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Managing risk in your SMSF

Posted on October 12, 2018 by admin


SMSFs provide the trustee autonomy and an increased opportunity to maximise your retirement savings. However, an investment strategy must be accompanied by a risk management plan should some of your investments come up short. Consider the following risk management strategies: DiversificationDiversification reduces risk by investing in many different assets including property, annuities and equities. By spreading your earnings across several investments you minimise the risks to your retirement nest egg that can occur if one investment suffers a loss or a disappointing return. Organise your target returns according to your asset class and establish the accepted variation range from this target. This allows you to track your investment portfolio and whether it is setting you on the right financial path. LiquidityIf you tie up your money in assets like property, then you may run short on cash. It is important that you have cash to cover the costs of running your SMSF and in the case of a member’s total and permanent disablement. If you’re also forced to sell an asset to get this cash the market conditions may not be ideal, and you could receive a disappointing return because you need cash in a rush.


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ATO announces $20,000 instant asset write-off

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The ATO has extended the $20,000 threshold to 30 June 2019. If you buy an asset and it costs less than $20,000, you may write off the business portion in your tax return. To be eligible to use the simplified depreciation rules and claim an immediate deduction for the business portion of each asset costing less than $20,000, you must: Have a business turnover less than $10 million (increased $2 million on 1 July 2016) The asset was first used or installed ready for use in the income year you are claiming it in. If your asset costs more than $20,000, you are not eligible for immediate deduction. They will continue to be deducted over time using the general small business pool. You can write off the balance of this pool if the balance (before applying any other depreciation deduction) is less than $20,000 at the end of an income year. The $20,000 threshold applies from 12 May 2015 to 30 June 2019 and reduces to $1,000 on 1 July 2019. Remember, registered tax agents and BAS agents can help you with your tax.


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Choosing the right super risk profile

Posted on October 5, 2018 by admin


Choosing the right super risk profile at the right time can drastically increase your retirement savings. The following considerations will help you invest wisely when it comes to building your retirement nest egg. Types of investment optionsYour super fund should offer a range of investment options to consider. Here is what to know about each kind of option: Aggressive options are high risk, and you may have to sustain significant losses hoping to maximise your return in the long-term Growth options aiming for higher returns over longer terms may sustain some losses in poorly performing markets Balanced options provide moderate growth but endure less damage with an economic downturn Conservative options provide a lower return but are the lowest risk option Picking the right optionThe investment option right for you depends on your retirement goals, your financial circumstances and your attitude towards risk. Your timeframe for investment should be substantial if you are looking at high-risk options as you have a considerable opportunity to recover from any losses. As your income stabilises and your retirement comes closer consider shifting to a low-risk alternative to secure what you have built up. You may also want to look to your assets like […]


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Claiming tax when working from home

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The ATO is seeking to increase their attention on home office expenses due to the high level of questionable claims made by taxpayers. There has been an increase in the number of Australians claiming deductions for costs incurred from working from home. The ATO reports that in the last tax year 6.7 million taxpayers claimed a record $7.9 billion in deductions for ‘other work-related expenses’, including expenses relating to working from home. The main mistakes stem from individuals claiming the whole instead of the work-related portion of expenses for bills related to phone, internet, printing and stationery. The ATO has identified that a separate work area will incur work-related expenses eligible for tax deductions as opposed to answering some emails at a kitchen bench. The ATO has also recommended recording expenses in case of an audit or if the ATO contacts your employer to confirm your claim. To ensure you do not suffer non-compliance penalties, the ATO recommends you follow the three golden rules for taxpayers working from home. One- you must have spent the money yourself and not been reimbursed, two- the claim must be directly related to earning your income, and three- you need a record to prove […]


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Managing risk in your SMSF

October 12, 2018

SMSFs provide the trustee autonomy and an increased opportunity to maximise your retirement savings. However, an investment strategy must be accompanied by a risk management plan should some of your investments come up short.

Consider the following risk management strategies:

Diversification
Diversification reduces risk by investing in many different assets including property, annuities and equities. By spreading your earnings across several investments you minimise the risks to your retirement nest egg that can occur if one investment suffers a loss or a disappointing return. Organise your target returns according to your asset class and establish the accepted variation range from this target. This allows you to track your investment portfolio and whether it is setting you on the right financial path.

Liquidity
If you tie up your money in assets like property, then you may run short on cash. It is important that you have cash to cover the costs of running your SMSF and in the case of a member’s total and permanent disablement. If you’re also forced to sell an asset to get this cash the market conditions may not be ideal, and you could receive a disappointing return because you need cash in a rush.