Tag: investments

for sale sign

Selling property? Understand the tax implications first

Posted on | by Allan Hall

Know the Tax Consequences before you sell property

ATO flags income tax, CGT and GST issues for business property transactions

If your business or entity is planning to sell property, it’s important to understand how the transaction will be treated for tax purposes. The Australian Taxation Office (ATO) has issued a timely reminder that the way property sales are taxed depends on the purpose of ownership and how the property has been used.

Business Property Sales May Be Taxable

If you’re in the business of buying and selling property or even developing property for resale, you may be assessed on revenue account, not capital account. This means the entire profit from the sale could be considered ordinary income, and not eligible for capital gains tax (CGT) discounts.

The key considerations are:

  • Was the property acquired with the intention to resell for profit?
  • Was the property used in a business of property development or subdivision?
  • Have you previously engaged in similar transactions?

In these cases, tax applies to 100% of the gain and CGT concessions may not be available.

Capital Gains Tax May Apply in Other Situations

If the property was held as a long-term investment and not part of your trading stock, CGT may apply instead. This could allow for CGT discounts if the asset was held for more than 12 months.

Factors affecting CGT include:

  • The nature of the entity (individual / trust / company)
  • The holding period of the asset
  • Whether it qualifies for any small business concessions.

GST Could Be Involved Too

If you are registered for GST and the property transaction is part of your enterprise, you may need to account for GST on the sale. However, if the sale qualifies as the “sale of a going concern” or involves farmland, GST concessions may apply.

Property transactions can trigger complex tax implications depending on your business structure, purpose and transaction history. Incorrect treatment can result in significant tax liabilities and penalties.

Need clarity on your property tax position?

Talk with your accountant or business advisor before you list or sell. We’re here to help you navigate the tax implications and make informed decisions.

CONTACT ALLAN BUSINESS BUSINESS ADVISORS

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working from home

Manage capital gains tax and boost your super

Posted on | by Allan Hall

If you make a gain on the sale of an investment, capital gains tax (CGT) can eat into your profits.

But the good news is you may be able to use some of the sale proceeds to help you save on tax and grow your super. It involves making a super contribution and claiming a tax deduction to reduce your tax bill.

Here’s how it works

When you sell an investment for a profit, the taxable capital gain is added to your other income and taxed at your marginal rate, which can be up to 47%¹ including Medicare levy.

But if you use some of the sale proceeds to make a super contribution and claim a tax deduction:

  • you can offset some (or all) of the taxable capital gain, and
  • the super contribution will generally be taxed at only 15% (or 30% if your income from certain sources is over $250,000).

By using this strategy, you may pay less tax on the sale of the investment. Also, once the money is invested in super, you can benefit from ongoing tax concessions. Earnings in super are taxed at a maximum rate of 15% (or 0% if the investments are supporting a ‘retirement phase pension’).

Case Study: Tax savings from deductible super contribution

Anna, aged 42, is self-employed and earns a taxable income of $100,000 pa. She sold some shares for $80,000 and made a taxable capital gain of $20,000. If she doesn’t make a deductible super contribution, the gain will be taxed at her marginal rate of 32%¹. She’ll therefore have to pay tax of $6,400, leaving $13,600 for her to save, invest or spend.

If she makes a deductible super contribution of $20,000², she’ll offset the taxable capital gain and 15% tax ($3,000) will be deducted from the super contribution. By making a deductible contribution, she’ll save $3,400 in tax and add a net $17,000 to her super.

Key issues to consider

  • It’s generally not tax-effective to claim a tax deduction for an amount that reduces your taxable income below the effective tax-free threshold. This is because you would end up paying more tax (you will pay tax on the super contribution but get no tax benefit from the tax deduction claimed).
  • To be eligible to claim the super contribution as a tax deduction, you need to submit a valid ‘Notice of Intent’ form before certain timeframes. You’ll also need to receive an acknowledgement from the super fund before you complete your tax return, start a pension or withdraw or rollover money from the fund to which you made your personal contribution.
  • Personal deductible contributions count towards your ‘concessional contribution’ cap. This cap is $30,000 in 2024/25, but may be higher if you didn’t contribute your full concessional contribution cap in any of the previous five financial years and are eligible to make ‘catch-up’ contributions. Tax implications and penalties may apply if you exceed your cap.
  • If you’re between ages 67 and 74 at the time you make the contribution, you’ll need to have met a work test or satisfy the work-test exemption. Generally, you cannot make a personal deductible contribution if you’re aged 75 or older.
  • You can’t access super until you meet certain conditions.

