Hefty fines for NSW real estate agents who don’t divulge inspection reports.

Jimmy Thomson - May 26, 2016

•Climate change inspections may join building inspections as prerequisites for buyers

•Companies hustle to become the Uber-X of property

•How much do building inspections cost?

The new regulations are due to come into force at the beginning of August.

Real estate agents in New South Wales face fines of up to $4400 if they don’t reveal details of property inspection reports conducted on houses and units they are selling, under new regulations due to come into force from August.

And, in a huge boost to property’s so-called “collaborative economy”, agents when asked must tell potential purchasers whether the report was commissioned by the vendor or a prospective buyer.

They will also have to reveal the contact details of the person or company that prepared the report to anyone requesting a copy of the contract of sale, and say whether the report is available for repurchase.

The changes in the regulations are contained in a draft issued by Minister for Innovation and Better Regulation Victor Dominello.

 “We’ve heard from many consumers that they are sick and tired of paying for multiple building and pest inspection reports, at a cost of $200 to $600 each, in their search for the right property,” Mr Dominello told Domain. “This is an innovative reform that will help reduce this burden.”

A significant push for legislative change came from professional report-sharing agencies, part of the so-called collaborative economy that comes under Mr Dominello’s portfolio.

Two major players, Before You Bid and Eyeon, are already active in sharing reports, although with different approaches to the same issue.

Before You Bid starts with one potential purchaser paying $499 for a report and then offering a discount every time another buyer takes a copy, reducing the fee to $149 if four or more buyers chip in. Strata reports start at $249 and drop to $79 if enough buyers purchase one.

Under Eyeon’s system, the vendor pays a discounted fee to have all necessary reports done, which are then put on the company’s website for potential buyers for about about 20 per cent of the normal cost – $99 for house building and pest reports, and $69 for strata reports.

Alternatively, all buyers pay the full price for the same report where the vendor hasn’t contributed to the cost, but then those who don’t succeed in the purchase receive a rebate.

Taking a different tack entirely, Jim’s Building Inspections looks for properties hitting the market that are likely to have multiple bidders and then conducts its own reports, which it sells online for half the price to anyone interested in buying that property.

“It is great to see Minister Dominello putting a focus on this area and having a strong understanding of the importance of independence,” Before You Bid chief executive Rhys Rogers says. “This is a fantastic step in creating a fairer, more-affordable system for people completing their property due diligence.”

One of the government’s concerns was that, after losing out on properties several times, prospective buyers weren’t having reports done properly or at all, adding to the significant risk in house purchases.

“Having start-ups and disrupters compete in the property market and offer inspection reports is reflective of our 21st-century economy,” says Mr Dominello. “It also increases competition and reduces the price of these reports for potential buyers.”

The government clearly didn’t want to go down the ACT’s road of compulsory vendor-supplied reports after complaints that poorly trained inspectors were allegedly “ticking boxes” to the benefit of the sellers.

“This reform is a practical demonstration of the NSW government’s commitment to embracing the collaborative economy,” says Mr Dominello. “We want to encourage market disrupters whose business models rely on delivering better consumer experience and greater transparency, to flourish.”
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QT Mutual, RACQ merger: is a bigger customer-owned bank better than $2000 sellout?

May 22, 2016 - Liam Walsh (The Courier-Mail) 

STEVE Targett wants to convince his 60,000 banking customers to merge with RACQ, potentially forgoing an immediate $2000 windfall.

He’s chief executive officer of QT Mutual Bank, a Brisbane-based customer-owned lender created 51 years ago by teachers. The spotlight is on because the 14-branch bank last month announced merger plans with fellow customer-owned motoring and insurance outfit RACQ.

That means QT customers, if they vote for it, would remain in a mutual, or customer-owned institution. That’s opposed to selling their membership to a sharemarket-owned entity.

The problem is when Queensland Professional Credit Union YCU last month sold out to shareholder-owned bank Auswide, each YCU customer received $7600 for their membership. Under a similar formula, QT members would receive more than $2000 each.

Mr Targett said his bank’s board had assessed an RACQ merger as superior. “We think that we can provide the members, through RACQ, with a better experience,” he told The Courier-Mail.

A merged entity had more financial clout, meaning members received improved digital products, better pricing on loans or deposits, and a wider geographic spread thanks to RACQ’s 34 branches, he said.

They would also retain the customer-owned ethos, he said, pointing to RACQ’s education programs in schools.

Mr Targett said without the RACQ merger, QT Mutual faced problems being able to develop their digital banking services or in offering pricing as competitive as it does now.

