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April 2022
11CGT home exemption

When is a home exempt from CGT

CGT home exemption

Your home can be exempt from CGT providing it is your castle. You need to do a few things to make sure it meets the ATO

The ATO considers several factors when determining if a dwelling is considered a client’s main residence. Various tests in relation to different factors to determine to see if you meet this test as your home. This may vary depending on the circumstances and it may be several factors.

What makes a home regarded as your home and makes your home exempt from CGT?

The main residence test for a dwelling is based on facts and takes into factors such as:

▪ whether they / their family live there

▪ how long they have lived there

▪ their intention to occupy the dwelling

▪ is the mail delivered to your home?

▪ are your personal belongings there ie have you physically moved in

▪ is it your house address officially on the electoral roll,

 ▪ whether they have connected utilities such as electricity and gas etc

If you acquire a dwelling and move in ‘as soon as practicable, it will be treated as your main residence from the acquisition date.

Change of circumstances

Of course, if your circumstances change, you may nominate another dwelling or take advantage of the six-year absence rule in relation to your existing home. This can continue to make home exempt from CGT.

Many people often purchase a house move in and then find after several months that the mortgage repayments are impacted due to a change of circumstances. They rent out the property and then wonder if they will then have to pay CGT on their home?

The good news in certain circumstances your house will still remain exempt

To make sure you meet the six-year rule you need to ensure it is your main residence before it was used to produce assessable income; and that you haven’t nominated another property as your main residence for the same time period. 

After establishing the property as your main residence, it is possible to move out and rent the property out for up to six years.   

Per the ATO (summary)

Your property stops being your main residence when you stop living in it.

However, for CGT purposes you can continue treating the property as your main residence:

  • for up to 6 years if it is used to produce income, such as rent (sometimes called the ‘six-year rule’)
  • indefinitely if it is not used to produce income.

During the time that you treat the property as your main residence:

  • Your home continues to be exempt from CGT to the same extent that it was exempt when you stopped living in it, even if you start renting it out after you leave
  • you cannot treat any other property as your main residence (except for up to 6 months if you are moving house).
  • If you do not use your former home to produce income (for example, you leave it vacant or use it as a holiday house) you can treat it as your main residence for an unlimited period after you stop living in it.

The good news is if you move back into your home and then down the track you move back out the six-year rule is reset, and the exemption applies for another six years. Of course, if you only have one home and you leave it empty or for the kids to use it then as long as it does not earn an income it remains exempt indefinitely.

However, if you acquire a new home then the above exemption ceases. Make sure if you are renting your property out then please don’t hesitate to contact us and discuss your circumstances. We welcome you to contact us if you need some advice phone 95979966

11SMSF Trustee

Acting as an SMSF Trustee and incapacity!

SMSF Trustee role needs to be considered in your Estate planning

Your role as an SMSF Trustee and incapacity are crucial to consider in running an SMSF. Have you thought about what happens when something goes wrong, and you run an SMSF?

Control is one of the main reasons many establish an SMSF. As an SMSF Trustee, you can control your own SMSF. You can control how the Funds investments and the strategy on how and where. What happens if you can’t do it anymore?

What happens if things go wrong?

One day, you may not be able to meet your SMSF Trustee responsibilities. This can happen due to a loss of control or incapacity might be due to an accident, illness or death. But, in most cases, it will unexpectedly leave you with ongoing financial matters for your that need resolving unless you have done some forward planning.

Under the SMSF legislation, a person with a legal disability (including mental incapacity) cannot be a trustee or an SMSF.

Incapacity as an SMSF Trustee

When you are not able to act as a Trustee, someone else must step in on your behalf. They basically act as an SMSF Trustee in your capacity. Your incapacity results in you having to relinquish control of your Trustee role. When appointing someone to act on your behalf make sure the decision is based on Trust. Trust that the person who steps in understands and acts on your wishes and needs.

We also point out that for ease of SMSF Trustee appointment, we recommend that the structure of your SMSF includes a Corporate Trustee rather than individual trustees.

Seek legal help that gets it right!

Your health and financial welfare are paramount for more information read our blog on Estate Planning.

It’s a great reason you need an adequately prepared and executed Will. Have you made an Enduring Power of Attorney( EPOA)? Preparing an EPOA (enduring power of attorney )will assist you in both ensuring someone can step in and continue sorting out your financial affairs. They can then step in and manage your SMSF.

 If you become incapacitated, they will undoubtedly have to set up in your shoes as an SMSF Trustee. Therefore choosing the wrong person or no person can result in your wishes not being adhered to. Or worst still, someone appointed as your replacement  SMSF  Trustee with the wrong intentions.

