Sunday, 31 July 2011

FULL 3G Guaranteed Optus to boost indoor mobile reception


click link to check out product

FULL 3G Guaranteed Optus to boost indoor mobile reception

Optus Femtocell

First why is this good !!
People with iPhone and have data plan and want to use that
data to share with your laptop at home,

 BUT reception was SH#@ .

Now a solution....YEAH ....Optus 3G Home Zone...

Author: AAP

Thursday 28th July 2011
Optus says a new product to boost indoor mobile reception will encourage people to ditch their fixed-line phone and save on line rental fees.
The device, called a femtocell, connects to a fixed-line broadband connection and gives Optus mobile users up to five bars (full reception) of coverage in their home.
The product, launched on Thursday, allows Optus mobile customers to get unlimited standard national calls to landlines and mobiles for a fee on top of their mobile plan.
Optus consumer managing director Michael Smith says the product ensures that mobile phones can be used to its fullest extent indoors.
"It is probably best explained as a mini base station in your home," Mr Smith said on Thursday.
"This device is about saying `actually in your house, where ever you are, we can be confident that you will get up to five bars of coverage'."
When an Optus mobile customer uses their phone inside the home, the data is delivered via the device and the fixed-line broadband connection rather than the mobile network.
Plans start from $5 a month, depending on the user's mobile package.
Up to 12 mobiles can be registered on the device, which will be available in Australian capital cities and some regional centres from Sunday.
A minimum fixed broadband speed of 128kbps is required.

Australia’s relationship with the home phone set to change with new Femtocell technology
11 Apr 2011


Femtocell devices designed to boost indoor 3G network coverage could actually create coverage blackspots, according to Telstra's chief technology officer Dr Hugh Bradlow.
Femtocell devices are deployed into homes and buildings where coverage is poor, acting as mini cell towers. Only 3G devices that are approved to access the femtocell can leverage a household's fixed-line broadband coverage to provide improved voice and data coverage. Optus launched a trial of an Alcatel-Lucent femtocell called 3G Home Zone with consumers earlier this year, while Vodafone has begun a limited trial of Huawei-branded devices with business customers.
According to Bradlow, Telstra is reluctant to join its rivals in offering femtocell devices because he said they interfere with normal network coverage for other users.
"[Femtocells] do actually cause holes in the macro coverage, so that because a femtocell is basically a private base station, you have to register handsets or dongles onto that base station for use by it. If you happen to be in someone else's house and their femtocell is actually sucking away capacity from the macrocell, then you actually can't get coverage at all," Bradlow told Twisted Wire.
Telstra has a philosophy of providing "always 3G" coverage for both indoor and outdoor, according to Bradlow. He also said Telstra addresses indoor coverage issues by using the more penetrative 850MHz spectrum in some places, as well as carrier-controlled small indoor cells in other areas. Furthermore, there was a buffer built into the network to allow better indoor coverage.
"We designed the network with an indoor margin built into it so that when the signal hits the side of a building there is at least 15dB that it can use to get inside the building and get coverage in the building," he said.
According to international group Femto Forum, however, the femtocell devices in use today do not interfere with macrocell coverage.
"They are extremely intelligent devices capable of sensing the use of frequencies around them and adapting their operation to minimise any disturbance while staying within parameters which are set by the operator. Ultimately, they benefit from the certainty of operation on licensed frequencies which can be carefully managed by the operator, unlike the licence-exempt frequencies used for Wi-Fi. Calculations and trials have demonstrated that femtocells actually reduce the overall interference levels in a network by reducing the loading of the outdoor network."
Bradlow also rejected industry speculation that customer use of femtocell devices would reduce network capacity issues for telcos.
"A lot of the femtocell manufacturers will claim that it does give you extra capacity, but we've done studies on that and the penetration of femtocells would have to be so significantly high to get any impact on network capacity that it is a meaningless concept," he said, adding that one third of households would need to have femtocell devices for it to have any noticeable effect.


Optus announced today that it had commenced the first Australian commercial pilot of a new wireless technology that is set to change Australia’s relationship with their home phone.  Australia’s first commercially available Femtocell device for consumers has arrived with the launch of Optus 3G Home Zone.
Optus 3G Home Zone is the newest and simplest way for consumers and small business customers who want an alternative voice solution for the home or small office.
The Optus 3G Home Zone is a small device that customers can self-install, by plugging the device into their existing fixed broadband internet service. Once connected, the Home Zone unit provides Optus customers who use mobile phones, smartphones, tablet PCs and mobile broadband devices in the home or small business office with access to their own private and dedicated in-home mobile network.

