COVID-19 and your SMSF

COVID-19 has had an impact on many SMSFs. We look at the key issues.

Early release of superannuation

When a member of your fund wants to access up to $10,000 of their superannuation early under the COVID-19 measures, there are some additional steps that trustees need to take. Trustees will need to ensure their deed allows for early release, the member has met the eligibility criteria for release, and ensure that no funds have been released until the release authority from the ATO has been received. This will be a 2019-20 audit area of focus.

Tenant Rent Relief

Setting rent for a tenant that is less than market value in an SMSF is usually a breach of superannuation laws. If the rental relief is provided to a related party, then the situation can become trickier as the difference between the rent charged and the market value can amount to a loan and potentially put the fund in breach of the in-house asset rules. 

However, to manage COVID-19 rent reductions for SMSF landlords, the ATO has stated that for the 2019-20 and 2020-21 financial years it will not take action where the rental relief is provided on arms-length terms. That is, the relief is in line with the National Cabinet Mandatory Code of Conduct for commercial leasing principles, has a set timeframe to it, and the reason for the relief and the relief provided is documented.

Relief for related party loans

If your SMSF has a limited recourse borrowing arrangement in place with a related party, and that related party provides repayment relief, this would ordinarily be a breach of the superannuation rules. The ATO however will accept the relief if it is provided on reasonable terms similar to commercial banks (see the Australian Banking Association's website for comparison), the relief and the reasons for it is documented, and is for a set period of time.

A fall in asset values

If the assets of your SMSF have fallen in value, you should consider whether the current asset allocation is consistent with the fund's investment strategy, and if the long-term goals of the fund continue to be met. 

If you need to sell assets and make a capital loss, such as a loss on residential real estate, this loss can be offset against any capital gains. If the capital loss exceeds any gains, this loss can be carried forward and applied against future capital gains.

No deductions are available for unrealised gains (a fall in value for assets the fund continues to own).

Minimum pension payments

For funds drawing a pension, minimum draw down rates for the 2019-20 and 2020-21 years has been halved.  


Default min. drawdown rates

2019-20 & 2020-21 reduced rates

Under 65


















95 or more



If you have any questions relating to the above contact us.

Find My Lost Super

Looking for lost super ? Here's how.

To find any lost or unclaimed super, both AUSfund and the ATO have superannuation search tools. Generally all you need is your Tax File Number (TFN) and, if you want to transfer your unclaimed super to your preferred super fund, your super fund membership number as well.
  • Create a myGov online account and link it to the ATO.
  • View the details of all your super accounts, including any you may have lost track of.
  • Find lost super that you can rollover into a super account you choose.
  • Find any super the ATO is holding on your behalf.
  • Consolidate multiple super accounts into one account.

For more information visit


From 1 January 2020, eligible individuals with multiple employers can apply to opt out of receiving super guarantee ('SG') from some of their employers, to help them avoid unintentionally going over the concessional contributions cap.

If appropriate for them, they should submit the relevant ATO form to apply for an SG employer shortfall exemption certificate, which releases one or more of their employers from their SG obligations for up to four quarters in one financial year.

Note that this measure may not benefit everyone who is eligible, so before lodging the form, it is important to consider the individual's employment arrangements, such as how their pay and other entitlements may change (if at all), and the effect of any relevant award or workplace agreement applicable to them. Editor: We can assist with the analysis of your personal situation and the lodgement of this form.

The measure only became law on 2 October 2019, so to give eligible employees time to make an application, the ATO will accept applications for the 2019/20 financial year as follows:

n       third quarter commencing 1 January 2020 - lodge on or before 18 November 2019; and

n       fourth quarter commencing 1 April 2020 - lodge on or before 31 January 2020.

A separate application is required for each financial year.

#clarkemcewan #optoutsuper #highincomeearners #atosuper #superannuation #superoptout #superopt-out

Whether you use a tax agent or choose to lodge your tax return yourself, it is important for investors to know that anyone who is deriving income from the gig economy without declaring it, the tax office either already knows, or its capability to unearth such hidden income is becoming more sophisticated. This includes rental property advertised on GumTree, AirBnB, Stayz and

Taking cash? You'd better get your ducks lined up. The ATO can go back years if it believes there has been a non-declaration of income in past years.  The ATO knows there is very low compliance in this area and that a lot of people have chosen to ignore the obvious: that is, if they rent out a room or a granny flat for cash, that is assessable income they need to declare.

