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.