Gavin Williams, Optus Consumer Marketing Director said, “Increasingly customers are abandoning their fixed line in favour of mobile plans which offer incredible value, such as the Timeless plans which Optus pioneered two years ago. As more customers use 3G mobile devices as their main service in the home or small business office, Optus has been investigating ways to ensure customers receive the best experience possible from their mobile service, both from a value and a network perspective.
“Australia’s first commercial Femtocell pilot will provide valuable feedback from our customers on the multiple benefits of this technology.

The device will be initially available in selected Optus stores in Sydney, Brisbane, Wollongong and the Gold Coast,” Mr Williams said.

Optus 3G Home Zone will allow four simultaneous users to reliably make and receive calls and access 3G data services like email, internet browsing and social networking sites within a 30 metre radius of the Home Zone unit. The Optus 3G Home Zone can be easily activated through an online portal where customers can add and remove friends, family and colleagues to ensure everyone has a secure and dedicated signal within the home or small office environment.

“We believe Femtocells are an important way of enhancing the customer experience of the Optus Open Network by acting as a wireless gateway into the home or office. The Optus 3G Home Zone will not only personalise the quality of mobile coverage in the home but has the potential to deliver relevant service benefits such as applications for social networking, entertainment and business,” Mr Williams said.

Select Optus Business Enterprise customers are also participating in an Optus 3G Business Zone Femtocell trial.
For more information please see
Media contact: Joshua Drayton, Optus Corporate Affairs, 02 8082 8138

COOL use of FEEMTOCELL Fridge Magnet technology.

NOW how can this technology help your energy costs in the future.

Ok back to property...

NEXT week looking closer at REAL ESTATE INVESTAR (
if your interested in Investar, check out latest specials.

Do you want the good news or bad news first?

July 14, 2011

Do you want the good news or bad news first?

Filed under: General by admin at 11:16 am — Tags: ;
The latest RP Data Market Update provides a mixed bag of data, with both good news and bad news for Australia’s property market.

Reading some of the newspapers or watching the evening news, you’d most certainly be excused for thinking that Australia was in an economic recession. Much of what we hear in the media is doom and gloom; rarely is there a positive story about the property market nowadays. However, when you dig a little deeper, you can also find some very positive news, which can give us a little bit more confidence in the market. Yes, it may sound strange, but there definitely is positive news out there!

First, the bad news.
  • Canberra was the only capital city in Australia where property prices increased during the three months to April (and that was by a miserly 0.8 per cent).
  • The number of properties selling is well below the five-year average.
    The average time taken to sell a house has increased from 41 days last year to 55 days.
  • The average time taken to sell a unit has increased from 36 days last year to 51 days – that’s an increase of over 40 per cent!
  • Vendors have to drop their asking prices for their houses more than they did last year; from a discount of five per cent to 6.5 per cent.
  • Vendors have to drop the asking prices for their units more than they did last year; from a discount of 4.5 per cent to 6.5 per cent.
  • Auction clearance rates have been trending downwards since the beginning of the year.
  • The number of properties currently on the market are at almost all-time highs – there are 280,000 properties currently for sale!
  • Consumer confidence is dropping.

Now for the good news!
  • Rents are increasing.
  • Inflation is currently under control.
  • Standard variable rates are below the 30-year average.
  • Unemployment is almost at record lows.
  • There are more full-time jobs being created compared to part-time jobs.
Even though I’ve outlined almost twice as many points for the bad news as the good news, the thing to remember is that the most vital news is good. That is: inflation is under control, interest rates are relatively low and most importantly, the job outlook is very good and getting even better.
At the moment there’s some pressure on inflation but if we continue to save our money and not spend as much, the pressure on interest rates will ease. Interest rates will probably go up sooner rather than later but when you put everything into perspective, a 25 basis point increase will put more pressure on household budgets but it won’t cause a catastrophe. Why? Because we have jobs that are secure and our wages are increasing.
Despite what you may read or hear in the media, all is not lost. Yes, property prices are dropping, but don’t expect them to drop for too much longer.
What do you think about the outlook for the property market? Is an upward swing just around the corner?

Peter Koulizos is a property educator at UniSA and TAFE and the author of The Property Professor’s Top Australian Suburbs – a guide to Australia’s top suburbs for property investors and homebuyers, available from

Saturday, 30 July 2011

07 - Dying for a dispute over super

William Buck
June 2011
National Newsletter

Be Informed
The Winter Edition 

07 - Dying for a dispute over super

The media recently reported that the main area of dispute in relation to superannuation is the distribution of benefits on death.