The flip side of the cash economy is that the cash-based investor is missing out of hundreds of dollars of expenses relating to that rent.  You can avoid these common mistakes and save time and money by addressing the 10 tips below. 

Apportioning expenses and income for co-owned properties

If you own a rental property with someone else, you must declare rental income and claim expenses according to your legal ownership of the property. As joint tenants your legal interest will be an equal split, and as tenants in common you may have different ownership interests.

Make sure your property is genuinely available for rent

Your property must be genuinely available for rent to claim a tax deduction. This means:

•you must be able to show a clear intention to rent the property

•advertising the property so that someone is likely to rent it and set the rent in line with similar properties in the area

•avoiding unreasonable rental conditions.

Getting initial repairs and capital improvements right

Ongoing repairs that relate directly to wear and tear or other damage that happened as a result of you renting out the property can be claimed in full in the same year you incurred the expense. For example, repairing the hot water system or part of a damaged roof can be deducted immediately.

Initial repairs for damage, that existed when the property was purchased, such as replacing broken light fittings and repairing damaged floor boards aren't immediately deductible. Instead these costs are used to work out your capital gain or capital loss when you sell the property.

Replacing an entire structure like a roof when only part of it is damaged or renovating a bathroom is classified as an improvement and not immediately deductible. These are building costs which you can claim at 2.5% each year for 40 years from the date of completion.

If you completely replace a damaged item that is detachable from the house and it costs more than $300 (eg replacing the entire hot water system) the cost must be depreciated over a number of years.

Claiming borrowing expenses

If your borrowing expenses are over $100, the deduction is spread over five years. If they are $100 or less, you can claim the full amount in the same income year you incurred the expense. Borrowing expenses include loan establishment fees, title search fees and costs of preparing and filing mortgage documents.

Claiming purchase costs

You can't claim any deductions for the costs of buying your property. These include conveyancing fees and stamp duty (for properties outside of the ACT). If you sell your property, these costs are then used when working out whether you need to pay capital gains tax.

Claiming interest on your loan

You can claim interest as a deduction if you take out a loan for your rental property. If you use some of the loan money for personal use such as buying a boat or going on a holiday, you can't claim the interest on that part of the loan. You can only claim the part of the interest that relates to the rental property.

Getting construction costs right

You can claim certain building costs, including extensions, alterations and structural improvements as capital works deductions. As a general rule, you can claim a capital works deduction at 2.5% of the construction cost for 40 years from the date the construction was completed.

Where your property was owned by someone else previously, and they claimed capital works deductions, ask them to provide you with the details so you can correctly calculate the deduction you're entitled to claim. If you can't obtain those details from the previous owner, you can use the services of a qualified professional who can estimate previous construction costs.

Claiming the right portion of your expenses

If your rental property is rented out to family or friends below market rate, you can only claim a deduction for that period up to the amount of rent you received. You can't claim deductions when your family or friends stay free of charge, or for periods of personal use.

Keeping the right records

You must have evidence of your income and expenses so you can claim everything you are entitled to. Capital gains tax may apply when you sell your rental property. So keep records over the period you own the property and for five years from the date you sell the property.

Getting your capital gains right when selling

When you sell your rental property, you will make either a capital gain or a capital loss. This is the difference between what it cost you to buy and improve the property, and what you receive when you sell it. Your costs must not include amounts already claimed as a deduction against rental income earned from the property, including depreciation and capital works. If you make a capital gain, you will need to include the gain in your tax return for that income year. If you make a capital loss, you can carry the loss forward and deduct it from capital gains in later years.


Why Apartments Trump Houses as Investments

There was a time when investing in apartments was considered to be a far inferior choice to buying a home or duplex.

The value of real estate is in the land, the experts say, so you should plonk your investing dollars in houses where the land value appreciates for many years to come.  However, George Raptis, director of Metropole Sydney says that rule doesn't always apply. 

"Some people have this notion where they think that a house and land is a good concept as far as investment is concerned, because obviously the land appreciates, but the house doesn't," he says.  "But here's the thing: if you go out into the suburbs and buy a house and land package, you might pay $400,000. Of that, $100,000 accounts for the land, and $300,000 is the cost of constructing the property. So the part of the asset that appreciates is only a small portion anyway. 

