the mortgage.

A s our clients are not yet 60, they will pay tax on the pension income, but will receive the 15% tax-offset here as well. Their cash flow is at a point where they can continue to make periodic loan repayments, which, coupled with the TTR lump sums, should see their mortgage repaid in 3 years instead of 7 or 8.

The downside to this is that they have drawn from their super, leaving less for retirement. Once the mortgage is gone however, we will continue to max out their concessional contribution limit each year until their total retirement at age 65, where the freedom of the caravan will be waiting.

Danny Archer

Financial Planner

Geelong & Ballarat Office

M: 0409 096 680

Xero price change

adam@mulcahy.com.au (Adam Foale) — Wed, 17 Feb 2021 01:08:50 GMT

Xero delayed the price change that was supposed to take place in March 2020 to help you and the wider small business community impacted by COVID-19. The price change will now take effect from 1 March 2021.

The price change helps Xero improve for you now and in the future. It also helps them continue to respond quickly with new tools and services. Pricing whether through Direct Debit or Go Proposal will be adjusted accordingly.

Plans that are changing:

The details of this price change relate to subscribers on Starter, Standard, Premium plans in Australia only.

Only the price of Starter, Standard and Premium plans is changing. There’s no price change for any optional extras you have as part of your subscription, or for Xero Cashbook, Xero Ledger or Payroll Only plans.

Discounts and promo codes will continue to be honoured:

If you have a current Xero discount or promo code, it will continue to be applied to the new pricing from 1 March 2021, until the discount or code expires.

The price changes take effect from 1 March 2021:

The price changes take effect for new and existing Australian Starter, Standard and Premium plans from 1 March 2021 and will show on invoices from this date onwards. Your first invoice on or after 1 March 2021 is likely to have two lines: the period up to the price change, and the period after the change.

Further information can be found here .

Financial tips for University students

adam@mulcahy.com.au (Adam Foale) — Tue, 16 Feb 2021 00:32:33 GMT

Mulcahy & Co Financial Planner Lynde Adams discusses some ways that Uni students can make the most of limited income.

Know your 'Needs' vs 'Wants'

Know your income sources

Make a list of all income sources – Youth Allowance, Scholarship funds, Bank of Mum and Dad, Savings, Casual/part time job. Is it going to cover all your ‘needs’ above? Knowing what income you will receive will help to ensure you can allocate this wisely – have a separate bank account for your ‘needs’ and ‘wants’ and allocate your income to cover the ‘needs’ first.

Travel – Public or private?

If you are considering whether you need your own car while at uni, weigh up all the annual costs v’s public transport – not just the initial outlay for the car itself. Owning car involves paying for fuel, car registration, car insurance, maintenance, parking – this can add up to thousands of dollars each year…that’s a lot of train/bus travel if you live in the city or areas where there is good public transport options. Avoid borrowing money to buy a car! Car’s reduce in value – you will end up paying a lot more for your car when you add interest costs to the above expenses!

Keep track of super

While retirement may seem a lifetime away when you likely haven’t even started your working life, keeping track of your super from the beginning will have enormous impact on your retirement savings over the next 40 years! You have super choice! Make sure if you have multiple jobs or change jobs, you take your super fund with you – all you have to do is provide your employer with a super choice form which will be available on your super fund website. Look for a low cost fund by using comparison website such as www.canstar.com.au or www.moneysmart.gov.au

Plan meals ahead

If you are independent living then shopping for food and meals may be very new to you! A little bit of planning ahead can save $$$$ as you will avoid last minute shopping decisions and also unhealthy choices! If you can cook for yourself, you can pre-plan your weekly menu and buy what you need once a week – cook meals for 4 instead of 1 if you have freezer space so you don’t need to cook as often and you’ll not only save money but time as well.

Pay now, regret later?

adam@mulcahy.com.au (Adam Foale) — Mon, 15 Feb 2021 00:24:40 GMT

Mulcahy & Co Associate Financial Planner Tamara Vawdrey talks about the dangers and benefits of "Buy Now, Pay Later" programs, and how they should be approached.

Afterpay transactions in Australia increased from 16.8 million in the 2017-2018 financial year to a whopping 32 million in the 2018-2019 financial year which an increase of 90% in just one year. In the 2019 financial year Afterpay charged their customers $46 million in late fees which is a red flag that they aren’t complying with important consumer protections like responsible lending.

Buy Now, Pay Later schemes can also have an impact on individuals wanting to apply for home loans because in the banks eyes by having an open Afterpay account with a credit limit of $2,000 (even if there is nothing owning on the account) it can affect the amount they wish to borrow.

In saying that it’s not all doom and gloom for Buy Now, Pay Later schemes, if you repay all your purchases on time and in line with the terms and conditions then they can be used as a cashflow tool. It is when consumers start using them for ‘spur of the moment’ or for ‘impulse buys’. Many times the purchase is not really needed, only wanted. Try to restrain from using Buy Now, Pay Later schemes for impulse buys and save up for that wanted item and give yourself the time to consider is it really a need not just a want.

Google and Bing and how they can impact your business

adam@mulcahy.com.au (Adam Foale) — Thu, 04 Feb 2021 04:16:28 GMT

Welcome to 2021 and the new digital world we will all be expected to do business in!

You may have heard the recent news about Google and the Australian Government disagreeing and Google threatening to remove itself from the Australian Market.

If this happens, searching the internet within Australia will change overnight. We can help you to minimise any loss of search traffic to you business.

Microsoft Bing, is one of the main competitors to Google's search engine. Bing and Google both offer free business listings to their customers. You may be very familiar with the Google My Business listings you see on Google today.

We'd like to offer all our clients assistance with getting their Google My Business listing updated/verified and also establishing a Microsoft Bing Places for Business listing to ensure your business has the greatest chance of being found if Google does pull out of the Australian market,

The cost is only $240 + GST per year and includes the setup and maintenance of your Bing Places for Business listing aswell as your Google My Business listing. This fee also covers the updates you may require to the listing over time, which you can simply email or call through to us and we'll update them for you.

Key items in a business listings:

Business Name
Phone
Website
Opening Hours (think public holidays)
Business Description
Photos

Please download and complete the form below and email it to marketing@mulcahy.com.au and we can establish & verify both listings for you right away.

If you have questions, please call Gavin on 03 5330 7200

Challenges to a Growing Business

adam@mulcahy.com.au (Adam Foale) — Wed, 27 Jan 2021 01:00:35 GMT

To a growing business, challenges and decision making are continuous.

Decisions that will either make a business more profitable or risk losing clients. The impact of one decision, can have a flow on effect in your business. The ability to focus and hit the right trigger is essential. So what are the challenges and what type of decisions are necessary to make your business thrive?

The value of employee morale.

Morale is an intangible trait important to every functional working group. Depending on the mood of the group, it can either make them more energetic and excited about performing for the business or be drained with the turmoils of the workplace. The amount of energy consumed by the workplace environment shouldn’t be underestimated. Issues inside the group can produce conflict, discomfort and distrust that can interrupt with the rest of the company’s operating effectiveness and collectively, it affects the business’s ability to grow. Ensuring the team can communicate and work cohesively, and any issues are quickly resolved, is key to a highly productive workplace.

A strategy that people can relate with.

If the revenue is not growing as fast as you would like, it may be time to re-assess your strategies. It might be that you’re not selling to the right people, that you were mistaken in the demographics of your target. It might be that your channel of distribution is not efficient.

Linking it back to the first challenge – people. Your strategy for increasing revenue should be concise and articulated in such a way that it is easy to understand for your people to fulfil. Create a strategy that is unique to your market, reinforces your vision and is something that your people can identify with. It will make it easier for them to link to the right customers and bring in more business.

Making it all work.

Now that you have your people on the same page, and that page has been articulated well and the strategy is sound, it’s now time to execute.

Execution is done best when it’s efficient. There’s no use in increasing revenue when the profit remains the same. As a business, you want to ensure any funds spent operationally improve the bottom line, but tardy execution can sometimes dwindle away the funds without making any headway towards your goal. Keep a tight rein on the budget, test your execution first, and ensure the results are there. This way you’ll be sure the funds are being spent to deliver the right outcome and it will also give you the opportunity to test your internal processes and make improvements where they are needed.

Impriving cashflow.

How long does it take before a sale is closed? Measure how much times is needed before a dollar spent comes back. This will give you a clear idea how money flows through your business. Improving cashflow is vital in any business. You don’t want to be running on an empty tank hoping that your car glides through to the next pit stop.

If the average time it takes for money to come back into the business is say 60 days, cutting this in half gives you a faster return and, the ability to invest that into something else. Having cash is necessary for any growth to occur. Check your invoices, read tips on how make sure invoices are paid on time. They’re your source of cash.

As a business, you have to understand which challenge is your priority and has the biggest impact on your business. Most companies have dedicated people, a sound strategy but struggle to translate that to a profitable venture. Others can execute, generate cash but have a revolving door for staff which impedes business growth. Balancing the two can have great effects on your business.

If you’d like to talk to someone about what may be hampering your business growth, get in touch today .

How financial planning can help you

Sun, 24 Jan 2021 22:22:51 GMT

Mulcahy & Co Financial Planning Director Thayne Turley says one of the keys of financial planning is preparing for the worst, such as a year like 2020.

"Reviewing budgets to ensure you have the money to invest in the first place. To potentially send your kids to a private school or to understand what you need to save or contribute to superannuation so that you can eventually retire comfortably," he said.

The Financial Planning team at Mulcahy & Co can also help reduce your tax, analyse interest rates and borrowing capacity, with your superannuation, making sure you have a will, estate plans, aged care, age pension and personal insurance cover.

As mentioned off the top, it’s important to prepare for the worst. Thayne says personal insurance cover can help ensure that if the worst was to happen, you have a strong foundation and can remain financially secure.

If you’re looking to review your finances or just want to catch up for a refresher, contact Thayne and the Financial Planning team at Mulcahy & Co to set up an appointment.

The power of doing nothing.

adam@mulcahy.com.au (Adam Foale) — Mon, 18 Jan 2021 02:37:51 GMT

Let’s face it, not many of us enjoy logging into our superannuation or investment accounts and seeing the balance is less than it was 2 or 3 months ago.

Danny Archer

Mulcahy & Co Financial Planning

FS360 Episode 21 - The strength of the Share Market

adam@mulcahy.com.au (Adam Foale) — Tue, 22 Dec 2020 22:28:55 GMT

Joining Chris Mulcahy and Gavin Nash on the FS360 Podcast, is Director of Financial Planning at Mulcahy & Co Thayne Turley.

Thayne says November was the best performing month for the Share Market since 1987, for the Australian Security Exchange (ASX).

The value sector was the best performing, which is sustainable businesses that don’t rely on economic growth to be expanding or economies to be expanding to be benefiting. Traditionally these are the banks and Woolworths etc.

Most equity and property markets across the world were, broadly speaking, up by 10 to 15 percent. Most people’s investment and superannuation accounts are looking healthy.

The expectation is to have lower interest rates for a longer period of time. However, Thayne says inflation and these interest rates rising again in the future is something we need to be mindful of.

Thayne explained that thanks to government assistance, the chance for economic growth in the future is looking strong.

“In a nutshell you’ve had governments … provide a lot of money … the money available is probably around 20 percent greater than what it previously was. If you look at household savings rates’ they’re well and truly up,” he said.

“There’s been some supply shocks in the system too like manufacturing plants have been shut down or had to slow down, so it does bode well for economic growth going forward.”

Household savings rates are up because of the government stimulus packages and the fact that people haven’t been able to travel anywhere and spend money due to COVID.

Chris says governments want to provide confidence in people through these stimuluses so that they are out spending money again. Thayne mentioned clients have questions about Australia’s debt levels and borrowing, but our debt levels are good, they are heading back towards surplus.

Thanks to the COVID vaccine in the United Kingdom, there is a lot more confidence in the Share Market moving forward. Pharmaceutical companies were expecting a 50 percent effectiveness rate in terms of success when issuing the vaccine and the timelines on a release were uncertain.

However, when they were above 90 percent effectiveness and being released earlier, investors could see the upwards trajectory going forward and the fact that COVID may not be prevalent as long as first expected. This led to airline stocks and flight centre stocks etc. increasing by 40, 50 and 60 percent.

Thayne says lots of the online stocks such as Amazon, Google, Microsoft, Zero, Tesla have grown considerably over the COVID period which is what’s helped the Nasdaq outperform.

“Those share markets are higher than where they were in March earlier this year. They’re the ones that have done all the heavy lifting because they’re the ones that make up the highest percentage of the indexes,” he said.

International stocks are higher than where they were in February 2020. Australian equities are a little bit lower than where they were in March and cash and fixed interest allocations haven’t gone anywhere in terms of capital difference, they’re negligible. Overall if you look at equity returns to date for the last 12 months, it’s only the Australian equities that are down and if you look at that, your banks are the ones that are actually in the worst position as opposed to all the other stocks.

Looking ahead for the next 12-months, Thayne says working with his research team for investments, from a risk and reward perspective they look at emerging markets, Australian shares and property, in that order, as the better sectors to be investing in. These are the reasons that dividend yields are high so you will have the opportunity for growth.

Uncertainty with shares arises in the black swan events, like COVID, that sends the world into shock again. Thayne says investments in low variable interest rates is where you would prefer to be.

“Compare those likely rates and return to cash and fixed interest which are very minimal and then the expectation that there’s the possibility of inflation so that’s when you see interest rates rise,” he said.

“So, if you’re invested in fixed rated bonds and inflation is happening, you could see a deterioration in capital so you don’t really want too much money to be invested in there.”

“You would like to be exposed to variable interest rates, but once again still low, so it’s more about that capital preservation, so that’s the way we’re seeing the world … in that your hypothetical opportunities for return are really going to be from the equities.”

“If the inflation scenario happens then businesses are better positioned to deal with that because they can subsequently increase their price of goods … to counteract inflation. So, broadly speaking, equity is better than cash and fixed interest.”

Thayne says the biggest worry going forward is inflation rates. There’s been lots of capital provided around the world, up to 20 percent more cash flow than there was previously and then you’ve had some manufacturing shocks where people can’t get their hands on goods.

That’s been expected to be the main driver of interest rates increasing going forward. However, with the essential banks and Reserve Bank ensuring that interest rates will remain low for the next three years, outside of inflation you wouldn’t see that that would be the need.

For any more information or assistance with the Share Market an any other financial planning needs, contact Thayne and the rest of the team at Mulcahy & Co Financial Planning at one of our 5 nationwide offices (Ballarat, Geelong, Ararat, Mildura and the Sunshine Coast).

Article by Ollie Nash

From Episode 21 of the FS360 Podcast by Mulcahy & Co

FS360 Episode 20 - How can I take advantage of low rates?

adam@mulcahy.com.au (Adam Foale) — Fri, 11 Dec 2020 00:07:09 GMT

How can I take advantage of low rates?

The Australian Government and Reserve Bank are doing everything in their power to keep the economy going and it has provided some great chances for people and businesses to take advantage.

Gavin, Chris and Director of Lending at Mulcahy & Co, Neil McCahon, delve into these opportunities in Episode 20 of the FS360 podcast.

Neil says home loan rates are very competitive at the moment. Variable rates are in the low 2 percent range, with fixed rate options looking strong, some under the 2 percent mark. You can lock in four years on a home loan owner occupied under 2 percent, with a couple of two and three year options around that mark also.

In the business and farming industries the rates are also around the 2 to 3 percent marks, so there are some great opportunities for those who can, to take advantage.

Chris says interest rates are always a reflection of where the economy is. 12 months ago, the rates were higher and estimated to climb but there’s been three decreases due to COVID, hence the encouragement to take advantage if you are in a position to.

“In business lending for example, the government is guaranteeing 50 percent of some of those business loans. So, the government and Reserve Bank are doing everything they can to keep the economy going,” he said.

Thanks to this, lending in the housing industry is really strong. Neil says across the industry, the number of brokered home loans are at record highs.

A lot of this activity has come through first home buyers due to the HomeBuilder grant and the extension of the first home owner’s grant. Therefore, developers are getting a lot of land out as quickly as they can.

With the Cash Rate at 0.1 percent, the time to cash in with a home or business loan is now. The Cash Rate is the rate that the Reserve Bank sets for banks to borrow and money between themselves. The banks then have a margin that goes on top of that which is basically the cost to run their business and you end up with the interest rate that you - the borrower - is paying.

The Reserve Bank Governor said that rate likely won’t increase in the next three years. This provides a bit more certainty for people so that they can go out and borrow and invest with some more freedom.

Chris says at the moment if you were looking at a low fixed rate below 2 percent, you should want an extended time at that rate. If you looked at a three to four year fixed rate, by the time you come out of it into a variable rate it may have increased and may continue to do so.

Dealing with aged care

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 01:00:38 GMT

I am lucky, my parents are amazing humans that I was lucky enough to be born to. There may come a time to make decisions when they can longer stay at home which will be heart wrenching.

Episode 22

Turning 57 & the financial implications! Antonia Gapes - Financial Planner from the Sunshine Coast chats to Gavin Nash about this key life event and how you can make the most of it financially with your retirement around the corner. Three topics around retirement and aged care are covered in this informative discussion.

Available on Apple Podcasts & Spotify or right here!

Getting Married

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 00:32:49 GMT

I remember when I was getting married, I wondered what I would think about once the wedding was done, it is so mind consuming!

Episode 24

Getting Married or Having Children? This is a must listen episode about the financial implications of both life events as they arise.

Financial Planner Antonia Gapes joins Gav for the last time in this 3 episode series about how big life events can be planned for financially.

Available on Apple Podcasts & Spotify or right here!

Having Children

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 00:32:15 GMT

It is an exciting time welcoming a new family member to the world while for the mum to be, fatiguing!

Episode 24

Getting Married or Having Children? This is a must listen episode about the financial implications of both life events as they arise.

Financial Planner Antonia Gapes joins Gav for the last time in this 3 episode series about how big life events can be planned for financially.

Available on Apple Podcasts & Spotify or right here!

Financial Implications of Going Solo

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 00:31:38 GMT

Two becoming one has its challenges. Treading the path alone and working out what you can do with your split just part of the challenge.

Turning 60. Super and financial considerations.

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 00:31:03 GMT

So many people turn 60 and miss the boat.

Episode 22

Available on Apple Podcasts & Spotify or right here!

About to retire

adam@mulcahy.com.au (Adam Foale) — Tue, 08 Dec 2020 00:30:21 GMT

The light at the end of the tunnel shines brightly and is the perfect time to shine a spotlight on the income you can access in retirement.

Episode 22

Available on Apple Podcasts & Spotify or right here!

Moving out of home

adam@mulcahy.com.au (Adam Foale) — Mon, 07 Dec 2020 22:58:27 GMT

It is exciting setting up your own pad. Largely moving out of home generally falls into 2 categories; you are likely pursuing work or completing studies. Of course, there are a raft of instances that do not fall into either category. The assumption I will make is you are having to secure some level of income to pay your day to day bills.

Are you approaching a Big Life event?

adam@mulcahy.com.au (Adam Foale) — Mon, 07 Dec 2020 22:39:02 GMT

Moving out of home? Getting married? Having children? Facing going solo? Turning 60? About to retire? Dealing with aged care placement?

FS360 Episode 19 - How to best insure your small to medium business

adam@mulcahy.com.au (Adam Foale) — Mon, 23 Nov 2020 05:33:41 GMT

How to best insure your small to medium business

As a business owner, insuring all aspects of your business is vital, as Tom Molan from Elders Insurance Ballarat Central spoke about on the FS360 podcast.

For a small business Tom believes there are three insurances they must have to confidently protect themselves.

Work Cover
Assets
Liability

Protecting your employees and yourself through work cover is objective number one and covering any mistakes that could have a destructive impact on the business through your liability cover is number three.

Assets is the area that Tom says some businesses don’t consider enough, sometimes not protecting enough of the assets associated with their business.

“For example, an excavation business, they’ll have their excavator and their bobcat insured but they won’t have thought about all the add ons and the trailers and the utes …” he said.

“You have that conversation with them and then they start to look at the whole business, rather than just ‘I’m in the excavator, I better make sure that’s insured.”

When considering insurance policies, Tom says key aspects to be mindful of are hidden limits and basic cover. The policy may say your contents are covered, but only up to $1000, a hidden limit. Or, there’s a basic cover in place, but when you look into it further, it doesn’t include jewellery or the tennis racquet in the back of your car etc.

If you’re a new start up business, Tom and the Elders team will discuss with you exactly what your business will entail and decisions on policies can be made from this.

“For example, a plumber, are you a gas plumber? Are you residential or commercial? What’s the 60 percent of your work going to entail?” he said.

“We need your plumbers license numbers, we need to know exactly what you’re going to have in terms of machinery, stock etc.”

Once they understand exactly what the business is, they can decide what you need to cover. Is it just your assets? Are you a sole trader? If you went down would your business go with you? Would you need accident and illness cover?

Once established, Tom encourages businesses to assess their insurance policies every year. He and his team would expect to meet with a client six weeks before renewal. Here they can analyse if there was any downturn or growth, see if there have been increases in stock levels, if aspects of their business have changed, whether they’ve incorporated another part of their business in, new machinery, more staff etc.

For any general insurance enquiries feel free to give Tom and his team a call at Elders Insurance Ballarat Central .

What are the costs of having a website?

adam@mulcahy.com.au (Adam Foale) — Mon, 23 Nov 2020 05:27:04 GMT

The best way to explain what the costs are in having and maintaining a website are as follows:

Domain name registration
This is the www.yourbusinessname.com.au web address (URL) of where your website and it's related services will be found once live in the internet. It has an initial registration fee and a RE-registration fee every year it is active.
Email hosting
This is the server (or service) that runs your email and also archives it for future reference. This fee is normally yearly and includes a certain number of email addresses and a certain amount of storage. It allows you to have personalized email addresses on your business domain name eg: info@yourbusinessname.com.au
Web hosting
The last of the yearly fees. This is where your website ‘lives’, or the server that holds your website files. These days it regularly also includes a self editing system, known as a CMS (content management system), that allows you to edit your own website text and images.

