CONNECT December 2013 ISSUE
Our new home in Brisbane After six years in Brisbane’s Fortitude Valley, Powers Financial Group has incorporated our Stacey & Stirk subsidiary and will now be operating out of Murarrie. We all know the dread of moving – the packing, the unpacking, the re-direction of phones and mail, planning layouts and a myriad of other disruptions. However, after six years in Fortitude Valley and operating a second office in Murrarie via our amalgamation twelve months ago with Stacey & Stirk (a well established Brisbane business), we “bit the bullet” and decided to merge our teams into one new location at Murarrie. So, in the second week of December 2013, Powers Financial Group and Stacey & Stirk’s Brisbane teams united under the one roof at our new office at Unit 10 “Etro”, 8
INSIDE THIS ISSUE
Metroplex Avenue, Murarrie. Murarrie is situated in the heart of Brisbane’s “Trade Coast”, one of the major new commercial areas in South East Queensland. It is conveniently located on the south side of the Gateway Bridge and has free parking – a rare commodity in Brisbane these days! Our new office offers greater accessibility and convenience for all of our clients, colleagues and staff. With greater space available to us, we will be utilising our premises throughout 2014 for a number of functions, seminars and events which we
• Purchasing property for family Some of the unforseen pitfalls and obligations from an act of good will
hope will prove to be of interest and benefit to our clients and friends. With our Brisbane team now in one office, we will no longer operate the Stacey & Stirk name. Ken Stirk and John Stacey gave many years of care and attention to their clients and we are certain that these services will only be strengthened by our improved facilities and unified team. We look forward to making our new premises as efficient and friendly as possible and you are welcome to visit at any time.
• Contractors and Employees
Know the difference before it is too late
• Small asset write-offs
Make your purchases before 1 January 2014 or miss out
• Estate Planning
There is more to your financial affairs than simply having a Will
In his media release in November 2013, Treasurer Joe Hockey announced the Government’s plan to support regional Australia by increasing the non‑primary production income eligibility threshold for Farm Management Deposits from $65,000 to $100,000. To find out more, contact your Powers Accountant in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
Thinking of assisting family members with purchasing a home? Although an enticing sentiment and good-willed approach, buying a house for your children may have veiled tax implications. by Joel Canning
A recent judgement by the Administrative Appeals Tribunal (“AAT”) has brought to light a pitfall associated with helping family members in purchasing a home to be used as their principal place of residence (“PPR”) and the capital gains consequences that can result, which by most is often overlooked. The facts of the matter were that a taxpayer had purchased a townhouse for his son to reside in and use as his PPR in a joint tenant arrangement with the intention of guarding against his son acting irresponsibly by holding it on trust. Five years later the townhouse was sold and the proceeds of the disposal were used to reduce the son’s debt on a second house.
It was held by the AAT in their decision that an assessable capital gain resulted for the taxpayer even though his intention was not to profit from the arrangement. It was only his intention to safeguard his son from the possibility of acting unwisely however there was no formal trust arrangement in place. This issue can arise quite easily when children are purchasing their first home and the bank requests that the parents are put on the title for the purpose of being guarantor. The consequences are that without documented words to the effect of holding the property on trust for children, assessable capital gains may arise for the parents.
It is also important to note that this doesn’t just apply to the purchase of a home. It may apply to all property purchasing arrangements where parents are guarantor’s and being added to the title of the property also. Whilst in most cases the intention of a parent would only be to assist their children; it does bring to light the need to think about and work through the process of buying property. If you have any queries regarding your obligations, please contact your Powers Accountant in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
Are contractors really contractors or are they employees? The difference between contractor and employee becomes grey when talking about employer obligations. There can be benefits in utilising contractors as they may not come with the requirements of superannuation, withholding tax, paying Workcover insurance premiums or messy dismissals.
their own business, the type of work undertaken and the type of trading entity the contractor operates through can result in the distinction between contractor and employee.
However the flip side to this is that a contractor can be deemed to be an employee for any of the above purposes.
