June 2009
Client Profile
Client profile
Pg 1
First Home Owner Grant
Pg 2
Investment Allowance
Tax Break
Pg 2
Education Tax Refund
Pg 2
Changes to Payroll
Reporting
Pg 3
Centrelink Pensions
Pg 3
Staff Announcements
Pg 3
Superannuation Concessional
Contributions Cap
Reduced
Pg 4
Transitional to Retirement Pg 4
(TTR) Pensions Remain
Dr John McIntosh
Dr John McIntosh is a very busy man. He owns and manages three medical practices,
is a director of Mater After Hours Pty Ltd and in his spare time practices as a general
practitioner, seeing as many as 200 patients a week.
John began his medical career in Scotland after studying at Dundee University. He began
with Dr Anne Nixon and the Pioneer Medical Centre in 1995 and later moved this practice
to the Greenfields site. John saw a need for an after-hours general practitioner service to
reduce the pressure on the public hospital system and on the GPs. With the majority of
Mackay’s GPs supporting this project, John formed Mater After Hours Pty Ltd in 1997. The
company’s shareholders are all local doctors who established the company and due to the
success of the service, most other practices subsequently joined the service. John has
been the Chairman of the Board since the formation of the company.
The plight of the homeless youth was also a major issue that became obvious to John and
with a group of community members, the Youth Information and Referral service was set
up in the mid 1990s. John was on the board for 10 years and Chairman for most of these
years as well as performing medical services in the clinic on a weekly basis.
John was also instrumental in setting up the Mackay Division of General Practice and
served on the board locally as well as the Queensland Divisions of General Practice board,
trying to improve medical service provision locally and across the state. Some innovative
Medicare payments were developed by him which now allow practices to receive payments
for work performed by nurses and for vaccination services. He also set up the MDGP
locum service for GPs that continues to give GPs a well earned break.
In 2003 John saw a further opportunity and purchased the Bucasia Road and Hibiscus
Medical Centres. With the reducing availability of doctors in Australia, John began
assisting foreign doctors to relocate to Australia to work in these surgeries. This provided
added medical expertise to the region in addition to allow
these surgeries to stay open at a time when medical
practitioners were scarce in the Mackay region. John has
since gone on to purchase the Walkerston Medical Centre in
2007. He has expanded services provided from the group of
surgeries to include cosmetic procedures (Botox and fillers,
IPL, peels, microdermabrasion etc) as well as Occupational
Health services. All very exciting stuff.
In 2005 John teamed up with Dr Richard Hogben to include
Advanced Mole Clinic as an additional service that they
operate from the Pioneer Medical Centre at Greenfields,
offering an advanced sun cancer detection facility to the
residents of Mackay.
John utilises Brown and Bird’s accounting and taxation
expertise in addition to our structures and tax planning
services.
43 years Supporting Local Business
Page 1
The First Home Owner Grant
A way of helping you own your first home
finance
The $7,000 First Home Owner Grant (FHOG) was created to help you buy or build
your first home. It is a federal initiative that is administered and funded by the State
Government.
Boost to FHOG – has been extended
The Federal Government announced, during the recent budget, that the First Home
Owner Boost would be available until 30 September 2009. The Boost means an
extra $7,000 to eligible homebuyers purchasing an existing home and an extra
$14,000 to those buying or building a new home. After 30 September 2009, the
Federal Government will be phasing out the Boost until it ceases all together on
31 December 2009.
At Brown and Bird Finance we help turn the confusing task of shopping for a home
or investment loan into a hassle-free experience. So why walk into 30 banks and
other lenders to find the right home loan when you can have an accredited MFAA
Mortgage Broker bring them all to you in our office?
What you need to know
How do I apply for the grant?
What documents do I need to submit?
• Word processing and
spreadsheet software, internet
filters and anti-virus software
What if my circumstances change?
To answer these or any other questions about reviewing your existing loan or
discussing you next loan, please contact Bianca Dodd on (07) 4968 3100 or
[email protected] for assistance.
We also invite you to visit our website at www.brownbird.com.au.
Investment Allowance Tax Break
The tax break (investment allowance) for new capital expenditure has been
increased to 50% for small businesses (turnover under $2 million). The tax break
applies for expenditure on new assets committed to by 31 December 2009 and
first used by 31 December 2010.
• Text books, study guides and
school stationery.
The things that are not included
are school fees, uniforms, school
excursions and camps, tutoring
costs, musical and sporting
equipment, building and subject
levies and other costs not directly
attributed to the core educational
system.
