TIC STANDS FOR

I have been searching for an adequate word to describe all of the get rich quick promoters out there. The word I have settled on is tic. The dictionary describes tic as an involuntary spasmodic twitching of the muscles, especially of the face. Interesting also that a word with the same pronunciation but spelt tick is described as a blood-sucking mite or parasitic insect. I cant help but think that tic is what those who follow religiously what these schemers preach will be experiencing in years to come as they realise their wealth has been sucked dry by a tick.

SRO GRAB FOR OUR CASH

For all of you who invest in property there is an important notice you will receive from the State Revenue Office that you need to read very carefully. It is your LAND TAX Notice and it appears the SRO attitude is include everything and the majority of the population will just pay it. This could cost you hundreds of dollars if not thousands if you don't do something about it. The 4 biggest grabs we have seen are the following:

1. Your residence is included with land tax calculated on it,
2. Your primary production property is included with land tax calculated on it,
3. You have altered titles and this has not been reflected, and
4. The market value placed on your property's is excessive.

If the SRO have had a grab at you and tried one of these 4 on you, you need to object against the assessment within the time frame allowed. If you don't you will be expected to pay the tax for every year that you own the property.

PROPERTY MORTGAGE SAUSAGE SIZZLED IN @$#*

Ever been told that you can fire proof your home from someone trying to sell you property and all the other associated products. These products will rang from advice on were to purchase, agents commission, advertising, home insurance, life insurance, mortgage insurance, the actual mortgage, how to structure the purchase, valuations, depreciation reports, body corporate, property management, property maintenance, gardening, conveyancing, tax returns, wills and what else they can think of to make money out of you.

The latest sausage I have seen, is sizzled as Fire Proofing your Home. This is when the loan you take out to purchase the investment property does not require your house to be used as security, it is also described as a low doc loan. The promoter will make more money out of this type of loan as the interest rate and establishment fees on these loans are higher than normal loans. This sounds like good advice as you are prepared to pay more money for the protection so how can it be a sizzle. On the surface it is good advice however where the sausage starts to loose its appeal is in the detail. You see the lender, as they are not in the business of losing money, will more than likely have you sign a personal guarantee for the loan. A personal guarantee will mean that if the proceeds from the sale of the investment property does not repay all the loan, anything else you own will be used to pay it. So basically you will have agreed to pay a higher interest rate and higher establishment fees for no real protection.

When you also factor in all the taxes that the state and local governments charge it makes you wonder how an investor makes any money at all. We wont if the never ending property boom stops, e.g japan.

PERSONAL PROPERTY SECURITIES REFORM AND RETENTIONS OF TITLE

The Personal Property Securities ACT 2009 is expected to commence from May 2011 and if you are currently using RETENTION OF TITLE CLAUSES you will have to change what you do. The ACT deems a retention of title as a security interest. This means that you will not be able to take possession of the goods should the purchaser default on your agreement with them. To over come this you will have to register your interest on the Personal Property Securities Register and make sure your agreements are worded correctly.

There are also a number of other areas of your affairs that will need to be reviewed to continue your existing risk minimisation strategy's. In particular if you lease goods to related entities and have fixed and floating charges over assets to protect inter entity loans. We will be talking to you over the coming months with what you will be required to do, however should you in the mean time require assistance please contact DHM Partners.

BANKS SHOULD JUST STICK TO LENDING MONEY

I have just had another example of the banks trying to move into advice giving instead of doing what we want them to do in lend us money via the most appropriate loan product. This time it was the NATIONAL AUSTRALIA BANK (NAB) and they are trying to sell insurance to their clients. So if the NAB suggest to you that you should talk to their insurance broker who is not a local remember the following:

1. they will quote you a cheaper rate this year and then get you the following year
2. the profit on the premium is leaving the town
3. if you have to claim you will not be dealing with a local,
4. as you are not dealing with a local it is likely the claim will take longer so think about what detriment this could cause your business, and
5. do you really want your bank having more control over you.

If this does happen and they suggest you can get it cheaper you need to say to them "thanks you have me thinking about cutting costs and can you have the details of your loan as you would like to take it to another bank and see if you can get a better deal".