As a matter of law, a person's benefits in, and the assets of, a superannuation fund will not form part of the member's estate on their death (even if it is a self-managed superannuation fund). Accordingly, it is not possible for the member to gift those benefits/assets (Death Benefit) under their Will. Therefore, other steps must be taken in order to properly deal with a member's superannuation on their death.

Normally, the rules of a superannuation fund regarding the death benefit generally give the fund trustee the discretion to pay the Death Benefit in whatever proportions the fund trustee decides to any one or more of:

— the member's 'dependants' (which include their spouse, children
     and anyone who is financially dependant on the member); and
— the member's legal personal representative (i.e. their estate)

While this flexibility can be advantageous, it is also potentially open to abuse, or significant disputes and delays unless further steps are taken.

It is possible to restrict the fund trustee's discretion, or force the fund trustee to deal with Death Benefits in a specific way, by having a valid Binding Death Benefit Nomination in place at the time of death. It is one thing to have a valid Binding Nomination in place, but another to have the right one in place.

Unfortunately, it is common for 'standard' Binding Death Benefit Nominations to be used. In our view, no Binding Nomination should ever be prepared without a complete review of the member's circumstances, estate planning objectives and arrangements and the Fund's rules.

Examples of some issues that need to be considered before preparing a Binding Nomination include:

— Is there a power under the Fund's rules to actually make a Binding Nomination? If so, what type of Binding
     Nominations do the Fund's rules allow?
— Who are likely to be the member's death benefit dependants, allowing the Death Benefit to be paid tax-
— Are any of the member's children under the age of 25 or disabled, so that the Death Benefit can be paid in
     the form of a pension (if appropriate)?
— Will the intended beneficiaries need to access the Death Benefit quickly (e.g. to pay bills etc), in which case
     it may be best to direct it away from the estate (given potential delays obtaining probate)?
— Is it better to pay the Death Benefit to the member's estate and for it to be distributed in accordance with the
     terms of the Will? Has the Will been properly prepared and executed to deal with this Benefit?
— Is it better to have some flexibility so that the fund trustee can choose the most appropriate options at the
— Who will be the fund trustee(s) on the member's death? Can they be changed? Is it appropriate for them to
     have any discretion as to the distribution of the Death Benefit?
— If the death benefit is left to a spouse, what form must the Benefit be paid and are there any second
     marriage or asset protection matters to be considered?

The answers to the above questions and more will not only affect the drafting of the Binding Nomination, but potentially also the member's estate planning documents and the Fund's rules, which clearly require the input of a specialist.

Still happy to go it alone? If so, just remember, the problem with Binding Death Benefit Nominations is that they are binding. Get them wrong and you are stuck with the consequences.

If you would like to review your Binding Nomination, please contact your William Buck advisor.

Thursday, 28 July 2011

Changes Discretionary Trust new tax year 2011-2012

William Buck
June 2011
National Newsletter
Be Informed
The Winter Edition 

01 - Trusting times

2011 Is a big year for trusts. Over the last financial year a number of substantial changes have impacted on the application and interpretation of Australian tax laws in relation to the use of trusts.

In particular, in 2010 the High Court’s much awaited decision on the Bamford Case has affected the way in which a trust calculates and distributes its income which in turn has ramifications for the assessment of a beneficiary’s income.

Later in the year, the Australian Tax Office (ATO) finalised its position on unpaid present entitlements which may now be subject to Division 7A.  This new stance provides a restriction on the previously common use of company beneficiaries to limit the tax on trust profits to 30%.

In the year ahead, it is expected that the Government will introduce new laws on how capital gains and franked dividends are dealt with by trusts and the 2011 Federal Budget announced changes which will affect distributions to minor beneficiaries.

All of these developments mean that 2011 has shaped up to be a critical year for trusts.  Some of the key changes are reviewed below.

Distributions >
Corporate beneficiaries >
Streaming >
Minors >




Trusts are still dealing with the repercussions of the Bamford decision and the ATO’s subsequent position which have had a major impact of how the “income” of the trust estate is defined.
The High Court deemed that the “income” that is distributed to its beneficiaries each year is determined by the terms of the trust deed rather than accounting principles, trust law or tax law.  As such, the trust deed is critical and the concept of “income” may differ from trust to trust.

If a trust receives amounts of income such as franked dividends, foreign income from which tax has been deducted, or discounted or concessionally taxed capital gains, the trust deed will need to be carefully reviewed to ensure the trust can actually distribute the income to the beneficiaries to which it intends.  Otherwise the amount may be assessed to the trustee and taxed at the top marginal tax rate, or the wrong beneficiary may be assessed.