If you have any doubts, bring the
claims in and we will assist you at
our tax interview meeting.
The existing proposals continue to apply (ie expenditure
commitments must be made by 30 June 2009 to qualify for
the 30% allowance).
Page 2
As you prepare your records for
your 2009 income tax interview,
please make sure that all costs
associated with education have
been included. Costs include the
following:
• Home internet connections and
the cost of maintaining them
When will I get the grant?
Please contact us for advice
before purchase. You need to
take advice before deciding
how to finance this purchase.
Leasing should be avoided
as it makes the investment
allowance claim more difficult.
From July 2008 parents are
eligible for an education tax
refund of up to 50% of education
expenses - up to $750 for primary
school children and $1,500 for
secondary school children. The
method of receiving this refund
will be declarations made in the
lodgement of your 2008/2009 Tax
Return.
• The purchase, repairs and
running costs of computer
equipment and laptops which
the student uses
Can I get the grant?
Note that assets that would
normally be depreciated are
allowable (eg vehicles) but
structured assets (eg sheds)
may not be eligible.
Education Tax
Refund
Small Business
Investment Commitment Time
Installed by
30 June 2009
30 June 2010
31 December 2010
Before 13/12/08
Nil
Nil
Nil
Other Businesses – Existing Concession
Investment Commitment Time
Installed by
Before 13/12/08
13/12/08 to 30/06/09
30 June 2009
Nil
30% in 2008/09
30 June 2010
Nil
30% in 2009/10
31 December 2010
Nil
10% in 2010/11
43 years Supporting Local Business
13/12/08 to 31/12/09
50% in 2008/09
50% in 2009/10
50% in 2010/11
01/07/09 to 31/12/09
n/a
10% in 2009/10
10% in 2010/11
Changes
to Payroll
Reporting
Recent changes in Federal
Government legislation have
meant that salary sacrifice
decisions are now going to
be recorded in more detail by
the employer with information
supplied to the employees and
subsequently to the Australian
Taxation Office. The reason
behind these changes is that
clients have been able to
manage their income due to
certain entitlements in the past.
In particular, clients may have
sacrificed a significant amount of
income into superannuation, thus
allowing them to qualify for other
entitlements and benefits.
Whilst the concept of salary
sacrifice is still legitimate and
acceptable, the flow-on effect
that enables clients to gain other
Government benefits has been
changed to ensure Government
monies are allocated where
the Government interprets
the greatest need. It is the
Government’s view that if you can
afford to sacrifice a significant
amount of your income into
superannuation then perhaps
you may not be eligible for other
benefits.
For this reason all payroll
reporting systems will need to
include new features effective
1 July 2009. If you are generating
your payroll on your computer,
then your software provider will
have developed upgrades to
ensure that you accurately record
additional information from
1 July 2009.
If you have any questions in this
regard contact your software
provider or Brown and Bird.
Centrelink Pensions
Under the current legislation a male may qualify for a Centrelink pension when he
reaches the age of 65. A female may qualify when she reaches the age of 63.5
years.
There are two tests that must both be satisfied to determine eligibility for a pension.
They are the assets test and the income test.
Assets Test
Most of your assets will be counted to determine your eligibility. The main asset
that is excluded is your principal place of residence. Recent turmoil in share and
property trust markets may have reduced the value of your assets to the point where
you may now qualify for a pension.
To qualify for any pension at all, a single homeowner must have assets worth less
than $555,750. For a couple, the combined value of their assets must be less than
$882,500 to qualify for any type of pension.
Income Test
The second test that is applied to determine your eligibility for a pension is the
income test. A single person will not be eligible for a pension if their income exceeds
$41,015 pa. A couple will not be eligible if their income exceeds $68,497 pa.
For those clients taking a pension from a private superannuation fund, the pension
which you take has been counted as assessable in determining your eligibility for
Centrelink benefits.
Some time ago the Federal Government announced that clients could reduce
their minimum pension due to the global financial crisis impacting on the value of
their superannuation funds. The minimum pension that you are required to take
was halved. In the recent Federal budget it was announced that this 50% cut for
the minimum pension will continue in the 2009/2010 financial year. This provides
another opportunity for you to review your income to determine if you may now
qualify for some Centrelink entitlements that you were not previously entitled to.
Anything that comes from Government will always be in a state of change. The
figures quoted from this article are current as at May 2009. The Government
announced in the recent Federal budget that the age to qualify for a pension for both
males and females will be increased to 67 years of age during the year 2017.