He also described Auswide’s deal as “far too simplistic” and divvying up QT Mutual’s $130 million in capital as not so easy.

“Who’s money is it?” he asked. “We’ve had people that have passed on, and they’ve been active members and valuable members, and we’ve got some members that contribute more than others and then you’ve got some people who’ve just joined lately. Now are they all entitled to the same amount?

“I’d almost argue that the money’s there to provide a banking experience going forward for members. It’s not there to be split up and paid across to people.”

THE OTHER SIDE

But Auswide CEO Martin Barrett said he found “it curious why boards of mutual (lenders) seek solace in other mutuals when merging”. “Consideration of member benefit, particularly payment for their ownership is, I believe, an important and significant consideration,” he said.

Mr Barrett further rejected notions that customer-owned banks offered better-priced products, or that shareholder-owned lenders did not support local communities.

QT Mutual plans to offer a safety net anyway. While there is no intention for RACQ to demutualise, Mr Targett said members would receive a legacy share for those concerned about the theoretical $2000. It means if RACQ were to demutualise within seven years, customers would receive the money to which they would have been entitled.

“What we’re saying through that is we believe over seven years if you bank with us actively, multiple products, you’ll get more than $2000 of value,” he said.

The debate spreads beyond QT Mutual. Just last week, two customer-owned lenders, Townsville-based Queensland Country Credit Union and Cairns-based credit union ECU Australia decided to merge, saying their combined entities would be stronger and be better for customers.

QCCU CEO Aileen Cull argued that selling out to a shareholder entity was not so black and white in terms of members pocketing thousands of dollars. Customers in mutuals received benefits in terms of pricing and service, she said.

ECU CEO Colin Daly said members helping each other was the credit union’s “reason for being”. The credit union’s stored-up capital “belongs to the organisation”, and not for some “carpet bagger” to come along and grab at the end, he said.

QT Mutual members will vote in midway through this year on the RACQ merger. To be successful, at least 25 per cent of members have to vote and 75 per cent of votes must be in favour.

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Tax office introduces new rules for prestige property owners

Lucy Macken (Domain Prestige Reporter - May 20, 2016)

Prestige home sellers are being slugged with more red tape and face losing 10 per cent of their sale price thanks to measures designed to better police foreign property transactions.

Home owners who sell a property for $2 million or more will be required to provide a clearance certificate from the tax office as of July 1, the day before the upcoming federal election.

But foreign sellers will not be issued a clearance certificate, forcing buyers to withhold 10 per cent of the purchase price - or an agreed adjusted amount - to be sent to the ATO.

Foreign sellers will then be able to claim back part or all of that withholding tax when they settle their capital gains tax obligations.

The audit system is designed to stop tax revenue being lost overseas when foreign resident taxpayers return home with the proceeds of their sale without paying any outstanding capital gains tax.

Those buyers who proceed with the property settlement without a clearance certificate will be slugged with a penalty equal to the amount that was required to be withhold with interest.

The changes have not been welcomed by many in the legal fraternity who specialise in high-end property deals.

"Why should the innocent buyer be burdened with the tax problems of the vendor?," said Neil Matthews, principal of Matthews Solicitors.

"The buyer shouldn't even have to enquire about the tax affairs of the vendor, but that's effectively what the government is asking of them. And the burden then falls to the buyer's lawyer too because that's who will be sued if they get it wrong and omit to get the relevant clearance certificate."

Prestige agents were more sanguine about the impacts of the proposed changes but Michael Coombs, of McGrath Mosman, questioned if it might be easier on buyers if all vendors - including foreigners - were able to be issued with a certificate as part of the contract of sale so foreign sellers were not at risk of being avoided by buyers.

"I appreciate what the government is trying to do here, but I don't think it's fair that the vast majority of prestige vendors are loaded with this extra paperwork just so the ATO can catch those few foreign vendors who owe capital gains tax," said Mr Coombs.

Rob Ward, director of Di Jones Wahroonga, said the extra compliance burden won't necessarily hold vendors to ransom.

"Vendors can apply for this clearance certificate before they go to sell and if they can't get the certificate then they are more likely to not sell at all," said Ward.

Australians vendors will need to provide their name, address and answer three questions to receive a clearance certificate. If they have outstanding tax debts or have not lodged a tax return for the past two years, the certificate will still be issued, once further proof of their identity is established.

Assistant Commissioner Malcolm Allen said the clearance certificate will confirm that the 10 per cent withholding amount does not apply to the transaction.