The Court also decided that a beneficiary’s assessable income for tax purposes should include the same percentage of the trust’s net (taxable) income as is received for trust purposes. For example, if a beneficiary received 10% of the “income” of the trust estate (calculated in accordance with the trust deed), then the beneficiary would be assessed for tax purposes on 10% of the trust’s net (taxable) income.  This can create issues where different definitions of income are used for tax and trust purposes and where tax adjustments occur in later years.

Consequently, great care is needed when planning where trust distributions will be made this year and effectively documenting this decision.

Corporate beneficiaries

The ATO has now finalised its position on unpaid present entitlements (UPEs) owing from a trust to a private company where the two entities are part of the same family group. 

Unpaid present entitlements are essentially trust distributions that have been determined by the trust but have not been physically paid.

Private company beneficiaries are often used to limit the effective tax rate on trust profits to 30%.  This strategy generally involves the trust distributing income to the private company, without physically paying some or all of the distribution to the company beneficiary (i.e. a UPE is created).  The income distributed is taxed at 30% within the company, while the funds representing that distribution remain within the trust.  The trust may then use those “company owned” funds for its own purpose (e.g. to purchase assets, retire debt, etc).

The ATO will now take the view that the UPE is a loan for Division 7A purposes.  Unless specific actions are taken, this can mean that a deemed dividend will arise for the trust.

Before 30 June 2011 trusts will need to review existing unpaid present entitlements (UPEs) to:

1. Identify UPEs which have been converted to loans
2. Determine if any UPEs created before 16 December 2009 satisfy the requirement to be grandfathered.

For UPEs created after 15 December 2009 (essentially those relating to 2010 distributions), trusts will need to decide if the amounts will be paid out, converted to complying loans, administered under one of the ATO safe harbour options, or if an alternative approach will be applied to prevent a deemed dividend arising.

For current year (2011) distributions, the use of a corporate beneficiary strategy needs to be re-evaluated.  For trusts conducting a business or building an investment portfolio, using a corporate beneficiary and the ATO’s 7 or 10 year loan safe harbour options could be a viable approach, however this will require ongoing management over the coming years.  Trusts looking to adopt one of these approaches should contact their local William Buck advisor.


One of the historical advantages of a discretionary trust has been the ability to stream particular types of income to particular beneficiaries.  For example, capital gains could be distributed to individuals to utilise the 50% discount concessions and franked dividends could be distributed to a corporate beneficiary (to cap the tax at 30% and allow the franking credit to offset against the tax payable) or to a beneficiary on a low marginal tax rate (to achieve a refund of excess franking credits).

Late last year the decision in the Bamford Case put the viability of this strategy into question because all beneficiaries are required to be assessed on the overall percentage of their share of the income.  The subsequent ATO position further suggested that streaming would not work post 2010.

The Government has now released draft legislation that is intended to restore the ability of discretionary trusts to stream capital gains and franked dividends.  This change is intended to apply for the 2011 year.

For trusts intending to utilise the streaming strategy for 2011, a more detailed consideration of the application of the new streaming laws (once enacted) to the situation of the trust will be required.


In the 2011 Budget the Federal Government announced that, with limited exceptions, minors will no longer be eligible for the Low Income Tax Offset.  This will affect the amount of distributions made from trusts to minors from 1 July 2011 (so for the 2012 year).

Historically minors could receive $416 in income tax free.  Above this amount, penalty rates of tax applied, creating an effective tax rate equal to the top marginal rate.  With the introduction of the Low Income Tax Offset, the tax free amount was increased to $3,333 for the 2011 year.  The tax free amount is even higher if franked dividends can be distributed to the minor.

2011 will be the last year that this strategy can be applied.  From the 2012 year onwards, the historical $416 limit will once again apply.

The changes outlined above make 2011 a momentous year for Trusts and will require careful consideration.  If you have any queries about any of the issues raised in this article please contact your local William Buck advisor.

Tuesday, 26 July 2011

GST and the margin scheme


easy PDF link for your iBooks app on your iPad






Using the margin scheme

The amount of GST you must normally pay on a property sale is equal to one-eleventh of the total sale price.
When you use the margin scheme, the amount of GST you must pay on a property sale is equal to one-eleventh of the margin.
Your margin is generally the difference between the sale price and one of the following:
  • the amount you paid for the property
  • the value of the property provided in an approved valuation of the property as at 1 July 2000 (if certain conditions are satisfied).
Your margin is not:
  • the profit margin - unlike an accounting profit margin, the margin on the sale does not take into account costs you incurred to develop the new property or subdivide the land
  • the selling price minus a valuation of the property for a property purchased after 1 July 2000
  • worked out the same way as a capital gain - it is possible that you still pay GST under the margin scheme when you have no capital gain for income tax purposes.

