|
 |
 |
 |
 |
|
* MSCI World ex Australia Index $A Economists are saying that we are in a bear market [2] or maybe even approaching stagflation [3]. It is a tough question but where, in what and with whom should we be investing our money? Would you feel comfortable about investing today in this market that seems to be gyrating so wildly? The Psychology of “fear and greed”! The psychological phenomenon which we always see raising its ugly head regardless of whether the market is “bullish” or “bearish” is that of "fear and greed" When people see certain investment sectors making significant returns in bull markets [4] they rush in; usually buying at the top. This is the greed factor! Investors in this cycle intuitively believe it is not dangerous to invest and that they can't lose as the sector is clearly doing well. Conversely when these same people see sectors crashing around their ears they leave them in droves because they think they will lose even more of their money if they wait any longer. This of course is the fear factor! So they sell down, turning their "book" loss into a "real" loss and then up and buy into another sector which is doing well (again at the top of its market!). In the current turbulent cycle this way of thinking suggests there is no point buying a bargain. These trends see people buying at the top and selling at the bottom of investment cycles. Intrinsically we know that without risk there is no reward, but where do you think is the most appropriate place to take the risk; at the top of the market or at the bottom? Time in the market .. History has shown that sticking with your investment strategy when times are difficult as opposed to panic selling when markets are falling can pay off handsomely over the long term. Look at these returns for the different sectors over the last 20 years:
A patient investor who maintained their investment in the Australian share market over the last 20 years could have posted annualized returns above 12% pa to the end of June 2008. This figure includes some of the negative impact of the last 12 months in addition to other market shocks ... October 19th 1987 (a drop of 22%); the tech wreck of 2000; 9/11 in 2001; and SARS in 2003. These have all been and gone now, though each had a big impact on the markets at the time. We understand that it is tough to hang in there and not succumb to the "sell sell sell" mentality, but with good quality investments that stand the test of time there is no need to panic. Please feel free to contact us if you have any queries. LBW Financial Services Pty Limited
[1] Source: Lonsec Sep Qtr review. [2] Please refer to information sheet attached. [3] Please refer to information sheet attached. [4] Please refer to information sheet attached. [5] Source: Russell Investments comparison of various sectors for the 20 years to 31 December 2007.
Definitions:
Bear market A bear market is described as being accompanied by widespread pessimism. Investors anticipating further losses are motivated to sell, with negative sentiment feeding on itself in a vicious circle. The most famous bear market in history was after the Wall Street Crash of 1929 and lasted from 1930 to 1932, marking the start of the Great Depression. A milder, low-level long-term bear market occurred from about 1973 to 1982, encompassing the stagflation economy, energy crises in the 1970s, and high unemployment in the early 1980s. Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of a range of issues over a defined period of time. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period." However, no consensual definition of a bear market exists to differentiate clearly a primary market trend from a secondary market trend. The markets most recently entered a Bear Market in July 2008 when the S&P 500 Index, Dow Jones Industrial Average and NASDAQ Composite were all down 20% from their October 2007 highs. Investors frequently confuse bear markets with corrections. Corrections are much shorter lived, whereas bear markets occur over a longer period with typically greater magnitudes of loss from top to bottom. Bull market A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of future capital gains. A notable recent bull market was in the 1990s when the U.S. and many other global financial markets rose rapidly. In describing financial market behavior, the largest group of market participants is often referred to, metaphorically, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also described as a bull run. Dow Theory attempts to describe the character of these market movements. India's BSE SENSEX increased from 14000 points to 21000 points in a period of 1 year from Jan 2007 to Jan 2008. The United States was described as being in a long-term bull market from about 1983 to late 2007, with brief upsets including the Panic of 1987 and the NASDAQ crash of 2000-2002. Stagflation Stagflation is an economic illness wherein inflation combined with stagnation lock a society into slow-to-negative economic growth and rising unemployment, invariably including recession. When combined, the presence of both these factors is more than sufficient to launch an era of stagflation. For example, policies which promote growth in the money supply to allow consumers to afford higher priced oil contribute as a cause for runaway inflation, even if implemented to fight stagnation or recessions. The global stagflation of the 1970s is often blamed on both causes: it was started by a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to try to avoid the resulting recession and stagnation, causing a runaway wage-price spiral. The above definitions were taken from the Wikipedia free online encyclopaedia.