"If you buy an apartment in a premium land-locked suburb, the land has a higher value. There might be a block of 10 apartments in Bronte, for instance, where the land beneath is worth millions of dollars. Your land-to-asset ratio is a lot higher, and that's really what drives the price up."  In other words, Raptis is saying that it might be better to own a small slice of a highly valuable piece or land, rather than a large slice of a low-value patch of dirt.


To add weight to his argument, Raptis confirms that units have recently outperformed houses as far is growth is concerned. 


"That's not traditionally the norm – usually, it's normal for house values to outperform units," he clarifies.  "But I think apartments will continue to make good investments, because it all comes back to supply and demand."  Raptis points to Australia's changing demographic as the main driver of growth in apartment living.


"Obviously, units are more affordable, and rising property prices mean that more people are looking for units as opposed to houses," he says. "But as well as that, there are more single and two-person households today than there's even been, and they don't want to live in a five bedroom McMansion out in the suburbs. They want to be close to the CBD, close to work and entertainment."


The Australian Bureau of Statistics (ABS) projects that the number of lone-person households will swell significantly in the next decade or two, up from 1.8m in 2001, to between 2.8m and 3.7m by 2026.


"The way that we live is becoming more cosmopolitan, with beaches, cafes, and restaurants creeping higher on the priority list," Raptis adds.  "There's a whole new generation of people leaving home looking at apartment living, and basically, it's not necessary for these types of people to own a house with land."


Top tips for buying an apartment

When choosing a unit, there are specific details that can help you refine your search and improve the desirability of your property.


Bedrooms and floor space

The more bedrooms and the larger the floor space the better. If you're looking for a two bedroom unit, look at buying something above 80m2 and above 110m2 for a three bedroom. More bedrooms means that as an investor you can charge more rent, and your tenants can split the rent further to reduce their costs.


"The more bedrooms, the better it is in terms of affordability. Two bedroom units are in high demand, but I always think the larger the unit the better because construction costs are going up," says Rich Harvey, managing director with



The position of the unit in the building is the next element you need to look at. If your unit is in a quiet suburb, your tenants or buyers will probably be young families or empty nesters. These types of tenants or buyers will be looking for an easily accessible but safe, smaller apartment block with a unit on the first two floors.  Renting families are likely to expect that the apartment has its own garage or allocated parking spot. They may also pay more for a home with a good view of the city, water or surrounding suburbs.


If you are looking to buy in an active inner city apartment block, you will most probably be renting your unit to young professionals. In the upper end markets these tenants will pay for good views, but in the general tenant market, any level of the building would suffice.


Peter Koulizos, author of Top Australian Suburbs believes that no matter who your market is, the ground floor of a unit complex is by far the best decision for an investor. 

"Some people would argue with me but I would say ground floor is best from a landlord's perspective because you don't eliminate any of your market. If you go above ground floor you eliminate the older generation who don't want to go up the stairs or people with young kids," he says.


Property experts agree that an apartment facing towards the north and away from the road, would make a highly desirable unit in the right area. This type of unit would receive good air flow and minimal noise from the traffic.  A unit which is newer or has been renovated to incorporate modern open plan living will also be attractive to tenants and owner occupiers. Look for an apartment which provides a plenty of natural light and areas which can be used to entertain and relax.  


 Investors should be looking to buy established dwellings with character details as these properties will return higher capital growth due to their individual designs says Koulizos.    "I am talking about anything up until art deco or World War 2, before then is classified as 'character'. They were built with higher ceilings and more solidly, and they look nicer than the new high rise apartments," he explains.  As an owner occupier, you may be better off buying a newer apartment as it is less likely to have major problems and there is generally less maintenance involved.  

Buying process

The legalities of buying a house and a unit should be the same for each purchase. However, there are some key points of difference to keep in mind when purchasing a unit (over a house). 

  1. Get a copy of the strata report and get a strata search – the person who does the strata search will explain to you in plain English what has occurred in the strata report.
  2. Ask the professional doing the search whether the building is adequately insured (and if there is proof of how much the insurance covers). Go to  for an example.
  3. Ask yourself whether you can afford the quarterly levies.
  4. Know how much you may have left to pay on the quarterly council, water or electricity rates.
  5. Make sure you have done your due diligence before bidding at auction – this includes your strata search.
  6. Keep in mind the individual unit, common areas and entire building when bidding at the auction – keep your emotions out of the purchase if you're an investor

It pays to do your sums before taking the leap into property investment.  For advice about deposits, your borrowing capacity, financing a loan and other property purchase related matters contact us. We can refer you to a wide range of contacts in the financial and banking sectors once your initial figures are in order.