For these first three items you can expect to pay around $600 per year in Australia with reputable companies offering these services.

A word of warning to avoid the internet ‘specials’ that offer you heavily discounted services for the business critical items listed above.

These discount services are always with overseas budget businesses whose customer service - especially to Australians - is often poor. Email and your website are key elements to promote and work within your business. You don’t want to be in the situation where you can’t get hold of your domain registrar and your email and website go down for a period of days or weeks.

The last cost is the website design and build. This is often a once off cost with a website designer and can vary greatly depending on what your website needs to do. For example, an online store will be more expensive than a simpler brochure style information-only website. This part normally includes training by the web designer for you and your staff to be able to update the website content yourself.

The last thing that may invoke additional ongoing costs is maintenance and updates. As previously mentioned most websites are built in systems that now allow you to update the site yourself. However, in our experience, most clients opt for us to make ongoing changes as it's one less thing to think about. Simply email the updates to us and we'll make the changes for you for our normally hourly rate. This allows you to keep working in your business (at what you do best) while someone else updates the content on your website. We'll also ensure that things are done correctly, so that search engines index it correctly, and your prospective customers can find you easily.

Gavin Nash

M Group Marketing

Tax Planning

adam@mulcahy.com.au (Adam Foale) — Mon, 16 Nov 2020 00:10:31 GMT

How can I keep more money in my pocket come tax time?

Tax time is a great chance for businesses and families to look at their expected incomes for the current financial year and future income years.

With consideration to both of these factors, Mulcahy & Co can look to legally minimise your tax position, bringing more money into your pocket and less to the tax man.

Ben Hutchesson from the Geelong/Melbourne office says there are a host of options you can look at to assist this.

“Reviewing debtors, stock levels, super payments, there’s a host of options that we do have to help reduce your taxable income and also give you an idea of what your tax exposures are going to be coming up,” he said.

Tax planning isn’t just about reducing tax however, it’s also about looking for opportunities to grow your family and business wealth and look to achieve your financial goals and security.

Mulcahy & Co has introduced FS360, a holistic approach to help clients achieve and maintain financial security. This system helps to make sure that items like your I.T. is secure, your marketing is working effectively, wills and business efficiencies are in place, achieve your future retirement, business and personal goals. The team at Mulcahy & Co have multiple opportunities to be able to help you achieve those goals.

You have the added benefit of going down this path and knowing that you are in the best place to become financially secure.

For advice on tax planning, contact Ben or any of our accounting staff at Mulcahy & Co.

- By Ollie Nash

Business Structuring

adam@mulcahy.com.au (Adam Foale) — Fri, 13 Nov 2020 03:15:46 GMT

Structuring for start-up or established businesses.

One size does not fit all when it comes to business structure and with many considerations needed to be taken into account when deciding on a structure, Mulcahy & Co is here to help.

Whether you’re a business just starting out or an established brand, your business structure will vary. Ben Hutchesson from the Geelong/Melbourne office says it’s important your structure reflects where your business is at.

“One size does not fit all and it doesn’t always mean what’s appropriate now is appropriate in the future,” he said.

For a start-up business there are several options to consider such as sole traders, partnerships, companies and trusts. In discussions with Mulcahy & Co to establish your needs and goals, the team will consider aspects like; asset protection, the possibility of bringing in new partners as the business grows and the industry you are in and how that may affect the business structure.

Asset protection can include your family home, a business premises, investment properties, shares, any type of asset that you want to protect.

Future growth of the business includes possible future partners and projected income and profit levels. Mulcahy & Co will ensure these are a priority so the business is structured correctly based off these predictions and goals.

As an established business, once you have a specific structure this is not locked in for life. You may have outgrown your current structure, circumstances may have changed or you may have little to no asset protection. In these cases, Mulcahy & Co can help re-structure your affairs and corporate structure.

Tax consequences and the way to actually conduct the re-structure will need to be considered but are both issues the Mulcahy & Co team can help your business through.

For anymore advice on business structuring, contact Ben or any of our accounting staff at Mulcahy & Co.

- By Ollie Nash

How can I improve cash flow for my business?

adam@mulcahy.com.au (Adam Foale) — Thu, 12 Nov 2020 00:33:52 GMT

Cash Flow Management for businesses is as important as ever.

Ben Hutchesson, a Chartered Accountant from the Geelong Mulcahy & Co office, discussed the best ways to manage your cash.

As anyone in business would know, cash is the lifeblood of the company. Having poor Cash Flow Management can therefore lead to businesses lacking the funds to survive.

Ben discusses three main areas of a businesses’ Cash Flow Management; managing your accounts receivable, managing your accounts payable and managing inventory.

Ben’s first tip is that looking at only your profit is not beneficial to managing your cash flow.

“As long as you’ve got profit then yes the business looks like it’s not going under,” he said.

“However, because your profit takes into account your debtors, creditors and other factors that don’t necessarily translate into cash, focusing on that alone is not going to benefit you in managing your cash.”

Areas a business needs to focus on as well begins with managing debtors effectively so that cash keeps rolling in. Making sure you have a cash reserve for a rainy day is also vital.

Thinking outside the box can be beneficial to boost sales. Ben says marketing through offering incentives, hosting events for clients or staff, anything that can advertise your business will help with cash flow.

For anymore advice on Cash Flow Management, contact Ben or any of our accounting staff at Mulcahy & Co.

- By Ollie Nash

FS360 Episode 18

adam@mulcahy.com.au (Adam Foale) — Thu, 29 Oct 2020 04:33:03 GMT

In the ever changing world of business, specifically now during the COVID-19 pandemic, Business Advisory is a necessity more than ever.

On this week’s episode of the FS360 Podcast, host Gavin Nash is joined by the Director of the Mulcahy & Co Sunshine Coast office, Jodie Thompson, who specialises in this area.

Jodie and the rest of the Mulcahy & Co team love to help their client’s business grow and prosper, which is Business Advisory in a nutshell.

“We see business as an enabler, the profit in your business enables you to achieve the lifestyle you desire,” Jodie says.

The advice offered can be explained as a ‘full business life’. It begins with establishing a new business with the correct structure, leading into industry specific advice throughout your business existence all the way through to the exit and doing so in the most advantageous way possible.

Jodie explains that the best way to achieve your business goals with this structure is through regular meetings to establish aims and a pathway to get there.

“Our most successful clients have what we call ‘accountability meetings’, which is a regular catch-up at least quarterly,” she says.

These allow owners to step out of the business, look at how it is performing, where opportunities may be and potential issues. The Mulcahy team can help them through this, as well as analysing how their set goals are looking down the track.

Jodie explains growing the business may mean delegating to those with more time and potentially more expertise in a specific area. It doesn’t always mean working harder and taking on more roles as the owner. This can give them the freedom to take some downtime and trust their systems if they step away for a holiday or time off.

Jodie says all businesses are suited to this advisory service. Whether it’s a single operator or large family business or corporate enterprise, Mulcahy & Co can help.

“All you need to have is a desire to improve and/or protect your situation. People are normally driven to or away from something, so if you’ve got something that drives you, that gives you passion to act,” she says.

While the meetings are usually composed of the managing team, the extension of this service is that managers or those to be promoted within the business can be mentored by Mulcahy & Co. They can be included in these discussions to get them ready for future roles.

One successful example of the Business Advisory service came in the farming industry. A sole trader came to the Mulcahy & Co team wanting to grow their business to eventually provide employment and a stable income for their immediate and extended family.

A 10-year business plan was developed. In due course he was able to bring his brother into the business. However, overtime the opportunities they had with their clients and the farming in their area dramatically reduced.

The Mulcahy & Co team helped them analyse possible industries and opportunities to expand their business into. Plans were put into action and they found new life. Other family members were able to be brought in and they eventually grew to a million dollar business.

They were able to work through the selling process with the Mulcahy & Co team and exit in the most advantageous way as well.

More recently throughout COVID-19, Mulcahy’s knowledge of and contacts in the hospitality industry were able to help many businesses survive.

The team were able to stay a step ahead of announcements regarding lockdown and business shut-downs. On the flip side, they were able to help these business re-open successfully once regulations were lifted in Queensland.

This included helping businesses to act on protecting themselves. Applying for grants that were available, even those that were going to be offered in a months’ time for example. Discussions with landlords and suppliers too, negotiating deals with them to be sure the business was in the best position possible.

In doing so, these business are flourishing once again as Queensland and broader Australia begin life in a COVID normal state.

To contact the Sunshine Coast office just head to mulcahy.com.au/sunshine-coast . The office is offering a free initial meeting at the moment, allowing your business to get to know Jodie and the team to understand your business and its goals.

Budget 2020 – Boosting the Economy

adam@mulcahy.com.au (Adam Foale) — Thu, 08 Oct 2020 08:27:19 GMT

The Federal Budget is wide ranging to cushion the impact of Covid-19 and kickstart the economic recovery. The treasurer said it is focused on “boosting consumer and business confidence, growing the economy and creating jobs.”

The Federal Government will run a budget deficit of $213.7 billion with total debt peaking at $966 billion by 2024 as it spends on a range of programs and incentives designed to rescue the Australian economy from its worst downturn since the Great Depression.

Instead of bringing the budget back “into the black”, the 2020/21 budget will take net government debt to $703 billion or 36 percent of GDP this year, and to 44 percent by 2024. This is half of that of the UK, a third of the debt of the US and a quarter that of Japan.

There is no indication on how the Government plans to fund this expenditure and ultimately repair the budget. This will happen when unemployment falls below 6%. The government forecasts a 3.75 percent contraction in the economy this calendar year, but a return to 4.25 per cent growth next year, with unemployment to fall to 6.5 percent by the June Quarter of 2022.

In additional to the incentives below, the government is spending big on infrastructure - $14 billion in new and accelerated infrastructure projects across Australia over the next four years.

Individuals

Reduction in tax rates

The government’s strategy is to put money in your pocket in the hope you will boost spending and lift the economy out of recession. The already legislated tax cuts will be brought forward from1 July 2022 to 1 July 2020.

The Government has also announced that the legislated increase to the Low Income Tax Offset (LITO) from $445 to $700 per year will be brought forward to 1 July 2020 instead of 1 July 2022.

While the Low and Middle Income Tax Offset (LMITO) was due to be removed with commencement of Stage Two of the Personal Income Tax Plan from 1 July 2022, the Government announced that it will continue as a one-off additional benefit during the 2020-21 tax year.

Capital Gains Tax removed for granny flats

The government announced it will provide a Capital Gains Tax (CGT) exemption for granny flat arrangements where there is a formal written agreement for a family member to reside on the relevant property (either in the same home or a separate building). The exemption will apply to arrangements with older Australians or those with a disability. This could commence as early as 1 July 2021.

Superannuation reform

The Government has announced that it will implement the following reforms from 1 July 2021 to improve outcomes for superannuation account holders:

new online YourSuper tool to compare and select superannuation products
existing superannuation accounts will be ‘stapled’ to a member so they keep their superannuation account when changing jobs
MySuper products will be subject to an annual performance test. Funds that underperform for two consecutive years will not be permitted to accept new members until their performance improves; and

Business

Business Support Grants exempt from income tax

The government announced that it will ensure that Victorian Government business support grants for small and medium businesses will be non-assessable-non-exempt income for income tax purposes. This will extent to all States and Territories on an application basis. Eligibility will be limited to grants announced on or after 13 September 2020 and for payments made between 13 September 2020 and 30 June 2021.

Jobmaker Hiring Credit

The JobMaker Hiring Credit will be payable for up to 12 months for each new job and is available from 7 October 2020 to employers who hire eligible employees aged 16-35. To be eligible, employers must firstly demonstrate that the new employee will increase the overall employee headcount and payroll, using total headcount on 30 September 2020, and total payroll in the three months to 30 September 2020 as the base line. Special rules apply to newly established businesses and businesses with no employees at the reference date.

The Hiring Credit will be paid quarterly in arrears at the rate of $200 per week for those aged between 16-29, and $100 per week for those aged between 30-35. Eligible employees are required to work a minimum of 20 hours per week. The credit will be available to most eligible employers regardless of size (with some exceptions, most notably any employer who is claiming the JobKeeper Payment), and there is no fall in turnover requirement to be satisfied.

Treasury estimates that this will support around 450,000 jobs for young people

More support for apprentices or trainees

From 5 October 2020 to 30 September 2021, businesses who take on a new apprentice or trainee will be eligible for a 50 per cent wage subsidy of up to $7,000 per quarter, regardless of geographic location, occupation, industry or business size. This assistance will aim to support 100,000 new apprentices across Australia, and is in addition to the Supporting Apprentices and Trainees wage subsidy (announced as part of the COVID-19 stimulus package) which is helping small and medium businesses to keep their apprentices and trainees in work and training.

Extended instant asset write off

The instant asset write-off is temporarily extended and being made even more generous. From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

Small business loss carry back

Compa nies with turnover up to $5 billion will be allowed to offset losses against previous profits on which tax has been pai d, to generate a refund. Eligible companies can carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in 2018-19 or later income years. Companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.

A company will be able to obtain a refundable tax offset (i.e. cash-back) in a loss year against previously taxed profits, subject to satisfying certain conditions. The offset is uncapped, however the amount carried back cannot be more than the earlier taxed profits and the carry back cannot generate a franking account deficit.

These losses may be created by other measures announced in the Budget including, for example, the new and improved instant asset write-off. There is, however, a one year delay in accessing the cash refunds, with eligible companies only able to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.

Expanded small business tax concessions

Amendments will allow businesses with less than $50M aggregated annual turnover (up from $10M) to access up to 10 small business concessions.

For the first time, businesses with an aggregated annual turnover between $10 million and $50 million will have access to up to ten small business tax concessions. The changes are estimated to support an additional 20,000 businesses and their employees.

The expanded concessions, as part of the 2020-21 Budget will apply in three phases:

From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
From 1 April 2021, eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.

This budget is a confidence booster and is designed to get the country moving again. It does lack in some longer term strategy or vision and there is little to support the reinvention or reimagination of business. The budget though, will be the kick start the economy is looking for. If you have any questions about the budget, please give Mulcahy & Co a call to discuss your situation.

FS360 Episode 16 - Personal Insurance

adam@mulcahy.com.au (Adam Foale) — Sun, 04 Oct 2020 22:47:16 GMT

As Thayne Turley describes it on the FS360 podcast, personal insurance cover isn’t the most glorious topic to talk about. However, it is something that has affected Thayne’s and host Gavin Nash’s personal lives over the years with loved ones needing to claim on their personal insurances in times of sickness or injury.

In Episode 16 of the FS360 Podcast, Thayne talks about the five insurance policies available for individuals. The first is life insurance, which is a lump sum paid in the event of death or terminal illness. The second is total and permanent disability (or TPP) for when you are unfit to work again, which is a lump sum payment depending on your financial and family circumstances.

The third is trauma insurance, which is a lump sum amount depending on which amount you have chosen to be covered for. Thayne says there are usually around 40 insurable events for this, the main ones including heart attacks, strokes and cancer.

Income protection insurance is the fourth, which is available when you are unfit to work for a period of time. You can be paid 75 percent of your monthly salary up until the age of 70 with this insurance. The last policy is business expenses which is for those that are self-employed and are unfit to work. It will cover your fixed costs within your business up to the amount you have nominated that you want to be insured.

Income protection and business expense are tax deductable to the individual as well and if life and total and permanent disability covers are structured through superannuation, they can be claimed as a tax deduction too.

Thayne says that if we are insuring our car and house, then life insurance needs to be included in this.

“Your claim for a car might be $60 000 to $70 000 or less, but if you aren’t able to work or generate an income then depending on the length of time … the financial impact can be much more detrimental,” he said.

Thayne explained that there is life insurance covered in your superannuation fund, however they are not personalised. These policies have a default amount of insurance cover in them, which is usually selected based on a formula like how old the individual is and what the superfund deems appropriate.

He says this is what the professionals at Mulcahy & Co Financial Planning can assist people with.

“Given that humans are different, financial situations are different, family scenarios are different, it’s recommended that people review their personal insurance needs and make sure that it is adequate, because most of the default insurance cover is very minimal,” he said.

Some people may be sceptical because of the myth that insurance companies don’t pay up and the process is hard. Thayne says this isn’t true and that people should make the most of their policy.

“Over $12 billion was paid out in 2019 from insurance policies and over 95 percent of all claims were accepted. So, with the myth that … insurance companies don’t pay out, they well and truly do,” he said.

Podcast Attendees

Gavin Nash – Director of Marketing, Mulcahy & Co

Thayne Turley – Director of Financial Planning, Mulcahy & Co

Article by Ollie Nash

Attract more customers with Inbound Content Marketing

adam@mulcahy.com.au (Adam Foale) — Thu, 01 Oct 2020 06:43:07 GMT

Watch the video here >>

Positioning you as the expert in your area is a combination of digital assets these days.

We can assist you to reach your target audience for your business through a myriad of formats.

Let’s say you have a topic you want your potential and current customers to know about.

But – you either hate writing, sitting down in front of a computer or you just don’t have the time.

But you know your topic well and can talk about it.

Let’s have a recorded conversation and publish it as a Podcast to Apple Podcasts and Spotify, all branded as your business.

We can then transcribe the podcast as a written article and post this content to your:

Website
Your social media accounts
Emailed to your customers/clients via a regular eNews
Send your well written and informative article to local news outlets like Radio, Newspapers & other Publications for inclusion in their content delivery.

All of this is designed to position you as the expert in your field – and you’d be surprised how little of that you need to do yourself!

Engage us to do this for you on a monthly retainer and we can take over the digital footprint for your business.

This helps customers or clients coming to your business rather than you pushing advertising to them in the hope they may make the decision to come to you.

It’s called Inbound Digital Marketing and we can help – visit www.mulcahy.com.au/marketing for more info and to see some case studies and sample work.

Watch the video here >>

FS360 Episode 16 - Market Update

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Sep 2020 07:36:59 GMT

The COVID-19 pandemic has had a huge impact on the everyday lives of people around the world. This has extended into the economy, but Mulcahy & Co Financial Planning Director Thayne Turley says a lot of the initial hit has been weathered and it will improve.

Speaking on the FS360 podcast, Thayne said the Australian economy did contract by 7 percent. While disappointing, he said a contract of some sort was expected due to Melbourne central being in lockdown while Victoria is the dominating state for gross domestic product across Australia.

Thayne, along with host Gavin Nash, discussed the Large Corporations of Australia report that was released, which was based on their earnings and profits up until the end of 30 June.

Thayne says the report was more positive than some in the industry had initially expected.

“Most of those beat guidance. What that really means is that analysts in the investment world expected figures to be worse than what they actually came out at,” he said.

For retail stocks like Bunnings, Officeworks, Harvey Norman etc. their financials were better than expected. Revenue and profits were still down for those business but not as bad as first thought.

Thayne continued to say that after an initial correction in Australian and international stock markets of about 30 percent, about half of that has been recovered. This means they’re sitting at about 15 percent lower than at the end of February 2020.

The Government has assisted a lot in this area Thayne says, as they did with the global financial crisis in 2008.

“The Government have come to help in terms of Job Keeper and Job Seeker, allowing some people to access their superannuation early … it’s all geared to try and help the economy get back to where it once was,” he said.

In the current market if you can hold your shares or if you have the money and can invest, it’s a good time to do so because prices are low, and you can reap the rewards down the track. As Thayne says ‘The art of investing is to buy low and sell high’. Now may be as good a time as ever to invest in the Australian Share Market.

Podcast Attendees

Gavin Nash – Director of Marketing, Mulcahy & Co

Thayne Turley – Director of Financial Planning, Mulcahy & Co

Article by Ollie Nash

FS360 Episode 15 – Marketing your business in the digital space

adam@mulcahy.com.au (Adam Foale) — Tue, 29 Sep 2020 05:06:29 GMT

The need for a digital footprint has become such a vital requirement for businesses in the last decade. In the last 10 months, it has risen in importance again due to the COVID-19 pandemic.

So, what is a digital footprint? Speaking on episode 15 of the FS360 Podcast with Chris Mulcahy and Gavin Nash, Digital Consultant Adam Foale put it simply as all your touchpoints with existing and potential clients online. This ranges from your website, to email newsletters (EDMs), social media channels and Google My Business listings. Anywhere your business is represented online.

Throughout a global pandemic such as this one, just letting people know you are open is such a simple way to maximise your business. Gavin mentioned that a retail Mulcahy client had a competitor that confirmed a positive COVID-19 case within their staff.

Existing and potential clients then rang the client to see if they were still open. All it took was a quick post on their website home page, Google My Business listing and social media accounts to confirm they were open and the issue was resolved.

Updated information and consistent messaging on all of your digital platforms is vital to maximise your digital output.

One effective way to do so is through EDMs. Adam explains that during COVID when people are on their phones more often, it’s important to keep yourself in the forefront of their minds with EDMs.

“Most businesses will get 80 percent of their revenue from talking to their existing customers, and the best way to do that these days is via an EDM,” he said.

The important aspect of EDMs is not overdoing the amount you send out. Adam says overuse of them can drive people to unsubscribe.

“We’ve had clients that do two-or-three time weekly emails and you end up with a lot of unsubscribes, so you don’t want to talk to these people for no reason,” he said.

“But you want to make sure that you’re keeping in touch so they know you’re there next time they’re looking for a product you might have or a service you offer.”