While this strategy has some potentially powerful benefits, you should seek tax and financial advice before going ahead, to ensure it suits your needs and circumstances.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

¹ Includes 2% Medicare levy
² Anna is eligible for and uses catch-up contributions.

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volatile markets

Market Volatility Returns Amid Global Economic Uncertainty

Posted on | by Allan Hall

Global financial markets have experienced renewed volatility, with major indices posting sharp declines in response to a mix of economic and geopolitical pressures.

Escalating trade tensions, downgraded global growth forecasts and ongoing uncertainty around central bank policy settings have contributed to heightened investor concern.

The introduction of new tariffs by the United States targeting key trading partners such as China, Canada, the EU and Mexico has raised the risk of slower global growth and rising inflation. These measures are expected to disrupt supply chains, reduce corporate profit margins, and potentially weigh on GDP. In addition, recent reports point to weakening U.S. consumer confidence, adding further pressure to market sentiment.

In Australia, the S&P/ASX 200 fell 10.2% over 18 days, while the MSCI World Index dropped 7.95% over a similar period. Although there have been modest rebounds, volatility levels have lifted from previous lows. The VIX Index, a common measure of market volatility, has also risen, though it remains close to long-term averages.

Amid these developments, investors are reminded of the importance of maintaining a long-term perspective. Diversification across asset classes continues to be a key strategy for managing risk and reducing the impact of short-term market movements. While current conditions may appear uncertain, a measured and disciplined investment approach remains essential.

If you have concerns about how recent market movements could affect your investment strategy, now is an ideal time to seek professional guidance.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

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International Services

US Tariff Announcement

Posted on | by Allan Hall

Context

On 2 April 2025, U.S. President Donald Trump announced a series of new tariffs, collectively referred to as the “Liberation Day” tariffs, aimed at restructuring international trade relationships and bolstering domestic industries.

These measures include a universal baseline tariff of 10% on all imported goods, with additional reciprocal tariffs targeting specific countries based on their existing trade barriers against U.S. products.

Canada and Mexico are excluded from this round of Tariffs.

Key Aspects of the “Liberation Day” Tariffs

Baseline Tariff: A 10% tariff applies to all imports into the United States, effective 5 April 2025.

Reciprocal Tariffs: Additional tariffs are imposed on countries with significant trade barriers against U.S. goods. Notable examples include:

  • China 34%
  • EU 20%
  • Japan 24%
  • India 26%

Automobile Tariffs: A 25% tariff on all foreign-made automobiles is set to take effect at midnight on 3 April 2025.

Based on information available at this stage, Bloomberg estimates that these country-specific tariffs could add up to around 17 percentage point (ppt) the US average effective tariff rate, using the 2024 US trade composition.

  • The White House flagged that these new tariffs won’t come on top of the sectoral levies on steel and aluminium, as well as the new duties on cars and car parts due to start from April 3. Energy imports are also excluded, as well as some other products already threatened by additional sectoral tariffs.
  • The new tariffs will be additional to levies already charged on individual countries, according to the executive order.
  • Taking this into account, Bloomberg estimates that these new “reciprocal tariffs” could add around 17% to the average effective tax rate. Adding to tariffs on China, Canada and Mexico already implemented, this could take the average effective tariff rate to around 22%, from 2.3% in 2024.

Estimating the impact on the US economy is not straightforward. A Fed model from 2018 suggests each 1 percentage point (ppt) hike in the tariff rate lowers Gross Domestic Product (GDP) by 0.14% and pushes up core Personal Consumption Expenditures (PCE) prices by 0.09%. Hiking tariffs by 17ppt with this announcement would therefore point to a Gross Domestic Product (GDP) hit of 2.4% and a price boost of 1.4% – likely playing out over the next two to three years.

  • For inflation, firms’ pricing power, dollar moves, and the underlying state of the economy all matter, and interact in unpredictable ways. Early evidence from the data underscores the complexity. Import prices are up since Trump came into office, pointing to pass-through of tariffs to US buyers. At the same time, inflation readings in categories where imports are an important part of the consumer basket are down — possibly reflecting front loading of imports leaving retailers with an excess of inventory.