Would you be willing to spend 10 to 15 years working two jobs, living in rented student-style digs and saving and investing every possible dollar, if it meant you could retire in your 30s? A growing number of millennials think FIRE is worth the sacrifice.

How does a 20-something rebel against the system in 2019? For a growing number of millennials, the answer is simple: by saving money. More specifically, they are radically reducing spending to stash away at least 50 per cent of their income and retire in their 30s or 40s.

FIRE (financial independence, retire early) is an international movement of people who seek financial control and flexibility by strict budgeting and frugal living. They have an aversion to debt and work extra jobs to boost their income early in life, then rely on low-cost growth investments such as exchange-traded funds (ETFs) to both build capital and draw from in early retirement.

It's about having the freedom to pursue your dreams and ambitions (no matter what your age), says Deacon Hayes, author of You Can Retire Early! Everything You Need to Achieve Financial Independence When You Want It. When your net worth is 25 times your annual expenses, you're considered financially independent.

FIRE was born in 1992 out of the best-selling book Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez. In the book, the authors correlated expenses and time spent at work to hours of your life.

The movement first gained popularity in the US, spread through a 1990s newsletter called The Complete Tightwad Gazette. Today, the FIRE message is shared through blogs and podcasts, with one – FIRE Drill – downloaded 7000 times per episode, securing it a spot in the top 100 investing podcasts on Apple's US charts.

You'll find other specialist forums on Reddit devoted to the FIRE movement in Australia, the UK, Europe, Canada and Asia.

Rich dad, poor dad, retired millennial

FIRE is one of those radical ideas that divides people because it involves some of the most personal things human beings deal with – money, relationships and self-worth.

Due to the passions stirred by the FIRE movement and his job in the public sector, the millennial behind the blog prefers not to disclose his full name. "Matt" says he was always good at saving and being frugal, and discovered the FIRE movement online in 2014.

"FIRE is basically like financial independence [FI] on steroids," he says. "I knew FI was possible, but the people who had achieved it were all much older than me, so I assumed it must take decades of saving and investing."

Matt's investigation of FIRE strategies convinced him that FI as early as your 30s was possible, and the hundreds of people who comment on his website seem to agree.

"Careful spending in the consumer system we live in is also probably a positive, as is the willingness to be flexible about how you can earn a living in response to the way the world is developing." Dominic McCormick, Investment Consultant

One writes: "You merely need 10 years of pure sacrifice. I started late in my career, first decent job at age 30 and little money. Rented a small room, paying little and close to work. Worked hard, overtime etc. Scrooge for first five years. I took every dollar as gold because I understood the power of compounding.

Post five years, started to go easier on finances. Invested from day one. Fortunately it was 2008/2009 onwards. Bought a mixture of shares and Aussie properties. Had a like-minded partner, so it was a breeze. Retired age 38. Partner works one to two times a week. Two kids. Net worth A$2 million including super."

Matt says Australian FIRE chasers focus on investing in shares via ETFs and listed investment companies and believe there's a good chance they will be able to live off 4 per cent of dividends from their portfolio forever, which also factors in inflation. (This includes cashing in some of the shares over time.)

This investment strategy is common to FIRE groups in other countries, although some include other sources of investment such as rental property.

Financial independence, retire when?

Sydney-based investment consultant Dominic McCormick believes that, on the one hand, a rebellion against materialism is long overdue. "Careful spending in the consumer system we live in is also probably a positive, as is the willingness to be flexible about how you earn a living in response to the way the world is developing," he says.

Psychologist Jane Enter, of Cape Byron Medical Centre, agrees. "Millennials are extremely smart and they have looked at the way that boomers consumed and worked, and said they want greater balance and to do life differently."

The FIRE movement is also characterised by a desire to avoid reliance on government handouts.

However, the investment strategies used for FIRE by many millennials may be overly optimistic, McCormick believes.

"There seems to be excessive reliance on the rule that you can withdraw 4 per cent of the portfolio each year, and the growth as well as the income will reliably replace this."

What would happen in a deep or extended bear market, he asks. Even those who are older may face problems, "and we're talking about millennials who are looking at at least 50 years of retirement".