If you sell property as part of your business and you are registered for GST, you may be able to use the margin scheme to work out how much GST you must pay.
Whether you can use the margin scheme depends on how and when you first purchased your property. For GST purposes the date when settlement occurs will be the date that you have purchased the property.
You can use the margin scheme if you purchased the property before 1 July 2000 (the start of GST) or if it is purchased after 1 July 2000 from someone:
  • that was not registered or required to be registered for GST
  • who sold you existing residential premises
  • who sold the property to you as part of a GST-free going concern, or
  • who sold you the property using the margin scheme.
You cannot use the margin scheme if when you first purchased the property the sale to you was fully taxable and the margin scheme was not used. In this case the amount of GST included in the price you paid is one-eleventh of the full purchase price.

Attention icon
Certain requirements have to be met for you to use the margin scheme. These requirements vary depending on when you bought the property and when you are selling the property.

In terms of the purchase you made, requirements vary depending on whether you purchased your property:
  • before 1 July 2000
  • on or after 1 July 2000, or
  • on or after 9 December 2008.
In terms of the sale you made or make, the requirements vary depending on whether you make the sale:
  • on or after 17 March 2005
  • on or after 29 June 2005.
See '
Working out the margin and GST payable'.

First work out which one is you. Click the link from list below.....

Sections within Working out the margin and GST payable


There are two methods you can use to work out the margin:
the consideration method, or
the valuation method.

What method you can use will depend on when you originally purchased the property you are selling.
You can use the consideration method regardless of when you purchased the property you are selling.
The margin, using the consideration method, is the difference between the property’s selling price and the original purchase price – that is the sale price less the purchase price equals the ‘margin’.
When working out the margin using the consideration method, do not include any of the following as part of the purchase price:
costs for developing the property
legal fees

any options you purchased
stamp duty
any other related purchase expenses. 


EXAMPLE 2: using the consideration method for property purchased before 1 July 2000
James is registered for GST and reports GST quarterly.
On 15 June 2000 James purchases vacant land for $110,000 as part of his business. In May 2008, James contracts to sell the land for $220,000 and specifies in the contract that he will apply the margin scheme.
The margin for the sale of the land is $110,000, the sale price of the property minus the purchase price of the property ($220,000 – $110,000). The GST James must pay on the margin for the sale is $10,000 ($110,000 × 1/11th).
Because James chose to apply the margin scheme, the purchaser cannot claim a GST credit.

You can generally only use the valuation method to work out the margin if you originally purchased your property before 1 July 2000. The margin, using the valuation method, is the difference between the selling price and the value of the property (usually as at 1 July 2000) – that is the sale price less the value of the property (usually as at 1 July 2000) equals the ‘margin’.
You can only use the valuation method if you hold an approved valuation

Bayview Limited is a GST registered property developer and reports GST on a monthly basis.
Bayview bought land in 1970 for $30,000 and entered into a sales contract to sell the land in September 2008 for $1.44 million. The contract stated that the margin scheme would be used to work out the GST on the sale. Settlement occurred on 2 December 2008.
Bayview obtained a professional valuation of the land (as at 1 July 2000) of $1 million in November 2008 (Bayview’s tax period ends on 31 December).
Using the valuation method, Bayview calculates the margin as the selling price minus the value of the land provided in the professional valuation that they received, (that is $1,440,000 – $1,000,000 × 1/11th which equals $440,000). When lodging their December 2008 activity statement, Bayview reports and pays the $40,000 GST on the sale
of the land.
Because Bayview chose to apply the margin scheme, the purchaser cannot claim a GST credit for the GST included in the price they paid for the property.

You can change how you calculate the margin (consideration or valuation method) up until the due date for lodgment of your activity statement for the relevant tax period if you:
  • purchased your property before 1 July 2000, and
  • choose to apply the margin scheme at, or before, the time
    you sell the property.
    If you have an approved valuation by your activity statement due date, for the period the GST on the sale applies, and you work out the margin based on that valuation, you cannot later change to:
  • another valuation
  • a different method of valuation
  • an amount based on your purchase price
    (the consideration method).
    If you have more than one approved valuation by the activity statement due date, you must choose one of these by the activity statement due date. After that time you cannot change.

If you are selling property under the margin scheme and you originally purchased (or held an interest in) it before 1 July 2000, you can choose to pay the GST on the difference (that is, the margin) between either the sale price and the:

  • price you paid when you purchased the property (the
    consideration method), or
  • value of the property at a relevant valuation date, usually
    1 July 2000 (the valuation method).