Potential Impacts on Investment Markets

1 Equities
  • Short-Term Volatility: Global equity markets may experience increased volatility, particularly in sectors tied to global trade — including industrials, autos and technology.
  • Exporters & Multinationals: U.S.-based companies with global supply chains or significant foreign sales may face higher input costs and retaliatory tariffs, affecting margins.
  • Domestic Manufacturing Tilt: U.S. companies with a domestic production base may benefit if reshoring trends accelerate or trade barriers become entrenched.
2 Fixed Income
  • Inflation Risk: Tariffs on imports typically increase input costs, which can filter into higher consumer prices. If inflation expectations rise, bond yields could follow suit.
  • Central Bank Response: The Federal Reserve may be slower to cut rates, especially if tariffs are inflationary, adding duration risk to long-dated bonds.
3 Commodities and Currencies
  • Commodity Prices: If global growth slows due to a trade disruption, commodity demand may weaken — oil and industrial metals are particularly sensitive.
  • U.S. Dollar: Uncertainty and capital flight may initially strengthen the USD, but long-term trade imbalances and fiscal risks could reverse this trend.
4 Geopolitical Risk
  • The likelihood of retaliatory measures from China, the EU, and other major economies may lead to a broader trade war environment, which markets have historically reacted to with caution.

Portfolio Considerations

This is a rapidly changing environment, with the potential for escalation via further tariffs from other countries, or alternatively, exemptions based on negotiation. Given the lack of clarity around the path forward, we expect that volatility is likely to remain elevated and we remain focused on investing for the long term.

We are not suggesting any changes to portfolios on the basis of today’s announcements, however if you have questions about your portfolio, we suggest raising them with your adviser to ensure your portfolio remains appropriate for your objectives and risk tolerance.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

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investment behavioural traps

The importance of being simply invested

Posted on | by Allan Hall

Don’t wait for the perfect moment

Although Financial markets have experienced a significant rise over the past year, global financial markets have been volatile this past month due to geopolitical issues and changing trade policies.

Questions about whether it is still a good time to invest are common in times like these, but focusing solely on market timing can lead to fresh missed opportunities. Successful investing involves much more than predicting market movements; it requires discipline, long-term planning, and time-tested strategies to mitigate risk.

The risks of trying to time the market

Market timing refers to the practice of attempting to predict future market movements and making investment decisions, both investing and withdrawing, based on those predictions. While the idea of buying low and selling high is appealing, the reality is that even experienced investors find it extremely difficult to time the market consistently.

The challenge is that the best of a market’s performance in anygiven year is often concentrated in a small number of key ‘best’ days. Those best days are often clustered around periods of volatility, making them nearly impossible to predict. Missing out on those critical days regularly can have a serious long-term impact on your investment outcomes.

Why being (and staying) invested matters

The primary reason to be and stay invested is the power of compounding. Compounding occurs when your investment returns generate their own returns, creating a snowball effect over time. By staying invested, you allow compounding returns to work in your favour, which is critical for long-term wealth creation.

Financial markets have historically trended upward over time, despite both short and medium-term bouts volatility and negative performance. Investors who remain committed to being invested and maintaining their strategy consistently across their timeframe are more likely to benefit. Trying to time your entry and exit points unnecessarily increases the risk you’re taking.

The role of dollar cost averaging

One simple, yet effective strategy an investor can use to mitigate the risk of unfortunate market timing is dollar cost averaging (DCA). This involves investing a fixed amount of money at regular intervals, regardless of market conditions. By doing so, you spread your investment over time and reduce the impact of market volatility.

For example, if you invest a set amount each month, you will automatically buy more shares when prices are low and fewer shares when prices are high. This approach can help smooth out the effects of market fluctuations and reduce the emotional decision-making that often leads to poor investment choices. Does this sound familiar?

Benefits of dollar cost averaging

  • Reduces the impact of volatility: You are less likely to invest a large sum right before a market downturn
  • Promotes disciplined investing: You invest consistently over time, rather than reacting to market movements
  • Takes emotion out of investing: By following a regular schedule, you are less likely to make impulsive decisions based on fear or greed.

The only real downside of DCA is that it does not maximise returns in a consistently rising market. However, as noted, volatility is a normal part of long-term investing, and DCA remains a valuable strategy for navigating these fluctuations.

Focus on long term goals

Investing should be viewed as a long-term journey rather than a series of short-term bets. While it is natural to feel regret after missing out on a market rally such as in 2024, it is essential to remember that markets move in cycles. There will always be periods of growth and periods of decline.