Deciding on how often to send EDMs comes down to knowing your business, as Gavin explains. Understanding how often people will buy your products or use your service.

“We have an investment company we do some work for, they do one four times a year … but you’re not going to be investing money every second week, so for that particular business, less is more,” he said.

“We have some other businesses that do it on the same day every month … and they’ll actually put some specials in that email that they don’t really have anywhere else.”

They are measurable as well. Adam explains you can see how many people are clicking through, who is taking action and what is effective.

On the other side of the coin, video is an extremely effective medium. Stats show that upwards of 90 percent of people will try and watch a video of a product before they purchase it.

This is one of three different areas of the Google Ads network, called the video network, e.g. an ad played before a YouTube video, which is the second biggest search engine in the world. Gavin explains these short videos can be more effective than a 600-word article, as some people are more likely to sit and watch, than sit and read.

This tool can be coupled with some re-marketing techniques. Adam explains that for example, if someone has clicked through to a hot water service and decided not to purchase it at that time, you can start to deliver ads to them to keep you at the forefront of their mind because they visited that site.

This goes into the other two areas of the Google Ads network. The first is text search, where ads will pop up on your search page results. The second is the display network, which are the little graphical ads that follow you around. These are always displayed on highly hit websites like realestate.com.au

Advertisement will get you so far, but the final touch of maximising your online presence is through search engine optimisation (SEO). This is coupling your content with your digital footprint to be sure you are at the top of search results related to your business. Adam says this entails knowing what keywords potential customers are searching and not relying on people searching for your business name.

“People can sometimes be too close to their business. Even using things like industry specific terms on your website content or in the keywords, that doesn’t necessarily translate to your consumer market,” he said.

“You’ve really got to step back as a business owner and think what are people trying to find or what are people looking for when they’re looking for a business like mine.”

Once people can find your site, Adam says how your site is performing is the next important step to focus on. It can look nice, but if it is slow, not only will people go elsewhere, Google will punish you for it by pushing you down the search results list.

Gavin says that SEO is like the engine underneath the hood that no one can see, but it is important to look after it.

“It’s like having a brand new paint job on an old HQ Holden, but the engine underneath is no good. In a way that’s what SEO is, it’s the engine that runs everything and makes sure that you can be found,” he said.

Podcast Attendees

Gavin Nash – Director of Marketing at Mulcahy & Co

Adam Foale – Digital Consultant

Chris Mulcahy – Director Mulcahy & Co

Article by Ollie Nash

Casual loading and overtime – Fair Work clears up paid overtime.

adam@mulcahy.com.au (Adam Foale) — Thu, 17 Sep 2020 00:53:48 GMT

If you hire casuals, there is no doubt that you may have been confused over interpreting the wording of awards in order to figure out how to pay a casual who is entitled to both casual loading and an overtime rate.

Under most modern awards, casual employees are entitled to ‘casual loading’, which is an amount on top of the minimum hourly rate - often 25%. When these employees also work overtime, calculating what should be paid can be a nightmare. The Fair Work Commission has set out the way to pay overtime for these casuals under each award. In doing so, it split up the way awards deal with paying overtime to casuals into three different categories, namely awards where:

• Overtime penalty rates are payable in substitution for the casual loading

• The casual loading and overtime penalty rate are added separately to the minimum hourly rate (the cumulative approach)

• The overtime penalty rate is applied to an ordinary hourly rate consisting of the minimum hourly rate and the casual loading (the compounding approach).

Employers should check which category their award falls into and ensure they have been paying overtime to casual employees correctly to avoid any discrepancies that may result in a claim for underpayment.

Marketing Update

adam@mulcahy.com.au (Adam Foale) — Tue, 01 Sep 2020 01:59:45 GMT

We wanted to keep you all up to date some sharing of our latest news and completed projects as well as fill you all in on our latest service offerings. We are open as usual during lockdowns but working from home currently.

We joined the Mulcahy group in July 2019 and since then the team has grown from Gav & Kate to welcome Adam (Digital), Dan (Graphic Design) and Rachel (Marketing Manager of our Mildura office).

Below you will see some recently completed projects as well as a full service listing of what we can offer your business by way of services.

Please contact us by return email or by phoning to have a chat:

Gavin 03 5330 7200

Rachel (Mildura) 03 5021 1968

Gavin, Kate, Adam, Dan & Rachel

Mulcahy & Co Marketing Pty Ltd

Daylesford Primary School
Website and online tour

We recently completed this website for St Michael's Primary in Daylesford.
Our services included:
• Website design and build
• Online tour video shooting and editing

Click here to see the website and video tour.

Outsource your business marketing

With some businesses needing to downsize permanent staff, outsourcing the marketing function of your business can make good financial sense in the current market.

Outsource your business marketing to us for a fraction of the cost of a staff member. Don’t pay for Super, Workcover, Software, Hardware, Cameras or Payroll tax!

Our service is invoiced like any other supplier and we offer a full suite of marketing and design services. We develop strong brand identity and marketing strategies to cost effectively engage your customers.

Our Services

Below is a list of our services from our talented staff - we all specialise in different areas so your business can benefit:

Logo Design & Branding
Graphic Design
Website Design and development
Planned Marketing
Advertising
Video shooting and editing
Social Media posting and advertising
Google Ads and digital marketing
Illustration
EDMs (eNews such as this one!)
Retainer agreements to handle all business marketing including media bookings and sponsorships.

Have you heard our Podcast?

Chris and Gav are up to Episode 14 in this series, delivered to you via Spotify, Apple Podcasts (simply search FS360) or on our website.

https://podcasts.apple.com/us/podcast/fs360-podcast-by-mulcahy-co/id1505949812

Keep up to the minute on our social channels.

We post a few times each week with ‘up to the minute’ information regarding all things for businesses and individuals. We have social channels on Facebook, LinkedIn, Twitter and Instagram, so whatever you use, you can give us a follow!

JobKeeper Rules Changed

adam@mulcahy.com.au (Adam Foale) — Tue, 18 Aug 2020 05:03:05 GMT

The eligibility for JobKeeper has now been updated to allow additional employees to become eligible from the 3rd of August.

The extended eligibility allows for employees who were employed on the 1 ^st of July 2020 to become eligible. This has moved from the initial 1 ^st of March 2020 date. This means the following employees will now become eligible to receive the $1,500 per fortnight minimum payment between the 3 ^rd of August and 28 ^th of September:

you were employed by the eligible employer (or another entity in their wholly owned group), either as a
non-casual employee (whether full-time, part-time or fixed-term)
long-term casual employee (employed on a regular and systematic basis during the 12 month period that ended 1 July) and you were not a permanent employee of any other employer

you were aged 18 years or older (if you were 16 or 17 you can also qualify if you were independent or not undertaking full time study on 1 July 2020)
you were either an Australian resident (within the meaning of the Social Security Act 1991)
an Australian resident for the purpose of the Income Tax Assessment Act 1936 and the holder of a Subclass 444 (Special Category) visa

Eligible employees will be required to complete the a nomination form, available for download below, and return to their employer by the 21 ^st of August (a current extension has been requested). Employees that have already nominated do not need to complete a new form and will remain eligible.

Employer’s will need to ensure they have paid newly eligible staff the minimum amount of $1,500 a fortnight for the fortnight commencing the 3 ^rd of August. If a back payment is required to meet this condition Employers have until the 31 ^st of August to pay these amounts to their employees.

More information to be released on JobKeeper 2.0 extension that will apply from the 27 ^th of September at a later date.

If you have any questions about how this affects you or your employees please contact our office. 1300 204 781 or email info@mulcahy.com.au or directly to your normal Accountant/Clients Services Manager.

Three month extension for construction commencement in Victoria

adam@mulcahy.com.au (Adam Foale) — Thu, 06 Aug 2020 02:14:50 GMT

Three month extension for construction commencement in Victoria

With the introduction of Stage 4 restrictions in metropolitan Melbourne (effective from 2 August 2020) and Stage 3 restrictions in regional Victoria (effective from 5 August 2020), the Commissioner of State Revenue is exercising his discretion under the National Partnership Agreement to extend the HomeBuilder Grant’s construction commencement requirement by 3 months.

This means that all applicants for the HomeBuilder Grant in Victoria now have 6 months to commence construction from when the eligible HomeBuilder contract is signed.

The Commissioner does not have discretion to grant any extensions beyond this additional 3-month extension.

Full details of this extension are available in the revised guidelines on the SRO website, which have also been updated to clarify the supporting documents required, including proof that your builder was registered or licensed prior to 4 June 2020.

https://www.sro.vic.gov.au/homebuilder-grant-guidelines

Superannuation guarantee amnesty ends on 7 September 2020.

adam@mulcahy.com.au (Adam Foale) — Wed, 05 Aug 2020 03:53:31 GMT

A reminder that the Super Guarantee Amnesty is an opportunity to catch up on any unpaid super without the normal penalties applying. The Amnesty ends on 7 September 2020.

If you have paid the right amount of super for your employees, you don't need to do anything further.

If you are worried you have not paid all your employees their super, you should talk to us at Mulcahy & Co or visit our website to learn more about the Amnesty before it ends.

If you are eligible for the Amnesty you can pay the previously unpaid super and you will not have to pay any penalties or administration fees. You will also be able to claim a deduction for any payments you make before 7 September 2020.

The ATO understands that you may be concerned that you are not currently able to pay the amount you have owing. If this is the case, you should still apply for the Amnesty to receive its benefits whilst we work with you to establish a payment plan. Their payment plans can be tailored to your circumstances and extend beyond 7 September 2020 when the Amnesty ends.

To be eligible for the Amnesty the ATO must receive your application by 7 September 2020.

If you need further information, please talk to us at Mulcahy & Co or visit:

https://ato.gov.au/SGAmnesty

New Financial Year Resolutions

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Jul 2020 04:14:18 GMT

Another financial year has come to a close and FY2021 is well and truly underway. For many businesses and families the impact of COVID19 over last few months has been pretty tough and while there may still be a long road ahead to recovery the start of a new financial year is the perfect time to pause, reflect and take charge of your business and finances.

Before looking forward it is important to look back.

Reflect on the year gone by and consider what worked well and what inefficiencies and changes you would like to address.

Set your goals and resolutions for the new financial year

Whether it’s to grow your business, improve profitability, spend more time with the family or to save for retirement, that next big purchase or just that safety net bank account for the unexpected.

Failing to plan is planning to fail

Be specific, how will you know when you have achieved your goals and how do you intend to achieve them. Set a budget, make a marketing plan, implement staff training and software solutions that can allow you to delegate, automate, step back and refocus your attention on what is important. If you have pulled money out of super under the COVID stimulus maybe your goal this year is simply to save up and replace those funds or possibly you have a goal retirement age and it’s time to take a serious look at your present position compared to your projected retirement needs and what steps you can take now to get you closer to that goal.

Keep yourself accountable

Set aside time to check in throughout the year and measure your progress. Are you on track or have you dropped the ball. Don’t be afraid to reassess and move the goal posts, your goals generally should challenge you but not so much that they become demotivating and sometimes like we have seen in the last few months life just has other plans.

Should I use a tax agent?

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Jul 2020 04:09:06 GMT

With tax time rolling around again this year, a question that is often asked is;

Should I attempt to complete my tax return myself this year?

While doing your own tax return may seem like an easy task, knowing what you can and can't claim can often cause headaches and may result in you short-changing yourself.

Here we go through the advantages of using a registered tax agent to assist you in preparing your tax return;

LODGE CORRECTLY THE FIRST TIME

By lodging your tax return yourself, the responsibility for any mistakes falls squarely on your shoulders. This could lead to time consuming audits and dealing with the ATO to rectify any issues.

Having a tax agent prepare your tax return can ensure that your return is done right the first time. Fees paid to a tax agent to assist in preparing your tax return are also 100% deductible.

Even if you have filed a return by yourself and have made a mistake, your tax agent can amend your lodgement and can check that you have claimed all of your entitlements.

ENSURING YOU ARE COMPLIANT

Tax laws are frequently changing and unless you know what to look for, it’s easy to miss new rules and regulations. By using a tax agent, we ensure your tax return complies with the latest tax laws as well as ensuring you are claiming the correct deductions for your occupation.

TIME SAVER

Knowing what you can and cant claim or spending hours of research to find any information on what deductions you are entitled to is a time consuming exercise. By seeking the advice of a tax agent you could save yourself the time and hassle.

Tax agents are professionals for a reason. They know exactly what to look for. By contacting us prior to you appointment we can run through exactly what you need to bring with you and while each tax return is different, you’d be surprised at how painless the process with a tax agent can be.

HAVE I INCLUDED ALL MY INCOME

Tax returns aren’t just made up of your salary and wage income. There are many other forms of income that need to be declared when lodging your tax return such as share and dividend income, bank interest, trust income and foreign investments.

Specific rules and regulations apply when working out if income you have received is assessable. A tax agent understands what to look for, how your total income is calculated and what needs to be declared.

DEADLINES

If you lodge your own tax return, you only have until the 31st October to do so. If you haven’t got all your affairs in order or find the task to overwhelming, you may be penalised for lodging your tax late if you go over the deadline. By using a tax agent, you receive an extension which can give you the additional time to ensure you have got all the necessary information to complete your return correctly.

LONG LASTING RELATIONSHIP

While you may start out as an individual tax return client, by forming a long term relationship with your tax agent, you can gain a valuable resource when it comes to other financial matters. Whether it be starting a business, investing in the share market, buying a house or even updating your will. Mulcahy & Co is your hub for professional accounting, taxation, financial planning, legal, loans & finance, information technology and marketing services.

There are many benefits to using a registered tax agent to prepare your tax return, contact us today at Mulcahy & Co to see how we can assist you.

Setting goals during a pandemic

adam@mulcahy.com.au (Adam Foale) — Thu, 09 Jul 2020 05:02:35 GMT

New financial year goals

Unless you’re an accountant or financial planner, 1st July doesn’t have quite the same significance as 1st January! However, it is a new financial year and in 2020 it’s probably not a time many are celebrating. With the impacts of Covid-19 hitting many financially, personally and socially, reflections of new financial goals are likely to be significantly different.

New Years are generally a time when we reset our personal goals. While this is often focused on personal goals such as relationships, health and well-being, it is also prime opportunity to review your financial goals. As a financial adviser, I encourage clients to set personal goals for each new year and beyond. These goals often revolve around saving for holidays and how soon can I retire, but focus is now certainly on other aspects of our financial wellbeing.

It is often difficult to imagine ‘worst-case scenario’ until you are in that position – what if I lost my job? What if my partner or I were sick and couldn’t work? What if there was another GFC? While the going is good, it’s hard to imagine life any other way. The Covid-19 pandemic has certainly highlighted that life is unpredictable and while we can’t control what is currently happening in our world, we can plan to reduce the impact it has on our financial future and therefore our wellbeing.

There has been many articles written with great tips for those who have been financially impacted by Covid-19. If you are in the fortunate position of still holding your employment/business/income, you are in the perfect position to review your goals and plans for the new financial year and beyond:

What if I lost my job or business?

Have I set up a savings plan to ensure I have access to 3 – 6 months of living expenses put aside for ‘worst-case scenario’
Where can I trim expenses to build this emergency fund?
How much am I currently spending and where is it going?
Am I in front of my mortgage payments or can I pay extra and build this buffer?

What if my partner or I got sick?

What personal insurance do we have?
What does it cover for?
How long will it cover for?
Who can I contact if I need to claim?
Are there circumstances I can’t claim for?

What happens to my super if we have another GFC or Pandemic?

Where is my super invested now how/why was it impacted when Covid-19 hit?
What impact has this had on my retirement plans?
How can I gain a better understanding of financial markets and the options I have for super?
If I’m closer to retirement, should I reduce risk even if it means a lower return?
Am I comfortable with market dips as I have 20 – 30 years until retirement?
Should I be putting more into super so I don’t have to rely on government pension when I retire?

Seeking advice from a professional is like having your own financial personal trainer – tailoring a plan to what you want or need to achieve, monitor that plan to help you stay focused and on track and help to alter plans if circumstances change or life throws us a curveball like Covid-19!

Queensland Government - Next round of small business adaption grants.

adam@mulcahy.com.au (Adam Foale) — Mon, 22 Jun 2020 01:09:48 GMT

You can secure up to $10,000 to help pay for a range of activities.

Up to $100 million is being made available to deliver the second round of grants, with half of this funding specifically earmarked for regional small businesses located outside of South East Queensland.

Eligible activities – undertaken since 23 March 2020 – include:

Financial , legal or other professional advice to support business sustainability and diversification
Strategic planning, financial counselling or business coaching
Building the business through marketing and communications activities
Digital/technological strategy development
Digital training or re-training and up-skilling employees to adapt to new business model

At Mulcahy & Co we can assist with these activities – so please reach out .

Interested? Here’s what you need to do:

Visit business.qld.gov.au
Answer a few quick questions online to check your eligibility and register your interest.
Download the Guidelines . We urge you to spend some quality time reviewing the Guidelines. You will be giving yourself the best chance of submitting a successful application by reviewing the criteria, paying particular attention to activities that can be funded and documents needed to support your submission.
Start thinking about your application and look at what you can apply for. Note that you will need to start a new application even if you prepared a partially-completed Round 1 application.
Gather all the evidence and documents you need to support your application so it’s on hand and ready to go when Round 2 opens on Wednesday 1 July 2020.

Extension to the instant asset write-off

adam@mulcahy.com.au (Adam Foale) — Wed, 17 Jun 2020 02:30:54 GMT

Some welcome news from Federal Parliament last week, where the government announced the extension of the $150,000 instant asset write-off until 31 December 2020.

This means that businesses with an annual turnover of less than $500 million will be able to take advantage of the extended period to purchase assets to support their business whilst restrictions begin to ease.

With businesses being able to purchase single eligible assets at a cost of less than $150,000 (ex GST), it means that they can claim an immediate deduction providing the asset is first used and installed ready for use for a taxable purpose on or after 12 March 2020 and by 31 December 2020. These assets can be new or second hand. So, for a small business, they can write off a number of assets under this scheme.

Will I Get a $150,000 Tax Refund for Each Asset?

Simply put, No. The instant asset write-off scheme simply means that a business can reduce the amount of tax that would pay (i.e. if your business is structured as a company, the most you would get back would be the current tax rate of 27.5%

Motor Vehicle Purchases

If a business purchases a motor vehicle, the instant asset write-off is limited to the business portion of the car limit being $57,781 (i.e. if the motor vehicle purchases was used 75% for business use, then you can only claim 75% of the car limit of $57,781 which would equate to $43,186).

Are All Assets Eligible?

Whilst most assets are included, there are a number of asset classes that are excluded from the scheme. These include capital work assets, horticultural assets and more. The ATO has a comprehensive list of excluded assets on their website .

It is best to speak to your Accountant or Adviser about your business situation and whether you qualify. Please contact us on 1300 204 781 for more information.

eCommerce launch: Wardrobe by the Sea

adam@mulcahy.com.au (Adam Foale) — Wed, 10 Jun 2020 00:54:13 GMT

Our Marketing division has just launched this great ladies fashion online store. A positive example of a business pivoting to take in the challenges that the pandemic has thrown at all of us.

This valued client even took advantage of a Government grant to assist with the digital marketing too.

Free shipping on orders over $100.

Check it out!

https://www.wardrobebythesea.com.au

The Federal Government today announced the HomeBuilder Package.

adam@mulcahy.com.au (Adam Foale) — Thu, 04 Jun 2020 06:07:20 GMT

HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home. HomeBuilder will assist the residential construction market by encouraging the commencement of new home builds and renovations.

You will be able to apply for HomeBuilder when the relevant State or Territory Government that you live in, or plan to live in, signs the National Partnership Agreement with the Commonwealth Government.

Some of the facts for you:

Applies to new builds or substantial renovations
The property must be your Principle Place of Residence (no investment properties).
The grant is additional to any other building grants/subsidies, including the First Home Buyers
The contract must be entered into between 4 June 2020 and 31 December 2020, and construction must begin within 3 months of the contract date.
Caps:

Income:

Couples must have earned less than $200,000 in previous financial year
Individuals must have earned less than $125,000 in previous financial year

Property value:

New build property value cannot exceed $750,000.00
The House value prior to renovations cannot exceed $1.5 million

For House renovations the value of the renovation must be between $150,000 and $750,000. The renovation does not include building sheds, granny flats, pools or tennis courts. Attachment to main residence is required.
The construction must be completed by a licenced or registered builder and be an ‘arm’s length’ transaction

Some standard rules apply so please contact our Lending Division to talk about how we can assist you to take advantage of this HomeBuilder package.

Ph: 1300 204 781 or email info@mulcahy.com.au

New temporary minimum annual pension payments due to COVID-19

adam@mulcahy.com.au (Adam Foale) — Tue, 02 Jun 2020 05:32:24 GMT

Over the past few months there has been a change in financial circumstances around the world due to the COVID-19 crisis, which has created a decrease to the account balances of retiree’s superannuation pensions or annuity accounts.

As a result, the Government has decided to reduce the minimum annual pension payments required for transition to retirement pensions (TRIS) and account-based pensions (ABP) by 50% in the 2019/2020 and 2020/2021 financial years.

Superannuation providers calculate the minimum annual pension payments required by using the account balance at the 1st July each year, which the 50% discount will apply too.

Superannuation providers have already made these reductions available to their members now, however if your account is automatically nominated to receive the minimum pension the next financial year your account will default to the new reduced pension minimums as per the table below.

Note: As per the ATO these withdrawal factors are indicative only. To determine the precise minimum annual payment (especially for market linked income streams), refer to the pro-rating, rounding and other rules in the Superannuation Industry (Supervision) Regulations 1994.

