Below is a great Article I read from Alan Weiss Summit Consulting Group on what helps you to make your ideas successful

As you might imagine, I've been asked repeatedly what my assessment is of the factors differentiating the highly successful from the less successful. The comparison isn't against the unsuccessful, which an entirely different dynamic, but against those who do well but aren't the best, the thought leaders, the champions.

You can easily read how it's a kibillion hours of practice (I find that to be nonsense), or heredity (perhaps appropriate in swimming or basketball), or IQ (I know too many smart failures), or education (I went to college and grad school with a lot of people who were no better off after the experience). Some people advocate coaching and some trial and error, and some sheer passion.

My general conclusions is that perseverance is the key, all else being fairly equal, and that perseverance is based on disciplined focus and resilience. (The closest work I'd recommend is Andrea Duckworth's excellent Grit).

Focused discipline is the ability to stay the course, to limit and overcome distractions, to handle multiple priority projects at once without sacrificing any. The operative word here is "priority." Focus requires the jettisoning of the non-priority, and if everything is a priority then nothing is a priority.

Resilience (see my book co-authored with Dr. Richard Citrin, The Resilience Advantage) is the ability to accept temporary, unavoidable pain without allowing voluntary, endless suffering to intervene. It's the ability to get back on the horse, to apologize, to return to the scene of defeat, to learn from failure.

I'll tell you here and now that most people aren't happy with my conclusions, because perseverance and resilience are within the control of the performer. They are not functions of DNA, or the right school, or particular life experiences. You can probably improve at both right now.

But do you choose to?

FARM MANAGEMENT DEPOSIT SCHEME

Some good new for primary producers with the following changes that came into effect on 1 July 2016:

1. The amount you can have deposited is now $800,000 per person, up from $400,000.
2. If effected by drought you can withdraw an amount after 6 months in the first 12 month period and not have to go back and amend the previous years tax return.
3. Financial Institutions (Banks) can now offer offset accounts allowing you to use the FMD to offset the interest costs of farm business borrowings.

If you want to know more about these changes and how best to use them please contact your taxation advisor at DHM Partners.

Brett Higgins
Executive Director

Does your business have any goodwill?

Below is a great Blog I read from DHM Partners external Chairman Andrew Geddes:

Every day I read about vastly indebted governments, bloated bureaucracies, rampant addiction to welfare, budget deficits, trade deficits, asset bubbles and global deflation!!!!

Resource prices have tanked too.

And wars seem to keep getting more entrenched in various parts of the world.

No wonder the stock market is volatile!!!!

Then the politicians keep their snouts in the short term troughs of getting re-elected.

And the baby boomers are going to sell their businesses to fund their retirements in ever growing numbers.

As a bloke who’s worked all his life with business owners, it makes me worry about the future.

What can we do to protect ourselves from this risk of not selling our businesses or no goodwill?

Here’s my 40 year’s take on it…

                *take some uninterrupted time to think about how you can make yourself redundant

                *list all the things you do and who else might be able to do them

                *list which things might be automated

                *list all the things to have documented processes (quality management concept)

                *get this done and delegate much of what you do

                *focus on creating quality products or services and do it better than your competition

                *focus on quality customers and ask them what they want, like and need

                *put examples of outcomes achieved for your customers on your website and in your eNews

                  and in social media

                *go on 6 weeks leave and see how the team handle it

If you can’t find an external buyer (big corporate or competitor), consider selling your business to your senior management team (SMT).

If you haven’t got a SMT, create one.

Have a planning day with them.

Set budgets and report monthly financial performance.

Identify three critical areas to improve in the next quarter (your strategic imperatives).

 

Establish project groups in your business to action these imperatives.

Exhibit contagious enthusiasm for these projects.

You might have to offer small percentages of equity to them at first and maybe vendor financed.

They have to sit around the board room table to feel the heat of decision making.

Send them to our “Leadership for Profitable Business”  workshop Nov 24/25 in Brisbane so they are further educated and their confidence builds.

Educate their spouses too!!!!

Then maybe you can create a succession solution for yourself in time.

Good luck with it.

Andrew Geddes

Federal Budget 2016 - more undermining of the superannuation system

The 2016 Federal Budget has again made changes to superannuation law.  For example it's proposed that the concessional contributions cap be reduced to $25,000 for everyone able to contribute to superannuation.  This constant changing of limits only undermines the general publics confidence in making contributions to superannuation.  If the general public can't be confident in the superannuation laws not being adversely changed over a one year period, why would they have the confidence to invest their money in superannuation for 10, 20, 30 years or more.  In addition retrospective changes are proposed to Transition to Retirement Pensions.  Where previously the investment earnings of these pensions were tax free, it is now proposed that this investment income be taxed at 15%, even for existing Transition to Retirement Pensions from 1 July 2017.  Again, how can people have confidence in the system and make long term investment decisions when superannuation has become a political football.  It's time for the politicians to provide confidence to the general public via ruling out any further adverse changes to superannuation rules.

