A Trump Presidency – What it means for Australian Investors

A Trump presidency in the US may have been a surprise for many but some international financial markets have been predicting the outcome with bond yields, the US dollar and Bitcoin all being ‘up’ over the past month, and likely to influence Australian interest rates and investment returns​.

Overall, a Trump presidency could also mean a potential ramping up of trade wars and general increased economic uncertainty.

AMP Head of Investment Strategy and Chief Economist Shane Oliver* says the likely investment market implications of Trump’s proposed policies are:

• • Upward pressure on US bond yields from a bigger budget deficit, higher inflation and higher interest rates

• • Upward pressure on the value of the US dollar (putting downward pressure on the Australian dollar) because of higher tariffs, higher than otherwise Fed interest rates and increased global uncertainty

• • Upward pressure on Bitcoin and other cryptos as Trump is seen as supportive of crypto

• • Ambiguity for the US share market - While tax cuts and deregulation will be positive in the short-term, trade wars and higher bond yields will be negative over the longer-term

• • US shares are likely to outperform global shares reflecting the tariffs and increased global uncertainty

• • Upward pressure on US financial and energy shares relative to clean energy shares

• • Upward pressure on US small caps relative to large caps as small caps will benefit most from the lower corporate tax rate on domestic profits and large caps are vulnerable to a trade war

YML’s Approach to managing our Clients’ Investment Portfolios

At YML we pay close attention to fund manager briefings and Webinars to understand their take on the global financial market and what actions are being taken in response to market influences. We constantly review macro commentary and regularly confer with our consultants at Morgans.

We agree with the comments made by Shane Oliver and have been allocating our clients’ funds to small caps and international shares over the past eight months. We continue to focus on investing in and holding shares in sound and quality businesses, as well as allocating investment funds to highly rated, ‘good record’ fund managers.

We remain mindful of ensuring diversification across various local and international asset classes as this bodes well for short- and longer-term results.

We welcome the opportunity to advise and manage our clients’ superannuation, personal and trust funds. As Trump’s presidency begins, our bespoke investment portfolio design and ongoing management will reflect you and your financial objectives for your life stage.

* Super news for November 2024

How can YML help?

Talk to our YML Financial Planning Team today to see how YML Group can assist you with your financial investments. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Not-for-Profits and Deductible Gift Recipients – Eligibility

Organisations in Australia that are created as not-for-profits (NFPs) focus on reaching charitable, social and humanitarian goals within their communities. Both NFPs and other Australian businesses can register as deductible gift recipients (DGRs) to receive donations that are tax-deductible by the donors who contribute to them.

NFPs must operate for a purpose, commonly charitable work, community support, education, religion, and any profits or surplus funds are used to further their purpose. Directors, members and shareholders may not receive a distribution of profits.

Setting up a NFP requires:

• outlining a mission and objectives that meet the definition of a charity
• ensuring compliance with relevant laws for NFPs – seek professional advice
• registering with the Australian Charities and Not-for-profits Commission (ACNC)
• funding a NFP which typically relies on grants and donations for financial support
• applying for tax concessions through the ATO, including DGR status, if eligible

DGRs are NFPs or funds which are eligible to receive donations from donors who may claim their donations as tax deductions. Being granted DGR status can be advantageous to an organisation because it encourages public donations for their charitable programmes, in areas such as health, education, environment, welfare. Receiving donations from the public can benefit a DGR by improving their financial ability to support their charitable work.

Becoming a DGR involves an organisation:

• meeting eligibility requirements, including falling into one of the general DGR categories listed in the Income Tax Assessment Act 1997
• registering with the Australian Charities and Not-for-profits Commission (ACNC), if required
• applying for DGR status with the ATO
• establishing public funds, if relevant to an organisation’s financial strategy for funding its causes or mission

A DGR-endorsed organisation has been officially recognised by the ATO as having a special taxation status that enables an organisation’s donors to generally – exceptions apply – claim their donations over $2 as tax deductions.