If you have any questions regarding your pension payments please contact us on 1300 204 781

Cashflow management on the farm – how it can help your business grow

adam@mulcahy.com.au (Adam Foale) — Wed, 20 May 2020 06:24:21 GMT

The importance of cashflow management is more apparent than ever and although most farmers we speak to say the COVID-19 restrictions haven’t affected them too much from an operational sense we are all holding our breath to see what affect it has on commodity prices into the future.

Traditionally we would say farmers haven’t seen a great deal of importance on completing cashflows. However in the past few years, we are seeing a shift in this mindset, particularly since the banking royal commission and the increase in land prices.

Gone are the days of completing a budget for the season, generally with your banker to get additional funding and putting it in the filing cabinet. With the accounting software providers and agriculture specific apps, it is now much easier to record your farm production data and complete meaningful budgets that help you achieve your business goals.

These budgets are used to reflect upon, make changes as the season progresses so your advisers can help you make informed business decisions. They can be used to help you answer questions; ‘Should you invest in plant and machinery?’, ‘Can you buy more farm land?’, ‘Should you lock in a forward contract now?’. They can also help you communicate with your lender so you can reduce your risk margin (lower your interest rate) or just additional funding. The bank need to see your thinking, your plan and what the results are expected for the decisions you are making. If you can show that you are prepared, with well thought out scenarios and confident in your decisions - that is half the battle ‘won’.

We recommend Figured for your cashflow management needs. Figured is an agriculture specific cashflow management tool that uses the transactional information from your Xero Accounting file to produce farming-specific management information. Figured helps you record your production information, for example it tracks livestock movements including births and deaths, and cropping production information such as hectares sown and yields. Figured automatically updates from Xero to allow comparisons between the budget and your farm’s actual results.

Figured not only enables you to record and analyse your production results and your cashflow performance, it gives you clearer insight into your business growth to help your financial security in the long term.

Contact Rachel Trickey at Mulcahy & Co Agri Solutions to get your farm cashflow projections sorted.

Call 03 5330 7200 or email rachael@mulcahy.com.au .

Recover from Covid-19 with $10,000 from the Qld Government

adam@mulcahy.com.au (Adam Foale) — Wed, 20 May 2020 06:20:51 GMT

If you have been subject to closure or highly impacted by the shutdown restrictions implemented by 23 March 2020, the Queensland Government is providing grants up to a maximum of $10,000 per eligible small or micro business.

The funds can be used towards getting your business back up and running after the impacts of Covid-19. An example of this is business advice to help your business adapt and grow. Mulcahy & Co are helping businesses like you with the information you need to apply for the grant as well as providing quotes for the services we can provide so that you can provide them with your submission.

Examples of the services we can provide that fall under the activities funded are as follows:

Strategic Planning
Business Mentoring
Business Development
Assistance with business specific software including converting to Xero, add-on software such as stock management
Digital Marketing & Advertising
Website Development
Bookkeeping Services

Please note that the grant can’t be used for salaries or purchase of business assets. It also can’t be used for services purchased prior to 23 March 2020. You must have between 1-19 employees and have a turnover over $75,000.

The grant is on a first come first served basis, so you will need to get in quick! If you have any questions, please do not hesitate to contact us. We can assist you to apply for the grant if need be (some fees may apply).

Phone 07 5413 9300 or email: queensland@mulcahy.com.au

Further information on the grant can be accessed here: https://www.business.qld.gov.au/starting-business/advice-support/grants/adaption

Trust Distribution Minutes 2020

adam@mulcahy.com.au (Adam Foale) — Mon, 18 May 2020 03:29:51 GMT

With the economy the way it is at the moment, and with everything going on, it’s hard not to get caught up in the ‘now’. The end of the financial year is fast approaching so it’s important to take a step back and ensure that, whilst we’re looking after our business during these unprecedented times, we’re also making sure we’re covering off on the other important tax items that need some attention before 30 June.

Trust Distribution Minutes is one of these.

What is a Trust Distribution Minute?

Trust Distribution Minutes are ‘minutes’ made by the Trustee(s) of a Trust in accordance with the Trust Deed which set out the allocation of the trust’s net income to its beneficiaries for the relevant financial year. These minutes are required by the ATO to be completed and signed by 30 June each financial year (or earlier if required by the Trust Deed).

Valid Trust Distribution Minutes must provide clear methodology of the determination of each beneficiary’s entitlement. Therefore, it is important that the minutes are prepared accurately and with reference to your Trust Deed.

Does it need to be in writing?

Interestingly, the ATO doesn’t insist that a distribution minute be provided in writing (unless this requirement is specified in the Trust Deed). In reality however, the easiest way of being able to substantiate to the ATO that a Trustee has made a distribution resolution before 30 June, should they ask, is by documenting the resolution in the form of a dated and signed minute. A written record will provide better evidence of the resolution and avoid any later disputes, with either the ATO or beneficiaries, as to whether any resolution was made.

Who makes the resolution?

The resolution is made by the Trustees of the Trust and must be signed by the Trustees also. Your Accountant or Business Advisor is here to help you calculate the most tax effective method of distributing the income made by the Trust. In some instances, it may be most tax effective to distribute the income of your trust equally between beneficiaries. In other cases though, interim financial statements and in-depth tax planning may be required to determine the most tax effective way to distribute the income from your trust between the beneficiaries.

What do I need to do?

Your Accountant or Business Advisor will be in touch prior to 30 June to discuss your situation with you and determine if there is a need for tax planning to calculate the best outcome for you and any other beneficiaries of your Trust.

In the meantime though, if you have any questions or would like to talk more about tax planning or Trust Distribution Minutes, please don’t hesitate to contact us.

Super Contributions before end of financial year

adam@mulcahy.com.au (Adam Foale) — Wed, 13 May 2020 02:11:02 GMT

Have you considered options to top up your super fund prior to 30 June?

Superannuation does impose restrictions on access to your money as it is intended to provide for your retirement. So why would you lock up more of your money?

Because superannuation remains one of the most tax-favoured environments to build wealth with a maximum tax rate of 15%.

Not only will contributing to super help to boost your retirement savings, you could also be reducing tax payable on your income, helping to cover some of your insurance premium costs and getting a bonus top-up payment from the government.

Concessional contributions

You no longer need to be self-employed to claim your contributions as a tax deduction (up to certain limits)
Making a spouse contribution may entitle you to a tax offset up to $540 (depending on your spouse’s income and age)
Setting up a salary sacrifice arrangement through your employer can help to boost your retirement savings throughout the year at the same time as reducing tax payable on your income

Personal contributions

Making a personal contribution not only boosts your tax-free savings for retirement, you may be eligible for the government co-contribution up to $500 (depending on your income)
If you are nearing retirement, there may be advantages in boosting your super to create a tax-free income stream. You may be eligible to bring-forward 3 years of contributions.

Considering the immediate tax incentives of contributing to super and the ability to access the funds tax-free after age 60 and long term investment rates of return typically being higher than mortgage rates it’s a good idea to consider contributing more to super.

Call us on 1300 204 781 today to see if the above options will work for you.

ATO assistance for SMSFs through COVID-19

adam@mulcahy.com.au (Adam Foale) — Mon, 27 Apr 2020 01:57:19 GMT

Whilst the ATO and the Government have released measures as part of their response to the COVID-19 which was initially aimed at businesses and individuals, there is some relief for SMSFs.

Reduction in the minimum pension drawdown

As part of this economic response to the coronavirus, the Government announced in their early actions the temporary reduction to the minimum pension drawdown for account-based pensions, transition to retirement pensions (TRIS), allocated pensions and market-linked pensions. Not included are defined benefit pensions such as lifetime or fixed term complying pension products.

This will see a 50% reduction to the minimum pension drawdown requirement for 2019-20 and 2020-21 financial years.

The measure will benefit retirees by reducing the need of potentially having to sell investments to fund their minimum drawdown requirements, due to many retirees losing a significant portion of their super balance as share markets plunged due to this current COVIS-19 crisis.

Temporary rental relief

One of the great benefits of SMSFs is the ability to acquire business real property and enter into an arm’s length lease agreement between SMSF and related party.

If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This even is the case when the tenant is a related party.
Ordinarily, charging a tenant a price that is less than market value in an SMSF is usually a breach of superannuation laws.

However, the ATO have provided guidance which allows SMSF landlords to provide for a reduction in or waiver of rent because of the financial impacts of the COVID-19.

For the 2019-20 and 2020-21 financial years, the ATO will not take action where an SMSF gives a tenant – who may also be a related party – a temporary rent reduction during this period.

If this occurs however it is crucial that documentation is put into place to ensure compliance is met, such as:

Ensure the relief only applies to rent and that the reduction in rent is only temporary.
The financial difficulty faced by the tenant is linked to the financial impacts of COVID-19
Clear arrangements which detail the amount of discount, waiver or deferral of the rent relief is reasonable and consistent with an approach taken by an arm’s length landlord.
Ensure the trustees of the SMSF has proper documentation which allows the auditor of the fund to be satisfied that the temporary rent relief satisfies all of the above; this may be in a form of a minute, renewed updated lease agreement to reflect the temporary change in rental terms between landlord and tenant
Even if you are both the tenant and landlord, the above should all be documented

LRBA repayments

As the banks are offering loan repayment concessions to businesses, individuals and LRBA SMSF arrangements are also been considered.

In relation to also providing concessions for SMSF related Party LRBA’s, you may be able to provide your LRBA with relief under an agreed commercial arrangement.

Ordinarily, not paying market interest rates in an SMSF is usually a breach of superannuation laws. However, the ATO have provide guidance which allows SMSF’s with an LRBA to negotiate a reduction in or waiver of interest payments because of the financial impacts of the COVID-19.

If the repayment relief reflects similar terms to what commercial banks are currently offering for real estate investment loans as a result of COVID-19, the ATO will accept the parties are dealing at arm’s length.

But there are some important things you should ensure are in place when you are providing a loan (LRBA) concession, especially when this is a related party.

Ensure the relief only applies to the related party loan
Ensure that the concessions are temporary; this means it should have an agreed period of time or agreed date where the loan concessions are reviewed in light of the economic circumstances
The financial difficulty faced by the SMSF is linked to the financial impacts of COVID-19
Clear arrangements which detail the amount of discount, waiver or deferral of the loan concession with proper documentation which allows the auditor to be satisfied that the concession satisfies all of the above.

These are extraordinary times and the ATO is providing this guidance in temporary rental reduction and LRBA repayment guidance to allow SMSF trustees to be flexible and agile. If trustees act in good faith in implementing a reasonable and measured reduction because of the impacts of COVID-19 they should not fall foul of the law.

If you need assistance in any of these matters or discussion around whether this is the right action for you and your specific circumstances, please speak to your Business Advisor at our office on 1300 204 781 .

Outsourcing your Marketing

adam@mulcahy.com.au (Adam Foale) — Wed, 22 Apr 2020 04:41:43 GMT

Time for a marketing rethink?

Amid the current business interruptions, it may be a good time to rethink how our business talks to its target audience. Outsourcing your marketing for a fraction of the cost of internal marketing staff is an option worth considering.

Check out this short video from Marketing Director, Gavin Nash about this topic:

Federal Stimulus for Business

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Apr 2020 00:22:58 GMT

Download a copy of our Federal Stimulus for Business 2020 Guide.

A complete summary as at 15th April 2020.

We are all coming to terms with the Covid-19 crisis. The pandemic has prompted a variety of Government and financial institution stimulus measures to help protect Australian businesses.

To read more, download a copy today .

Farmers Tax Planning 2020

adam@mulcahy.com.au (Adam Foale) — Thu, 16 Apr 2020 00:44:42 GMT

Tax planning opportunities for farmers.

There are some great opportunities this financial year to minimise tax and preserve cashflow.

Download our free Tax Planning Guide for Farmers to see if you can benefit from some of the options available.

Job Keeper Payment

adam@mulcahy.com.au (Adam Foale) — Mon, 30 Mar 2020 23:43:00 GMT

Yesterday the government announced a new payment to support business to keep workers employed.

In summary, if the business has a turnover under $1 billion and this turnover has reduced by more than 30% due to the impact of the coronavirus (or 50% if over $1 billion), then each eligible employee will be entitled to a fortnightly payment of $1,500 before tax. The subsidy will commence from the 30/3/20 and be for a maximum of 6 months, with first payments being made in the first week of May.

An eligible employee is:

Someone who is currently employed by the eligible employer, including those stood down or re-hired,
Were employed by the employer at 1/3/20
Are full time, part time, or long term casuals (a long term casual is someone employed on a regular basis for longer than 12 months as at 1/3/20)
Are at least 16 years of age
Are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
Are not in receipt of a JobKeeper Payment from another employer.

The payment is also available to businesses without employees, such as the self-employed.

To register your business visit:

https://www.ato.gov.au/general/JobKeeper-Payment/

If you have any further questions, please contact us at Mulcahy & Co to assist.

Should I Stay or Should I Go?

adam@mulcahy.com.au (Adam Foale) — Sun, 29 Mar 2020 23:15:52 GMT

Not the time for panic selling

With most major stock markets down around 30 – 35% at the time of writing, many investors are probably left wondering whether they should stay in the markets or go to cash or something less risky.

Prior to the COVID-19 outbreak, markets were experiencing one of the longest bull markets in history, now many investors are left wondering where to next as we face an unprecedented moment in recent history.

The emotions we feel when markets are behaving like they are at the moment are completely normal and you can be forgiven for thinking investment markets are not for you or that you will be happy just having your money in the bank.

The cycle of market emotions graph below has been around for decades and through many market cycles. It simply explains how we are all feeling at different times of the market cycle, both when things are going well and when things are not, as we find ourselves in this period.

As you can see below, when we are feeling the emotion, “Capitulation” (selling and going to cash) , this is nearing the bottom of the cycle and in many ways the wrong time to sell, as it is the “point of maximum financial opportunity”.

I will also point you to the top of the cycle, this is where we have all been over the past few years, a time when we have felt “Euphoria” feeling how good the share market is, and how happy we feel about our investments, yet this was the time when we were at the maximum risk.

At InvestSense we are very aware of the market cycles and consequently, the portfolios have been well-diversified, also in most cases, we had less of your money exposed to expensive shares than many other investment portfolios in the market.

We also have allocations to cash and other non-share investments in the portfolio which we will look to deploy into the portfolio as we get closer to the bottom of the cycle “point of maximum financial opportunity”.

Generally, after share markets have had a large selloff, they tend to rebound quite strongly, this is why selling out of shares and moving into cash near the bottom of the cycle can be the worst action to take, especially when money in the bank is not even keeping up with inflation, in reality, the value of your money is going backwards.

To help provide some context around how recoveries have played out historically, the chart below outlines some of the larger market falls that US equities experienced over the last 120 years and then how they have recovered. It can take some time to recover and this is where you will need to be patient.

Your questions have never been more important than now, and we will do all we can to answer them.

To find out more about setting up a Mulcahy & Co Investment Account , please download the document below:

COVID-19 Update - Superannuation and Retirement

adam@mulcahy.com.au (Adam Foale) — Tue, 24 Mar 2020 22:00:09 GMT

We wanted to share with you details around the Government’s economic stimulus packages.

Over the past two weeks the Government has announced two economic stimulus packages to cushion the economic impact of the Coronavirus.

A total of $189 billion is being injected into the economy by all arms of Government in order to keep Australians in work and businesses in business.

This includes $17.6 billion for the Government’s first economic stimulus package, $90 billion from the RBA and $15 billion from the Government to deliver easier access to finance, and $66.1 billion in yesterday’s economic support package.

There are some important superannuation measures that you should be aware of:

Early release of superannuation, Temporarily reduced superannuation minimum Pension drawdown rates and reducing Social Security (Centrelink) deeming rates.

The exact eligibility requirements will be formed in the coming days but broadly to apply for early release you must satisfy any one or more of the following requirements:

you are unemployed; or
you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
on or after 1 January 2020:
you were made redundant; or
your working hours were reduced by 20 per cent or more; or
if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website: https://my.gov.au/ .

Separate arrangements will apply if you are a member of an SMSF. You will be able to apply for early release of your superannuation from mid-April 2020.

Please note this information provided is not considered advice and is general in nature and does not take into account your personal situation.

If you need any assistance with understanding this announcement, you should consider whether the information is appropriate to your needs and where appropriate, seek further advice from our office.

Downloads (PDF)

Market Update - March 2020

Tue, 17 Mar 2020 04:47:58 GMT

Tune in for a rundown of Australian and international market activity March 2020, presented by Thayne Turley, Director of Financial Planning at Mulcahy & Co.

How much money do I need in retirement?

Thu, 12 Mar 2020 04:56:11 GMT

It's a question asked by many of our financial planning clients. Tune in to find out more about retirement income and how Mulcahy & Co can help ensure you retire able to live the lifestyle you 'd like.

Time's running out for Income Protection!

adam@mulcahy.com.au (Adam Foale) — Wed, 11 Mar 2020 22:42:48 GMT

Now’s the time to act to insure your income with the best option – Agreed Value – being taken off the shelf from our Insurer’s product offering in the coming weeks.

What’s Agreed Value?

This form of Income Protection locks in your benefit payments based on what you’re earning now, should you become sick or injured and unable to work, regardless of any future changes to your income from changes of employment, time off work or anything else unforeseen that could reduce your earnings.

What you should do…

At Mulcahy & Co we process around 10 claims per month. In 2019 our insurers paid out over $6bn in claims – so contact our advice team now to discuss further and see if Income Protection is suitable for you!

Give us a call

Or find out more...

Workcover in Queensland

Tue, 10 Mar 2020 03:00:32 GMT

As an employer, it is your responsibility to make sure your workers are insured for work-related injury.

In Queensland, WorkCover Accident Insurance Policy is a compulsory cover for all ‘workers’ as defined under the Workers’ Compensation and Rehabilitation Act 2003. This insurance covers you against all statutory and damages claim costs in the event of a work-related injury to your workers. There are no limits or caps to the number of claims that can be made against your policy and you cannot pay any of your own claim costs in Queensland.

Who is a Worker?
From 1 July 2013 a worker is ‘a person who works under a contract and, in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953’. The worker is:

An individual
May include a sole-trader contracted under an ABN even if they are responsible for their own tax
Can include a worker even if they work from home or telecommute
The Act specifically excludes a person who performs work under a contract of service for:
a corporation of which the person is a director
a trust of which the person is a trustee
a partnership of which the person is a partner

The following people are also excluded:

people who perform work under a contract of service with the Commonwealth or a Commonwealth authority
professional sportspeople
members of the crew of a fishing vessel receiving wholly or mainly a percentage of gross earnings or profit
people who use a motor vehicle for tuition
a person who has a personal services business determination (PSBD) — this is explained further down the page
people who participate in an approved program or work for unemployment payment under the Social Security Act 1991.

In Queensland there is no threshold before you are required to hold a Workcover Policy.

You must insure anyone who meets the definition of a worker within five days of commencing employment. Employers who are found to be uninsured may be subject to penalties for unpaid premiums and any compensation costs.

Director’s, Trustees, Partners & Sole-traders
Now you have your compulsory worker’s compensation in place, it is time to think about your personal cover for the above business operators,. If you were to suffer a work-related injury you would not be able to claim under your standard WorkCover policy. WorkCover QLD offers a separate Workplace Personal Injury Insurance Policy just for you. This is not compulsory and should considered in comparison to other third-party insurance provider policies.

Other Considerations

Household Worker Insurance

If you employ a household worker, it is compulsory to take out a Household Workers' Insurance Policy to cover you against potential compensation costs if the worker is injured while working for you.
A household worker is a worker you employ solely in and about, or in connection with, your own private dwelling or the grounds of the dwelling (ie. cleaners, nannies, baby sitters, gardeners, tradespeople and in-home carers).

Workcover in Other States

Workcover requirements are governed separately by each state and you should consider which state laws are relevant to you.

Superannuation - Compare the Pair

Mon, 09 Mar 2020 05:15:06 GMT

Thayne Turley talks Superannuation and the options available in the Australian market. An important topic at any stage of your working life.

Main Residence Exemption Changes for Foreign Residents

adam@mulcahy.com.au (Adam Foale) — Thu, 05 Mar 2020 23:35:32 GMT

Deadline of June 30th 2020

The previously proposed changes to legislation for non-residents have now been enacted. This can have severe tax implications for former Australian residents who sell a former main residence while they are a non resident of Australia.

Old Legislation

Prior to the changes if you were an expat and classified as a non-resident for tax purposes your previous Australian main residence was eligible for the Capital Gains Tax (CGT) main residence exemption in the same way as if you were still an Australian resident.

Under these rules:

• A capital gain or loss from the sale of a house is disregarded if the house was your main residence throughout the ownership period

• You received a partial CGT exemption when your house was a main residence for only part of the ownership period or when the property was also used for the purpose of producing assessible income

• Could access a 6 year main residence absence concession

New Legislation

The new legislation removes the entitlement to the main residence exemption to those who at the time the contract for the sale of property is signed are:

• A foreign resident and have been continuously a foreign resident for more than six years; or

• A foreign resident who has not been a continuous foreign resident for more than six years and does not satisfy one of the below special conditions:

o Terminal medical condition affecting the person, spouse or children

o The sale occurred in relation to a matter involving the person and their spouse during the period of foreign residency such as divorce, separation or death

This means an individual who ceases to be an Australian resident for tax purposes won’t have the benefit of the main residence exemption for any period of their ownership of the property.

Impact

• If you are a foreign resident at the time of property sale you will generally not be entitled to the main residence exemption no matter how long you lived in the property

• No access to the 6 year main residence absence rule

• Only entitled to main residence concessions if fall into the special conditions listed above

• Issues with obtaining cost base records

Application Dates

The new legislation does not apply to properties purchased before 9th May, 2017 and contract date of sale signed before 30th June, 2020 . Therefore there is a small window of opportunity left to still have access to the main residence concessions for non residents thinking of selling a property, but time is running out.

