Fringe Benefits Tax Return Time

Fringe Benefits Tax Return Time

With the FBT year ending on 31 March and some tax saving ATO concessions related to Covid-19 being released, we have taken the opportunity to create a series of fact sheets that explain all things FBT. You can access the fact sheets below:

FBT 2021,01 – Why Should You Lodge a FBT Return with NIL Liability

FBT 2021,02 – How the ATO Identifies Potential Audits

FBT 2021,03 – What is a Car Fringe Benefit

FBT 2021,04 – Employee Business Cars Tips & Traps

FBT 2021,05 – Workhorse Vehicles and new Safe Harbour provisions

FBT 2021,06 – Meal Entertainment Factsheet

FBT 2021,07 – Minor and Infrequent Benefits

Keep an eye out for our emails in the coming days, to be followed by a phone call from your advisor to assist in ensuring that you complete your FBT return on time & with all the tax savings possible.

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7 Ways To Turn The Tables On Your Mortgage! #Savings

7 Ways To Turn The Tables On Your Mortgage! #Savings

Why is now a great time to refinance your mortgage?

Because:

  • Australia has the third most expensive housing market in the world.
  • As many as 83% of people are paying too much on their mortgages.
  • Even though interest rates have fallen to record lows, a whopping 94% of mortgage holders have not refinanced their loan in the past 12 months – potentially missing out on saving thousands of dollars.
  • Research shows that 38.8% of all mortgage holders are experiencing mortgage stress.

Surely there’s some GOOD news?

The short answer is YES. There are some straightforward steps you can take to turn the tables, save thousands and take years off your loan…saving $33,222* in the process.

* Calculation based on $400,000 mortgage over 25 year term at 3.8% interest per annum on a variable rate, P&I. This calculation is not an offer of credit and does not take into account your personal circumstances. It is intended for use as a guide only. It is not intended to be relied on for the purpose of making a decision whether to apply for finance. It provides an estimate of the repayment amount based on the proposed borrowed amount. Other fees and charges may apply.

Negotiate a better interest rate

Studies show that 82% of Australian population don’t know their current interest rate. And yet, with your mortgage likely taking up at least one quarter of your monthly income, even the slightest change in your rate could make a huge difference to your monthly disposable income.

For example, for every $100,000 you borrow, even a 0.1% discount will save you roughly $100 per annum in interest. Maybe that doesn’t sound like much, but let’s take a look at the maths…

Let’s say you have a $400,000 loan with a repayment term of 25 years. And let’s say you can save 0.5% on your interest rate, going from 3.8% to 3.3%… that means you would save $32,273 over the life of your loan. What could you do with $32,273 back in your pocket over the course of your loan? That’s family holidays, a new car, helping the kids out, maybe installing that pool you’ve dreamt of. And it’s definitely enough to take the pressure down.

Shift from monthly to fortnightly payments

Many people pay their mortgage monthly – so that’s 12 payments a year. But if you can shift from 12 monthly payments to 26 fortnightly, you can make BIG savings over the life of your loan.

Here’s why… let’s say your monthly mortgage payment is $2,500. Over 12 months that’s $30,000. Now let’s look at what that looks like if you paid half your monthly payment every 2 weeks instead. That means you would pay $1,250 over 26 fortnights or $32,500. That’s finding a way to get $2,500 more off your loan each year and because you are spreading it out over the year, you don’t notice it as much (equates to an extra $48 a week).

BUT the cool thing this does to your mortgage is that every cent you pay above and beyond your set repayments goes directly to paying off your principal loan amount – and that’s the amount your interest is calculated on. So, the sooner you reduce your principal, the sooner your interest payments come down… and the sooner you get your mortgage paid off!

In fact, simply by shifting from monthly to fortnightly you could take 3 years and 1 month off your mortgage and put a whopping $30,160 back in your pocket in saved interest payments.*

*( Based on a $400,000 loan over 25 years at 3.8% p.a interest rate.)

Small sacrifices now = big wins later

When you first get your mortgage, those payments can look quite intimidating. But then, after a couple of years, maybe you’ve had a pay rise or two, or your business has grown. Perhaps you got that promotion you were after, or you landed your dream job with the nice bonus package you always wanted. While it’s great to enjoy those perks and the extra cash they put in your pocket, making even a small increase to your mortgage payments at those milestone moments can have a HUGE impact and really turn the tables on your mortgage.

As mentioned earlier, every cent you pay above and beyond your scheduled mortgage payment goes towards knocking down that principal amount. So, if you could find even another $100 a fortnight (that’s $50 a week) you could take another 3 years and 7 months off your mortgage AND save another $36,036*.

*(Based on a $400,000 loan over 25 years at 3.8% p.a interest rate.)

Get a mortgage offset account

When you get a standard variable loan (meaning the interest rate isn’t fixed), you usually have the option of putting your income and savings into what’s known as an offset account. That’s simply a separate savings account attached to your loan account.

As the name suggests, your offset account works in tandem with your home loan, with its balance being subtracted from the outstanding home loan principal when your daily interest charges are calculated. By adding your savings into that account and getting any income paid into that account as well, you can take a healthy bite out of the principal, simply by getting the money you already had working smarter for you.

For example, if you have a $400,000 mortgage and $20,000 in your offset savings account, you will only be charged interest on $380,000, even though your loan balance is $400,000.