"We encourage all Australian residents who are looking to sell property with a value of $2 million or more to apply for a clearance certificate as early as possible in the sale process," Allen said.

There is no ATO fee for clearance certificate applications and it is valid for 12 months from issue.

The ATO is following in the footsteps of Canada, France, Spain, Japan and the United States where withholding arrangements to ensure foreigners pay their capital gains tax

Domain Data figures show that in the year to April 10.7 per cent of property transactions in Sydney were for $2 million or more, and 5 per cent of Melbourne's real estate traded above that price point.

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Last drinks as Woolworths ditches Liquor

Some are wondering whether the name change may be the first step towards Woolworths hiving off the liquor business, through a demerger, IPO or trade sale. Gabriele Charotte

By Sarah Thompson & Joyce Moullakis

Woolworths has finally confirmed one of the worst kept secrets in the liquor industry, the restructuring of its $8 billion liquor business under a new brand, Endeavour Drinks Group.

Woolworths told suppliers and partners on Wednesday the name change, which takes effect in June, better reflected the evolving needs of its customers and its vision for the business.

But statements by Rose Scott, Woolworths' general manager of merchandising and marketing for Woolworths Liquor, also left some wondering whether the name change may be the first step towards Woolworths hiving off the liquor business, through a demerger, IPO or trade sale.

"Woolworths is synonymous with the customer facing supermarkets food business," Scott said. "Our association with them through ownership is strong and proud, but it is time for a story about us, for us."

"We need to separate our ownership from the strong customer facing brands that sit underneath it (Dan Murphy's, BWS, Cellarmasters, etc.)," she said.

While Woolworths has been losing market share in supermarkets, its liquor business has gone from strength to strength, underpinned by strong growth at Dan Murphy's, and sales are expected to exceed $8 billion this year.

However, Woolworths' long suffering shareholders believe the value of the liquor business is not fully reflected in Woolworths' market value and the retailer should consider spinning off all of parts of the business to realise some value.

The problem has been putting a value on the liquor business. Woolworths reports liquor sales but does not disclose liquor earnings. The name change to Endeavour may prompt analysts to sharpen their pencils and come up with a valuation.

A Woolworths spokesperson denied that Woolworths planned to spin off the drinks group. However, market watchers have not ruled out a demerger further down the track, especially if Woolworths gets the supermarkets business firing again and is less reliant on liquor.

There has also been speculation that Woolworths could demerge, BIG W, once it has been turned around, and its petrol business.

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Prateek Chatterjee | 19 May 2016

New ATO rule on property deals over $2 million will hurt Chinese buyers even more

As if the negative gearing debate wasn't enough before the election, on July 1, there is another shocker waiting for real estate agents and property owners around Australia trying to transact in property exceeding $2 million.

According to a new ATO rule that comes into effect July 1, all Australian sellers of $2 million-plus properties will be classified as overseas investors unless they get a special tax clearance. That means that all buyers of $2 million-plus properties must deduct 10 per cent from the purchase price and pay that amount to the Australian Taxation Office (ATO) unless the seller can furnish a tax clearance, according to a recent report in The Australian. 

While the move will affect everyone, including Australians, Chinese investors will be impacted more, especially when taken together with steps taken to squeeze Chinese buying in residential property. 

Chinese and Asian buying of Sydney apartments has already fallen 50 per cent in recent weeks and the trend is spreading to other markets, particularly Melbourne. 

The current measure can be traced back to the days when former treasurer Joe Hockey caved into pressures to curb Chinese investment in Australian residential property in 2015. In the process, the treasurer was convinced by the Australian Taxation Office to widen the net to cover local residents, says the report in The Australian.

According to an ATO fact sheet, in May 2013, the government announced that it would introduce a 10% non-final withholding tax on payments made to foreign residents who dispose of certain taxable Australian property with a market value above a specified threshold. The new legislation for this measure became law in February 2016.

The $2 million rule applies to vacant land, buildings, residential and commercial property, leaseholds and strata title schemes.

The ATO website says, "The government is strengthening our foreign resident capital gains tax (CGT) regime to assist in the collection of foreign residents' liabilities."

The definition of property is very wide and includes leaseholds but does not include stock exchange investments. A purchaser who does not receive a “clearance certificate” from the vendor and does not send 10 per cent of the purchase price off to the ATO will still be liable to pay that 10 per cent to the ATO plus, almost certainly, will have to pay severe additional penalties and interest. The economics of buying the property will be severely damaged, says the media report.