Completing PAYG Payment Summary Individual Non Business

Please note that when you are entering an amount into the Reportable Employer Superannuation Contributions section you are to only include the amount that your employee salary sacrifices, not the normal 9% you pay on their wage.

Future potential tax changes

The following is a list of what might eventuate in the future

Small business (turnover of less than $2m)

1. From 1 July 2012 reduction in company tax from 30% to 29%
2. From 1 July 2012 immediate write off for any asset costing less than $5000
3. From 1 July 2012 all assets costing $5000 or more will be depreciated at 30%

Large business

1. From 1 July 2013 reduction in company tax from 30% to 29%

Personal

1. From 1 July 2011 50% tax discount on up to $1000 of interest income
2. From 1 July 2012 standard tax deduction of $500
3. From 1 July 2013 standard tax deduction of $1000

Superannuation

1. From 1 July 2012 government will contribute $500 to super for low income earners if money is contributed to super and a tax deduction claimed
2. From 1 July 2012 if you are 50 plus and your super is less than $500,000 you can continue to contribute $50,000 per annum and claim a tax deduction for it
3. From 1 July 2013 SGC increases to 9.25%
4. From 1 July 2013 the maximum ages for SG rises from 70 to 75
5. From 1 July 2014 the SGC increases to 9.5%
6. From 1 July 2015 the SGC increases to 10%
7. From 1 July 2016 the SGC increases to 10.5%
8. From 1 July 2017 the SGC increases to 11%
9. From 1 July 2018 the SGC increases to 11.5%
10. From 1 July 2019 the SGC increases to 12%

10 year anniversary

It has been 10 years since Rob and I first took over the firm from Bill Ridge and would like to thank you all for your loyalty during that time. Our goal over that time was to deliver more value to you than what we charge, and i feel we have been able to achieve that. Looking back we have had great pleasure in:

1. helping you start income streams from your superannuation,
2. helping you use the tax benefits you are entitled to from superannuation in retirement,
3. bringing a relationship with one of the best investment and superannuation teams in Australia to our firm. The dramatic changes to the investment world will ensure that this relationship in the next 10 years will add so much value to your wealth. Anyone can make money when times are good, but when times are bad making money and preserving your wealth actually requires a great skill set,
4. training and developing the next generation of professionals for not only DHM Partners but also for the community. It is hard to train and develop staff and keep them all. To those that have left I hope you are grateful for the training and development you received from us and use it to benefit the community. To those that have stayed I look forward to many more years working with you as your employer and future business partner,
5. running a series of seminars to help the young entrepreneur who are currently in business or plan on entering business,
6. helping you survive one of the hardest 10 years the local community has ever had to face, and
7. helping you convert some of your long term investments into a more liquid form.

There have been many more achievements and there will be many more going forward as Rob, myself and our team remain committed to bringing you the best advice there is.

Financial year 30 June 10

The planning is completed for another year. Thank you for your co-operation and providing of information in a timely manner. Our goal each year is to provide more value to you than what we charge via giving you:

1. certainty as to what your commitments will be when the tax return is finalised,
2. advice to make sure that you have invested your profits for the year in the most tax effective manner,
3. advice to make sure that you have structured your affairs in the most tax effective manner,
4. review your needs and help where help is needed, and
5. provide some ideas for you to think about when you are planning on how you will improve your business in the next financial year.

In the coming months we will be having some time off but be assured there will be a team member who is capable of helping you with your questions.

DHM Boxes - More to come!!!

A Sausage that has been sizzled in #*@$

For those of you that have read my latest newsletter here is a perfect example. I open up my mail today and there is a letter from Mr Hassle Free Share Sales Pty Ltd offering to purchase my CBA shares. He tells me that he will pay me $29.20 per share. He also tells me that the market value of my shares are $58.31. He also tells me that i will get my money in 10 days and that i don't have to pay any brokerage. He also tells me that this offer is regulated by the corporations act 2001 and that he is has no affiliation with the CBA. He has also carefully worded the letter to lead you into thinking that the $29.20 per share is the market value of the shares. Wow what an offer, FOR HIM.