Staff Announcements
Wedding Bells
Engagements
Scott and Jo-Anne Ashford were
recently married on 14 March 2009 at
Sarina Beach and followed this with a
fabulous honeymoon in Fiji. Jo-Anne
is an Accountant working in Chris
Wright’s team.
Bianca Dodd and Jai Hocking announced
their engagement on a camping trip last
June and are planning to wed in the near
future. Bianca is the Mortgage Broker
and Administration Assistant in our
Financial Planning division.
43 years Supporting Local Business
Page 3
Superannuation
Concessional Contributions Cap Reduced
The Government has announced that, effective 1 July 2009, the concessional contributions cap
(CC) will be reduced to $25,000 (indexed) per annum. Concessional contributions generally include
superannuation guarantee (SG), salary sacrifice contributions and personal deductible contributions.
The transitional CC, which applies to individuals aged 50 and over at any time during the transitional
period (2007/08 to 2011/12), will be halved from $100,000 pa to $50,000 pa (not indexed) for the
2009/10, 2010/11 and 2011/12 financial years.
However, the annual non-concessional contributions cap (NCC), will remain at the 2008/09 level of
$150,000. It is proposed that from next financial year, the NCC will be calculated as six times the
level of the CC.
Contribution Cap
Concessional contributions (CC) cap:
v Under age 50 1
v Over age 50 (until 30/06/2012) 2
Non-concessional contributions
(annual NCC) cap3
3-year NCC cap4
1
2
3
4
2008/09
$50,000
$100,000
2009/10
(before Budget)
$55,000
$100,000
2009/10
(after Budget)
$25,000
$50,000
$150,000
$165,000
$150,000
$450,000
$495,000
$450,000
These thresholds are indexed in line with movements in Average Weekly Ordinary Time Earnings (AWOTE) in
increments of $5,000 (rounded down).
This cap is not indexed.
This cap is equal to six times the CC cap from 1 July 2009. It will change when the CC cap is indexed.
This cap only applies to individuals less than 65 on the first day of the financial year. The year in which the 3-year cap is
initially triggered determines the value that can be contributed during the 3-year period.
Impact
» Clients who have money available to invest into superannuation in the current financial year could
consider maximising superannuation contributions to fully utilise their 2008/09 contributions cap.
» Clients currently making total concessional contributions of more than $25,000 each year
(or $50,000 if aged 50 or over) will need to reduce salary sacrifice (or personal deductible
contributions) from 1 July 2009 to ensure that they do not inadvertently breach the reduced
concessional contributions cap. Excess concessional contributions are subject to tax of 31.5%, in
addition to the 15% contributions tax. Excess concessional contributions also count towards an
individual’s non-concessional contributions cap.
» For clients not currently making additional contributions to superannuation (ie in addition to SG),
the need to start making contributions earlier in life is now greater, as the ability to make large ‘last
minute’ concessional contributions has been diminished. Clients could be encouraged to start a
regular annual savings plan into super to ensure adequate retirement savings are accumulated.
» Contributions splitting – the maximum allowable amount able to be split will be reduced in line with
the CC.
» Clients who are salary sacrificing bonuses, especially where the amount is unknown, need to take
extra care not to inadvertently exceed the CC.
Transition to Retirement (TTR) Pensions Remain
No specific change was announced regarding TTR income streams. However, the contributions
cap change may impact individuals who utilise strategies which combine salary sacrifice and TTR
pensions.
Impact
» Clients currently undertaking TTR strategies and who make concessional contributions of $50,000
or less per annum will not be impacted by the contribution cap change.
» Those making concessional contributions in excess of $50,000 will need to review their strategy to
ensure it is re-balanced for the post 1 July 2009 contribution rules. This may include:
❖ Reducing the amount of their salary sacrifice or personal deductible contributions;
❖ Reducing the income from their TTR pension;
❖ If already drawing the minimum income from their TTR, rolling some of their TTR pension into
accumulation phase of superannuation (keeping in mind the continued temporary reduction in
minimum payments for 2009/10); or
❖ Contributing surplus income as personal after-tax contributions after reaching the new
concessional cap (care should be taken as this is generally only appropriate for some
individuals age 60 or over).
The above information is of a general advice only and is not intended as a personal advice. It does not take into account the
particular investment objectives, financial situation and needs of a particular investor. Before making an investment decision you
should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. We
recommend you consult a professional financial advisor who will assist you.
Page 4
43 years Supporting Local Business