That said, many FIRE followers, including Matt, say they never plan to retire, they just want to be financially comfortable enough to do work they love. Others start later in life and don't have such an enormous portfolio to build.

Financial consultant Ivan Guan, author of FIRE Your Retirement: 3 Simple Steps to Financial Independence and Retire Early and founder of, says: "FIRE is a widely discussed subject among the online community in Singapore.

"Typically, FIRE becomes a topic when people reach their 40s. It is probably because they are sick of their corporate jobs and want to make some changes. At the same time, they have more financial resources [such as savings] and time [as their children have grown up] to devote to FIRE."

FIRE-proofing life

McCormick says that, theoretically, the FIRE model could work, if millennials save and invest enough money to not only account for long retirement, but also inflation and unexpected life events such as illness.

"Over a longer time period, it is more likely that some form of disaster may hit. If you are retiring on a very frugal budget, you need everything to go right, including in life and the assets market. Often, FIRE followers just look back at how equities have done recently and assume high single-digit or double-digit returns.

"At the same time, younger people who follow FIRE need to be willing to give up on eating out a lot or going on expensive holidays, and a lot of millennials are about experiencing life as well." 

"I don't think of FIRE as restricting my spending," says Matt. "I think about it as a shift in mindset and identifying what truly makes me happy.

"I'm human. I buy stuff I don't need all the time, but I know that spending money on something I don't need will mean I'm delaying my [progress] towards freedom."

He and his partner don't buy the latest smartphones, and they rent a small unit instead of buying a house.

On this, Guan, himself a millennial, concurs: "There is nothing wrong with buying a house if you can afford it. However, tying down your financial resources to a property [especially in Singapore] creates a huge future liability and opportunity cost. If you have a mortgage to pay, you simply can't quit being a slave of your work."

Matt and his partner also focus on the small stuff that adds up. "We make little smart decisions like always packing lunch for work, using credit card rewards for cheap flights and insurance, trying not to buy any clothes at full price, and stocking up on specials at the supermarket [we average A$600 a month at the supermarket, which is quite expensive and something we could really tighten up if needed].

"In a normal year we save 60 to 65 per cent of our income. We still go out for drinks once a week and get a Friday night takeaway. But if we haven't retired within five years – when I am 34 and my partner is 32 – something has gone drastically wrong."

Of course, you could argue that someone in a First World country or a higher-paid career has a better chance of building a bulletproof portfolio. For many people, FIRE is outside of the realm of their day-to-day life because they don't make a living wage, says Elizabeth Willard Thames, author of Meet the Frugalwoods: Achieving Financial Independence Through Simple Living.

"Achieving FIRE in Singapore is exceptionally challenging, considering the high cost of living in one of the world's most expensive cities," says Guan.

However, he believes the FIRE movement awakens a person's desire to achieve more in their lives, not only limited to financial success, but other aspects in life. 

"It also helps bring up the society's standard of financial literacy. The bad thing about the FIRE movement is that, if you're not careful, you may end up sacrificing other important things in your life."

Matt agrees a potential disadvantage is alienating yourself from friends or family because they live a vastly different lifestyle than you. The advantage, he says, is peace of mind, options and being able to prioritise what's important.

The value of work

Work is not just about paying the bills. It can be meaningful if it gives you purpose, development opportunities and recognition. "People need meaning and connection, a reason to get up each day. For many, a job can provide that, as well as structure, and connection with colleagues," says Enter.

On the other hand, if you have a job you hate, or you just don't believe in the capitalist/consumerist world most of us live in, then the idea of giving up 40 hours a week of your life to work may rankle a little.

It is believed to be Confucius who said: "Choose a job you love, and you will never have to work a day in your life."

"When you work for your passion instead of survival, the whole dynamic changes," says Guan, "but I must admit it is not easy to achieve."

The answer for many may indeed be FIRE; in other words a focus on becoming financially independent as soon as possible.

It seems life after work, and a big life, is possible, no matter whether you're 30 or 65. According to Guan, "the difference between a dream and reality is action."

Editor's Disclaimer:  the above article is intended for insight only and is not advised as an alternative to conventional investment planning

The Superannuation Basket

Are all your SMSF eggs in one basket?

The investment strategies of Self Managed Superannuation Funds (SMSFs) are under scrutiny with the Australian Taxation Office (ATO) contacting 17,700 trustees about a lack of asset diversity.