It’s essential that you choose wisely and that this person is someone you trust and has the financial ability to make the right decisions. Make sure you discuss their role and support this by considering executing Binding Death Nominations in the SMSF.

Reversionary pensions for those in pension mode are a great tool to enable the pension to be transferred to your partner upon death.

Now is the time to Act – not when incapacity strikes

 Implementing tools in the case of incapacity as an SMSF Trustee will also issue some clarity of your estate planning wishes.

Thinking ahead and planning means if and when things don’t go as planned, you have a well-thought-out plan that will ensure your estate and any assets are dealt with your wishes.

11newsletter

Weekly Newsletter April 7th

Super Guarantee Charge reminder.

This is just a reminder that employers must meet their SGC obligations by the due date for the last quarter, which is  Thursday 28th April 2022.

The date super has been paid is when the payment hits the employee’s super account, not the date that an employer pays the super to the clearing account.

In some circumstances, It can take several days for the employer’s super contributions to clear through a super clearinghouse. Then it will be processed and recorded against the employee’s account. We, therefore, recommend paying the employee super guarantee at least 5 working days before the ATO due date. This will allow enough time for your payments to be processed before the quarterly due dates. Your cloud accounting software provider may state that the super has to be paid even earlier than this for processing times. . This is especially around the end of the financial year.

We also recommend making monthly or fortnightly super payments to reduce any risk of late payment. If you are going to do this, make sure the total SG obligation for the quarter is received into your employee’s super fund by the ATO due date.

The ATO is watching. STP reporting and information provided by Super Funds means that the ATO can see if you have met your obligations. If you are having trouble meeting your obligations, don’t hesitate to get in touch with us to discuss your situation, and we can work with you to find a solution.

Most search easter eggs according to google in 2021.

This is what Australians were searching for when it came to Easter Eggs and chocolates in 2021.

  1. Cadbury Creme Egg
  2. Mini Eggs
  3. Kinder Surprise
  4. Cadbury Caramilk
  5. Kit Kat Bunny
  6. Lindt Gold Bunny
  7. Violet Crumble Bunny
  8. Kinder Mini Eggs
  9. Ferrero Rocher Squirrel
  10. Smarties Easter Egg

What’s your favourite?

11discounting in your trade business

Customer Discounting for a trade business leads to profit leaks

Customer Discounting in your trade business is a quick race to the Bottom

Some tradies will start customer discounting to land enough renovation or trade jobs to just survive in the current building market downward trend or to keep their sales pipeline busy. So right they have work, they will survive?

WRONG – don’t do customer discounting!

Right about the “just survive” bit because survival is all you derive when you discount.

Discounting really is a race to the Bottom. The bottom line and an empty bank account is what hits you with this stragey!

Geoff Gartly has been looking after small business trade clients for many years. He has seen what works and what doesn’t. We know that discounting is NOT a recommended business strategy.

Profit can be tight sometimes when you are quoting but don’t discount to get the job!

We got your back – our tips on how not to dig a hole with customer discounting!

So here are a few tips to help you quit discounting in your trade business.

Decide that you can’t afford to discount

Unless you have heaps of spare $$$ in the bank you can draw on to tide you over several years make the decision that you cannot afford to customer discount anymore.
It’s a bad habit to get into at the best of times. But, if you do it for too long, it can become a hard habit to break. Sure, you may need to adjust your prices to meet market conditions, but that is quite different from getting into a discount war against another builder or tradie. Do that, and you both lose?

We help our tradies get the pricing right so that the hourly rate allows for GP, admin , mistakes and anything else that can impact.

Re-evaluate your service.

Make a (long) list of all the things you provide for your customers and make customer discounting not one of them. List things that are not in a typical estimate. If you are a good builder or tradie, you actually provide your client with many things that they don’t pay for. So, increase the value of your estimate by letting them know all the other things you provide. Improve your sales delivery and your customers will feel like they are getting a fair price!

Determine to walk through the fear (of missing the sale).

This is the hard part because it’s so personal. Yet it is an absolute requirement if you are going to rise above the discount mentality because facing fear head-on is the only way to overcome it. Sometimes you just need to talk to someone who has done it before to know it is OK

It takes courage to stick to your prices, but if it ensures you retain decent margins and make decent money, then it’s worth learning to do. Right?

To do it right, you need to add value to your trade business by marketing quality and service, not cheapness and discounting. Set your trade companies vision and start marketing this to your customers

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