"Low returns are shaping as the new normal" That was the headline in The Australian Financial Review in early July 2012 in anticipation of another grim year on global equity markets for Australian investors. How did that forecast turn out? Rick Maggi Read more here
The last financial year saw returns of over 20% from Australian and global shares, so what's in store for 2013/14? Rick Maggi Read more here
The tax office - in its role as regulator of self-managed super - stripped 132 SMSFs in 2012-13 of their prized complying status for committing serious breaches of superannuation law. This is the toughest action that the ATO can take against a wayward SMSF. And it typically affects the savings of all the fund's members.
The market value of SMSFs declared non-complying is taxed at the top marginal rate, less any non-concessional (after-tax or undeducted) contributions. This could remove almost half a fund's assets.
And the ATO prevented 180 proposed new funds from entering the system. (As part of its compliance work, the tax office examines whether a fund has been established for "genuine" superannuation purposes. Sometimes funds are setup as means to extract savings from the super system before the members are legally entitled to the money.)
The ATO's Compliance in focus 2013-14 publication - released over the past week - reveals how the regulator will scrutinise the activities of SMSFs over the coming 12 months.
The annual compliance program can serve not only as a warning of where the tax office is looking but as a reminder of areas where your self-managed fund could possible improve.
During 2013-14, the ATO intends to particularly focus its SMSF attention on:
1) Prohibited loans. (SMSFs are prohibited from making loans to fund members and their relatives or providing other financial assistance to them.)
2) Funds with a history of non-compliance, including failure to lodge annual returns on time. The ATO is also keeping an extremely close watch on the compliance of new SMSFs.
3) Incorrect reporting of tax-exempt pension income. (The tax-exempt treatment of pension assets is a valuable tax break that some SMSFs incorrectly claim.)
4) Tax losses. (The ATO wants to ensure that funds are correctly calculating any claimed losses.)
5) Related-party transactions. (Generally, an SMSF is barred under the in-house asset rules in superannuation law from leasing or having investments with related parties involving assets that are worth more than 5 per cent of a fund's total market value. Business property is among the few exceptions to the rule.)
6) Non-arm's length transactions. (Self-managed funds are required to invest on a commercial, arm's length basis, including transactions involving related parties.)
How does your fund measure up in regard to these areas of ATO focus? Rick Maggi.
Markets have had a rocky time lately. Is this something to worry about? Rick Maggi Read here
Want to be kept informed in real-time? Tired of stale, irrelevant websites and blogs? Subscribe to our free updates here. Happy New Year! Rick Maggi & Staff.
As we're now approaching June 30th, its important to do some planning to maximise your strategy. This is a summary of the Government's 'co-contribution' scheme, which was spared in the recent May Federal Budget. Rick Maggi Read more here
Recent market falls and noise around the US Federal Reserve's potential moves going forward has been rattling investors. The following is a candid and easy to understand article on the subject from AMP Capital's Dr Shane Oliver. Rick Maggi. Read more here
In this brief article, Dimensional's Jim Parker comments on currency speculators and just how spectacularly wrong most individual and professional investors get it. A good read. Rick Maggi. Jumping Off the Currency Cart
Recent share market falls have taken some of the lustre from the stellar gains we've witnessed over the last year, although investment returns remain extraordinary to date. So is the perennial "sell in May and go away" behind the recent market correction or is there more to it than that? The following is an easy to understand three-minute video commentary (just released) from AMP Capital's Dr Shane Oliver that should help to calm the nerves... Rick Maggi. Watch Video
With the end of the financial year fast approaching, now is a great time to take advantage of various superannuation, insurance and tax strategies to reduce costs, save tax and streamline your finances.
Below is a useful guide to help you get there, but if you have any doubts or concerns, please contact us or discuss your personal circumstances with your financial adviser or tax specialist before taking action. Rick Maggi. Read Smart EOFY Guide
Has the Australian dollar peaked? What can we expect going forward? What can you do to take advantage? Rick Maggi. Read more here
The Reserve Bank of Australia has just reduced the cash rate by 0.25% to 2.75% effective 8 May 2013. The RBA's Media Release is below. This action is in response to a slowing Australian economy (unemployment is rising, retail and government spending is falling, mining is sluggish, and taxes are set to rise).
Leading brokers are now predicting that our cash rate is headed to 2% and billionaire investor George Soros is betting that the Australian dollar will fall. Against this backdrop, interest rates are likely to continue their drift downwards, which is bad news for term deposit investors, and will probably encourage more Australians back into higher dividend yielding shares, much like the recent American experience (US markets are now trading about 4% above their all-time highs, primarily on the back of very low interest rates).
As the Australian market remains 23% below pre-GFC levels, it is quite conceivable that our markets will get a boost from falling interest rates, provided the global picture doesn't deteriorate. Rick Maggi. RBA Statement
Following the recent changes to Japan's monetary policy, AMP Capital's Dr Shane Oliver discusses it's implications for global share markets. Rick Maggi. Watch Now
Here's the good news. The changes were not 'draconian', as feared in recent weeks. In fact, most Australian's won't be impacted by the tweaks to investment earnings tax on pension balances. The bad news is that all of this adds greater complexity to an already complex area, which is why you should speak to your financial planner. Below is a bullet point summary of the changes, but there are other areas to consider as well, so call us. Rick Maggi. Super Changes
After a strong start to the year, share markets have had a few wobbles lately and bonds have rallied again. Sell in May and go away? Rick Maggi. Read more here
In this article, Dr Shane Oliver looks at the recent move to the relative safety of bonds and whether now is the right time to be making the shift. Read more here
So far this year we have seen solid gains in global share markets. Economic news has been positive with receding tails risks regarding Europe, greater confidence of continued growth in the US and some lessening worries about China. But there was also a burst of confidence in early 2010 and early 2011. Read more here.
Trying to correctly time your entry point to the market is never easy. Just ask the experts. This brief article written by Jim Parker, VP of Dimensional (DFA) Australia, is another reminder of the perils of market timing. Let me know if you'd like a copy of Jim Parker's book 'Outside the Flags' - an easy, enjoyable read. Rick Maggi. Read 'Running to Stand Still'
A refreshing take on the new year from Vanguard's Robin Bowerman… Read Here
The Dow Jones Industrial Average soared to an all-time record high on Tuesday, passing the five-year old mark to leave behind the deep losses of the economic crisis. The positive impact on Australian superannuation and pension funds has been huge. Read More Here. Rick Maggi.