Pandemics and panics - what are we doing about it?

adam@mulcahy.com.au (Adam Foale) — Tue, 03 Mar 2020 03:31:37 GMT

Not much... for now.

We are already positioned cautiously because markets are (probably) quite expensive. We have noted how many other low conviction long equity investors are waiting beside the fire exit. So should we get off the equity bandwagon ahead of (or during) the rush? Frankly, we are not sure and we don’t think it’s time to fight the Fed.

Do we even know if the latest sell-off is the start of something bigger?

If the numbers coming out of China are to be believed, then the spread of the virus has slowed dramatically within China’s borders. However, it is quite possible (and we have heard it to be the case) that Hubei province has simply not reported for the last few days. The recent flat-lining of the Chinese data could support this thesis, just as it could indicate that the drastic actions of the Chinese authorities have been successful. What we do know is that confirmed cases outside of China have surged but overall remain comparatively low. That means the data is quite lumpy with the Diamond Princess cruise ship, a Church in Korea and a group of small towns in northern Italy having an outsized impact on the data.

Jonathan Ramsay — February 26, 2020

Listen to the InvestSense Podcast with Andrew Hunt

We have heard from various sources that sustained growth rates in confirmed cases of the virus above 20% are cause for serious concern while rates in the low teens would point to something more manageable. The last few days we saw those levels breached. While it was probably inevitable that we would see an initial ramp-up in cases as the focus moved from Chinese containment to global coping, the media in the Western world has reached fever pitch levels in the last few days. What we don’t know is whether this is another set-back that will ultimately be seen as a buying opportunity or the straw that broke the back of the global economy.

In fact, we can’t even be sure that it is just the Coronavirus that has caused the recent falls in markets (bear in mind that while media headlines make for compelling narratives we still don’t know with absolute certainty what caused the 1987 crash thirty-three years and many books later). One compelling reason, or contributing factor, for recent market turmoil, is the polling of the Democratic Nomination in the US where Bernie Sanders’ standing jumped markedly in recent days vs the more market-friendly Joe Biden. Compared to the unknowns of the Coronavirus, the economic impact of a Sanders Presidency is relatively easy for markets to discount (given the prevailing assumptions of most market participants).

It is, of course, early days in this race but in this respect Bernie has form. It is highly plausible that the last time the US felt the ’Burn’ was not a particularly market-friendly environment, and that was before the world had really contemplated the possibilities of populist policies. This reminds us that markets are volatile precisely because they quickly discount future scenarios, that may or may not happen. Sell the rumour buy the fact?

The market has also spent much of the last 30 years making life difficult for asset allocators and forecasters. The market has fallen by 5% or more 27 times in that period. 12 of those happened during a bear market but these occurrences were concentrated within 5 years (2000-3 and 2007-8). The rest of the time they proved to be feints that left many hapless investors whipsawed and wrong-sided on both the fall and the subsequent rebound. Of course, the time will come (possibly quite soon) when it becomes apparent that we are deep into something bigger but in our view right now there is simply not enough tangible information to convince us to become more defensive than we already are. This is a subjective view which we discussed this evening with Andrew Hunt, who we consider to be more ‘plugged-in’ than ourselves. He too remains on the fence but, absent any further developments, awaits data from the US Federal Reserve on Friday which should reveal the extent to which the US central bank is willing to support markets in the way that the People’s Bank of China evidently has been recently.

Postscript

The markets continued their wild swings overnight. Europe plummeted and then mostly recovered while the US then opened up and retraced its steps later on. At times like these, we find these multi-day/intra-day charts useful in interpreting the swings in sentiment and how they shift across the globe. In this one, it is interesting to note that Asia has started to be strangely resilient when compared to the early part of the month. Maybe the focus is shifting to how the Coronavirus will affect the Northern Hemisphere and the West. Or maybe it has indeed more to do with what is happening in the US, or at least the sentiment of US investors?

5 ‘do’s for First Home Buyers

adam@mulcahy.com.au (Adam Foale) — Sun, 01 Mar 2020 23:47:56 GMT

Do speak to a Broker

Think of your Broker as a professional resource in the same way you think of your accountant, financial planner or solicitor. We are in the business of building ongoing relationships with our clients and to think of your best interests not those of the bank. We will work with you and for you. Regulations in the broking industry are continuing to improve across Australia and reputable brokers undergo professional development in order to keep up to date with regulations and laws. Look for brokers with industry accreditations – you may even like to call the industry watchdogs to confirm the broker’s accreditations and reputation. There are a number of government grants and benefits for first home buyers that a broker can explain to you and assist you in their application.

Do your homework

There is much to consider and plenty to think of when you are looking at buying your first home. That’s where we come in!

Where and what can I buy?
How much deposit will I need?
How much can I borrow?
Who should I borrow from?
What are all the other costs involved?
How can I repay my mortgage quickly?
What other decisions do I need to make during this process?

Our role as your mortgage specialist is to guide you through the process to ensure that all your needs and options are considered. We make sure that this exciting opportunity is professionally managed to reduce the time and worry for you throughout the purchase.

Do get yourself a credit check

The lender we choose is going to do a credit check on you. If you are not sure that you have a ‘clean slate’ let’s check it out before you apply. If something does appear, you are then aware and you can advise the agency immediately and look to have the infringement removed. Infringements on your credit check can limit the borrowers that will look to approve your lending scenario – it’s best to know upfront! Call us and we can order one for you! You will need to sign our privacy form and provide a small fee but this allows you to be informed and prepared.

Do look to get a building and pest inspection and ‘test drive’ the home

Enlist the services of an authorised pest and building inspector. The inspector will provide a written report showing any faults in the property and whether they can be repaired. It is a little like getting a mechanic to look at a car before you buy – but on a bigger scale! And just like buying a car, think of buying a house with a test drive. Do the doors close? Do the taps work? Do the lights turn on? At Mulcahy & Co we have a ‘Test Drive Checklist’ available for all of our clients and is available upon request.

Do get EXCITED!

We want you to have that ‘first step over the threshold’ of your first home feeling that we did. This is an amazingly exciting time for you as a First Home Owner and we want it to be just that. Stress and worry free is a part of our service. We go above and beyond to help you realise the dream of buying your first home. BUT it doesn’t stop there! We understand that your first home loan will not necessarily be your last. We are your ‘ally’ to negotiate through the maze of borrowing options.

Negative Gearing for rental properties

adam@mulcahy.com.au (Adam Foale) — Wed, 19 Feb 2020 01:32:56 GMT

Gearing simply means borrowing money to buy an asset. In property terms, negative gearing refers to when you borrow money to purchase a property and the rental income you receive from that property is less than your expenses (i.e. you’re making a loss). You should calculate whether a property will be negatively or positively geared prior to purchasing the property to avoid the possibility of putting yourself at financial risk.

If a property is negatively geared it is going to require you to contribute some of your disposable income to keep it (i.e. you may need to pay for some of the running expenses out of your own pocket as the rent received will not be enough to do so). It may seem like a great idea to have a negatively geared property to reap the benefits of a reduction in your taxable income but if it is going to put you under financial pressure throughout the year then is it really worth it?

So how do I know if a property is negatively geared?

Working out if your property will be negatively geared is easy. Simply total your estimated expenses and subtract these from the expected income.

When calculating the total expenses you will need to keep in mind that some expenses are fully deductible in the year you incur them, while others are deductible over a period of time.

Below is a list of some of the more common expenses that can be claimed as an immediate deduction:

Advertising for tenants
Body corporate fees and charges
Council rates
Water rates
Land tax
Cleaning
Gardening and lawn mowing
Pest control
Insurance (building, contents and public liability)
Interest expenses
Property agent’s fees and commission
Repairs and maintenance

Those expenses which may be claimed over a period of time include:

Depreciation
Capital works deduction on building
Borrowing costs

Depreciation and Capital Works

Depreciation and capital works write offs are much the same. Depreciation is the write off over time of assets purchased for use in your rental property (i.e. furniture if you rent the property as ‘fully furnished’) whereas a capital works write off is the write off over time of the property itself.

We often recommend that our clients purchase a Quantity Surveyor Report (sometimes also referred to as a tax depreciation schedule) to ensure we are claiming the maximum depreciation and capital works deductions for their property each year.

Borrowing Costs

These are expenses directly incurred in taking out a loan for the purchase of a rental property and include loan establishment fees, mortgage broker fees, fees for a valuation required for a loan approval etc. If your total borrowing expenses are more than $100, the deduction is spread over a period of 5 years or the term of the loan, whichever is less.

Why can negative gearing be helpful?

As mentioned earlier, when a property negatively geared, it means the cost of owning it is more than the income it generates. Because this strategy returns a loss it can seem risky – but there are other benefits that can add up in your favour overall. For example, you can deduct the loss from your taxable income.

While you’re making a loss, your property’s capital value is (hopefully) growing. Negatively geared investors are banking on their overall loss being offset by their property’s potential capital appreciation. Keep in mind also, there may be tax implications (like capital gains tax) that you’ll need to factor in if/when you sell.

Saving tax shouldn’t be the only reason for choosing an investment strategy, but it’s definitely worth factoring in as you weigh up the options.

Disadvantages of negative gearing

As well as the advantages of negative gearing there are also negatives that should be considered. This was briefly mentioned before – you’ll need to have enough cash flow to cover your losses until tax time comes around each year. Before you negatively gear a property, make sure you can afford the ongoing out-of-pocket expenses. If rates go up, you can’t offset the added expense by simply increasing your rent – and you don’t want to be forced to sell your investment property before your capital grows.

Speak to us

Before purchasing a property, whether it be positively or negatively geared, it’s always a good idea to run your plans by us so we can advise of any other tax implications there may be. We can also advise on the best entity for your purchase to ensure you are maximising your investment.

FBT – Are you prepared?

adam@mulcahy.com.au (Adam Foale) — Tue, 11 Feb 2020 00:00:47 GMT

As we draw closer to 31 March 2020, the date the FBT year ends, business owners should be ensuring they have all their fringe benefit obligations in order. This is constantly an area the ATO monitors closely to ensure lodgements are up to date, reviewing those employers that should be registered and that the right amount is being paid. FBT is an area that most of us find confusing and complicated, however we have put together a simplified list that every employer should review each year:

SHOULD MY BUSINESS BE REGISTERED FOR FBT?

Generally, if you have directors and employees and you provide them with car parking, cars, entertainment (food and/or drink), reimburse private expenses, provide employee discounts then it is likely you would need to be registered for FBT. As soon as you ascertain that a fringe benefit has been provided, information is required to be gathered so that an FBT return can be prepared and your FBT liability calculated. If using a tax agent, lodgement is due by 25th June 2020. If lodging on your own via paper, lodgement is 28th May 2020.

EXEMPT ITEMS FROM FBT

If you are providing your employees with mobile phones, laptops, computers, tools of trade and/or minor and infrequent benefits that are less than $300 in value, then you need not worry about FBT. It is however important to check and ensure that the exemption applies by checking out the link below:

https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax

SAFE HARBOUR PROVISIONS FOR WORKHORSE VEHICLES

The ATO has now released safe harbour guidelines for employees that are provided with workhorse vehicles. In a nutshell, the ATO has provided that where the vehicle first meets the definition of a workhorse vehicle, and provided that the private use of the vehicle satisfies the following conditions that car will be exempt from FBT:

Any diversions for private travel between the employee’s home and their place of work and these journeys add no more than two kilometres to the ordinary length of that trip (e.g. dropping children off at school on the way to work)
No more than 750 kilometres in total for each FBT year are taken for a wholly private purpose (i.e. multiple journeys) and
No single, return journey undertaken by the employee that is wholly private purpose exceeds 200 kilometres

WAYS TO REDUCE YOUR FBT LIABILITY

Below are some ways in which you can reduce your FBT liability:

Replace your fringe benefits with cash salary
Provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves
Look at providing benefits that are exempt from FBT
Use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don't reimburse them for. Though you should note that employee contributions may be deemed assessable income to you and subject to GST.

If you require any assistance regarding anything FBT or would like to book a meeting with your Advisor to ascertain if you need to be registered for FBT, please contact our office and speak to your Mulcahy & Co Advisor on 07 5413 9300.

Monthly Performance Update - January 2020

adam@mulcahy.com.au (Adam Foale) — Sun, 09 Feb 2020 23:48:36 GMT

Markets

Markets fell in the last few trading sessions of the month as the coronavirus epidemic put a large dent in the liquidity fuelled rally that started the year and most equity markets gave back their gains from the first couple of weeks of the year. However, a weaker Australian Dollar meant that international equities actually appreciated by 4.3% in Australian Dollar terms. Emerging markets, of which China is the biggest constituent, remained flat.

While the Australian market also ended the month up +4.9% its relative performance was flattered by a rebound from the previous quarter’s underperformance of 6% (driven to a large extent by the banks). Similarly, Australian REITs posted a very strong return of +6.3%, having fallen by almost 10% in December. In fact, it appears that Australian banks, REITs and some individual stocks are becoming increasingly interest rate sensitive as the opposing influences of a weaker local economy and potential interest rate cuts play out in long-term interest rate markets.

In January Australian 3-year bond yields have fell for four consecutive weeks and are again nearing record lows amid growing concerns of the impact of coronavirus on the broader economy and expectations that the RBA is likely to cut interest rates again in 2020. The Australian 10-year yield also approached its record low, and the Australian dollar fell to 66.9 US cents, its lowest level in over a decade.

It was therefore really a fall in interest rate expectations, in turn due to perceived weakness in the economy, that lifted the Australian equity market. By the same token, it was an apparent improvement in global growth prospects (and the effect that had on local rates) that caused local stocks to lag in December. Australia’s recent induction to the topsy-turvy, ‘good news is bad news’ world of low interest rates may be exacerbated by our relatively high dividend yields (due to dividend imputation) and so our whole market has become a bond proxy for overseas investors as well as local retirees.

Otherwise the US appeared to be the epicentre of the risk-on sentiment that fuelled the best part of the month. A better than expected earnings season boosted the likes of the Information Technology and Utilities sectors, while Energy and Healthcare lagged.

Global REITs were up a more sedate +1.3% and infrastructure assets continued to rise, up 3.2% in January. Australian and international fixed interest returned +2.3% and +1.8% respectively, and cash returned +0.1%.

While the full-scale implications of the coronavirus are still broadly unknown, markets were quick to discount such concerns after an array of worsening data showed no real signs of the virus slowing down. An extension of the nation’s Lunar New Year holiday means that most of the economy is still effectively sealed off, however substantial selling is currently expected once local equity markets reopen. At the time of writing the PBOC announced support of 150 billion yuan ($32.4 billion AUD) to support the country’s $45 trillion financial system and the local currency.

Portfolios

The Mulcahy Portfolios rose in January much in line with broader markets. Returns ranged from +1.1% to +3.6% across the different risk profiles. All portfolios outperformed their CPI+ objective for the month and continue to do so since inception.

Asset allocation contributed positively to performance for the month. This was predominantly driven by the portfolios overweight exposure to Australian equities, which enjoyed a solid rebound led by the banks and CSL. Overweight allocations to cash detracted from performance slightly, however this has been a position that has benefited the portfolios greatly in recent months and allows us to keep some powder dry given where valuations are currently at.

Vanguard’s U.S. Total Market Shares Index ETF (VTS) was the single-highest performing security within the portfolios for the month, up +5.6%. The liquidity-fuelled US market was the epicentre of investors risk-on trade through the beginning of the year, shrugging off geopolitical tensions and growth concerns around the world. The US market only seemed to show concern of the potential implications of the coronavirus later in the month hence the impressively solid return.

Regarding the direct equity portfolios, the Australian equity component underperformed the broader market, returning +2.0% vs +4.9%. This was largely driven by the portfolio’s position in Webjet (WEB), Star Entertainment (SGR) and Treasury Wine Estates (TWE). Treasury Wine Estates fell after downgrading its earnings growth guidance from a bullish 15-20% per annum to a more modest 5-10% in 2020 and 10-15% in 2021. As we wrote in our latest portfolio update, the stock now yields over 3% and if it can manage high single digits earnings growth in the future then we feel it holds its place in the portfolio as it is cheaper than the change in earnings guidance suggests it should be. That said, it is economically sensitive and any further sign of weakness (actual declines in profit) might see us revise this view. The largest relative contributions to performance came from the portfolio’s overweight position in Link Administration (LNK), Sonic Healthcare (SHL) and Challenger (CGF) compared to the market.

6 Smart Ways to Grow Your Business

adam@mulcahy.com.au (Adam Foale) — Tue, 28 Jan 2020 00:20:00 GMT

Growing your business is not only an excellent goal for any entrepreneur, it is often integral to the survival of businesses in what is a very competitive environment. It is important to approach business growth strategically or risk not being properly prepared to support growth making it not only unsustainable but risking the loyalty of existing customers and potentially even business collapse. Below are 6 top tips to grow your business.

Before you start

Review your business structure. Does it provide appropriate asset protection, flexibility and tax minimisation for your business through each stage of its growth cycle. A strong business structure may cost you a bit more in set up and compliance costs in the short-term, but will save you a lot of pain in the long run. Talk to your accountant about the structure that is right for your long-term goals and what the transition to this structure might look like.

Who is your target market?

Start with your current market. What is their demographic, location and what is the ‘why’ behind their purchase of your product. It is generally easier and more cost-effective to increase sales through your existing customers than to find new customers. And of course keeping your existing customers happy can be some of the most cost effective marketing, generating word-of-mouth and referrals.

What is the cost of growth?

It is important to consider what sales and services your current business model can support. If you double your sales, can your staff, systems and supply chain keep up and if not what will be the cost of upgrading and increasing resources. This is one of the most significant risks of business growth, and failing to plan is planning to fail. Remember the end game is to increase your bottom line and managing costs should be a top priority.

Have a marketing plan

What is your marketing strategy? Consider who are you targeting, what are you selling, what media will you use and the cost versus benefit. How will you handle any enquires generated quickly and effectively? Social media can be a very cost effective and well targeted marketing approach, but make sure to keep your profile current, and manage user interactions promptly or update settings to prevent unwanted public comments. Having a well-managed website that is informative, functional, device friendly and can be found on google is also an important part of your marketing strategy.

Innovate and Diversify

Once you have solidified your existing market and product placement, it is time to think next steps. In a competitive environment where technology is constantly becoming obsolete, it is important to stay ahead of the game. How can you diversify your product range and target market so as to better spread this risk while still focusing on your key business strengths. If you are not actively looking at this, someone else is ready to take the opportunity.

People Power

When you first start a business it is normal to personally manage as much as possible to minimise costs and get it off the ground. As you grow it is time to consider letting go of some of that control and hiring staff or outsourcing to allow you more time to work on the business rather than in it. Hiring the right people and building a culture that empowers staff and encourages ownership, initiative and loyalty will be fundamental to sustainable growth.

Once you have considered above and developed your business growth strategies, add it to your business plan.
If you require assistance identifying and implementing strategies for business growth, you can speak with one of our business advisers, please get in touch today.

Property investing in a SMSF

adam@mulcahy.com.au (Adam Foale) — Wed, 22 Jan 2020 21:55:56 GMT

Property investing using self-managed superannuation.

Australians love of property as an investment class extends to those investors who operate a self managed superfund (SMSF). In fact, the Australian tax office statistics show that direct property makes up around 15% of all SMSF assets.

This can be further broken down to show that 10% is represented by commercial property and 5% by residential property, showing the trend of business owners to purchase business premises.

The tax office recently issued letters to those with a SMSF whose investments were solely or at least heavily weighted to one particular property. This highlights one of the considerations in determining if owning a property in a SMSF is an appropriate course of action for SMSF members.

So with this said, what are some reasons people establish a SMSF to invest in a property or hold direct property investments in SMSF:

Purchase of a business premises to operate their business from rather than leasing
Transfer current owned business premises to a SMSF and leaseback from business entity
Access current superfund balances as deposit on property
Using compulsory super guarantee contributions to assist with property loan repayments
Concessional tax treatment on rental earnings - 15% tax rate (zero tax for those in pension)
Concessional capital gains in a SMSF - if property held over 12 months only pay 15% on 2/3 of the gain, if in pension mode pay zero tax
Retirement planning
Asset protection

Some common issues investors come across when looking to utilise SMSF to help grow their property portfolio and other things that need to be considered are:

You are not allowed to purchase residential property from a related party
You and related parties are not able to use for free, or for market value residential properties held in SMSF
Lack of diversification - if you have all funds invested in a sole property and no other investments
Tougher lending restrictions and less lending alternatives , also impacts what works/improvements can be done to properties held in SMSF
Issues with any changes to the members of superfunds
Lack of liquidity - especially for unexpected circumstances like death or divorce of members

While the above highlights some of the issues to consider it doesn't mean that you should not consider direct property as an investment for your SMSF. Rather, it is essential to consider your overall financial position and goals to ensure your investments of any type are appropriate to your circumstances.

If you're considering investing in property via your SMSF, give the friendly team at Mulcahy & Co Geelong a call to discuss your options. With the tax office targeting SMSF property owners it is more important than ever to ensure you are aware of all the rules and how they apply to you.

Contact our friendly staff at Mulcahy & Co Geelong to schedule an appointment to discuss your investment property tax implications.

Mark Cunningham
Director, Mulcahy & Co Geelong

$500,000 Loan available for small businesses

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Jan 2020 04:27:00 GMT

With Australia suffering through one of its worst droughts in history , the Regional Investment Corporation (RIC) has announced a new loan product to supply small businesses with $500,000.

This drought loan package is aimed at small businesses who are within the drought-affected area and are supplying primary producers with goods or services. Some examples of business areas they specifically mention include harvesting and fencing contractors, carriers, stock and station agents and other businesses dealing in agricultural equipment and repairs.