The ATO is concerned that, "a lack of diversification or concentration risk, can expose the SMSF and its members to unnecessary risk if a significant investment fails."


This does not mean that you must have diversity in your fund. A lack of diversity might be a strategic decision by the trustees but you need to be able to prove that the strategy was an active decision. Section 4.09 of the Superannuation Industry (Supervision) Regulations require that trustees "formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the entity." To do that you need to:


·   Recognise the risk involved in the investment, its objectives and the cash flow of the fund

·   Review the diversity of the investment strategy (or otherwise) and the exposure of a lack of diversity

·   Assess the liquidity of the investment and cashflow requirements of the fund

·   Assess the ability of the fund to discharge its liabilities, and

·   Review and have in place appropriate insurance cover for members and assets


Importantly, you need to be able to justify how you formulated your strategy if the ATO asks.


The 17,700 people being contacted by the ATO hold 90% or more of the fund's assets in a single asset or single asset class.


Property is one of the problem areas the ATO is looking at. With property prices at a low point, the asset value of many funds has diminished.


In addition, debt taken on by SMSFs has significantly increased. The number of SMSFs using Limited Recourse Borrowing Arrangements (LRBAs) to purchase property has increased significantly from 13,929 (or 2.9% of all SMSFs) in 2013, to 42,102 (or 8.9% of all SMSFs) in 2017. For SMSFs that have purchased property through an LRBAs, on average, these LRBAs represent 68% of total assets of the funds.


LRBAs are most common in SMSFs with a net fund size (total assets excluding the value of the amount borrowed) of between $200,000 and $500,000. In 2017, the average borrowing under a LRBA was $380,000 and the average value of assets was $768,600.


We live in an interesting world, don't we? Particularly if you're an investor. 

Every time the world's economic woes seem to have sorted themselves out, or we think Australia's economy is on the move again or we feel Australia's property markets seem to be steaming along nicely, a new set of challenges pop up for us as investors.


Some of them come from overseas – things like trade wars, terrorism and financial woes.

And some are new problems – back home.  Things like concerns about what the future holds for Australia's economy, talk of impending recession, unemployment, banks' tighter lending criteria and our property markets gyrations.  All this means is there is a heightened level of uncertainty about what the future holds.


After 2 years of falling property values around Australia, it looks like our markets are bottoming out – but that doesn't mean there's a property boom around the corner.


There's the likelihood of uncertainty ahead for some time yet, so I'd like to share 7 tips for building wealth in the current "interesting" economic times. You see, in my experience, times of economic change always create opportunities.


So what should an investor do? 


 1. Risk comes from not knowing what you're doing, so pay the price to learn what you're doing!


Sounds obvious I know, but many investors commit hundreds of thousands of dollars to buy a property yet have gained their property investment knowledge from attending a one day seminar or reading a book.


The first step for most investors should be to invest in themselves.


Invest in their knowledge. Get a mentor ... BUT  be careful who you learn from.  Just like in previous property cycles, currently there is a swag of new property gurus willing to take your money to teach you their new found knowledge.  Instead find a teacher who has achieved what you want to achieve, has invested through a number of cycles and has kept their wealth.

If your property investment mentor hasn't had some challenges and failures along the way, they probably haven't tried hard enough. 

 2. Adhere to a proven strategy


Most property investors don't have a plan or a proven strategy to adhere to.


In fact they spend more time planning where they're going to holiday than they do planning their financial future.


If you don't have an investment strategy to keep you focused, how can you hope to develop financial independence?


Adhering to a proven investment system will give you more predictable results, and will help you make more consistent and less emotional decisions.


Let's face it…it's too easy to get distracted by all the "opportunities" that keep cropping up.


Unfortunately many of these supposed opportunities don't work out as expected.


Look at many of the investors who bought off the plan or in the next "hot spot" or in mining towns, only to see the value of their properties under perform.


3. If you're the smartest person in your team, you're in trouble.


Successful investors surround themselves with a good team. This may consist of a property accountant, a proficient finance broker, a lawyer and a property strategist.


However, you must become your own most trusted investment advisor-no one can do it all for you.


Too many investors make the monumental mistake of thinking that success is a matter of choosing the right investment advisor to handle their wealth.


It costs them dearly!


No one-no one-will be able to manage your wealth like you can.