Tom is registered for GST and is carrying on a business
of leasing commercial property. Tom bought one of his commercial properties in 1989 for $50,000. He sells this commercial property in 2003 for $105,000 using the margin scheme. If Tom applies the consideration method to calculate his GST liability, the margin is $55,000 ($105,000 – $50,000). Tom’s GST liability is 1/11th of this amount, which is $5,000. 

However, if Tom decides to use the valuation method and obtains a market valuation (approved) of the property as at 1 July 2000 and the property is valued as $61,000, then the margin is $44,000 ($105,000 – $61,000). Tom’s GST liability would then be 1/11th of this amount, which is $4,000. 

If you are selling property under the margin scheme and you originally purchased (or held an interest in) it on or after
1 July 2000, you:

  • must use the consideration method, that is, you must pay the
    GST on the difference (margin) between the sale price and the
    price you paid when you purchased the property, and
  • cannot use the valuation method.
  1. EXAMPLE 5
John is registered for GST and is carrying on an enterprise of property development. He buys vacant land from Jane, who is not registered for GST for $100,000 on
25 September 2007. John improves the property with roads and other services and sells it to George for $210,000 on

2 October 2008. Then, the margin is
$210,000 – $100,000 = $110,000. John must pay 1/11th of the margin, that is, $10,000, as GST.



Eligibility to use the margin scheme changed for sales of property made from 17 March 2005 onwards. This means, you cannot use the margin scheme if you:

    ▪    purchased the property as fully taxable and the margin scheme was not used
    ▪    inherited the property from a person who could not use the margin scheme
    ▪    obtained the property from a member of the same GST group who could not use the margin scheme, or
obtained the property, as a participant in a GST joint venture, from the joint venture operator who could not use the margin scheme.


Sales of property using the margin scheme that are made from 29 June 2005 onwards require a written agreement between the seller and purchaser to use the margin scheme 


You may use any reasonable method of apportionment to work out the proportion of the purchase price for a subdivided allotment or stratum title unit. 
If you purchase land and subdivide it, or build strata title units on it and later apply the margin scheme, the margin is the selling price less the corresponding portion of the price you paid for the property. 


Working out the margin on subdivided land or stratum title units 

Josephine is a GST registered property developer. She purchases a 2,000 square metre block of land for $240,000 from a private individual that was not required to register for GST. The block is of equal value per square metre. She subdivides the block into two allotments of 600 square metres each, and one allotment of 800 square metres. 

Josephine decides to use an area basis to work out the purchase price of the subdivided allotments. The purchase price for each of the 600 square metre allotments was $72,000 (600/2,000 × $240,000), and the purchase price of the 800 square metre allotment is $96,000 

(800/2,000 × $240,000). 

If Josephine sells the 800 square metre allotment for $140,000, she must pay $4,000 GST on the sale of this allotment, that is, the selling price minus the purchase price of the property divided by eleven, that is ($140,000 – $96,000) × 1/11th. 


Monday, 25 July 2011

PAYG Variations - Extra Money in Your Pocket Weekly!

PAYG Variations - Extra Money in Your Pocket Weekly!

An often overlooked way in which Investors can improve their weekly cash flow is through a pay as you go (PAYG) variation. The PAYG system is a method of tax collection that was introduced in July 2000 to replace previous versions of the same system, such as pay as you earn (PAYE).

PAYG instalments are a system for paying instalments towards your expected tax liability on your business and investment income for the current income year. A PAYG variation is an application to the ATO requesting that your employer reduce your weekly/fortnightly tax payments to reflect set deductions like depreciation on a rental property. In essence it is a way of decreasing the amount of tax you pay each fortnight to help with your week to week cash flow. Rather than a tax return at the end of the financial year, it is equivalent to receiving small portions of your return each week.

The flexibility this gives the Investor, combined with depreciation deductions identified by your Quantity Surveyor, can be of great help in managing investments and mortgage repayments.

Let's consider a hypothetical situation;

You have just purchased an investment property. If you were to take your potential tax return, including the extra deductions gained from your investment property, and divide it by 52 weeks, this would give you the approximate amount your tax is reduced by per week - creating the extra cash flow.

A Quantity Surveyor makes it even easier for you when you consider the extra tax deductions they are able to identify for an investment property. Talk to your accountant about PAYG variations and increase your weekly cash flow!

Article Provided by BMT Tax Depreciation Pty Ltd. Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is a Director of BMT Tax Depreciation.

also from wealth farm:

Pay As You Go Variations - Extra money in your pocket every week!

Written on the 28th of April 2010 by Luke Glasgow
The following provides some preliminary information regarding applying for PAYG Variation as a result of investment in Australian residential rental property by Australian residents under the Australian taxation laws.