Eligibility

Your business has less than 20 employees
Your business is not a farm business, however, a substantial part of your turnover comes from supplying goods and services to a farm business that is in a drought-affected area.
Due to the drought, there has been an evident reduction in the turnover as a result of the business; or
As a result of the drought, there has been a significant increase in unsecured debt to your business.

Loan terms

Maximum that can be borrowed

The business can borrow up to $500,000, however, at least 50% of the debt must remain with a commercial lender, for example, your bank or finance company.

Term and Repayments

The loan is to be repaid within 10 years as shown below:

The first 2 years being interest-free with no repayments required;
Followed by 3 years interest only; and
Lastly, the final 5 years being principal and interest.

There will be no facility on the loan to redraw additional payments back.

Fees and Interest Rate

There will be no fees for application, early settlement or if you are able to make additional repayments.

The variable interest rate is currently 3.11% and will be reviewed and updated on 1 February and/or 1 August each year.

Security

Should you be successful in obtaining this finance, RIC will require enough security such as a registered mortgage over land or other assets. They will consider each loan application security options on a case-by-case basis and where applicable will negotiate their order in security with commercial lenders and the applicant.

Review

Should your application be successful, RIC will conduct an annual review with you to ensure that the business is on track to be able to repay the debt within the 10-year window.

If you believe your business would suit these criteria and benefit from a maximum of $500,000 cash injection, please contact us .

Lodgement relief from the ATO

adam@mulcahy.com.au (Adam Foale) — Thu, 16 Jan 2020 00:34:00 GMT

If you have seen over the past year, our country has been affected by the devastating bushfires which have damaged communities, homes and impacted wildlife and more importantly people.

When there is a significant disaster, the ATO implements a support program to assist those who have been impacted. The ATO advises that taxpayers who have been affected by the bushfires need not worry about their tax affairs at this stage. Certain impacted postcodes will be granted deferrals automatically in relation to lodgements and payments due.

For those residents impacted by the bushfires but are not listed in the postcode impacted list, you can simply contact the ATO Emergency Support Infoline on 1800 806 218 and discuss your situation confidentially.

An example of what the ATO Support Infoline can help with:

give you extra time to pay your debt or lodge tax forms such as activity statements
help you find your lost tax file number (TFN) by using methods to verify your identity such as your date of birth, address and bank account details
re-issue income tax returns, activity statements, and notices of assessment
help you re-construct tax records that are lost or damaged
fast track any refunds owed
set up a payment plan tailored to your individual circumstances including an interest-free period
remit penalties or interest charged during the time you have been affected.

The ATO has also granted small and medium businesses an additional 2-month lodgement deferral on activity statements and payments. There could also be further deferrals to include additional areas and payments as the government and ATO estimate the economic cost from the bushfires at around $2 billion (and rising)

If you also are interested in helping our fellow Australian regarding the bushfire incident then you can visit this page to donate to the Queensland Rural Fire Service to help our brave firefighter men and women.

If you require any assistance regarding any lodgements and/or payments, please contact us .

Bushfire Relief - Helping our fellow Australians

adam@mulcahy.com.au (Adam Foale) — Tue, 14 Jan 2020 01:05:00 GMT

Bushfire Appeals

As I'm sure everyone is aware, the bushfires across Australia have been devastating communities all over. From houses to forests, humans to animals, the bushfires have had an affect on everyone's lives.

Costs of the bushfires are approaching $100 billion, with the bushfires being Australia’s costliest natural disaster. An estimated 10.7 million hectares have burnt so far – this is an area the size of South Korea or Scotland and Wales combined

An estimated 1.25 BILLION animals have been killed as a result and this number is sadly climbing every day.

There are a number of organisations that could use your help.

If you'd like, you can donate to the Queensland Rural Fire Service to help our brave firefighter men and women by following this link: https://www.fire.qld.gov.au/about-us/frontline-services/rural-fire-service-queensland/donations

Or you can donate to WWF Australia in aid to the support and care for thousands of injured wildlife by following this link: donate.wwf.org.au

Claiming your donation as a tax deduction

Your donation to some of the organisations may be regarded as a claimable tax deduction, as long as it meets certain conditions.

There are four main conditions to be met in order to claim a tax deduction:

Make the donation to a Deductible Gift Recipient (DGR)
Must be a genuine donation*
Must be money or property
Must keep a record of donation (e.g. receipt)

* A donation is a voluntary transfer of money or property where you receive no material benefit or advantage

What is a DGR?

A deductible gift recipient is an organisation that can receive tax-deductible gifts or donations.

Not every organisation raising money will be a DGR. Take crowd funding platforms, for example, often these are individuals or organisation raise money for a personal cause. These are not a DGR.

You can check if the organisation you are thinking of donating towards is a DGR by logging onto the Australian Business Register Website: abn.business.gov.au/DgrListing.aspx

What can’t you claim?

Raffle tickets (e.g. Prize Home)
Fundraising items (e.g. Chocolate Fundraisers)
Cost of attending Fundraising Dinners
Payments to School Building Funds
Gifts to family and friends

If you want your donation to be tax-deductible, go to the DGR website mentioned above. Type in the organisation you want to donate to. If the DGR state’s the organisation is a DGR than any donations over $2 will be tax-deductible.

If the DGR states the organisation is not a DGR then there will be no tax deduction, however, I am sure that organisation will appreciate your generosity and support.

For small business out there, the Regional Investment Corporation (RIC) has announced a drought loan package to supply small business with $500,000.

Remember, some things in life are more important than a tax deduction. Dig deep and generously donate to those organisations that so desperately need our help. It’s the Australian way.

From the team at Mulcahy & Co, our thoughts are with those affected by the bushfires and we are thankful to all the brave men and women fighting the fires.

Carry-forward contributions

adam@mulcahy.com.au (Adam Foale) — Mon, 16 Dec 2019 02:49:51 GMT

How your unused contribution limits can help you catch up.

Carry-forward contributions are not a new type of contribution, they are simply new rules that allow super fund members to use any of their unused concessional contributions limit (or cap) on a rolling basis for five years.

This means if you don’t use the full amount of your concessional contribution cap ($25,000 in both 2018/2019 and 2019/2020), you can carry-forward the unused amount and take advantage of it up to five years later.

Any amount not used after five years expires and these carry-forward rules only relate to concessional contributions into super (not non-concessional contributions, as they have different caps).

To take advantage of the carry-forward contribution rules, your Total Super Balance (TSB) must be under $500,000.

Your TSB is calculated by adding together all the amounts you have in the accumulation phase of super, plus the retirement phase value of your super and any rollovers in transit between super funds at 30 June.

These provisions can be a great way to boost your retirement savings if you have taken time off work or have higher disposable income than in previous years. It may also be a great way to offset a capital gain if you sell down an investment and haven’t utilised your contribution cap in previous years.

As always, super caps can be tricky, so make sure you speak to your adviser to check eligibility and whether this strategy may be suitable for you.

Mulcahy & Co Financial Planning are locally based but work within their national office structure. This allows us to have many experts in many areas of business to ensure your financial affairs are in order and efficient.

We offer services from Accounting to Marketing and everywhere in between so individuals and businesses can benefit. See our list of services at https://www.mulcahy.com.au/services/

Lynde Adams
Mulcahy & Co Financial Planning, Mildura.

Farm Management Deposits

adam@mulcahy.com.au (Adam Foale) — Tue, 10 Dec 2019 01:10:00 GMT

Many farmers will attest to the dramatic ups and downs of business in agriculture. The uneven income flow can be significant cause for cash flow and tax burdens. Farm Management Deposits (FMDs) when used appropriately are one available strategy that may help lessen both of these burdens.

Essentially, the Farm Management Deposits policy encourages taxpayers to set aside and save cash from a strong income year by deferring the tax on this income until it is withdrawn in a later income year. With good tax planning , this also has the impact of spreading the taxable income over multiple tax years and reducing the overall tax on the income where it may have been otherwise attributed to an individual and year with a higher marginal tax rate.

To be eligible to make a deductible deposit into an FMD account, you must:

be an individual (including a partner in a partnership or beneficiary of a trust)
be carrying on a primary production business in Australia when you make a deposit
have no more than $100,000 in taxable non-primary production income in the income year you make the deposit
hold no more than $800,000 in total in FMDs.

The current drought, not to mention recent floods and fires mean a lot of our farmers are doing it exceptionally tough at the moment. For those with funds in FMD accounts, you may be considering tapping into these savings. Before you do, please talk to your accountant. Poor planning when withdrawing your FMD can mean tax as high as 47% on your withdrawal. Some key tips and traps to consider when withdrawing your FMD are below:

The taxable income on withdrawal of the FMD will be in the individuals name. Depending on your business structure, this may mean you have tax losses trapped in a trust which will not offset the FMD income when calculating the tax.
Your full FMD will become assessable, if you cease to be a primary producer in a tax year.
Plan the timing of your FMD withdrawals to prevent being hit by the top marginal tax rate (47%):

It is generally most tax effective to spread the withdrawal of your FMD over multiple tax years;
Where FMD’s are in the names of multiple individuals from a trust or partnership, consider splitting your withdrawals between taxpayers to minimise the overall effective tax rate;
Consider above in conjunction with any other taxable income

When you make an FMD Deposit or reinvest your FMD on maturity, you do not need to claim a full tax deduction and would in turn not be taxed on the future withdrawal of these amounts. There is plenty of scope for strategic tax planning around this, so that when you need to withdraw the money, the tax obligations have largely already been met.

The above tips are general in nature and you should speak to your accountant for advice specific to your circumstances. Your accountant should also be able to provide you with an estimate of the tax payable on your withdrawal, so you can set aside this portion of your FMD withdrawal rather then receiving a nasty shock with your tax return at the end of the year.

Where is the grain market heading?

adam@mulcahy.com.au (Adam Foale) — Thu, 28 Nov 2019 02:52:09 GMT

Harvest is fast approaching and the focus is on to get the crop off, but in the meantime have you been looking at where the grain market is heading?

Unfortunately, at this stage, indicators aren’t showing a whole lot of upside concerning prices. Why?

Here are just some of the contributing factors:

Mallee, Wimmera and Western District harvests are predicted to happen fairly close together, with minimal time lapses between the different regions. Therefore It is expected a flood of grain will hit the market at once.
Coarse grains are still $15-$20 per tonne above export parody, this makes Australia’s grain too expensive to compete in the global market.
There isn’t as many mouths to feed in the drought affected areas in NSW & QLD due to destocking. 3.9 million tonnes is estimated to be required to supply both the feedlotters and remaining stocked producers for the next 8-12 months, but a statewide crop yield of nearly 12 million tons is expected in Victoria alone this year. (CHS Broadbents, 2019)
China’s anti dumping investigation into Barley has been extended by 6 months.

A couple of things to consider:

Do you need cash at harvest? Don’t be a price taker, see what contracts are available for December/January delivery.
Review your target price & look to see if at this stage any contracts are available that would meet this, if so, consider locking a portion now. What would you be more disappointed with grain going up by $10 per tonn or the price dropping $20 per tonne? Spread your risk!
If you don’t have enough on farm storage and you are looking to warehouse, remember the handling and storage fees associated with this method. You may not be further in front by storing grain when you take these costs and labour associated with this process into account.

Afterpay – Too Much of a Good Thing?

adam@mulcahy.com.au (Adam Foale) — Wed, 20 Nov 2019 22:30:00 GMT

Coming into the silly season, here’s what you need to know about those buy-now-pay later schemes to avoid falling into the black hole of debt! Most retail stores offer buy-now-pay later terms through providers such as Afterpay, as these are far more enticing payment option than LayBuy or credit cards.

But are we just being lured into a false sense of financial security?

At least Laybuy used to make you pay off the item before you received your goods and credit cards had a bad enough reputation from your parents you’d at least think twice before making a large purchase. But, Afterpay where do you draw the line?

Afterpay encourages impulse purchases and disguising the cost by allowing consumers to break down the cost into x4 instalments and let’s face it, 4 x $25 sounds a whole lot better than $100.

How does it work?

As the name suggests, you take the item home on the spot andpay for it later in 4 equal fortnightly instalments. Afterpay is interest freeand no application fees with repayments made automatically.

Pro’s

Quick Account Set Up

All you need is basic account details to set up and consumers can use Afterpay straight away. No checks from the bank, provided you are over 18 years of age)

Immediate access to your purchase (unlike Laybuy items)
Available in store and online
Interest “Free”

No interest on repayments and no application fee, make Afterpay a better pick for Millennials than credit cards

Organising automatic repayment from nominated debit/credit card

Con’s

No excuse not to buy on impulse!

Sometimes an item not on sale or waiting until next week’s pay to purchase an item can be a blessing in disguise.

Encourages poor spending habits

4 x payments of $100 sounds affordable at the time, but it is still a $400 purchase that you may not have really needed. If you had $400 cash would you still have purchased it?

Non-payment fees

Although no interest or application fees, if the scheduled payments do not clear Afterpay can charge late payments.

As long as you meet the fortnightly repayments and purchase items you can realistically afford and actually have use for (and not on impulse) there is no reason why Afterpay can’t work in your favour.

But like all good things, use Afterpay in moderation. It’s still okay to save up for things you want.

With the silly season upon us, just remember your family and friends don’t need extravagant presents, just your extravagant presence will be enough.

Renting your property with AirBnB? Your tax implications explained.

adam@mulcahy.com.au (Adam Foale) — Sun, 17 Nov 2019 21:46:58 GMT

Are you renting out your investment property with Airbnb?

You might be about to receive a letter from the Australian Tax Office (ATO) in the coming months. The ATO have been gaining access to Airbnb’s user database along with other digital platforms to gather information regarding tax payers renting out their investment properties.

The ATO will be matching tax returns lodged with income declared for rental properties to ensure the digital platform rental income has been included in their tax returns. If you have made a mistake you can expect a stern warning or worse an audit if the return isn’t amended by the requested date. The ATO have stated the main objective “is to identify and educate those individuals to ensure they include the correct amount of rental income from these sources in their returns and pay the appropriate tax.”

As part of renting out all or part of your residential house or unit through a digital platform, like Airbnb, Home Away or Flipkey, you will need to keep records of all income earned which are generally provided on statements from the platforms along with receipt records of expenses paid on the property to claim as a tax deduction.

Deductions that you can generally claim can include:

Council Rates
Interest on a loan for the property
Electricity and Gas costs
Property Insurance
Cleaning and Maintenance costs including repairs
Appliances and Furniture
The commission charged by the platform

If you are renting out via a sharing platform you also need to consider the number of weeks the house has been rented out and available for rent and apportion these accordingly for the private weeks if you are using the house yourself during the year.

With so many possibilities available to you with property these days, whether it be short term Airbnb holiday homes, home sharing or permanent tenants, it is important to get the right advice to ensure you aren’t left with a bill from the ATO when your taxation return is assessed.

Contact our friendly staff at Mulcahy & Co to schedule an appointment to discuss your investment property tax implications.

Financial Planning Update - October 2019

adam@mulcahy.com.au (Adam Foale) — Mon, 11 Nov 2019 01:20:54 GMT

Markets

A relatively subdued October saw ‘the most unloved bull market ever’ grind higher, volatility continue to fall, and investors bring a little more risk back to the table. Australian inflation data came in broadly in-line with expectations (+0.5% for the September quarter), easing pressure on the RBA for another rate cut by year end. The federal reserve closed out the month with what’s now be coined a ‘hawkish cut’ and at the time of writing the market broadly expects rates to stay on hold for a while now. A ‘hawkish cut’ is a new one in market vernacular meaning a rate cut, which is supposed to be ‘dovish’ and supportive of markets, accompanied by ‘hawkish’ commentary. The commentary is designed to stop markets assuming more cuts are on the way and discounting them straight away. This speaks volumes about the degree of uncertainty in the market and the Fed’s increasingly uneasy relationship with financial markets and the cause and effect of monetary policy.

Australian equities slipped -0.4% for the month, international equities rose by +0.8%, while emerging markets climbed +2.2%. A-REITs rebounded from last month’s drop returning +1.4%, while in local currency terms G-REITs and infrastructure posted +2.0% and -0.2%, respectively. The resurgent risk appetite of investors was partly to blame for the lacklustre month of fixed interest assets, returning -0.5% domestically and -0.7% internationally. Cash returned +0.1% for the month, and gold appeared seemingly resilient given investors risk appetite for the month.

Australian 10-year yields rose from 1.0% to 1.1% during the month while their US counterparts traded in the ranges of 1.5%-1.8%. Domestically, the Morrison government remained resistant to the idea of any fiscal stimulus suggesting the RBA’s monetary intervention will need to do the heavy lifting in terms of economic growth. Conversation of our home-grown quantitative easing policies continued in the wake of this dynamic, with many speculating on the scale in which buying government bonds with newly created money can truly impact the economy.

Earnings season kicked off in the US showing the widely anticipated signs of softer consumer data, although seemingly not as bad as investors expected. At the time of writing over 85% of earnings had beaten estimates, propelling the S&P 500 above 3000 and subsequently the gauges record high.

Sentiment continued to improve after the US China trade war edged towards a ‘Phase 1’ agreement in which resolution was sought over intellectual property, agriculture and currency. Although clearly a long way from that, and nothing we haven’t heard before, this alleviated tensions and equity markets responded well; the MSCI All Country World index lifting +2.7% for the month on a total return basis.

Brexit continued to be at the forefront of the UK and EU’s agendas, but was yet again delayed from its original October 31 deadline. The UK is set for a December 12 general election in which the stakes are high for Prime Minister Boris Johnson. For markets this means a whole lot more uncertainty.

The pound rose +4.1% (against a basket of leading global currencies), UK equities fell -1.9% (FTSE 100) and UK 10-year government bond yields finished the month at 0.6%.

Portfolios

The Mulcahy Portfolios posted mixed results for the month with returns ranging from -0.3% to +0.3% across the nine active risk profiles. For the direct share models, those with a higher allocation to growth assets fared a little better, whereas for the no direct share models, the results were somewhat mixed.

Asset allocation did little to impact performance for the month. The portfolios’ overweight to Australian equities detracted slightly given the poor domestic performance we touched on above. The portfolios’ underweight to international equities was also a slight drag on performance, as did having no exposure to property & infrastructure assets. These negatives were offset by the portfolios’ slight overweight to cash and underweight to fixed interest, as cash proved defensive against falling fixed interest markets, driven by investors preference

for risk-assets for the month.

The more meaningful implications on the performance of the portfolios came from manager selection during the month. VanEck Vectors Austrian Floating Rate ETF (FLOT) outperformed its fixed interest composite benchmark, returning +0.2% for the month. The ActiveX Ardea Real Outcome Bond Fund performed similarly, returning -0.2% for the month. This slightly negative return compares well to the more extensive negative returns of the asset class, both domestically and internationally. The portfolios’ exposure to the Vanguard FTSE All World Ex-US ETF

(VEU) added value, and remains a high conviction investment thesis of an underweight to US equity markets. The Fund returned +0.6% for the month.

The Mulcahy Direct Australian Equity component returned -0.2% for the month which was a pleasing result given the -0.4% performance of the S&P/ASX 300 Index. Compared to the index the portfolios slight overweight to consumer discretionary and materials and underweight to real estate each added value. From an absolute return perspective, the highest performers were Bluescope Steel (BSL, +11.0%), Challenger (CGF, +8.0%) and Star Entertainment Group (SGR, +7.8%). At the other end of the spectrum was Newcrest (NCM, -9.9%), ANZ (ANZ, -6.2%) and Treasury Wine (TWE, -5.4%).

While negative returns are never welcome, it’s worth keeping a longer-term perspective in mind when it comes to investing. Since inception, the Mulcahy Portfolios have continued to outperform their respective objectives. While lower yield and higher volatility environments may increase difficulty in achieving these objectives, we remain confident in the fact the portfolios are positioned to perform in line - subject to the usual ups and downs of equity markets.

Guide for football players' match payments

adam@mulcahy.com.au (Adam Foale) — Mon, 04 Nov 2019 04:07:16 GMT

This guide is available to assist clubs and players with understanding their obligations.

Player remuneration has quickly become a hot topic amongst football clubs across Victoria. The expectations and obligations of country football players have grown substantially and concurrently so has the size of their player payments. This has placed greater emphasis on football clubs and their players to ensure that these payments are being treated correctly for taxation purposes.

Player payments can be treated in one of two ways, each is explained below:

Nick Willowhite

Senior Accountant

As employees

Players will be deemed to be employees if they are utilising their skills in a systematic, regular and/or organised manner with a view to obtaining assessable income. The amount, which a player gets paid per week, is a factor in determining whether they are a player or not. If they are receiving amounts in the hundreds of dollars per week they should be treated as employees.

Should any of your player payments be treated as wages there are a number of obligations that need the club needs to complete including:

Registering for PAYG withholding with the ATO
Withholding tax from player payments based on their payment amount
Preparing quarterly Business Activity Statements (BAS) outlining the amount of tax withheld from players and forwarding this amount to the ATO
Preparing PAYG summaries for each player paid at the end of each financial year
Submitting an annual report to the ATO outlining the total amount of PAYG withheld during the financial year

If you need any assistance in meeting these obligations please contact our office and we can help you through the processes.

As a recreation or hobby

A player is seen to be playing in pursuit of recreation or hobby if payments to them are:

Of a non-commercial nature;
Generally not intended to cover expenses; and
Are not relied on for regular living costs.

A player must supply their club with a ‘Statement by a supplier’ form from the ATO, which removes the requirement for the club to withhold tax from their payments. This form states that their services are being provided in pursuit of a recreational activity or hobby and not for a commercial purpose.