Compliance of NFPs and DGRs

Annual reporting is required by the ACNC to comply with fundraising regulations. It is therefore important to maintain accurate records of income, expenses and donations. Finally, transparency with donors is essential to ensure that an organisation retains both its integrity and legality to provide the incentive of tax deductions to the donating public.

How can YML help?

Talk to our YML Chartered Accountants today to see how YML Group can assist you with structuring your NFP and applying for DGR endorsement. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Is it a good time to think about fixing your loan and will it help your borrowing capacity?

No one really knows how low they will go. 

But some banks will not wait. We are already seeing low fixed rates. As low as 5.69% fixed for 2 years with Principal and Interest repayments for home loans. 

If your current loan is 6.45% pa or above, the difference is 3 rate drops of 0.25% each.

Also, some lenders will use the actual fixed rate to assess your borrowing capacity, allowing you to borrow more if you fix your home loan on the lower rate.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with your financial investments. For more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

How Transition-to-Retirement (TTR) works

Retirement is in your sight, and you would like to either a) wind back your work hours, or b) keep working full-time to contribute more to your superannuation fund. Both these scenarios might be possible with an income stream from a transition-to-retirement (TTR) pension.

What is TTR?

A transition-to-retirement strategy allows individuals who have reached their preservation age (55 if born before 1 July 1960, rising to 60 if born after 1 July 1964) to access their superannuation in the form of a TTR income stream whilst continuing to work beyond their preservation age.

If you’re looking to reduce your work hours, then a portion – between 4% and 10% – of your superannuation can be rolled in to a TTR pension account from which you can draw a regular income to supplement your income from working.

Benefits of TTR

By supplementing your work income because you decide to work less, TTR can make up for reduced income. You won’t have to compromise your lifestyle, providing you with a smoother transition to retirement.

A TTR income stream can help you to increase your superannuation contributions via salary sacrifice (after-tax contributions), creating a larger retirement fund and giving you possible taxation savings. Your contributions will be taxed at the concessional rate of 15% up to an annual cap of $30,000.

TTR and Taxation

From 1 July 2017, superannuation investments underlying a TTR pension are taxed at up to 15% (as in a superannuation accumulation account). However, the earnings on your TTR income stream are tax-free after age 60 if you are a member of a taxed superannuation fund.

Disadvantages of TTR

The more of your superannuation funds that you withdraw into a TTR pension account, the less money you will have available when you retire.

A TTR income stream may affect any Centrelink entitlements you receive.

Voluntary contributions into your superannuation fund may not be worthwhile – providing minimal taxation savings – depending upon your work income level.

Starting and stopping a TTR Income Stream

Transferred funds from your superannuation fund into a TTR pension account are not counted towards your transfer balance cap until you turn age 65 or you fully retire, when the TTR pension will convert to retirement phase.

Whilst you are under age 65, a minimum of 4% of your TTR pension account balance must be withdrawn each year and at least one withdrawal must be made each year.

Once you reach age 65, your TTR pension becomes a retirement phase pension, and you will be entitled to tax-free investment earnings and no upper limit on withdrawals.

You may transfer your TTR pension account balance back into your accumulation account at any time, so long as you have withdrawn at least 50% of that year’s minimum payment.

Approaching retirement? A TTR strategy can be a flexible way to ease into retirement or boost your retirement savings. YML Super Solutions can help you decide whether a TTR strategy aligns with your working life and retirement planning.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your TTR strategy. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Who should register for Land Tax?

Land tax is an annual state-based tax levied on property owners. Individuals, trusts, companies and self-managed superannuation funds (SMSFs) that have land holdings in NSW may be liable to pay land tax under the Land Tax Management Act 1956 in NSW.

