What's New @ Dewings?

The Financial Services Inquiry (FSI) headed by David Murray has handed down its final report. The report included a recommendation that direct borrowing by superannuation funds should be abolished.

Currently, borrowings are allowed as a part of a superannuation strategy under limited circumstances. This can be beneficial when, say, looking to buy property as a part of an overall wealth creation plan.

For those in business, there are good structural, tax and asset protection reasons for buying property in superannuation, particularly when it involves a business premises. Often, however, the balance in super alone is not sufficient to acquire a more costly asset like a property. Even if it were, having a significant proportion of member balances tied up in one asset may not be ideal, from a diversification and risk management perspective. Borrowing within super expands the investment possibilities with respect to property.

The FSI, however, is concerned that too much borrowing within the superannuation sector as a whole increases the risk to the financial system. Overall, borrowings are currently relatively low, however they are increasing, and it is suggested that this could potentially have a destabilising effect. Further, the report suggests that superannuation should first and foremost be about saving for retirement, not generating wealth more broadly.

Although by no means law yet, the Government is likely to implement some of the recommendations of the report. Those with self-managed superannuation should watch this space closely, especially those who may have intentions for using it to buy property in the future through borrowings.

Between now and 31st December Intuit is offering its QuickBooks Plus Online accounting product for only $4.99 per month for the lifetime of the subscription.

QuickBooks Online is a fully featured cloud-based accounting product from Intuit. The 'Plus' edition includes inventory and payroll for up to 10 employees.

A subscription to the 'Plus' edition of QuickBooks is normally $35 per month. As a comparison, the equivalent product in Xero may cost up to $60 per month without inventory (although Xero is still a great product).

Plus, if you already have your data in another product, Intuit will convert your data file for free!

Intuit is working hard to establish itself in Australia and this pricing is part of its push to unseat the incumbent players. Business consumers are the big winners from this increased competition, but only for a limited time.

To take advantage of this pricing, you must establish a new subscription by 31st December 2014.

The only catch is that this offer is not available direct to users. It has to be taken up through an accountant.  All you need to do is contact us and let us know, and we'll set up a file for you.

Even if you're a little unsure at the moment, why not take out the subscription now and then cancel it later if you don't end up using it? For the price of a cup of coffee a month, you can park your subscription while you work out your transition strategy and test whether it's the right product for you. You can cancel your subscription at any time.

If you'd like to talk about it or take out a subscription, please contact our Managing Director John Manning on (08) 8291 7900 or email us.

We pride ourselves on our professional independence. We never endorse any product to the exclusion of others, but rather endeavour to work with whatever works best for our clients. That's why it's important to us that you know that we are not QuickBooks accredited advisers, we are not recommending this product and won't make any margin or be otherwise remunerated for your subscription.

 

In this issue we take a look at the Financial System Inquiry that is currently underway. We also provide a warning about a recent increase in so-called 'ransomware' computer attacks, and we farewell Margaret who has recently retired after 24 years with the Dewings team.

You can read the full version here.

The Federal Government has withdrawn legislation to implement measures for the proposed $7 GP co-payment, due to a lack of support.

This is consistent with a general Government refocussing in the last month or so on pushing through legislation that has a better chance of being passed by the Senate.

The Government has emphasised on a number of occasions since the measure was shelved though that it is not dead yet, and that they still hope to be able to see it passed in future.

At a recent medical research centre launch in Sydney, the Prime Minister highlighted the clever political tactic of connecting the co-payment to the Medical Research Future Fund, by pointing out that many more research jobs would be available if the co-payment were allowed to pass.

However recent analysis in NSW showed that introducing the co-payment would threaten gains in Emergency Department waiting times. The AMA too continues to oppose the measure, and numbers in the Senate still appear to be against it.

The AMA has expressed additional concern over the possible compromises that may be made to achieve savings in the health sector. This may mean that the co-payment ultimately finds support if only as the lesser of possible evils.

Putting all of this together, it appears that while there has been a temporary reprieve, the GP co-payment is still showing signs of life.

The so-called 'Mining Tax' has been all but repealed after the Senate passed measures to abolish the tax yesterday.

The Government struck a deal with the Palmer United Party to repeal the tax in return for a further pause to compulsory superannuation increases, along with an extension of the low income superannuation contribution measure until 30th June 2017, retaining the schoolkids bonus until 31st December 2016 (now means tested) and also keeping the income support bonus until the same date.

The change to compulsory superannuation contributions sees the current rate of 9.5% retained until 1st July 2021, from when it will increase annually until it reaches 12%. Unfortunately this once again signals a concerning trend from the Government in continuing to tinker with superannuation despite promises to leave it alone for the foreseeable future. While it's likely to be welcome news for small business, constant changes to the superannuation law leads to uncertainty and a lack of confidence in both the business and financial sectors. We doubt this will be the last change to super during this term either.

Other small business measures associated with the Mining Tax were not fortunate enough to survive the negotiations. This means that the loss carry-back provisions for companies, the instant asset write down measures and accelerated depreciation for motor vehicles will be abolished.

The loss carry back provisions were only in effect for one year and will not be available any longer, while the instant asset write down will drop from $6,500 to $1,000 retrospectively, applying from 1st January 2014. The accelerated depreciation for motor vehicles allowance provided that the first $5,000 of a motor vehicle purchase could be claimed as an immediate deduction. This too will be abolished retrospectively from 1st January 2014. These two measures together did not provide any greater deduction to small businesses over time. They simply allowed a deduction for the associated costs to be brought forward.

The axing of these incentives will lead to a significant saving in the Federal Budget. Unfortunately it will be a saving largely funded by small business.