In general a contractor is treated as an employee when the following occurs:
This is highlighted in two recent cases, one regarding superannuation guarantee obligations by the Administrative Appeals Tribunal (“AAT”) and the other pertaining to the unfair dismissal of a taxi driver by the Fair Work Commission (“FWC”). These two cases emphasise that although it may appear that contractors run
• There is an inability to sub-contract/ delegate • The basis of payment is for time worked, a price per item or a commission not for being paid for a result being achieved based on a quote • The business (i.e. employer) provides the equipment, tools and other assets
• No control over the work • There is no independence and • The contractor is a sole trader It is important to keep in mind the above before utilising a contractor, so as to better prepare for the present and future obligations should they apply. You need to be aware of your obligations before the fact. Without good advice, it could cost you at a later stage. Please contact your Powers Accountant in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
• No commercial risk is taken
Take advantage of small asset write off before 1 January 2014 Small businesses thinking of acquiring a depreciating asset costing less than $6,500 or a motor vehicle need to do so before proposed changes come into effect from 1 January 2014. by Susan Birss
Under the current measures, a small business can, in general: • Immediately write off most depreciating assets costing less than $6,500 each • Pool most other depreciating assets (irrespective of their effective life), in the general small business pool and depreciate at the rate of 30% • Depreciate most newly acquired assets costing more than $6,500 at 15% in the first year • Claim an immediate deduction of the first $5,000 value of a newly acquired motor vehicle plus 15% of any additional value. The remaining value is allocated to the small business general pool with a rate of 30% to be claimed in subsequent income years. The Government has announced changes to the above measures as part of the draft legislation to repeal the minerals resource
rent tax (MMRT) from 1 July 2014. With effect from 1 January 2014, the proposed amendments to small business depreciation will: • Reduce the $6,500 immediate write off threshold to $1,000, so that assets exceeding this will instead be allocated to a general small business pool, and • Remove the special rule for motor vehicles so that they will be depreciated in the same manner as other depreciating assets (i.e. by being allocated to the general small business pool). To clarify, business means an individual, partnership, company or trust that carries on the business activity, and small business means ‘small business entity’, which is an individual, partnership, trust or company with aggregated turnover of less than $2M.
only be claimed if the relevant asset is ‘first used’ or is ‘installed ready for use’ before 1 January 2014. The mere execution of a contract to acquire an item of plant or equipment would therefore not be deemed sufficient under the tax law for there to be a deduction. Although the Bill in relation to repealing the MMRT and related measures will not be passed until the New Year, if you are an eligible small business and wish to maximise your deductions for the 2013-14 income year, you should consider bringing forward your capital purchases before 1 January 2014. To get further clarity on the issue, please contact your Powers Accountant immediately in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
Importantly, the instant asset write-off and special deduction for motor vehicles can
Estate planning is vital to your family’s future security As we near the festive season, many of us will be preparing to spend time with our families, reflect on our year and remember those who have come into the world and those we have lost. It seems we are not the only ones – the Queensland Government has also been thinking of families and our futures and has designed and implemented a new portal to assist Queenslanders in taking control of their lives and planning for the future.
what and whether an out of date Will is in fact valid and enforceable.
While estate planning may seem a morbid topic, it not only protects your hard earned wealth, it is a positive tool in ensuring our loved ones do not suffer more distress when dealing with the loss or incapacitation of a fellow family member.
A Will does not cover your Superannuation or Insurance Policies and if you do not nominate someone, the Public Trustee will use his discretion to distribute the funds.
If you are depended on, own assets, value your health or have a family trust, you are going to need much more than a Will. The following list of estate planning tools is a quick overview of what you need to consider regarding your family’s future: 1. Do you have an up-to-date Will? Having an up to date Will helps prevent any in-fighting with your beneficiaries and will also ensure your assets are not frozen in Probate while the Courts decide who gets
2. Have you nominated beneficiaries for your Superannuation and your Insurance Policies?
3. Have you chosen Guardians for your dependents? Not naming a Guardian will often mean a Court ruling which again is costly and lengthy and could result in foster care while the decision is made. You know who is best suited to look after your most valued possession; be sure to name them in your Will. 4. Have you nominated a Power of Attorney?
Power of Attorney will take control of your financial and personal affairs which will stop accounts being frozen or sticky fingers getting a hold of things that do not belong to them. 5. Have you thought about setting up a Testamentary Trust? A Testamentary Trust has the potential to reduce tax liabilities for your beneficiaries after your departure. Ask us how! So while you have all your family together this year, think about your future. Visit the Planning for Life website at www.justice.qld.gov.au/justice-services/ guardianship/planning-for-life If you have any questions or would like assistance in the most tax effective way to distribute your assets, please contact Powers in Brisbane on 07 3906 2888 or in Biloela on 07 4995 6677.
Should you become incapacitated, your
For further information on any of the articles in this issue contact your local office:
BILOELA 54 Callide Street Biloela QLD 4715 PO Box 98 Biloela QLD 4715 P 07 4995 6677 F 07 4992 1787
BRISBANE Unit 10/8 Metroplex Ave Murarrie QLD 4172 PO Box 518 Cannon Hill QLD 4170 P 07 3906 2888 F 07 3906 2889
MONTO 3 Newton Street Monto QLD 4630 PO Box 69 Monto QLD 4630 P 07 4166 1366 F 07 4166 1343
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The information in this document is of a general nature and is provided for information purposes only. It does not take into account your particular objectives, financial situation or needs and should not be used as a substitute for independent advice from a qualified professional. Limited liability by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. All financial advice is provided by Authorised Representatives of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558.