New Fuel Tax Credits for Business - From 1 July 2008Tuesday, 1 July 2008GET MONEY BACK FOR YOUR BUSINESSNew expanded eligibility from 1 July 2008.Don't Miss OutDid you know that from 1 July 2008 most businesses can claim fuel tax credits? If you haven’t checked your eligibility for a while, you may want to check again. To date, you’ve been able to claim for fuel used in heavy vehicles travelling on a public road, if they had a gross vehicle mass (GVM) greater than 4.5 tonne. You’ve also been able to claim for activities such as agriculture, forestry, fishing, mining, and marine and rail transport. Now you can also claim fuel tax credits for the diesel and petrol you use in a whole range of activities that weren’t eligible before, including machinery, plant and equipment used in activities such as construction, wholesale, retail, property management and landscaping. Make sure you don’t miss out! After 1 July 2008, there are even more benefits to being registered. You can claim fuel tax credits for much of the fuel you buy and use in your business from that date. The only exceptions are aviation fuels, alternative fuels and fuels used in light vehicles (of 4.5 tonne GVM or less) travelling on a public road.
There are three different rates of fuel tax credits depending on the way you use fuel in your business activities, as explained in this table.
This means that under the expanded eligibility you can claim around $19 in fuel tax credits for every 100 litres of fuel you use in your business, even if you use it in machinery, plant or equipment such as:
Get on BoardYou will need to register to get the credits. LBW can assist you in doing this so please contact us if you wish us to do so. See the ATO fact sheet on Fuel Tax Credits.
NSW Mortgage Stamp Duty Abolished!Friday, 31 August 2007OFFICE OF STATE REVENUE (OSR) ANNOUCEMENTDuty on mortgages for owner occupied housing will be abolished on 1 September 2007.Owner occupied housingFrom 1 September 2007, mortgage duty will not be chargeable if the mortgage secures an advance or advances made for the purpose of owner occupied housing and no other advances. Borrowers must be natural persons. Where the mortgagor is also a natural person, the mortgage can be registered without having to be stamped by OSR. Investment housingFrom 1 July 2008, mortgage duty is not chargeable if the mortgage secures an advance or advances made for the purpose of investment housing and no other advances. Borrowers must be natural persons. No duty will be payable on any advances made on or after 1 July 2009. Source:- NSW Office of State Revenue website
SUPER DAY - SIMPLIFIED SUPERANNUATION PASSES THE SENATEThe Minister for Revenue and Assistant Treasurer, Peter Dutton, today welcomed the passage of the Simplified Superannuation legislation through the Senate. “These bills implement the greatest reforms to superannuation in Australia’s history. This is bedrock economic reform: sweeping away complex tax arrangements, improving incentives to work and save and increasing retirement incomes.” “These reforms will empower Australians in saving for their retirement and help maintain Australia’s economic prosperity into the future.” “It may have taken many, many months, but I am pleased that Labor has finally agreed to support this legislation,” Mr Dutton said. Under the legislation, from 1 July 2007:
As a result of these reforms, in the vast majority of cases, the 90 per cent of Australians in taxed schemes will have the tax treatment of their superannuation benefit covered in one paragraph of law if they access their superannuation after age 60. Source: Treasury Press Release No. 015 - 27 Februray 2007
Simplified Superannuation - Treasury decides!Wednesday, 6 September 2006SIMPLIFIED SUPERANNUATION - FINAL DECISIONSThe Treasurer and Assistant Treasurer today [5 September 2006] announced the outcome of the Government’s consideration of the proposals outlined in A Plan to Simplify and Streamline Superannuation which was released as part of the 2006-07 Budget. The Government undertook an extensive consultation process on the proposals in the plan. The Government received more than 1,500 written submissions and more than 3,500 phone calls from across the community. The Government thanks all individuals, businesses and organisations who participated in the consultation process. The main proposal of the plan was to remove benefits tax from 1 July 2007 for Australians aged 60 and over who have already paid tax on their superannuation contributions and earnings. Other key changes proposed in the plan were:
The Treasurer confirmed that the Government will proceed with these proposals which represent the most significant reform of the taxation of Australia’s superannuation system in decades. The changes will sweep away the current raft of complex tax arrangements, improve retirement incomes and increase incentives to work and save. As a result of the consultation process transition arrangements will be put in place to make the transition to the new superannuation system easier, improve administration and improve the integrity of the superannuation system. For further information please click here. Source Treasury Press Release 2006 No 093
Employer's superannuation guarantee (SG) reporting requirements.What are the new changes to super guarantee (SG) reporting requirements?Employers will no longer have to provide employees with quarterly superannuation statements showing contributions made to super funds. This means that employers may choose to report their superannuation contributions to em[ployees, but are no longer required by tax law to do so. However, employers covered under Australian workplace legislation, awards or agreements that require them to report superannuation contributions on payslips will still be obligated to report to their employees. There is no requirement for employers to cease reporting to employees and thus existing reporting arrangements may be retained. What are the new changes to super guarantee (SG) reporting requirements?The requirement for employers to report contributions will cease for all contributions made on or after 1 January 2005 . After this date, employers will not be required, under the new SG arrangements, to report to employees on employer superannuation contributions.