VOLATILITY IS INCREASING

Markets have been whipsawed around by both positive and negative news, with some significant events highlighting the need for caution and also diversification.  For example, some of the issues that have moved markets include:

·         US 30 year Treasury yields hitting a record low (US borrowing costs are at record lows);

·         European government bond yields hitting record lows, and even turning negative for some durations (savers are paying banks to hold their money);

·         Chinese GDP growth hitting a 24 year low (China is slowing down, double digit growth rates are gone);

·         European equities hitting a 7 year high (shares are rising on the back of stimulus measures);

·         The Euro currency falling to an 11 year low against the US Dollar (money printing is devaluing currencies);

·         Commodities falling sharply, with oil down more than 50% since October (good for consumers, but not for exporters);

·         A surprise move by the Bank of Canada to cut interest rates by 0.25% (falling commodity prices are taking their toll);

·         A shock move by the Swiss National Bank to unpeg its currency from the Euro (currency soars and equities tank);

·         The European Central Bank announcing a massive stimulus package to print €60 billion per month (Europe is bordering recession, can stimulus turn it around?);

·         Anti-austerity party, Syriza, winning Greece’s election (this puts debt default concerns back on the agenda);

·         Standard and Poor's downgrading Russia’s government bond rating to below investment grade (Russia’s credit now considered ‘junk’).

 Some of these events have come as a complete surprise to markets.  Of particular note was the Swiss National Bank’s decision to unpeg its currency from the Euro, only two days after confirming to the market that it would maintain the currency peg.  This decision sent the Swiss Franc soaring 30% against the Euro and sent the Swiss share market down more than 10%.  These large scale and quick moves have negatively impacted some investors, with the world’s third largest retail foreign exchange broker requiring a bailout to stay afloat.

 

Despite these issues and rising volatility, share markets have held up relatively well, with most trading positively for the month to date.  However, we would caution investors from becoming too complacent.  The market is providing some warning signals, and we recommend that investors remain focused on diversification and risk management to mitigate the possibility of a negative ‘event’ impacting portfolio returns.

NEW SELF MANAGED SUPERANNUATION FUND PENALTY REGIME

From 1 July 2014 be afraid as the ATO will penalise you heavily if you have breached any of the superannuation fund rules.  Not only are the penalties large they apply to all trustees and cannot be paid by the superannuation fund.  Below are some examples of the breaches and the penalty that applies:




Failing to prepare financial statements                                                    $1700


Failing to keep trustees minutes for at least 10 years                              $1700


Providing financial assistance to members and relatives                        $10200


Failing to keep records of change of trustees for at least 10 years          $1700


Failing to sign Trustee Declaration within 21 days of                             $1700
appointment and keeping same for at least 10 years


Failing to keep members reports for 10 years                                         $1700


Failing to notify the ATO of an event that has significant                      $10200
adverse effect on the funds financial position


Failing to notify the ATO of a change of status of the SMSF                 $3400


Failing to appoint investment managers in writing                                 $850


Failing to comply with ATO education directive                                    $850


Failing to formulate, review regularly and give effect to an                    $3400
investment strategy


Failing to have funds financial statements prepared, signed and            $1700
retained for at least 5 years


Contravene borrowing prohibition                                                          $10200

QUICK TIP TO BECOME MOTIVATED ABOUT SAVING FOR RETIREMENT

If you are lacking motivation and direction with regards to investing for the future then answer these 3 questions:


1. What will your income needs be in retirement?
2. How much are you prepared to contribute to your retirement whilst you are working?
3. How long are you going to work for?


Generally your answers will be that the time you have left working and how much you are prepared to or are capable of saving will not accumulate enough asset to generate enough income to support the life you want to live in retirement. 


Then you need to be honest with yourself and face the fact that the only way to try and solve this problem revolves around the following strategies:


1. Save more
2. Work longer or harder
3. Adjust your investment philosophy


or you will just have to be prepared to retire with less and not be able to live the life you want in retirement.


There is no magical answer no matter how many guru's tell you there is.

Cold Callers

The latest garbage that cold callers are now peddling is "tax variations".  They make it sound like there's a tax loophole that allows people to get a whole lot of additional tax refunded.  For most people there is absolutely no benefit.  For some people who typically get large refunds of their PAYG withholding when they complete their tax return, all that it means is that they get this refund slightly earlier. This is because the "tax variation" means not as much PAYG withholding is taken from their wage during the year.  For this minor cash flow benefit the cold caller will charge a fortune - I wonder whose interest the cold caller is thinking of.

This "tax variation" garbage comes on top of cold calls in relation to "fantastic property investment opportunities", which just happen to make the cold caller thousands on dollars.

Always check with a trusted adviser before proceeding with anything these cold callers have to say - better still just hang up on them.

Superannuation Myths

Superannuation is still undoubtedly the best vehicle to save for your retirement.  As I have written in previous newsletters, superannuation has both tax and Centrelink benefits which can add greatly to the wealth of clients.