This method should only be used when a player is not earning in the hundreds of dollars on a weekly basis as it may be difficult to argue in the courts that the players are receiving payments whilst in the pursuit of a recreational activity or hobby.

If the club intends to rely on the statement by a supplier we would recommend documenting the reasons behind this decision for each player.

Superannuation requirements

Where the first method for paying players is used clubs will be required to pay superannuation to all eligible players. A player is eligible for the superannuation guarantee if they receive in excess of $450 (before tax) in wages in a calendar month. Super is paid at a rate of 9.5% minimum on top of a player’s normal payment.

Superannuation must be paid to each player before the quarterly due dates. We recommend that each club use an accounting package, such as Xero, to assist them in tracking the amount of superannuation owing to each player and that payments are made accurately and on time.

Allowances clubs can pay to players

Should a player’s payments be deemed wages then there are a number of allowances that could be available for clubs to pay their players. These allowances can include:

Car Allowance – based on the kilometres travelled to and from games and training
Uniform/Equipment Allowance – involves covering the costs of football shorts, socks, boots etc.

These allowances need to be considered on a player by player basis and need to form part of the player’s remuneration package.

Tax deductions available to players

Players have access to a number of deductions, which can be claimed against the income they earn from playing football. Below are a number of examples that may be available:

Apparel or equipment
Membership costs
Entrance fees and travel to away games
Direct training costs e.g. gym and pool entry fees
Vitamins and dietary supplements
Car expenses
Any other football-related costs

Players should keep records and receipts of all their expenditure, which is directly related to them earning their player payments.

Insurance and work cover

As part of the player’s registration with the WorkSafe VCFL, players are covered for Personal & Accident cover under the National Risk Protection Programme by JLT Sport.

This provides clubs with a minimum of silver level of cover. The option is there for clubs to upgrade this level of cover themselves to either gold or platinum. Please note that some football leagues are in agreement with other insurance providers and do not participate with the above program. Please contact your league for further details on your insurance cover.

Details on the levels of insurance are accessible on JLT Sport’s website.

We also recommend that Clubs should contact an insurance broker for further information on work cover for its players. Work cover provides clubs with insurance cover for the cost of benefits if your players are injured or become ill as a result of playing football.

If your club would like assistance with any aspect of player remuneration please don’t hesitate to contact our office. We can also provide advice and assistance to any player or coach in regards to their personal taxation requirements and how their football related remuneration will affect them.

Disclaimer

The information above is general advice only and should not be taken as taxation advice. The above has been prepared without accounting for your specific circumstances and situation. If seek professional tax advice how the above information applies to your individual situation and circumstance please don’t hesitate to contact our office on (03) 5330 7200.

An incentive plan to reward and retain key employees

adam@mulcahy.com.au (Adam Foale) — Mon, 21 Oct 2019 04:30:59 GMT

A good employee is worth their weight in gold! Well that may be taking it a bit too far but the point is they are very valuable to your business. No doubt to get them to this point you have invested heavily in training and provided the opportunity for them to grow and develop. You think the pay and conditions offered are good and comparable to what other farmers are offering, but you don’t really know for sure. You have come to rely on your worker and they have an extensive understanding of your farm enterprise. In reality he/she is like a manager, particularly with the day to day operations. This has allowed you to have more family time and focus on the business rather than always playing catch up on the farm. This is what you have always wanted in your business and wonder how you ever coped previously. Which makes you stop and think – How do I continue to keep this person engaged and less inclined to look elsewhere for a career change?

Research has shown that work conditions are as important as the level of wage paid. Equally as important is a bonus or incentive plan to maintain engagement and reward team members. A bonus system that also involves loyalty is becoming more and more common in many industries. Also known as a Long Term Incentive Plan (LTIP), this essentially establishes a criteria on how the bonus will be calculated. This is reviewed annually and assuming all boxes are ticked, the bonus amount is added to the ‘bonus pool’. The bonus pool can be accessed in a future year and a prescribed percentage can be withdrawn by the employee. Take the following example:

The Farmer and Worker determine the criteria for the bonus system to be reviewed annually and equal to 10 percent of the Worker’s normal wage. Let’s assume for simplicity this is $6,000. If achieved the bonus is added to the bonus pool and can be accessed from year 3. From year three 30% of the bonus pool can be withdrawn each year. The following table sets out what could happen over the next 5 years.

The key is to clearly establish the rules on how the LTIP works including the requirement to be an employee to access the pool balance.

This is just one example of an incentive or bonus system for your team. However in practice we think this one works well as it recognizes the longer term nature of the employment relationship rather than just looking at a year in isolation.

For assistance in developing the criteria to assess the bonus structure and formalizing the arrangement alongside the employment agreement please do not hesitate to contact us.

Farm succession planning through asset transfers

adam@mulcahy.com.au (Adam Foale) — Tue, 17 Sep 2019 05:13:44 GMT

Why transfer your assets to a trust?

Many people feel uncomfortable transferring assets from their own name to a trust that is legally controlled by the next generation. The reasons for doing so however are extremely attractive.

Certainty

By involving your family in the process and transferring your assets now, you provide certainty to the next generation as to what they will receive and reduce the possibility of a very expensive challenge on your will.

Asset protection

Rather than transferring assets directly to children where they will be in danger of litigation, marital breakdown or liquidation, a family trust of this nature is currently a much safer vehicle to hold assets and is therefore more likely to withstand any court proceedings.

Aged pension

To qualify for the full aged pension, a couple can have up to around $300,000 of personal assets (principal place of residence is exempt) with very little income annually (around $15,000). For part pension a couple can have assets over $1.1 million. Most business or farm owners will not qualify for any government assistance due to their asset levels. However, by transferring assets into a trust controlled by one or more of their children, these assets are no longer counted in the means test and hence a pension of over $30,000 per annum for a couple is available.

Health care card

As people age, a greater percentage of their income is spent on health care and medical on. Similar to the pension, health care cards are not available to those with considerable assets or income. By transferring land now, you should qualify for a health care card, which can provide an immense saving on not only health care and prescriptions, but also possibly stamp duty and travel.

Aged care bond

If aged care is required, the care provider will charge a bond dependent on your level of assets. It’s not uncommon for amounts of over $500,000 to be required to be paid prior to farmers entering care facilities and with no maximum amount in place this might rise in future. This obviously has a dramatic impact on a farm or family’s cash ow if that money needs to be locked away without any return. Not only that, ongoing fees include daily care fees of around $40 per day as well as an additional means tested fee (o en $50 or more per day) can also be payable. The catch in this though is that if a person has no assets or income, they will receive the exact same care without requiring any bond or additional means tested daily fees.

Like the pension and health care card, transferring your assets now can reduce the requirement to pay a bond at all. Not having to pay for the exact same facility you otherwise would have been contributing a massive sum of money is a very attractive reason to progress with your succession planning.

The five-year rule

To stop people from transferring all assets from their name just to qualify for the above, Centrelink imposes a 5-year deemed ownership period. During this period, regardless of transfers, Centrelink will still include any assets transferred from your name as your assets and hence most people will need to wait 5 years to start receiving all the above benefits.

Foregone or unpaid wages

There are two options available to reduce the value of the gift and therefore access bene ts within five years. If the transferee (usually one or more children) worked on the family farm business during their life me, then the transfer may form what is called “unpaid wages”. The idea behind this is that the land is transferred to children in return for their unpaid work on the farm or business. Regular work over a period (even only a few hours a week) can amount to considerable deemed “unpaid wages” which will reduce the amount Centrelink count in the 5-year gifting period – meaning you can access some or all of the benefits much earlier than you could by not claiming unpaid wages.

The great benefit of this is that there is no adverse tax consequence for these “unpaid wages”. It is simply an estimate Centrelink uses in determining early pension, health care and bond assessments, without any other government body using these details.

Granny flat rights

Where land is transferred to the younger generation and the older generation retain a right to live in the property rent free for their life me, Centrelink will deem this “Granny Flat right” to have a certain value which will offset against the sale of the gift.

The rules relating to “Granny Flat rights” are complicated and must be structured correctly to access this concession.

Security and protection

The decision to transfer assets is a decision that is not made lightly. Therefore it is imperative that every effort is made to protect the assets and family members involved. This security and protection is provided through our farming specific Farm Deed Succession Agreement. This deed is tailored to the families’ specific needs and circumstances, providing piece of mind for.

Are there any disadvantages?

In reality, nothing in life comes without some cost. The disadvantages of the benefits mentioned above are:

Setup Costs: there are costs associated with setting up the trust, transferring assets, dealing with Centrelink and drafting a Succession Deed.
Ongoing Fees: the trust will need annual accounts each year it earns income.
Tax Planning: as mentioned above, allocating trust income each year does require some management and in the event there is no suitable family members to allocate tax income to, then the advantages of doing this reduce for that income year.
Asset Protection: arguably a trust is better asset protection than holding in the original owners own name, however we cannot guarantee on the other hand that the assets won’t be subject to some legal challenge if any of the children involved in the trust are sued for any reason.

Is this compulsory?

The above is merely information and it is for the family to decide whether this structure is for you. In our opinion, the advantages far and away outweigh the disadvantages in almost all circumstances. However, given it is your family and your assets, it is completely up to you and your family as to whether you wish to proceed with this.

Reasons why Australia won’t have a recession

adam@mulcahy.com.au (Adam Foale) — Sun, 08 Sep 2019 15:55:30 GMT

As of yesterday, Australia’s Gross Domestic Product (GPD) was at 0.50% for the quarter and stood at 1.40% for the year. It could be viewed that it has been the slowest rate of growth since the Global Financial Crisis or depending on your outlook 28 years of growth without a recession. AMP’s Chief Economist penned this article yesterday which outlined the nine reasons why Australia would not have a recession.

Slow growth but probably not recession Since last year our view has been less upbeat on growth. This remains the case as the housing construction cycle turns down and weighs on consumer spending. As a result, it’s hard to see much progress in reducing high combined levels of unemployment and underemployment, and hence wages growth and inflation are likely to remain low. But there remains a bunch of positives that should help the economy avoid a recession even though growth will remain weak for a while yet.

Rate cuts and tax cuts should provide some growth boost – while July retail sales were disappointing, the experience from the GFC stimulus payments is that the tax cuts will provide some lift to growth in the months ahead and various retailers have expressed optimism about this recently.
The threat of crashing property prices looks to be receding – while it’s so far been on low volumes, buyer interest has returned to the Sydney and Melbourne markets and we never saw the much-feared surge in non-performing loans or forced selling. This has helped remove the threat of a debilitating negative wealth effect on consumer spending.
Infrastructure spending is booming – recent state budgets saw the projected peak in infrastructure spending pushed out yet another year to 2020. And it’s likely states will seek to take even greater advantage of ultra-low long-term borrowing costs to further push out the peak in infrastructure spending.
The low $A is helping to support the economy – the $A is down 39% from its 2011 high and is likely to fall further and this provides a boost to Australian businesses that compete internationally by making them more competitive.
The business investment outlook is slowly improving – the big drag on growth as mining investment fell back to more normal levels as a share of GDP is over and mining investment plans are rising. This is driving some pick-up in the outlook for overall business investment.
Australia has a current account surplus – the June quarter saw the first current account surplus since 1975. The slide since then in iron ore and coal prices suggests it may not be sustained, but the reasons for the improvement are more than just commodity prices so the deficit is likely to be well below the norm of recent decades going forward. What’s more there has been a significant improvement in our foreign liabilities with a less short-term debt and a growing net equity position. This all means that our reliance on foreign capital inflow has declined.
There is scope for extra fiscal stimulus – the Federal budget is nearly back in surplus and while we have had a long run of deficits our public finances are in good shape compared to the US, Europe and Japan. As a result, there is scope to provide more fiscal stimulus and this is probably more important than a narrow focus on the surplus.
Population growth remains strong – Australia’s population growth at around 1.6% pa remains strong. Of course, strong population growth is not without issues and in terms of living standards it is economic growth per person (or per capita) that matters. But solid population growth also has significant benefits in terms of supporting demand growth, preventing lingering oversupply and keeping the economy dynamic.
Finally, cyclical spending (consumer durables, housing and business investment) as a share of GDP remains low – suggesting that apart from bits of the housing market there’s not a lot of excess in the economy that needs to be unwound.

Concluding comment:

Our assessment remains that growth will remain soft and that the RBA will have to provide more stimulus – by taking the cash rate to around 0.5% and possibly consider unconventional monetary policy like quantitative easing. Ideally the latter should be combined with fiscal stimulus which would be fairer and more effective. While Australian growth is going through a rough patch with likely further to go, recession remains unlikely barring a significant global downturn.

Agriculture is back on trend- let’s talk succession.

adam@mulcahy.com.au (Adam Foale) — Fri, 09 Aug 2019 01:14:50 GMT

Let's talk succession

Succession can be defined as, ‘a process by which individuals are scanned to pass on the leadership role within a company’. The process ensures that the business continues to operate efficiently without the presence of people who were once holding key positions as they must have retired or resigned for example.

‘Succession Planning’ is on trend at the moment, and simply the way I see it as a generalization agriculture as a whole industry is pretty good, some would say the best they have seen it. Protein markets are sizzling (excuse the pun!) wool & grain prices are well above the 10-year average & it is an exciting time to be in the heart of agriculture. Naturally when things are going well it is encouraging for those with an agricultural bent, people want to be in it, do it & let’s be honest if you are a farmer breath through it!

In the last five years I think we have seen a turnaround, those returning to the family farm or choosing careers in agriculture no longer declining. The conversations around succession planning are continuing to become more and more because people can see a viable future.

We think that is important to remember you don’t have to take the linear approach with succession. Say for example, you don’t have any children of your own or perhaps your children aren’t interested in taking on the family business, but you are not ready to just sell it up to who ever wants to pay the highest price. We find that most farmers who are having trouble letting things go on the farm are usually the most passionate, they have worked hard their whole life to have what they do now & they are usually people that want to pass on their knowledge to someone; and there are people actively looking for transition opportunities. Whether or not your succession plan will be the more traditional family style or choose a different transition opportunity the crucial elements to consider in this situation are very much the same.

What things should be considered when talking succession planning for all farming businesses:

Identification of those to be involved & role definitions
Property Identification & landholding specifics (owners, date of purchase ect)
Identification and review of most suitable business structure & setup
Responsibility & treatment of income & expenses
Responsibility & treatment of profit or share dividends
Decision making responsibility for purchasing capital requirements (equipment or land)
Reporting & performance reviews
Exit Strategy & requirements for this (termination)

We like to remind our clients when we undertake succession planning it’s not a one step process, we like to break it down into three key areas:

Management &/or control transition
Business ownership transition
Asset & liability ownership transition

Each of these steps can be completed over a period of time, there is nothing to say that these thre areas to be completed at once, we normally recommend a three staged process as it allows for people to work through the transition gradually and to before comfortable with each stage.

Common Mistakes

Assumptions: It’s often quite funny that people assume what other family members want and sometimes when you actually take the opportunity to listen to each person it may be different to what you thought- this is step one; get a clear understanding of what each individual involved actually wants. You may be surprised just because your siblings aren’t interested in the day to day running of the business, they may have an emotional attachment to the farm; they may not want their share of pie in cash if they realise the farm can’t survive that capital outlay- they may be happy as silent share holder.

It has to be Equal: If you start with the idea that your succession plan should be equal amongst the successors things get difficult, we prefer to look at what is fair- has one person been involved in the family business for a longer period of time and given up other opportunities or taken a reduced income for a period of time?

Succession isn’t completed by one person: Succession is a team approach- there so many different elements. Make sure that you are comfortable with the team you assemble. For example, we would recommend you include, an accountant, solicitor, bank manager, mediator. It is important for these purposes to not have someone that sits to ‘one-sided’ – get a team together that everyone is comfortable with not someone with an individual’s best interests at the centre. A good outcome is when everyone is a little unhappy; it means that things haven’t gone too much one person’s way.

Succession planning success is determined by setting a clearly defined mutual objective by those that are involved in the process at the beginning. It should be remembered that succession planning is a process not a job so works through each part of the process- don’t be in a rush. And remember a succession plan can be reviewed and so it should be as we know that circumstances change.

Looking to start the succession conversation, contact us to receive a FREE copy of our succession scorecard.

What are the Penalties for STP Failures?

Thu, 04 Jul 2019 02:24:00 GMT

STP has now been rolled out to smaller employers (19 or less employees) from 1 July 2019.

With the 12-month waiver on penalties now over for larger employers, the Tax Office has explained what these penalties will look like and how they will be applied.

The penalty is calculated at the rate of $210 for each 28 days or part thereof that the Single Touch Payroll (STP) report(s) is/are overdue (to a maximum of $1,050). The penalty increases to a maximum of $2,100 for medium entities, $5,250 for large entities and $525,000 for significant global entities.

There are penalties for late or missed STP reports, although the ATO would generally only apply these penalties where an employer is consecutively and repeatedly late. There will also be fines for lodging false or misleading reports.

ATO has suggested that such penalties would “generally” only apply when the employer has not resolved the error “within a reasonable time frame.”

“The STP law allows for the commissioner to provide a period of grace for an employer to correct a mistake without penalty; as such, we would generally only apply penalty where an employer knowingly reports incorrect information and does not correct it within a reasonable time frame — usually that period is 14 days.”

According to the Tax Office’s spokesperson, its attention remains on assisting smaller businesses to become STP compliant, restating that these employers will not face penalties for mistakes or missed lodgements over the next 12 months.

Although the small and micro business has started reporting their payroll and superannuation information via STP system on 1 July, there will be a three-month grace period until 30 September. There is also a 12-month waiver for closely held employees, including immediate family members.

Despite these extensions, businesses must begin their STP reporting as soon as they can, rather than leaving things to the last minute or taking a disorganised approach according to different types of employees. Here in PJT Accountants and Business Advisors, we recommend setting up STP as soon as possible in your business, we would be delighted to assist your business in setting this up and your year-end payroll finalisation.

For more information on STP, contact PJT Accountant and Business Advisors we would gladly explain and help you on your STP queries and implement this in your business.

Think you can claim your lunch time ‘client meetings’? Think again….

adam@mulcahy.com.au (Adam Foale) — Tue, 26 Feb 2019 00:52:00 GMT

It is a widely held belief that you can claim your client or team ‘meetings’. That is, lunch with your client or team member while discussing business. Although these meetings may be a necessary cost of doing business, in the eyes of the ATO there are certain circumstances in which only a portion of this meeting will be deductible, if at all.

The ATO classes most events with food and drink as entertainment. Meal entertainment, if no exemption apply, will attract Fringe Benefit Tax (FBT) which is 47% of the taxable value. This means you would be paying more tax than the deduction available to you. It is important to know what types of situation will be treated as Entertainment.

In order to determine when food and drink provided during client meeting is treated as Entertainment, we must consider the following factors:

Why is the food or drink being provided?
Providing refreshments (e.g. tea, coffee etc) – not entertainment and is tax deductible
Providing in a social situation (e.g. beer or wine) – more likely entertainment
What type of food or drink is being provided?
Light Meal (e.g. morning tea) – less likely to be entertainment
Elaborate Meals (e.g. Lobster cordon bleu) - more likely entertainment
When is the food or drink being provided?
During work hours (including travel time and overtime) – less likely to be entertainment as it may be for a work related function
Outside work hours – more likely entertainment
Where is food or drink being provided
Provided on business premises – less likely to be entertainment
Provided off site or at venue – more likely entertainment

If you have any questions or something is not quite clear then please give us a call.

Software & Apps that help you manage your business

Mon, 14 Jan 2019 18:40:00 GMT

As a business owner, you know it is important to have regular management reports to help you make timely business decisions. But do you have this information available to you in a way that you understand?

If not, I am pleased to let you know that there is hope for you.

If you are a numbers person, the first step would be to set out your management reports in a way that gives you the best information. Examples of this could be:

Shows Gross Profit and Net Profit %
Shows Wages compared to Sales as a %
Separate depreciation and interest from the operating expenses so you can compare results against other periods.
Split out divisions of the business to see how they are performing.

Xero has flexible reporting to provide reports with information like the examples above. We can help you setup the reports that would be right for you.

If you are more of a visual person, than the use of a dashboards and graphs may be more useful. Addons such as Fathom or Spotlight can assist you. They integrate nicely with programs such as Xero too. They both have great reporting, it really comes down to what features are important to you. At Mulcahy & Co, we use both apps, so can help you decide what would work better. In fact, there are a lot of reporting tools that can help you in various ways or help certain industries. Just let us know if this is of interest to you, and we can help you wade through the options.

However, none of this is of any use, if you don’t have your bookkeeping up to date and reliable. If you need assistance with this, we can recommend Evolve Online Bookkeeping to help you.

Average Transaction Value and Number of Transactions

adam@mulcahy.com.au (Adam Foale) — Mon, 31 Dec 2018 22:24:10 GMT

Average Transaction value

The average transaction value is calculated by dividing the total value of all transactions by the number of transactions or sales. This can be calculated on a daily, monthly or annual basis.

An example of this may be - sales of $200,000 for the year, generated from 10 sales or transactions. Therefore the equation would be 200,000 / 10 = $20,000. The average transaction value is $20,000.

3 Common Mistakes

Not considering the costs involved in the transactions or process.
Utilising a certain cut-off period (IE sales transactions may fall over into the following period and therefore certain costs may be missed).
Upselling products or services to increase the average transaction value.

Average Number of Transactions

The average number of transactions is calculated by using the number of transactions over a specified period of time and dividing that by the time period of the desired outcome.

An example of this may be – total number of transactions for the year would be 1095 and the desired outcome is how many transactions on average would there be daily? Therefore the equation is 1095/365(days in a year) = 3 transactions per day.

3 Common Mistakes

Coupling transactions together as a single sale.
Expanding a single transaction to multiple transactions.
Using data from a specific time period, taking into account seasonal expectations if need be.