Instead of focusing on market timing, investors should concentrate on investing in a diversified portfolio that aligns with their risk tolerance and financial goals. A well-diversified portfolio can help reduce risk and provide more stable returns over time.

Final thoughts

While it can be tempting to wait for the “perfect” time to invest, the truth is that the best time to start investing is often as soon as possible. The longer you are in the market, the more you can benefit from compounding returns. Strategies like dollar cost averaging can be useful to help mitigate the risk of market timing and promote consistent investing habits.

Remember, it’s time in the market — not timing the market — that leads to long-term success. Focus on your financial goals, stay disciplined, and let your investments work for you over time. Remember, this is an area where a Financial Adviser can provide substantial value.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

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house key

Changes to foreign purchases of established dwellings

Posted on | by Allan Hall

Banning foreign purchases of established dwellings

On 16 February 2025, the Government announced that it will impose a temporary ban on foreign purchases of established dwellings for at least 2 years and crack down on land banking.

From 1 April 2025 to 31 March 2027, foreign persons, including temporary residents and foreign-owned companies, cannot apply to buy an established dwelling in Australia, unless an exception applies. These limited exceptions will include investments that significantly increase housing supply or support the availability of housing supply, and for the Pacific Australia Labour Mobility (PALM) scheme.

Other existing exceptions remain in place, such as for purchases by:

  • permanent residents
  • New Zealand citizens
  • spouses of Australian citizens, permanent residents or New Zealand citizens (when purchased as joint tenants).

A review will be undertaken to determine if the ban should be extended beyond 31 March 2027.

The Tax Office will enforce the ban through enhanced screening of foreign investment proposals relating to residential properties.

It will carry out a full audit of current foreign investment approvals for vacant residential land development.

The Tax Office will also take a tougher stance on compliance of foreign investment approvals for vacant residential land development. This will help ensure that foreign investors who have bought or want to buy vacant residential land meet development conditions.

CONTACT ALLAN HALL INTERNATIONAL SERVICES

Related reading

Changes for Australian and foreign residents buying and selling property
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US election

US Election: Implications for Investors and the Economy

Posted on | by Allan Hall

Navigating Economic Challenges in a Transformed Landscape

Donald Trump’s return to the White House is set to have significant implications for the US economy and global markets

Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, commented: “The economic environment is considerably tougher than it was during Trump’s first term. However, these constraints may nudge the administration toward more balanced, supply-side reforms, which could ultimately benefit markets in the long run.” 

Key economic indicators  

  • Higher inflation, larger budget deficits and increased bond yields are shaping a more constrained environment for policy-making 
  • Inflation has risen to 3%, federal debt has reached 125% of GDP, and bond yields are at their highest levels in years, limiting the potential for aggressive reforms without market repercussions 
  • While Donald Trump’s re-election reflects a strong voter mandate for addressing key issues like the cost of living and immigration, the current economic landscape presents challenges far greater than those during his first term in 2017. 

Despite these, Trump’s administration is expected to push forward with policies aimed at tax cuts, deregulation and trade protectionism. However, constraints such as market sensitivity to rising bond yields, a slim Republican majority in the House and limited flexibility in mandated spending could temper the more extreme measures. 

Mixed market reactions to the US election  

While US stocks initially rallied, concerns about tariffs and inflationary pressures have weighed on global equities. Meanwhile, cryptocurrencies like Bitcoin have surged, reflecting speculation about crypto-friendly policies. 

While investors should prepare for potential volatility, the long-term outlook for global equities remains cautiously optimistic, albeit with more moderate returns than in previous years. 

For further insights and updates on the evolving economic landscape, read the full article here » 

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

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health insurance

Navigating SMSFs and Insurance

Posted on | by Allan Hall

Key Rules and Essential Considerations

If you’ve chosen to manage your own SMSF, it’s likely you’re also proactive and responsible regarding insurance.

Whether you currently hold life insurance outside super or within an existing super fund, starting an SMSF requires attention to your insurance strategy.

SMSF trustees must assess whether to obtain suitable insurance coverage for each fund member as part of developing their investment strategy.

What are the rules?

Legally, all SMSFs must prepare a documented investment strategy during setup.

This strategy—including any insurance coverage—must be regularly reviewed by the fund’s trustees to ensure it aligns with members’ evolving needs and circumstances. Compliance with this investment strategy is checked annually by a licensed SMSF auditor.