This advice is of a general nature and you should seek independant professional advice before acting on any of this information.
Sometimes the expenses associated with holding a rental property (e.g. Interest, repairs, insurances, rates,depreciation etc) are greater than the rental income received from the property. This scenario generates a tax loss and is called negative gearing. Where an individual tax payer incurs a negative gearing loss they may apply to have their PAYG instalments reduced, so the out-of-pocket costs of holding the property are reduced.
This entails:
•calculating your projected annual assessable income from wages, interest, dividends, rental property rent and any other assessable sources, and
•calculating your projected annual allowable deductions for work related expenses, interest and dividend expenses, rental property expenses including borrowing costs and depreciation claims and any other allowable deduction, and
•reporting the above to the Australian Taxation Office in the prescribed form.
It is very important that the calculation of the projected taxable income reduction be accurate, otherwise the Australian Taxation Office will penalise the taxpayer for lodging an incorrect variation. Similarly, it is very important that the Australian Taxation Office be advised of any change of taxpayer income or expenses which may have occurred after lodging the Application for Variation of PAYG Withholding so that penalties do not apply. It is for these reasons that we recommend you engage a qualified professional to assist in the preparation of the Application for Variation of PAYG Withholding.

Where a resident individual makes a rental property loss for Australian income tax purposes, this loss may be offset against other Australian sourced income. Accordingly the benefit of the income tax reduction will depend on what marginal income tax rate the taxpayer is currently paying based on other assessable income less allowable deductions. If there is no other taxable income to absorb these losses, then the rental losses may carry forward to be offset against future taxable income.
The PAYG variation period ends each 30 June. Accordingly your first application will most likely be for a part-financial-year. Each year thereafter, your application will cover the coming full-financial-year commencing 1 July and ending 30 June. In the first year, you need to lodge your application for PAYG variation either shortly after settling on the property acquisition or shortly before commencing to rent the investment property depending on your specific circumstances.
In the second year and each year thereafter, prepare your application for PAYG variation in April, to lodge with the Australian Taxation Office in May, with the commencement date for reduction from your salary being 1 July.
Once you have lodged the application with the Australian Taxation Office and it has been processed, the Australian Taxation Office will advise your employer of the new varied % tax rate at which to deduct PAYG withholding tax from your gross salary. The Australian Taxation Office will also advise you of this new varied % tax rate.  You should budget for a delay of 28 days from date of lodgement to date of ATO advice to your employer of the new % tax rate.
In order to assist you in preparing an Application for PAYG Variation your accountant will ask you for the following information relating to the financial year for which they are preparing the variation:
•Copies of your two latest payslips
•Estimate of your annual wages, overtime or other benefits your are paid/receive by your employer
•Details of your investment income and deductions (interest, dividend income)
•Details of the weekly rental income you will receive from your investment rental property (your rental agent will be able to assist us in this regard)
•Your accountant will discuss the rental expenses you may claim against your rental income (your real estate agent or solicitor will be able to assist your accountant in relation to some of these matters which will be documented during the property contract and conveyancing process)
•Details of any other income or expenses which will be included in your Australian income tax return
Wealthfarm Accountants are able to assist you with PAYG Variation. If you require further information or assistance, please call us on 1800 WORK IT or email


One way in which a property investor can improve their cashflow is by lodging a PAYG variation. A PAYG variation is an application to the ATO requesting that your employer reduce the amount of tax withheld from your regular salary or wage payments, to reflect the expected rental loss from your investment property.
This is effectively a way of reducing the amount of tax you pay each payroll cycle, rather than receiving a large lump sum refund at the end of the financial year, and can be a great help in making mortgage repayments.
If you own an investment property, speak to your accountant about making a PAYG variation.


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Thursday, 21 July 2011

BIS Shrapnel Residential Property Prospects 2011 – 2014; 19% Growth?

BIS Shrapnel Residential Property Prospects 2011 – 2014; 19% Growth?



Price growth has begun to stall in 2011. The residential markets around Australia have been impacted by rising interest rates, and the decline in first home buyers and general purchaser activity upon the expiry of the First Home Owner's Grant Boost Scheme.

Economic activity has also slowed in 2010/11, although private investment is poised to take over from waning Government spending as the key driver of the economy, and growth is expected to accelerate from 2011/12. Moreover, most residential markets remain in deficiency, with low vacancy rates and solid rental growth coming through. Interest rates have been relatively stable in 2010/11, but are in line to edge upwards again to fend off re-emerging inflationary pressures.

Can the improving economic conditions underpin further price growth or will affordability constraints hamper sentiment? Will investors continue to return to the market as the economic outlook improves? To what level will first home buyer demand recover in 2011 once the current decline after "pull forward" effect of the Boost Scheme is worked through? What does this mean for the price outlook over the next three years by capital city?