When speaking with clients there are 2 main objections to using superannuation as a savings vehicle.  The first objection is that superannuation is always losing money.  What is not clear to many people is that superannuation is only a tax structure.  Superannuation does not dictate that you must have shares or property.  Therefore provided the superannuation investment strategy allows for it, 100% of your superannuation money could be invested in cash or fixed interest based investments.  Therefore it is possible that your superannuation is no more risky then money in the bank.  It is a myth that superannuation is risky as it purely comes down to the member’s investment choice.

The second main objection to superannuation is that the Government is always changing the rules and making it less attractive.  While it is true that the rules around superannuation have always and will always change, the tax effectiveness of money, once it’s inside superannuation is as great as it has ever been.  There have been measures taken to reduce the amount of money that people can contribute to superannuation, however a superannuation tax rate of 0% on pension investment earnings and 0% tax on pension payments for superannuation members over the age of 60 is still as good as you can get. In fact recent announcements by the government in relation to capital gains tax when a member passes away have increased the tax effectiveness of superannuation.

The main advice I have for clients is to be aware of the rules of superannuation and how they affect their own personal circumstances.  Do not make blanket assumptions that superannuation can’t be of benefit to you.

Wealth creation for the next generation

 

Over the last few months I have had the pleasure of a number of clients bringing in their young adult children who have recently commenced  employment for the first time.  The idea was to discuss with them how to create long term wealth.

While each client’s circumstances are slightly different there are a number of key themes that continually recur in each meeting which I have summarised below.

1)      Continue to improve your knowledge in the career you have chosen.  The main asset of a young adult is their ability to earn an income.  By increasing knowledge of your job you are increasing your ability to earn a high income from that job and you are increasing your job security as you become more integral to your employer.  Many young people see a job as the end to their education process, but it should just be a continuation of that process.

2)      Don’t try and emulate your parent’s lifestyle too early.  Many young adults are seduced into far too much debt as soon as they earn an income because they want a house and a car like their parents.  It is far better to start off with a modest house and car and pay them off quickly, then to be burden under the weight of large debt repayments.  Some parents have taken decades to accumulate their assets and their children should understand there are no short cuts in achieving wealth.

3)      Pay off your non-deductible debt first.  The allure of a hot share tip or a get rich quick scheme is often too tempting for many.  However, there is no investment that offers a better risk adjusted return then that off paying off non-deductible debt first.  Non-deducible debt maybe such things as a home loan, car loan or credit card debt.

4)      Be prepared to take some risk with superannuation.  The default superannuation fund option that many people are automatically invested into is often the wrong investment option.  People in their 20’s have a 40 year investment timeframe in front of them before they can access their superannuation and therefore this should lead them to weight their superannuation in favour of growth assets such as shares & property.

5)      Never spend more than you earn.  Credit cards are a convenient way to pay for many items, however they can be the worst financial trap for many people.  It is very easy to spend on a credit card without any thought as to how it will be repaid.  The 20% plus interest rates can then make it virtually impossible to climb out from under this debt burden.  Ultimately everyone needs to ensure that live within their means and if debt is becoming a problem there are only 2 solutions.  Increase your income (eg second job) or decrease your spending.

The above items are by no means an exhaustive list of what young people should be considering when first starting to earn an income, however they would be well on the way to financial success by taking note of these 5 principles.

Control of X-Mas spending.

With the festive season almost upon us,
does anyone have any tips on keep the X-mas spend under control?

Have your Debtors Blown out???

When talking to clients a common issue they are facing at the moment is a blow out in their Debtors or getting paid for the goods/service they have supplied.
We are then developing strategies that help combat this.
Let me tell you about one of the most stringent strategies I encountered just the other day. In order to have any work done I was required to complete a credit application form that was supported by a credit card. The night of the work being performed my credit card was charged. NO BLOW OUT THERE!!!

IS YOUR WEALTH MANAGER SHOWING YOU THEIR RESULTS COMPARED TO A BENCHMARK

The next time your financial planner says they are doing a great job looking after your money, as they sold out at the perfect time and bought back in at the perfect time, don't take them at face value and ask them to prove it.  To do this ask them to compare your result  net of fees to the most relevant benchmark, do this for the current review period and the previous 12 and 36 months.  You might be surprised at how exact their timing was or was not.

Reporting on Contractors in Building and Construction Industry

The ATO is watching and collecting more and more data on your business.

From the 1 July 2012 you will have to record any payments you make to a contractor who is providing building and construction services and report it to the ATO on an annual basis.

It will be interesting to see what the ramification are to both you and the contractor whey the ATO receive the report and see that a contractor is basically acting as an employee.

BEWARE THE DEATH TAX

Recently seen the death tax at play.

A big cheque written to he ATO that could have been avoided.

You need to be mindful of your circumstances and estate planning, you also have to consider super and where it fits into this.

If you are diagnosed with a terminal illness, or if you have parents that are unwell, be aware that if you can access the super monies you may be able to avoid any tax charged prior to being paid out.

Complex area consult experts.

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".