If you own, or jointly own, any of the following, you may have to pay land tax:

• Vacant land, urban or rural,
• Land on which a residential property stands
• A holiday home
• An investment property
• Company title units
• Commercial, industrial or residential units
• A car space
• Leased government land

Exemptions – Land Tax generally does not apply to:

• A principal place of residence (your home)
• Primary production land (your farm)
• Any land with a total value below the general land tax threshold

How much Land Tax is payable?

The amount of land tax paid by property owners is based on the total value of land held by any entity/ies, including by foreign owners who may have to pay an additional surcharge land tax, above the state government-specified land tax thresholds.

The Valuer-General of NSW assesses land value – based on the market value – on 31 December each year. Land tax is calculated on 31 December and applies for the following full calendar year.

Land Tax Thresholds (from 2024)

• General threshold is $1,075,000 – Calculated as $100 plus 1.6% of land value above the threshold, up to the premium threshold
• Premium threshold is $6,571,000 – Calculated as $88,036 plus 2.0% of land value above the threshold

Registering for Land Tax

Property owners can register for land tax via the Revenue NSW website when they acquire new land or for land already owned, providing details of their landholdings, including the use of the land and what entity type owns the land.

All changes must be updated annually to enable land value to be assessed each year for an accurate calculation of any land tax payable.

Failure to register or failure to pay land tax when required may result in penalties, including interest charges and possible fines, under the Taxation Administration Act 1996.

Reach out to us at YML Chartered Accountants and we will review and assess your property holdings to check thresholds and rates in preparation for the registration process via Revenue NSW.

How can YML help?

Talk to our YML Chartered Accountants today to see how YML Group can assist you with your land tax obligations. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

YML Finance can help you pay your ATO Debt and Division 7A Loans 

If your company owes an ATO or debt, or your company has Division 7A loans, then you might consider a loan from YML Finance. We can help you to pay your ATO debt or your Division 7A loans.  

Learn more about how we can help you by calling us on (02) 8383 4466 and requesting a callback or making an appointment with the YML Finance Team. 

How can YML help? 

Talk to our YML Finance Team today to see how YML Group can assist you with a loan. For more for more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Virtual Bookkeeping Services for streamlining your Business

Virtual bookkeeping helps business owners monitor their financial health. For many small to medium Australian businesses (SMEs) accessing highly skilled accounting specialists is made easy by adopting virtual bookkeeping services.  

Outsourcing and co-sourcing – using your company’s established internal resources alongside external specialists – bookkeeping services to manage your business’s financial functions and processes makes sense in a shifting domestic economy.  

With highly specialised know-how, virtual bookkeeping services can assess the financial health of your company. They can streamline your day-to-day accounting operation, potentially increase productivity by reducing costs and help ensure your business can ride the fluctuating economy with minimal stress. 

What virtual bookkeeping services offer is: 

• Cost-effectiveness as a virtual bookkeeping service often reduces the need for full-time, in-house staff, which saves on salaries, employee benefits and office space. Furthermore, your business can hire virtual bookkeepers on an as-needed basis, meaning you only pay when you use a service.

• Access to real-time financial data through cloud-based accounting software, improving decision-making as you can quickly review your business’s cashflow, expenses and overall financial health.

• Automation of repetitive tasks such as payroll processing, bank reconciliations, and invoicing, all susceptible to human error. This offers improved time management, so you can refocus your attention on more strategic tasks within your business.

• Adjustment of bookkeeping services without the need to invest in additional in-house resources as your business grows and more work is required to be done.

• Maintenance of accurate, up-to-date financial records to help simplify your tax preparation and help ensure compliance with the Australian Taxation Office (ATO)’s laws, thus avoiding penalties for non-compliance. As experts in Australian accounting standards and taxation regulations, virtual bookkeepers comply with GST, BAS, superannuation and all other statutory requirements<

By adopting virtual bookkeeping services, you can gain and maintain better control of your financial operations. Think of it as gaining an additional employee within your staff structure without the hassle of accommodating another person in your office. 