It suggests that real estate agents selling $2 million plus properties should study how this new tax regime would impact their business.

For example, banks and other financiers may be affected where their secured debt exceeds 90 per cent of the value of the selling price. In a situation where the owner is being forced to sell, the banks will be better to take possession and sell themselves rather than being caught in the “tax clearance” delays.

In the majority of cases, local resident vendors will have no problem obtaining a clearance certificate, but it might increase the risk of a tax audit for property sellers who:

• Have not filed tax returns for many years;
• Have filed tax returns, which would indicate they could not afford such a property;
• Are selling their residential house at the same time as their neighbours to a single developer, which may give rise to a profit making scheme (such that the principal residence capital gains tax exemption may not apply to the value uplift generated by selling the properties together); or
• Where the ATO has gathered information that indicates the vendor is in the business of developing property, which means that the principal residence capital gains tax exemption may not apply.

The post by Robert Gottliebsen says this might lead to a rush to sell before July 1 and might create some property bargains for buyers.

Another implication is that as property prices rise, more vendors will fall into the $2 million plus category. Over time, the ATO may shift their audit target identification processes to $2 million-plus property vendors and away from other areas.

Additionally, if the vendor has a tax debt, the application for a “clearance certificate” may in some circumstances involve the ATO seeking to recover some or all of that tax debt from the purchaser by way of a garnishee notice. 

While the report argues that the ATO's new rule will only help recover tax legitimately owed, the danger is in the complexity. 

The legislation is yet another blow for Asian investors in Australian property. Banks have already imposed a credit squeeze on Chinese property buyers.

On July 1, the Victorian state government is set to raise the levy on foreign purchases of apartments from 3 percent to 7 percent 

For a Chinese investor, getting a tax clearance would be tough, or else they would have to give off 10 percent off the transaction price.

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Australian business is getting more comfortable with Uber

Jamie Freed - May 25 2016 - 11:45PM

Corporate Australia is starting to take to Uber.
Businesses have become much more open to their employees hiring Uber drivers rather than taxis now the ride-sharing service has been legalised, according to one of Australia's biggest corporate travel agencies. One of the reasons: the strict driver-rating system on Uber provides more quality control than taxi drivers.

"People struggled with Uber when it wasn't legal," said Carlson Wagonlit Travel Australia and New Zealand managing director Lisa Akeroyd. "We have seen a lot of our corporate customers using Uber now it is legalised. They have seen an improvement in employee satisfaction [as a result]."

Ms Akeroyd said that having a record of the driver's contact details in the mobile app meant if an employee lost an item in an Uber car it was easier to recover than if it was lost in a taxi.

Uber was legalised in NSW in December, in a move that Uber Australia and New Zealand general manager David Rohrshiem said had doubled its adoption overnight. Last week a Melbourne UberX driver won an appeal against a conviction for operating a commercial passenger vehicle without a licence, a decision that effectively legalised the ride-sharing app in Victoria.

"We have seen an amazing take up [among corporate clients]," Ms Akeroyd said. She said analysis had shown that companies could save up to 40 per cent using UberX rather than taxis, even accounting for Uber's policy of "surge pricing" during high-demand periods.

Sydney Airport this month said it would create a dedicated ride-sharing pick-up zone near its domestic terminals from July 9, although it will charge drivers $4 to access the area while they wait for passengers.

Airbnb views shift

Ms Akeroyd said corporate customers were generally more open to their employees using Uber rather than Airbnb, which was viewed as being less aligned from a risk standpoint.

"They are taking a pretty firm stance, some of them, on Airbnb," she said.

Ms Akeroyd said at a recent industry conference, 31 per cent of the travel procurement managers in attendance said their company allowed for the use of Uber in their travel policies. But of those lacking a policy, all of them said the company was willing to reimburse employees for using Uber.

Ms Akeroyd said employer views on Airbnb were also beginning to shift. Investment bank Morgan Stanley in January said it would allow all employees to use Airbnb Business Travel as part of its corporate travel policy after staff expressed interest in using the service for business travel.

Ms Akeroyd said companies might look to make use of Airbnb at times when hotel occupancy was high and there was a shortage of rooms, such as during the Melbourne Cup Carnival or the Australian Open. Sydney and Melbourne both have high hotel occupancy that has pushed up room night rates.