Yes, you need good advisors, but you need to have the sophistication to filter and use the best of your advisors.


This means you've got to invest the time, energy and money to master the skill of managing your own net worth.


4. Have Financial Buffers in Place


Smart investors don't only buy properties; they buy time to help them ride through the ups and downs of the property cycle. Recession Australia note money economy squeeze tighten save saving budget cut


After all…one thing that is certain about the times ahead is that there will be uncertainty.


Over the next few years we'll have some good times and some bad.


Some further periods of low interest rates and then they'll rise (possibly considerably).


We'll have some boom times and we'll probably have another recession one day.


Savvy investors will protect themselves by having financial buffers in place to see themselves through the difficult times.


5. Sometimes it's best to do nothing.


A great quote from Warren Buffett is:


 "The trick is, when there is nothing to do – do nothing."


Yet many investors get itchy feet and want to do more, put another deal together or buy another property.


There are stages in the property cycle and times in your investment journey when it is best to sit back and wait for the right opportunities because wealth is the transfer of money from the impatient to the patient.


6. Become an expert


Successful investors specialise. That's how they become successful.


They find something they are good at and do it over and over again, rather than moving on to the "next shiny toy".


Do you know a specific area and have a network of contacts that gives you information advantages?


Of course if you are investing in publicly traded securities you have to be wary of trading on "insider information", that is information that is not publicly available.


Which is one of the reasons I like investing in property; since not only do I get paid for my "insider information", but it is totally ethical and legal to trade on this privileged information!


Seek out your advantages?


What contacts, expertise, and experience do you have that you can leverage?


7. Treat your property investments like a business

Investing is a serious business and if done correctly can, over time, replace your personal exertion income.


I've seen some property investors, those who treat their investments like a business, become very, very rich by growing a multi-million dollar investment property portfolio.


They do this understanding "the system" and getting the right type of finance, setting up the correct ownership and asset protection structures and knowing how to legally use the taxation system to their advantage.


They also hold themselves accountable for their own success.


Here's a bonus tip…


If history repeats itself, and it most likely will, most people who get involved in property investment will not become financially independent.


Many will buy the wrong property or at the wrong time or in the wrong location.


Even as the property cycle moves into the next phase, most properties will not be investment grade.


However if you have a system, a great team of advisors, your finances organised and the right knowledge, now could be a great opportunity to buy good properties that will appreciate in value over the long term.  

In fact, now is the best time to buy counter cyclically in a decade or more.

You only get a chance to buy Sydney property 15% below what it used to cost, once or twice in your lifetime!

You only get a chance to buy Melbourne property 10% below what it used to cost, once or twice in your lifetime!

So I hope you put these 7 tips to great use in your financial life.


To avoid disputes, with the birth of every SMSF it pays to think about death

When commencing any self managed superannuation fund (SMSF), there is one over-riding expectation that an adviser will most likely drum into newby trustees again and again - that their fund must meet the sole-purpose test. This is not only to maintain access to the various tax concessions available, but to avoid possible civil or even criminal penalties.


This "sole purpose" is that the fund has been established with the core expectation that it is there to save and make money for each members' retirement savings. Or, to quote the regulator of SMSFs (the ATO), the fund "needs to be maintained for the sole purpose of providing retirement benefits to members, or to their dependants if a member dies before retirement".


Newly minted SMSF trustees will likely be focused on the first part of the above statement, but it is the last few words - or their dependants if a member dies - that can take on greater importance as time goes by.


While no-one really wants to think about it, it is important that SMSF members/trustees have the facts before them from the outset - that way there'll be less surprises (and hurdles) if the unthinkable happens and a member dies.


As an example, consider Peter Podd and his wife Peta. They set up an SMSF, the Ps-in-a-Podd Super Fund (PIAPSF), which is a typical two-member fund with individual trustees. But what happens if Peter dies?


A legal personal representative (LPR) may be appointed as trustee for Peter to look after his interest in PIAPSF for a limited time (until benefits are paid to beneficiaries). This is only possible when the trust deed governing the fund allows for such an appointment (many SMSF trust deeds do).


Then Peta must make sure PIAPSF still meets the definition of an SMSF.


Technically, after the death benefit payment is made to the beneficiaries, the LPR will have to be removed and the surviving trustee/member (Peta) will have to adopt one of the following options to ensure the SMSF will remain complying:

(1) ask someone else to become the second individual trustee, or (2) set up a corporate trustee (with the single member becoming the sole director of the company).