YML Group’s own virtual accounting services, a team of dedicated and trained professionals who partner with businesses and who use cloud-based technology to work seamlessly with Australian businesses’ management and staff, are available today to help you streamline your business.  

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with our virtual accounting services. For more information, view, our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

How to avoid a Director Penalty Notice

In Australia, directors should ensure that their company’s Australian Taxation Office (ATO) payments are up to date to avoid being issued a Director Penalty Notice (DPN) by the ATO. Failing to report and or pay their company’s tax obligations on time can result in a DPN, leading to personal liability for directors.  

If you are not ensuring that your company’s payments of: 

• Pay as you go withholding tax (PAYG)

• Superannuation guarantee charge (SGC)

• Goods and services tax (GST)

are accurately reported through your company’s Single Touch Payroll (STP) system, and paid to the ATO on schedule, then you will be subject to penalties, legal consequences, and personal liability as a director. 

What is a Director Penalty Notice and how does it work? 

A DPN is a legal tool used by the ATO that allows the ATO to recover unpaid tax liabilities by enforcing the personal liability of an Australian company director. 

This formal notice means a director will potentially pay outstanding company debt from their personal funds. 

Once the ATO issues you with a non-lockdown DPN, you have 21 days from the date of issue to: 

• Pay the corresponding penalty amount in full
• Engage with the ATO and negotiate a payment plan for the penalty amount

• Place the company in voluntary administration or liquidation

• Appoint a business restructuring practitioner

If you are issued a lockdown DPN, then you have failed to report and or pay your tax liabilities within three months of the due date, and you cannot avoid personal liability through voluntary administration, liquidation or restructuring. 

A DPN allows the ATO to ultimately – if the penalty payment is not resolved – pursue legal action against directors personally, including garnishing salary, seizing assets, or initiating bankruptcy proceedings to recover company debt. 

Resigning as a director does not absolve you of personal liability if the unpaid taxes were incurred during your tenure as director. 

What best practices can a director uphold to avoid receiving a DPN? 

Directors have a duty to prevent insolvent trading, and failing to pay ATO debts may result in breaches of this duty, leading to a DPN or worse, legal consequences. It is therefore in both the company’s and your best interests to be particularly mindful of your company’s ATO payments. 

Single Touch Payroll (STP) is an important system that your company uses to report its payroll information to the ATO, including salaries, wages, PAYG withholding, and superannuation. STP is crucial because it directly influences the ATO’s assessment of a company’s tax obligations. 

STP used effectively and monitored regularly by you can help to ensure that your company stays up to date with its ATO payments and help to avoid increased scrutiny and the issuance of a DPN. 

As director you can ensure STP compliance by: 

• Using STP-compliant software

• Incorporating regular software updates

• Monitoring data entry for accuracy

• Reviewing STP submissions for accuracy and promptly correcting any errors

Seeking professional tax law advice to provide guidance on your options should you receive a DPN would be prudent but rather staying up to date with your company’s ATO payments and maintaining compliance are the two best ways to avoid the implications of a DPN. 

How can YML help? 

Talk to our YML Chartered Accountants and YML Finance Teams today to see how YML Group can assist you with a Director Penalty Notice. For more information, view, our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Your SMSF and Estate Planning – What to consider

You can integrate your self-managed superannuation fund (SMSF) in to your estate plan, providing you the ability to distribute your retirement savings to your beneficiaries upon your death. It is important to remember to have a valid and current Will to enable you to include specific instructions about your SMSF, as personal superannuation is not generally an automatic inclusion in an Australian Will. 

When estate planning with a SMSF, it is important to address Members, Trustees and the Fund itself.   

Factors for Members to consider are: 

• A Binding Death Benefit Nomination (BDBN), a directive given by a member to the SMSF trustee to pay a member’s superannuation benefit to specified beneficiaries upon a member’s death. A binding nomination legally obliges the trustee to follow a member’s instruction, whereas a non-binding nomination gives the trustee discretion in distribution. 