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NSW Government looks to fully legalise sharing economy

January 19, 2016 3:10pm (Benedict Brook - news.com.au)

The NSW Government has already legalised UberX ride sharing, now it’s set to do the same for other sharing economy business. Picture: AP

THE NSW Government has given its clearest indication yet that it intends to give the green light to sharing economy businesses such as Airbnb and Uber, which will be good news for people hoping to rent out their spare room to travellers and not fall foul of the authorities.

But the peak body for hotels has warned that short-term accommodation sites are pushing up rental prices in popular suburbs and leaving guests at risk of assaults, theft and even death due to a lack of regulation.

This morning, the NSW Government announced it would create a framework for regulating the sharing economy, which most obviously manifests itself in websites and apps that bypass traditional industries, such as hotels and transport services, and instead directly connect consumers and service providers.

Also known as the collaborative economy, it’s estimated the industry brings more than $500 million into the state every year.

The move comes just over a month after the NSW Government legalised ride-sharing service UberX, which has enabled drivers who use their own cars to pick up passengers to operate within the law. Previously their licences had been suspended. In return for being legalised, UberX drivers have to pay a registration fee and pass a series of safety checks, while traditional cabs have had a reduction in their licensing requirements.

NSW was the second jurisdiction to give ride-sharing services the thumps up, following the ACT.

Speaking today, NSW Innovation Minister Victor Dominello said where governments had embraced new technologies they had provided a significant boost for start-ups and entrepreneurs.

“Digital innovation is transforming the way people do business in every city and every country around the world. The reality is the collaborative economy is here to stay,” he said.

“We are living in the information age and it is vital that government policies embrace new technologies and enable businesses to operate with certainty.”

A Deloitte Access Economics report estimated that more than 50 per cent of NSW consumers had used services such as Uber and Airbnb, while 45,000 people earned income from the collaborative economy.

While the government seems intent on allowing the sharing services, the discussion paper states all businesses should be “treated fairly and appropriate levels of consumer protection and public safety [should] be in place”. This means people who rent out their sofa to backpackers may be faced with extra regulations and safety hurdles.

This would probably be welcomed by the Winklers, who had their stay at an Airbnb rental on the Gold Coast ruined when the police raided the home, The Daily Telegraph reported. The family, who were held for questioning for five hours, had been told by the owners not to enter one room of the house as it was undergoing renovations. When the door to the room was opened it was found to contain a sophisticated hydroponic set up for growing cannabis.

Dieter Winkler and Jacquie Young and their five kids rented a holiday home from Airbnb in Burleigh Heads and one day into their holiday cops raided the property to find a hydroponic cannabis setup in the back room.

The chief executive officer of Tourism Accommodation Australia, the peak body for hotels, Carol Giuseppi, said premises rented out on Airbnb didn’t have to go through the same safety checks that established hotels and motels had to.

“In the past few months we have seen the results of the ‘no care, no responsibility’ attitude towards unregulated short-term accommodation with reports of assaults, property damage and a terrifying drug raid. Overseas, there have also been reports of deaths,” she said.

“The reality for many people involved in the so-called collaborative economy is that they take rather than give. They contribute virtually nothing to employment; whereas hotels and other legitimate operators employ 21,000 people in NSW [and] they avoid paying appropriate taxes and community charges.”

Ms Giuseppi said the growth in apartments being turned from long-term to short-term rentals may make money for the owners but it pushed rents up. People who rented out their homes through sharing apps and websites should be registered before they could operate, she continued.

However Airbnb welcomed the government’s proposal. Airbnb Australia country manager Sam McDonagh said they were looking forward to working with the minister to grow tourism in the state.

“This is great news for NSW and the everyday people — mums and dads and working families — who list their homes on Airbnb,” he said.

“We’re proud of the economic benefits Airbnb provides to families, communities and local businesses that otherwise wouldn’t benefit from the tourist dollar. Overwhelmingly, these hosts are renting out their home occasionally, earning a little extra to help supplement their income.”

Originally published as The best news yet for Airbnb

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Paypacket pain as wage growth slows

Real wage growth is just 0.5 per cent in annualised terms.

WAGE growth across Australia has slumped to a record low, creating yet another headache for an economy increasingly reliant on consumer spending.

The average Australian paypacket increased by a paltry 0.4 per cent in the three months to March, official figures reveal. In the year to March, wages rose 2.1 per cent.

Those gains are the weakest since the Australian Bureau of Statistics began collating the Wage Price Index nearly 20 years ago.

Real wage growth — which accounts for the effect of inflation — is just 0.5 per cent in annualised terms, meaning wages are barely outpacing rises in prices.