Residential Property Prospects 2011-2014 provides a comprehensive review and the outlook for residential property in each capital city and includes price forecasts for the regional areas of Cairns, Townsville, Sunshine Coast, Gold Coast, Newcastle and Wollongong through to June 2014. Understand what is happening with the key fundamental drivers of demand and supply:

  •  the economic outlook and business conditions
  •  interest rate movements and timings, housing loan affordability
  •  impact of Federal and State government incentives
  •  net interstate and overseas migration
  •  underlying demand and dwelling construction
  •  stock deficiencies or oversupply in each market
  •  trends in rental yields and forecasts for rental growth
  •  annual median house price forecasts for capital cities and above regional areas

An annual subscription includes the main report (published June), along with an Update report in December. Your organisation will also have access to our team of residential property consultants and analysts throughout the year to further discuss forecasts, content or methodologies. Subscriptions are for a hard copy of the report only.


Residential property is the major investment for most Australians. But without the information that allows you to judge correctly when to buy and when to sell, you can lose badly.

The report...
• forecasts annual median
house prices to June
2014 for capital cities
(Sydney, Melbourne,
Brisbane, Adelaide, Perth,
Hobart, Canberra and
• also provides forecasts
for selcted regional areas
(Newcastle, Wollongong,
Gold Coast, Sunshine Coast,
Townsville and Cairns).
• forecasts annual rental
growth for residential
• forecasts economic
conditions, interest rate
movements and timings
• provides forecasts for
net overseas and
interstate migration.
• estimates both underlying
demand and pent-up
demand or excess supply
for each city.
• explains the residential
property cycle.
Who should subscribe?
• Developers and builders
• Private investors
• Real estate agents
• Financial institutions
• Investment advisers
• Government departments
and agencies.


Wednesday, 20 July 2011

The RBA Minutes…July 19, 2011 2:07 AM GMT

The RBA Minutes…


The Reserve Bank of Australian released today its minutes that held on July, where the Bank saw that keeping rates unchanged steady at 4.75% it's a prudent decision amid the slowing global economy, while the Bank aims to support the economy to rebound.

On the other hand, the Bank has noted that increasing currency is helping to contain inflation appreciation, and higher Australian currency has dampening effect parts of economy which helped the nation's exports to decline, whereas the Bank has increased its warning about the situation in Euro-Zone as the Greece debt crisis that threatens the global economy, while it increased volatility in Forex markets on Euro concerns.

While the Bank aimed to encourage companies to increase their expansion that will help to hire more workers, because of the Bank targeted to decline the unemployment rates in the upcoming period, further the recent data showed that wages are doing a stable performance; this is a positive phase amid slowing the nation's economy.     

Tuesday, 19 July 2011

Citibank tips fixed rate reductions


Citibank’s head of mortgages strategy, marketing and product, Belen Lopez Denis, has tipped potential further downward movements in fixed rate as the European debt crisis continues to bite.
Yesterday, the bank reduced its standard 3-year fixed rate by 33 basis points to 6.99%. Lopez Denis told Australian BrokerNews that a softening yield curve over the last two weeks due to increased uncertainty over European sovereign and private sector banking debt was translating directly into reduced bank funding costs for fixed rates, making them more affordable for consumers.

Lopez Denis said the Citibank move was based on a forward looking view of fixed rate pricing. She also predicted that downward moves could be seen more widely among lenders in the market. “It's difficult to comment, but don’t be surprised if fixed rates are coming down fairly soon.”
Following the rate reduction, Lopez Denis added that downward moves in fixed rates were making these loans more attractive when compared with variable rates, labelling the current significant differential between fixed and variable rates as a "really unusual circumstance".

"If you think about it, 6.99% can be lower than some of the variable rates available in the market,” she said.
Citibank's move to reduce fixed rates made it "very, very competitive" when combined with its free 60-day rate lock option, she said. "I have heard one other lender from the second tier with a similar level of fixed rates, but they do not have this rate lock feature for free – even the majors don’t. It gives brokers and consumers certainty that the rate is locked in over a long term.”
Ctibank’s current Mortgage Plus standard variable rate for LVRs between 80% and 90% is 7.05%, while loans over $500,000 with LVRs less than 70% are priced at 6.90%. The pricing is based on Citibank's recently introduced "rate for risk" policy.

Lopez Denis said the rate for risk approach had seen a good response from brokers and consumers.
"At the time the structure was introduced on our Basic Variable product, we saw an immediate 30% increase in volumes on an average daily basis. Brokers like being able to show their customers that they higher equity they have, the more reward they get,” she said.