Note it is possible to ask the LPR to join the fund as soon as the death benefit commences to be paid in which case he/she becomes the second individual trustee of the SMSF in their own capacity, not as LPR.


Another viable option would be to transfer PIAPSF's balance to another fund and wind up the SMSF.


Peter's death benefits must be dealt with as soon as possible. If the fund has limited cash available, assets may need to be sold to pay the benefits.


Death benefit nominations

SMSF members can nominate who will get their benefits when they die.


A binding death benefit nomination directs the trustee to pay the benefit to a legal personal representative or a dependant. Without a binding nomination, the remaining trustees will decide how the benefits are distributed by considering the trust deed and super laws.


The trust deed must be followed, even if it is different to the member's will.


To understand how death benefits can be paid you need to know who is a dependant. A dependant is generally a spouse, or someone in a close personal interdependent relationship. Or a child who is under 18, has a disability or is aged between 18 and 25 and is financially dependent on the deceased.


In regard to tax, any sum paid to a dependant of the deceased is tax free. It's not assessable income or exempt income. The SMSF doesn't withhold tax from the payment and the recipient doesn't include it in their income tax return.


A dependant can be paid a lump sum or an income stream. A non-dependent can only be paid a lump sum. If the death benefit is paid as an income stream, or is paid to a non-dependent or the trustee of a deceased estate, there may be tax to pay.


Lump sums can be paid in cash or non-cash form, for example, shares or property.


The trustee may need to withhold tax from a death benefit. Working this out can be complex and will depend on a number of factors. If a trustee has to withhold tax, they must register for PAYG withholding and complete some other ATO forms.


It's wise to plan ahead. If there is a dispute over the payment of death benefits which can't be resolved, it may lead to costly court action. Clear guidelines in the trust deed will help prevent problems.


# # # # # # # #clarkemcewan #superadvice #smsfadvice

4 Things to consider before buying a holiday home

With summer fading from the horizon, you may be dreaming of a few lazy days at the beach or escaping to a country cottage. Perhaps you're considering buying your own piece of paradise.

Buying a holiday home is not too different from buying a family residence or investment property. Location, price and the property itself are important, but there are extra details to consider when you're on the hunt for a weekender.

1. Location

Proximity to schools and employment hubs may not be essential for your regional retreat, but you'll probably want access to some amenities. A petrol station or local shop where you can pick up the basics would be useful. Is it really absolute seclusion you crave, or would you rather have cafés and restaurants nearby?

If you plan to retire to the property in the future, consider distances to hospitals, shops and a local community.

Consider how easy it is to get to the area you've selected. You'll want to be close to highways and maybe airports – but not too close. Much more than two hours' travel from home might make you think twice about that weekend getaway.

2. Features

When looking for a full-time home, you should decide on features such as how many bedrooms you need and how big you want the kitchen and living areas to be. Do the same for your holiday home.

Also, ask yourself how important it is to have views. Do you mind being close to the neighbours? How much land can you manage? Consider maintenance requirements: you want to relax at your weekender, not spend time making repairs.

Remember you won't be around all the time, so think about security. Check whether the property could be at risk of fires or floods, and what you could do to protect it.

3. Costs

As with any housing purchase, make sure you budget for all the costs. These may include a deposit, stamp duty, mortgage insurance and solicitors' fees.

Get inspection reports, ideally by people who are experts in the local area. Regional properties may face different issues from those you're used to in the city. Noxious weeds, for example, are unlikely to concern you if you live in central Melbourne or Sydney, but they can be a major problem in the country.

Factor in furnishing costs. Some holiday homes are sold with furniture and appliances. If not, you'll have to find money to fit out your retreat. And don't forget transport costs to get there.

4. Tax and investment

A holiday home is not your primary residence, so you may be subject to capital gains tax when you sell. You may also have to pay land tax.

If you plan to rent out your weekender when you're not using it, you'll have to pay tax on any income earned, although you may be able to claim deductions for expenses. You should always seek professional advice on financial and tax-related matters.

Remember, when you're considering buying your own slice of heaven, it's the little details that will make all the difference to your weekend getaway.

We are happy to advise on all the above matters prior to entering into a contract. We love to see people realise their dreams.  Contact us now for an obligation free consultation. about securing that cabin-at-the-lake or beach house.