Be Smart with your equity

Check if your loan offers a redraw facility that enables you to access and withdraw additional repayments you have made. If you were worried about putting extra money into your mortgage, you don’t need to be, if you have a redraw facility.

This means you can put as much money as possible into your mortgage, keeping your interest down and paying your mortgage off faster, however still redraw the money if you need it.

It’s also possible to use those funds to consolidate debts with higher interest rates such as credit cards and personal loans. Often your home loan interest rate is a fraction of other interest rates and consolidating your loans can lower your interest, freeing up income. Having this kind of flexibility can give you peace of mind and help you out when you really need to access those additional funds.

Watch out for hidden fees & negotiate

It’s always nice to be aware of all the fees included in your loan (some hidden fees can end up being costly!) and you may also want to negotiate on those fees – hard. Many lenders will reduce or remove fees such as:

  • Loan application fees
  • Loan establishment fees
  • Service fees
  • Valuation fees
  • Legal fees related to your mortgage
  • Account transaction fees
  • Exit fees

And this can equate to thousands of dollars in savings, in some cases.

Getting the data you need , when you need it

Information is power. And that means you need to be able to access clear, accurate information on your home loan wherever and whenever you want (and in a format that you want). That includes your current interest rate (if variable) and your current loan balance. Plus, you want the flexibility to be able to make changes online at any time via a mobile app or your home or office computer.

For most people, the ideal way to get this information is online. But not all online banking experiences are created equal. You need to be able to access your home loan information easily, via a simple online interface that is available for both mobile and desktop use.

And, if you are one of the 5.7 million Australians who don’t use internet banking, you need to make sure you are getting the information you need in a way that is timely and transparent.

If you have any questions, let one of our senior advisors put you in direct contact with our Lending Partner, Loan Market Lower North Shore, experts in turning the tables on your mortgage. This could be the best time you have invested all year!

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Personal income tax cuts

Personal income tax cuts

As widely predicted, the Government has brought forward stage 2 of its planned income tax cuts by two years. Originally intended to apply from 1 July 2022, the tax cuts will come into effect from 1 July 2020 (subject to the passage of the legislation). The Treasurer the Hon Josh Frydenberg anticipates more than 11 million taxpayers will get a tax cut backdated to 1 July this year.

At a cost of $17.8 billion over the forward estimates, bringing forward the tax cuts is a controversial move. The Government argues that the measure will “boost GDP by around $3.5 billion in 2020-21 and $9 billion in 2021-22 and will create an additional 50,000 jobs by the end of 2021-22.” Others in Parliament believe the measure rewards higher income earners and the money could be better spent elsewhere. The Senate will decide whether the Government’s plan comes to fruition.

Stage 3 of the Personal Income Tax Plan that simplifies and flattens the personal income system remains scheduled for 2024-25.

  Tax thresholds
Tax rate Current From 1 July 2020 From 1 July 2024
0% $0 – $18,200 $0 – $18,200 $0 – $18,200
19% $18,201 – $37,000 $18,201 $45,000 $18,201 – $45,000
30%   $45,001 – $200,000
32.5% $37,001 – $90,000 $45,001$120,000
37% $90,001 – $180,000 $120,001 – $180,000
45% >$180,000 >$180,000 >$200,000
LITO Up to $445 Up to $700 Up to $700

Bringing forward the personal income tax plan will:

  • Increase the top threshold of the 19% tax bracket to $45,000 (from $37,000)
  • Increase the top threshold of the 32.5% tax bracket to $120,000 (from $90,000)
  • Increase the low income tax offset from $445 to $700

In addition, the LMITO (low and middle income tax offset), which provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000, will be retained for 2020-21. This measure was to be removed at the commencement of stage 2 of the reforms from 2022-23.

If you need any assistance please contact your PrimeAccountant on 02 9415 1511 or email reception@primeadvisory.com.au.

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SCAM WARNING – Do not reply, delete immediately

SCAM WARNING – Do not reply, delete immediately

During a time such as COVID-19 many scammers see an opportunity to target people who may already be afraid or unsure. Here are a few examples that will give you a better understanding of the types of scams and how scammers are targeting people through both email and SMS.

Several emails are circulating with malicious attachments claiming that the recipient is eligible for a ‘working from home payment’, these are scam emails trying to get you to download malicious software. Other emails are asking for your personal information such as drivers licence and Medicare card. Many of these either try and impersonate the Government or a third party. Note you should never give personal information unless you are sure who you are dealing with.

There has been reports of different SMS scams circulating in Australia that are pretending to be from the Government and trying to get you to click malicious links and give out your personal and financial details.

Scammers have also started to target Australians financially impacted by the COVID-19 crisis, cold calling people claiming to be from organisations that can help you get early access to your superannuation. These scams are following from the Government’s announcement about early access superannuation. The ATO is coordinating the early release of super through myGov, there is no need to involve a third party or pay a fee to access this scheme.

If you receive a message from the ATO asking for your personal information, you can call them on 1800 008 540 to make sure it’s legitimate. If you think it’s fraudulent, report it by email to reportemailfraud@ato.gov.au.

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Download our JobKeeper 2.0 Guide Today!

Download our JobKeeper 2.0 Guide Today!

From 28 September 2020, the eligibility tests to access JobKeeper for employers changed, along with the amount of the JobKeeper payment for employees and business participants. To receive JobKeeper from 4 January 2021, employers will need to assess their eligibility again.

Download the Guide here

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