In The Loop with Prime [February]
New year, new you? Getting your finances in order is one of the most common New Year’s resolutions, and we’ve got a few tips to help get you started. From new stamp duty laws to helping your kids enter the property market, there’s plenty to ponder now that 2023 has rolled around.
Stamp of Approval: New Laws for First Home Buyers
State governments across Australia are keeping a watchful eye on New South Wales. With the state now home to some of the nation’s most expensive real estate, the Perrottet Government has launched the First Home Buyer Choice Scheme (FHBCS).
Aimed at first home buyers looking to enter the property market, the FHBCS officially launched in mid-January. If offers eligible first home buyers the choice of paying stamp duty up front or otherwise opting to pay a smaller annual land tax instead.
Depending on how long they own the property, first home buyers could save thousands of dollars in the short term. NSW Treasury data analysis estimates the breakeven period for those opting to pay an annual land tax over an up-front stamp duty fee at:
Read more on the changes to New South Wales’ stamp duty laws.
All In The Family: Turning to the Bank of Mum and Dad
With the Australian property market showing few signs of slowing down, first time home buyers are feeling the squeeze to crack into the property market. As a result, kids are turning to ‘the bank of mum and dad’ to help gain a foothold in the market.
Parents who can do so are pulling out all the stops when it comes to giving their kids a boost up the property ladder. From gifts to loans and even guarantees, there are many ways parents are coming to the rescue and helping kids get a head start.
While it’s natural to want the best for your kids, there are some important factors to consider before you start opening the cheque book. Making major financial decisions require major consideration.
Read more on how you can protect your assets while helping your adult children enter the property market.
Downsizing Again: More Changes to Eligibility Laws
The federal government has made further changes to downsizer contribution laws. Having already shifted from 65 to 60 in 2022, the eligibility age has now gone from 60 to 55.
As of January 1st, 2023, eligible individuals aged 55 or older are able to make a $300,000 contribution to their super fund — or $600,000 per couple — from the proceeds of selling their home. An extra five years can make a big difference to your retirement lifestyle.
But for anyone eager to make a downsizer contribution, the clock is ticking. Eligible individuals only have a 90 day window to make a contribution and the ATO is unlikely to consider any extensions.
Read more on the ATO’s latest changes to downsizer contribution laws.
Asset Protection: How Discretionary Trusts Can Help
Keen to add an extra layer of protection to your assets? Many individuals are turning to discretionary trusts to confer the benefits of ownership while protecting their legal assets from personal creditors.
Discretionary trusts allow property to be held by an individual or company (the trustee) who handles the property on behalf of beneficiaries. It’s a fiduciary relationship recognised by law rather than a legal entity in itself, which makes it a smart move.
Along with the obvious benefit of asset protection, there are tax and estate planning benefits to leverage. With many advantages to discretionary trusts, it’s no wonder they’re taking off in popularity.
Businesses To Add Family and Domestic Violence Leave
As of February 1st, there’s a new type of leave available for businesses with more than 15 employees. Businesses now need to allow access to 10 days of paid leave for family or domestic violence leave without any entitlement periods.
For smaller businesses with fewer than 15 employees, paid leave access begins on 1st August. Paid family and domestic violence leave is capped at 10 days within a 12-month period. It doesn’t accumulate and is renewed on the employee’s work anniversary.
As a universal entitlement, it extends to full and part-time workers, as well as casual employees for their regularly rostered shifts. The Fair Work Ombudsman (FWO) has carved out payment details and defined additional related leave options too.
Read more at the FWO to understand your workplace obligations for support.
Get the Who’s Who on Contractors and Employees
Many hands make light work. But figuring out how to classify those helping hands correctly as contractors and employees, at least according to the ATO’s standards, is serious business. There are various consequences for both employer and employee, depending on the classification used.
Many businesses favour independent contractors over actual employees for business tax and superannuation purposes. For employees who prefer contracting, there are critical income tax, GST, and ABN implications.
Correctly identifying your staff comes down to more than just the contractual arrangement, but the realities of how the parties work together. But there are ways to help make sense of who’s who.
Read more at the ATO to ensure your staff are all wearing the right label.