Victoria, which has a largely services-led economy, managed to chalk up the highest annualised wage growth of 2.4 per cent, maintaining its lead over the other states since December 2014.

Miners, up 0.5 per cent in the March quarter, continued to see their wage gains pared back, while the education sector enjoyed some of the best gains, with pay rates climbing 1 per cent. Administrative staff recorded no growth in wages in the March quarter.

The headache will also be felt at the Reserve Bank, which has stuck fast to projections of a return to above-average growth in the medium term even as a cautious spending environment and muted inflation rates threaten to derail those assumptions.

“The continuing deceleration in wages growth means ongoing downward pressure on inflation as it means a further fall in cost pressures for businesses,” AMP Capital chief economist Shane Oliver said.

In an environment where households were more inclined to chip away at their mortgage than splurge, the figures could also prompt the central bank to consider another rate cut as early as next month, Dr Oliver said.

CommSec chief economist Craig James said it was hard to see where any breakout in wage growth might occur.

The slackness in the jobs market meant employers were yet to be pressured into lifting pay, he said.

“Wages are really only appreciating if there’s a productivity offset, so if a business is doing well or its employees are being more efficient,” Mr James said.

“It’s mostly a case of services over goods — the best gains are in finance, insurance, education, training, less so mining and manufacturing.”

The good news, he said, was that wages were still moving faster than retail prices, meaning there would still be an appetite to spend.

“It doesn’t add anything extra for the RBA ... it’s a result that’s a little bit below market expectations but it’s important to look at everything else moving at the same time: Dividends are continuing to be paid by companies, house prices are going up.

“It’s also good news for employers. With the wage bill being held down, it allows businesses to take on more staff.”

paul.gilder@news.com.au - Originally published as Paypacket pain as growth slows

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The housing tax dodge that makes negative gearing look like small fry

Jason Murphynews.com.au

IT IS time to kill negative gearing.

Paul Keating got rid of it once, when he was Treasurer, but he brought it back to see if it might encourage cheaper rent.

Instead it put a rocket under speculative housing investment and helped lift house prices, which made rents go up. It has been a dud and it needs to come to an end.

But negative gearing is not the only bad guy in the story. Even if it is killed, a bigger villain is likely to slink away.

Capital gains tax has been a huge factor in rising house prices, and it brings the richest parts of society even more advantages than negative gearing

The next two graphs show who benefits from each policy and if you think the negative gearing one looks skewed to the rich, the capital gains tax discount graph is going to blow your mind.

HOW THE HECK DOES IT WORK?

If you make a profit onselling an investment that’s called a capital gain. And yep, you would pay tax on it like income … if you owned the investment for less than a year. If you’ve owned it for more than a year, you get a big tax discount of 50 per cent.

So If I buy a painting for $1000, and sell it for $2000 two years later, I made $1000. But I only pay tax on $500. So I pay less tax on investing than if I earned $1000 cleaning toilets!

Why does the tax system reward investment like that?

Partly it’s because of inflation. If you own a painting for 35 years and it goes up by two per cent a year, it doubles in value (roughly). But that’s not a “real” profit, because inflation also went up, say, two per cent a year. The buying power of $2000 when you sell it is equal to $1000 at the time you bought it, so taxing that $1000 as profit is silly.

The capital gains tax discount helps compensate for this problem. It says, ‘hey, we know it’s unfair to put a huge capital gains tax on things that partly went up because of inflation. You can pay a bit less.’

But it’s a stupid way of doing it, because the full discount kicks in after just a year, so it gives the same advantage to someone whether they own an asset for a year and a day or for 50 years.

A CAPITAL IDEA

Labor has a policy for changing CGT. But its simplistic policy to cut the CGT discount from 50 per cent to 25 per cent is even more unfair for anyone who plans to own an investment for a really long time.

A better idea is to cut to the chase and tax profit above inflation. And — it turns out — we did that for a while back in the 1980s and 1990s. But then in 1999, the rules were changed. We moved to the current 50 per cent discount rule on capital gains tax.

Now, I don’t want to say that this one little change is responsible for the rise in house prices, but check out what happened after 1999.

http://www.couriermail.com.au/business/economy/the-housing-tax-dodge-that-makes-negative-gearing-look-like-small-fry/news-story/c8f7c15a69f968d3a651f34007098153

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Queensland car registration fees to rise, Labor urged to adopt Newman-like freeze

May 22, 2016 12:00am

Sarah Vogler - The Sunday Mail (Qld)

THE Queensland Government is being urged to freeze car registration as motorists brace for yet another above-inflation increase from July 1.