What a sizzle, he is leading me to believe that the price is the market value, i am getting my money quick, i am saving a fortune on brokerage, he is independent from the CBA, and it is all legal.

What to do with this.

Don't agree to it.
Burn the page titled ACCEPTANCE FORM
Mail the letter back and hand write on it that you had not realised the parcel you left in the toilet this morning had found its way into your hands, what a SAUSAGE SIZZLED in #*@$

A free tip for the government and water ownership and use

The government and ATO should make a simple decision that will help towns based upon irrigation survive these tough times so that they can prosper in the future. That decision is to classify a permanent water right as business real property. If they do this it will mean that a self managed superannuation fund can purchase a permanent water right and lease it back to the members at an arms length rate to use in their horticulture business. At present a self managed superannuation fund can purchase the water and only lease back a small proportion dependent upon the value of the superannuation fund. If this was allowed just think about what you could achieve in the game of survival to then prosper.

The future of the irrigator

Now that permanent water is dropping in value what does that mean will be happening to the overall value of your asset. Here is a thought, perhaps the future will look as follows:

1. Own water with the mindset as an investor and want a 10% return on it, so if water is valued at $1500 per meg then you would receive a net return after water holding costs of $150 per meg for letting someone use this water,
2. Own land with the mindset of a small business owner and thus the valuation of the land will be determined by what profit you can make from the land,
3. When calculating what profit you can make from the land the water required is factored in as an annual cost of $150 per meg as per 1 above,
4. The required return on investment you want from the business is 25% as it is considered a reasonable risky enterprise,
5. If your estimated maintainable profit per acre is $500 you would be prepared to pay $2000 per acre, if your estimated maintainable profit per acre is $1000 you would be prepared to pay $4000 per acre, if your estimated profit per acre is $4000 you would be prepared to pay $16000 per acre and so on, these are exlcusive of water.

Not sure if something like this will actually happen as such, but i now the new generation of business owners are making decisions based upon return on investment instead of purchasing a job.

Something to think about

Courage or Cash?????

I was talking to a client yesterday about the fact that he didnt take up a investment opportunity that we had talked about, due to lack of courage the decision cost him a 50% ROI. What stops you from taking the action that you know you should the courage or the cash????

Can an asset be deemed an estate asset if it is gifted prior to death

A client asked me if they gift an asset they were going to leave to a family member prior to their death can another family member try and include that asset as an estate asset.
This is a matter for each state and basically in all states other than NSW no family member would be able to have the asset re-included as an estate asset. If you think about this it presents a number of planning opportunities.

Why do I pay you what you charge me?

I was asked this question by a client today and it got me thinking why the client doesn't see the value in what I charge them each year. Whenever a new client comes our way they are happy with the fees quoted and then refer other clients within their network. I guess what happens is that existing clients forget that what you do is always the best possible for them as you don't remind them each year. The new client however sees the value as it becomes obvious that what they are currently paying for is not the best for them and can't wait to become a client. So to answer the existing clients question we provide the following for what you pay us:

1. Know that we are always thinking and looking for ways to help with profit maximisation
   
2. Know your tax is kept to a legal minimum
   
3. Know that your wealth is being looked after by the best
   
4. Know that your stress levels are not as high as they would be if the above are not being looked after
   

Of course there is a lot more to each of the above points but I don't want to post them here and give away trade secrets to the competition.

Tax in a mess??

At DHM we constantly are meeting new clients. Many new clients have receieved poor taxation advice in the past and often their taxation situation is in a mess. Having met such a client last week, their reaction is often to say "do you still want us a clients even though our tax is a mess". At DHM we thrive on these clients, because they have good businesses, its just that they haven't had decent advice to structure their affairs correctly. Taxation structuring advice can often save these clients thousands of dollars in tax and also make them feel in control of their financial situation again. If you feel your tax is in a mess, take control of the situation and do something about it.

Creating a high culture workplace

As a very broad and general overview the essence of a high culture workplace comes down to a general belief through the organisation that you are the best at what you do, in your chosen market. In order to gain this belief in yourself and your organisation there are a series of processes and systems that need to be developed and implemented to work yourself up to the point where you truly believe the work you do is the best available to your clients.