Episode 25

Do you want fries with that? Increasing your businesses 'Average Transaction Value' can dramatically improve your profit without the cost of attracting new customers.

Jodie Thompson from our Sunshine Coast office talks to host Gavin Nash about this very topic and gives some great examples and tips on how to do it.

Available on Apple Podcasts & Spotify or right here!

Occupational Health & Safety in the Hospitality Industry

adam@mulcahy.com.au (Adam Foale) — Mon, 20 Aug 2018 14:00:00 GMT

The hospitality industry is a fast paced environment and as such can be rife with workplace health and safety hazards. With the high number of casual staff members employed throughout the industry, the additional burden of ensuring each staff member is adequately trained and follows the correct WH&S procedure is part of running a business in this game.

Most staff duties in this industry require some sort of manual labour like lifting, pushing, cleaning, cooking etc. The hazards may include slips, trips and falls, exposure to hazardous substances, and cutting oneself.

What can you do to reduce health and safety risks?

Safe guarding yourself against potentially unwarranted accidents is not only a public responsibility, but it’s also looking after your own investment as the business owner.

Here are some tips:

Initial Training During Orientation

A strong initial staff orientation designed to familiarise the staff with the operation of your venue can help instil proper procedures and measures, is a necessary first step in setting the standards for all employees.

Identify key hazardous areas/situations

Prevention will always be better than cure. In the workplace such as club, pub and hotel venues, you will have areas that are high risk. Cleaning the beer lines, for example, is one of the more important jobs needing to be addressed. Identify your hazard, and document safe work processes, so staff understand what is required of them.

Continuous training, reminder and seminars

Whilst the industry is being looked on by different regulators such as the Workplace Health and Safety Queensland (WHSQ), business owners must remain proactive in conducting training in occupational health & safety. The onus falls on the business owner to provide a safe workplace, and the employee on following safe work practises.

The nature of staffing in the industry is having young, part-time and casual workers and as such, ‘commitment’ and ‘work ownership’ is often times absent. Together with a lack of training, it’s a combustible situation waiting to happen. Ensuring your workplace is safe and that all potential risks are managed is always a worthwhile initiative that can help you protect your business investment.

ATO’S new motor vehicle rates

adam@mulcahy.com.au (Adam Foale) — Thu, 02 Aug 2018 00:53:02 GMT

NEW MOTOR VEHICLE RATES FROM 1 JULY 2018

Cents per kilometre rate

The Australian Taxation Office has advised that the cents per kilometre rate has been increased to 68 cents per kilometre from the 1 July 2018.

The cents per kilometre rate is applicable for businesses paying their employees a motor vehicle allowance based on the number of kilometres they travel. For example, if an employee travelled 250 kilometres, the new allowance payable to them is $170 compared to $165 as was the case before the 30 June 2018.

It is additionally good news for individuals when preparing their 2019 tax return. As a bit of a recap, under the cents per kilometre method a deduction can be claimed for the number of kilometres travelled during a year up to a maximum of 5,000 kilometres. Written evidence is not required to be kept, however the Australian Taxation Office has voiced concerns over the last few months about more questions being asked if 5,000 kilometres are being travelled each year without any real grounds for the deduction. For example, claiming the travel between home and work is not allowed.

GST claimable on Motor Vehicles

From the 1 July 2018, the Australian Taxation Office has increased the car limit to $57,581.00.

Cars with a purchase price higher than the car limit are only able to claim GST on 1/11 of the car limit. For example, if a business purchases a vehicle costing $75,000 on the 15 July 2018, the maximum GST credit they can show on the next business activity statement is $5,234.

If you would like assistance with recording the correct GST on the acquisition of a motor vehicle, please contact PJT – we are awesome!

Understanding Single Touch Payroll

adam@mulcahy.com.au (Adam Foale) — Fri, 01 Jun 2018 06:00:42 GMT

From 1 July 2018 a new payroll reporting system will come into effect called Single Touch Payroll. With a staggered introduction period, this is an additional ATO reporting obligation and will become mandatory for all employers.

What is Single Touch Payroll?

The STP system aligns an employer’s payroll reporting obligations to their payroll processes. In short, every time you pay your employees, all information included on a payslip will be relayed directly to the ATO.

The information provided to the ATO includes employee’s salaries and wages, allowances, deductions and other payments, pay as you go (PAYG) withholding and superannuation. The first year is a transition year, and we are told by the ATO that generally penalties will not apply.

Who does it apply to?

Employers of 20 or more employees:

The employee count means 20 Employees or more from all employees, including part time, and casual employees who worked any time during March, and any employee on leave whether paid or unpaid, not just FTE’s or equivalent. It does not include independent contractors. If you are part of a company group, you must include the total number of employees by all member companies of the wholly-owned group.
Once you start STP reporting you must continue, even if your head count drops below 20.
STP reporting will commence on 1 July 2018 if your software is ready.
Some payroll software providers have requested a deferred start date to update their products – please check with your provider to see if they have a deferred start date.
If your software will be ready by 1 July 2018 but you are not ready, you will need to apply to the ATO through the Business Portal, for a deferred start date but this only applies in extenuating circumstances. More information on qualifying for and applying for deferrals and employee head counts is available here: https://www.ato.gov.au/Business/Single-Touch-Payroll/

Employers of 19 or less employees:

STP will be mandatory from 1 July 2019, subject to legislation passing in parliament.
You can choose to report through STP before 1 July 2019 if your software is ready.

What will change?

The following information must be reported to the ATO on or before the day you withhold from a payment (the pay day):
payment information, including salary or wages, allowances, deductions, etc.
withholding amounts
superannuation liability information or ordinary times earnings (OTE).
Employers who fully report all the information required through STP will not have to comply with a number of other reporting obligations under the existing law. This includes providing certain payment summaries and the corresponding payment summary annual report (PSAR). However, an annual finalisation declaration will need to be lodged with the ATO.

What should I do to get ready?

Count your employees to determine which commencement date applies to you. The number is based on a headcount, not Full Time Equivalents (FTE). Therefore, casual, part-time or seasonal staff members count as one employee each. Directors and officeholders are not included in the headcount.
Talk to your payroll software provider to find out how and when your current payroll solution will be ready for Single Touch Payroll (STP).

Your payroll software provider may offer STP reporting in one of the following ways:

An end-to-end solution, which allows employers to report and send the file directly to the ATO.
A solution which allows employers to report through their software and send the file through a third party, which is integrated into the software.
A solution that offers STP reporting only. Employers will need to send the file to the ATO separately through a third party, such as a sending service provider (SSP).

Your provider can let you know which solution they offer.

Review your payroll processes to ensure that you have accurate employee information, and confirm that you are calculating pay, super and PAYG withholding correctly.
If you currently report your payroll obligations on paper, or your payroll software does not offer an STP solution, you may need to consider a new payroll system. Talk to the team at PJT if this applies to you and we can guide you on appropriate systems.

If you need assistance in getting ready for STP, or have questions or concerns, please contact PJT. We can assist you with your software requirements, reviewing your payroll processes, and ensuring that you are ready for transition to STP.

More information is available through the ATO’s Single Touch Payroll section: https://www.ato.gov.au/Business/Single-Touch-Payroll/

Trust Distribution Minutes

adam@mulcahy.com.au (Adam Foale) — Wed, 15 Jun 2016 14:00:00 GMT

TRUST DISTRIBUTION MINUTES – THEY'RE REQUIRED BEFORE 30 JUNE!

Do you have a family trust? The ATO have tightened the requirements around the distribution of income. If you don’t follow the rules, you could end up paying a lot more tax than you intended.

Background

Your discretionary trust’s distributable income is the net income for tax purposes which beneficiaries will be entitled to receive, in accordance with the trust deed (rules of the trust). The allocation of your trust’s net income for the current financial year needs to be determined before 30 June, and trust minutes are used to inform the ATO of the allocation. These decisions and Trust Minutes must be done before 30 June each year.

ATO legislation stipulates that distributable income should be calculated prior to 30 June, and should the ATO request verification, signed trust minutes of the trustee’s resolution in this regard are required. In abiding by the ATO legislation, your trust distribution can avoid default beneficiaries unexpectedly becoming 'presently entitled' to the income and being taxed on it, or if there is no default beneficiary, avoid the trustee being taxed at the highest marginal tax rate (47% as at 2018).

Valid trust distribution minutes must provide clear methodology of the determination of each beneficiary’s entitlement. Therefore, it is important that the minutes are prepared accurately and with reference to your trust.

How we can assist you

At Mulcahy & Co we work closely with our clients to assist in the preparation of trust minutes that comply with the ATO requirements.

Generally, this requires the preparation of draft interim financial statements for your trust. We then use these figures to estimate the trust’s final net profit and calculate your trust distribution percentages. We will then prepare your trust distribution minutes for you to sign.

Upon the resolution of your trust’s net (distributable) income for financial year ending 2018, written minutes of this resolution will ensure that the ATO will have the information available as to the specified beneficiaries’ entitlements, ensuring trust income is not automatically taxed at the top marginal rate after 30 June 2018.

What should you do?

Arrange a trustee meeting with Mulcahy & Co without delay, to discuss trust resolutions for net income distribution, particularly if there are franked dividends and capital gains to be considered.

If you would like more information or need to discuss this tax incentive in more detail, please contact your Mulcahy & Co Business Advisor on 1300 204 781.

How to calculate your FBT entertainment expenses

adam@mulcahy.com.au (Adam Foale) — Mon, 22 Feb 2016 13:00:00 GMT

FBT obligations are employer’s responsibility. The ATO does not notify you of how much you’ll have to pay for FBT. You and your accountant will have to calculate your FBT debt.

The FBT rate varies annually. This year, for FBT period ending in March 2016, the rate is 49%.

Methods of Calculation

Meals and entertainment can be a grey area when it comes to FBT. What, where and why food is provided can have an impact to FBT calculation. Meals and entertainment FBT is calculated on a basis using one of the following three methods: the 50/50; the actual cost and the 12-week register.

A lot of small and medium scale business use the 50/50 rule as it the simplest of the three. Lacking complex understanding and software also contribute to the decision to go the 50/50 route for SMBs.

However, understanding the differences and how each method treats FBT will produce a more productive conversation with your accountant. It can also help you in determining how you provide benefits in the future.

50/50 method

The 50/50 method calculates FBT on 50 % of the total taxable value of fringe benefits incurred by providing meal entertainment during the FBT year (1 April to 31 March). The total meal entertainment expense includes providing food and drink to employees on your business premises and/or providing meals for clients. As a general rule, the 50/50 method comes into play when businesses do not have all the attendee data.

Actual method

This method may be most appropriate when organisations can identify the attendees at the majority of meals and entertainment provided at individual events or the total value of all meals and entertainment during the FBT year. Businesses should choose this method to calculate the taxable value based on actual expenditure.

12-week register method

The 12-week register method involves tracking the taxable value of each individual fringe benefit. It is based on the percentage of meals and entertainment provided to employees (versus non-employees) as itemised within a register or log for a 12-week representative period.

What’s included and what’s not?

When it comes to food or entertainment, the venue of where it was provided and who it was given to are important factors when determining whether or not FBT is to be applied or not. The table below shows a summary.

If entertainment was provided on a work day (in-house, meetings etc):

If done in another venue:

Irregular and minor benefits

An exemption is made to minor benefits, provided the taxable values is under $300 per employee. It should also be infrequent and irregular.

If you need help in ensuring you only pay what FBT you owe, talk to our advisors.

Top 5 Benefits of Online Accounting Software

adam@mulcahy.com.au (Adam Foale) — Mon, 25 Jan 2016 13:00:00 GMT

There’s no question that online bookkeeping and accounting software has taken over the entire world. Having your books done online really opens up a lot of new opportunities in terms of your decision making and ensures you get the most out of your money.

If you’re still not convinced, here are top 5 reasons why you should do your accounting online.

It shows real-time reporting

Efficient management of cash-flow is the heart and soul of financial success for many businesses. If business owners do not have insight as to their business’ finances, chances are, they can make a costly decision that can hamper the success, if not suffer complete downfall of the business. Blindingly making decisions on a day-to-day basis can break the business.

Business owners know their numbers. Having real-time insight is one of the benefits of online bookkeeping. It allows business owners to take charge of the driver’s seat as it provides them of auto-updated, real-time information about the financial health of the business.

Income and expenses can be instantly viewed so owners would know where the money is coming from and more importantly, where it’s headed.

No more software updates to run…..ever!

One of the worst parts of having installed software on your computer system is ‘updates’. There are tasks which you need to do and updating your software shouldn’t be your problem. Sadly, it is and you might even be charged for a ‘newer version’.

Cloud software eliminates that. It auto-updates itself even on the changes in lodging process, rates or other legislations changes, and updates are free.

Fast reconciliations?

Set up your bank feeds, and reconciling is so much faster! Much of it can be automated with rules and repeat transactions. We’re happy to show you how!

It’s cost effective

Cloud applications are offered on a subscription basis, which means it operates on a Pay As You Go system - when you no longer need it you stop paying for it. Sometimes this can mean the software is ultimately more expensive but you have access to all updates without paying ‘extra’ each year for the software and updates occur automatically. It’s less of a burden on your cashflow.

Try if now for free!

Here at Mulcahy & Co, we use Xero as our go-to online accounting software. We just love it as it makes it easy not only us, but more importantly our clients. If you haven’t tried it, what are you waiting for? The world of online accounting is awaiting, and it could give you your life back!

But don’t just listen to us – ask other businesses who use Xero! It’s made a huge difference in our client’s business lives and we’re sure that it will for you too. If you’d like to try, then contact us to find out more and we’ll set you up on a trial, risk free.

Division 293 Tax Explained

adam@mulcahy.com.au (Adam Foale) — Sun, 18 Oct 2015 13:00:00 GMT

The Labour Government’s 2013 Federal Budget aimed to make taxation on Superannuation “fairer” by targeting very high income earners to reduce their tax concessions for super contributions.

After 1 July 2012 individuals became liable to pay Division 293 Tax of an additional 15% if their income and super contribution combined was greater than $300,000.

Prior to this time, an individual paying the highest marginal tax rate of 45% on their annual income received a concession of 30% - as they only paid 15% tax on their low-tax (generally employer) superannuation contributions. However, with the introduction of Division 293, an individual with income of at least $300,000 will now be taxed at 30% on low-tax contributions to a complying superannuation fund effectively reducing their tax concession to 15%.

Does Division 293 Apply to You?

To assess whether you are liable to Division 293 Tax, the ATO uses information from your income tax return and low-tax contributions reported by your superannuation fund. However, an assessment will generally not be issued until both pieces of information have been received by the ATO. This can take weeks even months after lodgement of your income tax return to be raised.

Below is a list of all items considered as income for surcharge purposes:

Taxable income (assessable income less any deductions)
Employer and personal superannuation contribution amounts
Total reportable fringe benefit amounts
Net financial investment loss
Net rental investment loss
Amounts on which family trust distributions tax have been paid
Super lump sum tax elements with zero tax rate

Example 1:

For the 2014-2015 income year, Joe Footballer reported the following amounts on his Income Tax Return;

Taxable income per his tax return of $290,000
Total Reportable Fringe Benefits of $10,000
Net amount on which family trust distribution tax has been paid of $15,000
Low-tax (employer) contributions of $25,000

Therefore, Joe’s income for Division 293 purposes is $340,000, being the sum of the above amounts. As Joe’s income exceeds the $300,000 threshold, he will be assessed for Division 293 Tax.

In order to calculate the Division 293 tax, we must first determine the taxable amount, being the lesser of:

Income for Division 293 purposes less the threshold of $300,000, or
Low tax contributions

Therefore the calculation of his tax assessment is as follows;

Income for Division 293 purposes ($340,000 ) less the threshold of $300,000 = $40,000, or
Low tax contributions = $25,000

Accordingly, Joe’s assessable amount for the 2014-15 year is $25,000 because it is the lesser of the two amounts.

Assessed Division 293 Tax = $25,000 x 15% = $3,750

This amount of $3,750 is required to be paid to the Australian Taxation Office

How is it paid?

Payment of Division 293 Tax is generally due 21 days from the date of the assessment notice. Individuals can choose to have their superannuation fund pay the tax or they can pay it out of their own pocket. Contributions attributed to a defined benefit superannuation fund are eligible to defer tax and will not need to be paid until the benefit end of the defined superannuation interest becomes payable. Your notice of assessment will state whether this option applies to you and will we need to inform the ATO if you have requested this option.

Can you reduce your income?

If you are over the $300,000 threshold and have other income such as third party or endorsement income, you should be seeking is advice to ensure the appropriate structures are in place to divert any endorsement or third party income to other low income family members, thereby reducing your personal tax burden.

If you are approaching the $300,000 income mark, you should be seeking advice on how to structure your income without delay.

New Developments

On 5 October 2015, a statement was issued under the CFA-Mercer report, which recommended the $300,000 threshold be reduced to $180,000. We will continue to analyse the outcome and advise if any of these recommendations are adopted.

For an update on this issue and to seek advice on your circumstances, please contact us on 1300 204 781.

Privacy Act for Hotels

adam@mulcahy.com.au (Adam Foale) — Mon, 05 May 2014 14:00:00 GMT

Privacy Policy Changes for Hotels

In 1988, the Commonwealth Government enacted the Privacy Act 1988, which provided the legislative and legal framework for the collection and use of personal information in Australia. In Queensland the State Government has chosen not to enact its own privacy laws, but has put in place an administrative framework to ensure that the privacy act applies in Queensland.

The Privacy Act 1988 adopts a set of 11 National Privacy Principles (NPPs), of which 10 NPPs apply to businesses including hotels. These NPPs provide guidance as to what constitutes personal information, and how personal information should be treated, accessed, handled, stored and disposed.

Under the provisions of the Act, businesses and organisations including hotels, which collect information of a personal nature are required to develop and maintain their own Privacy Policy, which meets the requirement of the Act and the NPPs.

Hoteliers will need to ensure they develop their own privacy policy for their hotel as soon as possible. If you are unsure how to develop this, contact Mulcahy & Co Hotel Advisors and speak to one of our hotel specialists.

Whenever a business or organisation collects information of a personal nature, the Privacy Act requires it to:

Collect only necessary information;
Provide information about why personal information is being collected and how it is handled
Only use or disclose the personal information for the purpose of the collection, unless an exception applies
Only retain the information for as long as necessary, consistent with the purpose of collection
Store the information securely, and provide for it to be accessed by the individual if requested.

For more information about this contact Mulcahy & Co Hotel Advisors on 1300 204 781 or your can visit www.oaic.gov.au .

Division 7A Explained

adam@mulcahy.com.au (Adam Foale) — Thu, 14 Mar 2013 13:00:00 GMT

One of the high risk areas of tax and one that the Australian Taxation Office is continuing to monitor, is Division 7A. What is Division 7A you say? We have summarised below some of the situations where Division 7A may apply to you and the tax consequences or these arrangements.

Division 7A applies to all loans, advances and other credits made by private companies to shareholders (or their associates). The transactions that may be subject to Division 7A include:

Amounts paid by the company to a shareholder or shareholder’s associate. Payments include transfers of property for less than the amount that would have been paid in an arm’s length dealing.
Amounts lent by the company to a shareholder or shareholder’s associate. Note that this Division does not catch loans fully repaid by year-end.
Debts forgiven which were owed by a shareholder or shareholder’s associate to the company that the company forgives.

Payments treated as dividends

Generally, all payments made by a private company to a shareholder or shareholder’s associate are treated as dividends at the end of the private company’s year of income, provided there is sufficient distributable surplus in the company.

Payments not treated as dividends

Certain payments made by a private company to a shareholder or its associate are not treated as dividends. These include:

A repayment of a genuine debt owed to a shareholder or its associate.
A payment to a company (but not a company acting as a trustee).
A payment that is otherwise assessable under another provision of the Act.
A payment made to a shareholder or shareholder’s associate in their capacity as an employee or an employee’s associate.
A liquidator’s distribution.

Loans treated as dividends

Where a private company makes a loan to a shareholder or shareholder’s associate in a year of income (other than a loan made in the course of the winding up of a company) and the loan is not fully repaid by the end of that income year, the loan will be treated as a dividend, provided there is sufficient distributable surplus in the company.

Loans not treated as dividends

A pre-4 December 1997 loan.
A loan fully repaid in the same year.
A loan to a company (but not a company acting as a trustee).
A loan made in the ‘ordinary course of business on commercial terms’.
A loan made for the purpose of enabling the acquisition of shares or rights under an employee share scheme.
A loan that is otherwise assessable.
A loan that meets the definition of an ‘excluded loan’.

Forgiven debts treated as dividends

A debt is forgiven when:

The debtor’s obligation to pay the debt is released, waived or otherwise extinguished.
The creditor loses its right to sue the debtor for the recovery of the debt due to the expiration of the statutory limitation period.
The debtor is effectively released from the obligation to repay the loan notwithstanding the existence of arrangements which imply that the loan remains on foot.
The creditor assigns its rights under a loan to a third party, the third party is an associate of the debtor and a reasonable person would conclude that the new creditor would not exercise the assigned right.

Forgiven debts not treated as dividends

Debts forgiven in the following circumstances will not give rise to a dividend. These include:

Where the debtor is a company.
Where the debt is forgiven because the shareholder or shareholder’s associate has either become bankrupt.
Where the loan giving rise to the debt which is forgiven has been treated as a dividend.
If the Commissioner exercises discretion to exclude the forgiven debt from the operation of this Division where satisfied that the shareholder or shareholder’s associate would otherwise suffer undue hardship.

If you are in this situation call us on 1300 204 781 or email us to have your business's strategies and agreements put in place prior to the end of financial year.

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