The Government has again moved to increase the cost of car registration along with a host of other fees and charges, including licence fees by 3.5 per cent, twice the CPI of 1.7 per cent.

It means the cost of registering a small four-cyclinder car will jump from $340.40 to $352.30, not including compulsory third party insurance (CTP).

Registration for a five or six-cylinder vehicle will jump to $527.30, while a seven or eight-cylinder vehicle will jump to $717.50.

Licence fees will jump by 3.5 per cent next financial year, taking the cost of a five-year licence from $159.40 to $165.00.

CTP could also increase by $32 from July 1 if the Government is successful in its push to introduce the national injury insurance scheme in Queensland.

RACQ spokeswoman Renee Smith called on the Government to freeze the price of rego.

“Queensland is still the most expensive state in the country to run a car, so this is just adding to the cost burden for Queenslanders,” she said.

Treasurer Curtis Pitt has defended the move, insisting the Government was simply applying the indexation policy introduced by the former Newman government.

“These settings were built into the budget when we came to government and they will be maintained,” Mr Pitt said.

“We’ve stuck to our commitment of not introducing any new taxes, fees or charges beyond the revenue policy settings we inherited from the LNP.”

Opposition transport spokesman Andrew Powell, however, said the Government should take responsibility for the hike, as it had the power to decide whether or not to slug motorists.

“The LNP froze car rego for the three years while we were in government and has guaranteed that registration for the family car would not rise by more than the inflation rate during the first term of an LNP government,” Mr Powell said.

“Premier Palaszczuk has the power to do just the same. Curtis Pitt can strike whatever car rego rates he likes.

“Instead, we see this … Government looking for any opportunity to raise revenue, deciding to increase car rego ... and saying to hell with the impact on Queensland families.”

The President of the Emerald Chamber of Commerce, Victor Cominos called on the Government to give the people of Queensland a fairgo.

At a time when the economy is at an all time low and people particularly those living in the country arears trying to operate businesses are struggling the last thing that is needed is an increase in their cost of living. Mr. Cominos said, “It is time for the government to show some compassion”.   

 

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Formation of a Ratepayers and Residents Association planned.

 
A meeting was held recently in Emerald to form a steering committee for the purpose of evaluating the public response with a view of forming a local Ratepayers and Residents Association.
 
A spokesman for the committee, John Baker said that some twenty local residents had already indicated a willingness to join a new organisation.

In the weeks ahead it is expected that many more, who feel disenfranchised under the current system, will be seeking membership of the new organisation.

 
He said that during the lead up to the last local government election most of the candidates pledged that if elected they would be transparent and accountable.
 
“The new association plans to hold the winning candidates to their word”, said Mr. Baker.  
 
Disclaimer: The Emerald Chamber of Commerce Inc. is not directly or indirectly involved with the formation and or operation of an Emerald Ratepayers and Residents Association.

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(Ph: 07 4982 3444)  

The Coalition's $714k super shock for divorcees

Nicole Pedersen-McKinnon - May 15, 2016

The Coalition super policy spells disaster if you dissolve a marriage.

Budget 2016: Super changes hit the rich

There's been an 'important rebalancing' of superannuation tax breaks, concedes Finance Minister Mathias Cormann.

·         Latest from Federal Election 2016

·         Peter Martin: There's nothing retrospective about the new rules for super

Getting married is a money master stroke. You potentially double your income and halve most expenses (until kids…).

But getting divorced is rarely anything except a financial disaster. And the Coalition has – probably unwittingly – made it far worse.

The Coalition's superannuation policy will make life tougher for divorcees.

You'll have heard all the kerfuffle about its proposed super squeeze and probably switched off because it affects only the highest earners.

Well, anybody who divorces – even if that divorce was up to nine years ago – is collateral damage.

The super changes also make it far more likely if you endure the traumatic experience in future, that you'll have to kiss goodbye to your family's home.

As part of its sweeping super changes, the Coalition wants to limit non-concessional contributions – those made after tax – to $500,000 across a lifetime. Usually such crackdowns are "grandfathered" so apply only from, say, budget night, but this one counts contributions made back to July 2007.

It's rough in general but if, in the past nine years, you've lost your super as part of a divorce settlement – perhaps because you've kept the house – it's brutal. You'll struggle hard to rebuild your super balance.

But this is not just the case if you've already used up your $500,000 lifetime after-tax limit; a reduction in allowable before-tax (concessional) contributions could kibosh you too. The limit is planned to move from $30,000 to $25,000 a year from July 2017. Gone also will be the ability for 50-pluses to shovel in $35,000 a year when finally the mortgage and munchkins are gone and they can afford it.