• A Reversionary Pension which allows a member’s superannuation income stream to continue to be paid to a nominated beneficiary (usually a spouse), providing ongoing financial support, upon a member’s death.  

• Taxation, in terms of what form death benefits from the SMSF will be paid to beneficiaries, either taxable or tax-free, depending on the relationship of each beneficiary to a member. 

• Corporate trustees and to whom a member will leave the shares. 

Questions for Trustees to ask are: 

• What are the SMSF’s rules around the instructions for a member’s wishes to be carried out? 

• In what financial position is the SMSF for the carrying out of a member’s wishes?  

• Can death benefits be paid to beneficiaries in required timeframes? 

• Are the SMSF’s investment diversification and liquidity sufficient to pay death benefits? 

Fund compliance issues to address are: 

• The appointment of a new person to act as Trustee in place of any deceased member or to act as Director of a Corporate Trustee.  

• The taxation outcomes generated by the selling of assets, such as Capital Gains Tax (CGT) to be paid upon the sale of property. 

• The distribution of any insurance proceeds for policies held for a deceased member, and whether to claim any tax deductions on unused current year insurance premiums. 

• The continuation of the SMSF upon the death of a member, depending upon the SMSF structure and number of members, as well as whether its trust deed continues to support estate planning objectives made prior to a member’s death. 

Undertaking regular reviews and updates and seeking professional legal, taxation and financial advice are part of ensuring a SMSF estate plan is comprehensive, tax-effective and legally sound.  

How can YML help? 

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF estate plan. For more information, view, our website and contact us on (02) 8383 4444 r by using our Contact Us page on our website.

Restructure Relief Options – Small Business Restructure Rollover

Australia’s Small Business Restructure Rollover (SBRR) is a concession available to small businesses, providing immediate taxation relief via the deferral of capital gains tax (CGT) on active assets being transferred as part of a genuine business restructure. The SBRR provides several benefits to small businesses, assisting them to adapt, grow, and optimise their business operations. 

What is an active asset? 

An active asset is defined as a tangible (or intangible) asset currently used (or connected), or held ready for use, while carrying on a business.  

What are the eligibility criteria for the SBRR? 

• An eligible small business entity with an aggregated turnover of less than $10 million 

• From 1 July 2016, active CGT assets and other active assets were transferred between another small business entity, a small business affiliate or small business partnership 

• A genuine restructure of an ongoing business to improve a business, not an artificial or inappropriately tax-driven scheme, occurred for the transfer of active assets 

• There was no change in ultimate economic ownership of the transferred active assets 

What are the key benefits of the SBRR? 

• Immediate CGT taxation relief – without the financial burden of upfront CGT payments upon transferring active assets during a restructure, businesses can reallocate financial resources to business operations during and after restructuring 

• Improved cash flow management – by deferring CGT, businesses can reinvest savings to help manage their day-to-day, and to develop their longer-term business goals 

• Flexible restructuring – the SBRR applies to various entities (individuals, partnerships, companies, trusts), providing a choice of suitable restructuring, and it applies to various active assets used in businesses for a broad range of purposes 

• Business value preservation – the SBRR can help preserve the value of businesses and thus help maintain business and financial continuity during restructuring 

• Reliable taxation planning – the SBRR provides for the tax treatment of restructured assets to remain certain, so businesses can confidently prepare their financial and strategic plans 

• Business growth opportunity – by deferring CGT of active assets under the SBRR, businesses are encouraged to invest in new business opportunities, research and development 

The Small Business Restructure Rollover is a valuable tool for Australia’s small businesses, offering significant deferred tax relief, restructuring flexibility, and greater opportunity for business growth and innovation. 

How can YML help? 

Talk to our YML Chartered Accountants and YML Finance Teams today to see how YML Group can assist you with the SBRR for your small business. For more information, view, our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.