In 2015, the Federal Government’s Super System Review found that SMSF members were more likely to hold insurance outside super compared to members in other superannuation sectors. Consequently, SMSFs are not required to provide default insurance for members as many public sector funds do.

However, SMSF trustees still need to carefully consider each member’s financial situation to determine if they have adequate insurance coverage. Key considerations include:

  • Current debt levels of members
  • Whether members have dependents and, if so, how those dependents could be financially supported in the event of the member’s death or inability to work.

What types of insurance cover can SMSFs provide?

SMSFs are permitted to offer any insurance cover that aligns with one of these superannuation conditions of release:

  • Death (life insurance)
  • Permanent incapacity leading to the member’s permanent cessation of work (total and permanent disability insurance or TPD)
  • Temporary incapacity that causes the member to stop working temporarily (income protection insurance)
  • Terminal illness diagnosis (by two medical professionals) indicating likely death within two years, generally included as a feature in life insurance policies.

Note: With TPD insurance, insurers apply different definitions and features. A key distinction in TPD policies is occupation type, with two options:

  1. ‘Own occupation’ provides benefits if the member cannot work in their specific role
  2. ‘Any occupation’ offers benefits only if the member is unable to work in any gainful role they are reasonably suited for.

SMSFs cannot hold ‘own occupation’ TPD policies unless issued before 1 July 2014, as policies issued after this date must meet a condition of release to ensure proceeds are accessible before members reach preservation age. The ‘any occupation’ definition aligns with the permanent incapacity condition, so it is the permissible definition.

Each of the above conditions of release allows a fund member to access their super funds regardless of reaching preservation age.

Once you determine the insurance cover type you need, you can weigh the benefits of holding it within your SMSF, an existing super fund, or personally, outside super.

Ensure your SMSF’s insurance strategy meets legal standards and protects your members — review your coverage options and compliance obligations today.

CONTACT ALLAN HALL SUPERANNUATION

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Compliance cogs

Developing a Compliant and Effective SMSF Investment Strategy

Posted on | by Allan Hall

Your SMSF investment strategy  

Managing a Self-Managed Super Fund (SMSF) requires a well-structured investment strategy to ensure that retirement goals are met and the fund meets the ‘sole purpose test’.  

This test requires the fund to be maintained solely for the purpose of providing retirement benefits to members or their dependants if the member dies before retirement.   

All investment decisions need to be made in the members’ best interests and also to meet the sole purpose test. The decisions regarding how the funds are invested need to be documented in the investment strategy. 

As per Australian superannuation laws, trustees must develop, implement and regularly review the SMSF investment strategy, ensuring it aligns with the fund’s objectives and its members’ circumstances: 

  • Reflect Member Needs: Circumstances change; make sure the strategy still fits members’ retirement goals and risk profiles 
  • Adapt to Market Changes: Markets shift; adjust the strategy to reflect current economic conditions and protect fund performance 
  • Audit Readiness: Avoid potential audit issues by ensuring the strategy matches actual investments, preventing any compliance breaches 
  • Fund Future-Proofing: Use this review to plan for the next financial year, adjusting for diversification, liquidity and evolving fund goals. 

An SMSF investment strategy must consider crucial factors, including risks, diversification, liquidity and insurance coverage for members. It should address how the fund will make, hold and realise assets in a way that meets members’ retirement needs, factoring in their age, employment status and risk appetite. The strategy must be tailored to the fund’s unique circumstances and must go beyond simply restating legislative requirements. 

Trustees are free to choose their investment types, provided they comply with superannuation laws. However, placing all investments in one asset class can lead to concentration risk, especially if the asset is leveraged. To mitigate such risks, trustees should outline how the strategy addresses the lack of diversification and ensures the fund’s long-term stability. 

Regular reviews of the investment strategy are essential 

Significant events like market changes or members transitioning to pension phase should prompt a review to ensure liquidity and cash flow needs are met. Additionally, trustees must demonstrate that these reviews have taken place, with documented evidence available for auditors. 

Auditors will assess whether the SMSF has a compliant investment strategy and if it was adhered to throughout the year. In case of breaches, trustees must rectify the situation promptly to avoid penalties or disqualification. 

For expert advice on creating or reviewing an SMSF investment strategy, trustees should consult a licensed financial adviser to ensure the strategy’s effectiveness in meeting retirement goals. 

The fund’s accountant is generally not able to provide this but can assist trustees to complete a compliant template to create a suitable investment strategy for the fund. 

CONTACT ALLAN HALL SUPERANNUATION

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