In short, many divorcees who have lost their super now also stand to lose the ability to replace it.

And with an average divorce age of 44, says the ABS, they need to be able to do so fast.

What about future divorces, remembering this is the fate of one in three marriages? As Marshall Brentnall from Evalesco Financial Services puts it: "It's more likely you'll see proportional splits – so the super will be in the mix and the home will be in the mix [and will have to be sold]. If one party has a particular emotional tie to the home that could be problematic."

Consider the following scenario that Strategy Steps, adviser to the advisers, prepared for me…

A couple, both aged 50 and earning $80,000, divorces. The husband has $300,000 in super and the wife has $700,000, because of a $500,000 inheritance a few years ago that she paid into her super as a non-concessional contribution. In the settlement, she gets the $1 million house and he gets all the super.

The wife spends the next 17 years, until pension age, exhausting all available allowances in a bid to rebuild her super balance (and earns a net 7 per cent a year).

Under current rules: She pays in $35,000 a year in concessional contributions (employer and salary sacrifice) and also $2450 a month as a non-concessional contribution (this totals to another $500,000 in after-tax contributions).

Her super balance at age 67: $1.12 million.

Under proposed rules: She can pay in only $25,000 a year in concessional contributions and nothing after tax – even though she has been left with no super, she's used her lifetime non-concessional limit.

Her super balance at age 67: $401,541. This is well below the $545,000 that the Association of Superannuation Funds of Australia estimates a single person needs to fund a comfortable retirement (and it's a conservative estimate).

Of course, the $500,000 our case study was going to put into super could instead be invested outside of it but the earnings would be taxed at double the amount and income could be taxable in retirement (compared with tax-free super pensions).

I hear you ask: "Who on earth has $500k to dump in their fund?" Someone who has sold an investment property, cashed in a business or, yes, come into an inheritance.

But they may even just have paid off their mortgage and therefore freed up extra cash to invest each year. Or been forced by divorce to downsize the home they received in the settlement to extricate some money both to live on and fund retirement at a later date.

As Strategy Steps' Louise Biti says: "The closer the person is to retirement or the lower their remaining balance when they split, the harder it will be to rebuild."

In any case, an even super split would give each spouse a sporting chance.

I applaud many of the super changes in this budget – particularly the ability to mop up unused concessional contributions in the subsequent five years, which could significantly help people boost their super after a period of caring.

That one's great for divorcees too – provided they have the means.

But if this government is returned on July 2, it must undo the disadvantage to divorcees by allowing the asset "split" to also split out lifetime contributions so at least each partner keeps his or her share of allowance based on the super they retain.

We won't know until we see the legislation after the election.

Potential ways couples can protect themselves from super changes

Split your pre-tax super contributions equally in marriage – the main goal may be to equalise balances so, as a family, pay in and amass as much as possible under the proposed stringent limits. Contribute as much as concessional – salary sacrifice – contributions as you can for a lower earning spouse (from July 2017 it's planned you'll no longer have to do this through an employer).

Equalise your pre-tax contributions in marriage – if you and your spouse have unequal balances, you could also use the once-a-year opportunity to help even out balances by splitting concessional contributions paid into the higher balance account across to the other spouse's super. Under the super splitting rules, you can move up to 85 per cent of contributions into the other spouse's account.

Split your post-tax contributions equally in marriage – this way, in the event of a subsequent relationship breakdown, neither spouse loses the right to make future non-concessional contributions. When making after-tax contributions progressively over time, share them between accounts. Also get freebies and tax benefits via after-tax spouse contributions (attracting up to a $540 tax rebate if, from July 2017, your spouse earns under $37,000) and a $1000 annual non-concessional contribution (to get the government's co-contribution of up to $500 into the fund of someone earning under $50,454).

Split your super equally on divorce – possible the only way to ensure both parties still have some capacity to rebuild their super if they have the money to do so. We'll need to see the legislation to know if divorcees will be disadvantaged.

Read more: http://www.smh.com.au/money/super-and-funds/the-coalitions-714k-super-shock-for-divorcees-20160512-gotbq8.html?&utm_source=facebook&utm_medium=cpc&utm_campaign=social&eid=socialn:fac-14omn0012-optim-nnn:paid-25062014-social_traffic-all-postprom-nnn-smh-o&campaign_code=nocode&promote_channel=social_facebook#ixzz48hkhQIal
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