Briefly, in order to instil this belief through your organisation and experience the benefits that come with it you should consider implementing the following in your business or workplace.

Give your employees more input and control over what they do and the general direction of the organisation. This gives them more ownership over their job and they feel more confident and start doing it better.

Strive to be the market leader in innovation. It’s the easiest thing to sell around the BBQ when you are able to tell people about things you are doing that others simply cannot and your employees will be proud to promote themselves as your employees when you are seen as innovative.

Promote an open and honest line of communication with no threat of backlash. You will get better feedback more often from those at the coalface on what you can do to grow your clients and improve your bottom line.

Invest time in training and skill enhancement for your employees and give them the confidence they have enough skill to perform their job. So many employees get bogged down at work because they don’t believe they have the required skill to perform their tasks and therefore fear failure.

Promote a “different to does not equate to wrong” policy and give employees the freedom to consider better ways to do things. Out of 100 suggestions, the 90 that simply are not workable are worth sitting through to get to the 10 ideas that you have not considered and that really help your productivity.

Simplify your internal processes where possible, promote an easy way to do things. Words like hard, difficult, boring promote a negative frame of mind. Easy, new, challenging promote a positive way of thinking.

Have no fear of change.

Tell your employees to have the courage to make decisions as part of their job and the honesty to be up front about mistakes knowing that we don’t want to sack people, we just want to learn from them.

Remember, implementing some of the above ideas and some of the ones that DHM can help you with specifically will give you a competitive advantage over your competition and increase the gap in the market, positioning your firm above all others and making you and your employees feel great about themselves, their job, their organisation (that’s how they think of it because they have taken more ownership of its direction) and their future job prospects. It accelerates your growth, helps your promotion and with the help of DHM, increases your bottom line.

If your interested in exploring the implementation of some of these strategies & more come in and see us!

What does it mean to be successful?

The local cricket association has its grand final weekend starting tomorrow and it’s a time of year that I look forward to every year. Unfortunately I didn’t get a chance again this year to have a crack at winning premiership number two. I was thinking a little about it during the week and I remember thinking when I won my first premiership in 2005 in the thirds that it was the most successful I had ever felt. Sure it was a cracking grand final with a first innings tie and the result going down to the wire in the 2nd innings, three exciting days of cricket and I just happened to find myself in the middle when the game was there to be won but why should I rate that more highly then being a part of a team or organisation that overachieves even though they don’t get the honour of being recognised as the best?

Is success just a title or emotion that we assign to ourselves when we feel like it or is it actually something that we can dream up, plan for, take steps towards, take steps backwards and eventually fulfil the dream and become successful?

I believe in the latter and I believe every business person needs to experience the feeling of being successful because it does two things.
Makes you feel bloody good about yourself
Inspires you to push harder and become more successful (& increase your wealth!)

In business we tend to measure success on a year by year basis because it conveniently works around the end of the financial year. Should a business be dissatisfied with their performance because they don’t finish the year recognised as the number one leader in their industry & area? This is why it is important to sit down at the beginning of the year and lay out your hopes and dreams for the coming year. Make them realistic and stick to them. Next is the plan, how do you achieve these things? Do you need to set a pattern of meetings to monitor your progress towards these goals? What shake up in your organisational structure do you need in order to put yourself in the best possible position to achieve your goals? What extra resources do you need to purchase to expand your capacity and achieve your goals? Will you have enough cash to fund your operations during this time or should you consider an overdraft facility with the bank?

Finally & most importantly, celebrate achieving your goals. Enjoy the feeling of success & share that feeling with the people you work with and the people who associate with you. Motivate them to achieve success if they are not currently achieving it. Then restart the process, dream big, set the goals, set the plan and do it all again.

Remember, the current market leaders you are trying to chase down didn’t open their doors and become the best overnight. They had goals, they laid a plan and they worked hard at it. Now its your turn.

Good luck to all teams competing for the holy grail this weekend in the SCA.

Cheers,
Luke.