Will I still be notified regarding my employer??s SG contributions?
Superannuation funds will continue to issue annual member contribution statements. Many employees will, however, still receive information, in accordance with other Australian workplace legislation that requires reporting on payslips, and annual reporting from superannuation funds.
Will my employer still have to pay quarterly SG contributions on my behalf?
Employers will still be required to pay SG contributions on behalf of their eligible employees at least quarterly. The contributions are due by the 28th of the month following the end of each quarter.
NSW State Government to Abolish Vendor Tax -
|
| Back to top |
2005 State Budget Summary - 24 May 2005
Land tax
New Threshold Applies for 2006
For the 2006 land tax year a $330,000 threshold will apply to owners of liable land. There is no threshold for non-concessional companies and special trusts.
The land tax rate for 2006 will be 1.7 per cent (plus $100) on the unimproved value of the land in excess of $330,000. If your land tax liability is less than $100, no land tax will be payable.
Exemptions and concessions: There are no changes to the current land tax exemptions. The concession for non-income earning land, however, will cease after this year and will be unavailable in 2006.
The land tax liability for 2006 is based on all liable land owned as at midnight on 31 December 2005.
There have been no changes for 2005 ?? all liabilities remain payable.
Vendor duty
Changes to the definition of the vendor acquisition date for land-related property held by the vendor subject to a trust
Where land-related property is held by the vendor subject to a trust, the vendor acquisition date is the date on which a dutiable transaction in respect of that property was last chargeable with ad valorem duty.
This amendment applies to transactions entered into on or after 24 May 2005.
Land rich provisions
Disposer acquisition date for trustees of a trust
Where the disposer of an interest is the trustee of a trust, the disposer acquisition date is when the beneficial owners first became beneficially entitled to the interest being disposed of.
This amendment applies to transactions entered into on or after 24 May 2005.
Duty on refinancing loans
From 1 August 2005, the mortgage refinancing concession will be capped at $1 million. The concession will apply to the amount of the earlier loan or $1 million, whichever is the lower. Duty of $4 per $1,000 will be payable on the amount of any excess.
Note: this cap does not apply to refinancing land used for primary production or aquaculture.
| Back to top |
Federal Treasurer Announcement - Child care rebate
Monday, 20 December 2004
The Federal Treasurer, the Honourable Peter Costello MP, today announced the following measure:
NEW EARLY START DATE FOR CHILD CARE REBATE
The Government will assist families further with the cost of child care by backdating the introduction of a new 30 per cent Child Care Rebate to 1 July 2004, enabling families to claim an extra six months of out-of-pocket costs.
As a consequence parents should keep all receipts for childcare paid in the current year.
The Government will work closely with child care providers to encourage them to provide an annual statement of child care expenses paid. This will assist parents in claiming their entitlement.
The Rebate will cover 30 per cent of out-of-pocket child care expenses, that is, fees paid for approved care less Child Care Benefit (CCB), for taxpayers who receive CCB and meet the CCB work/study/training test.
CCB is primarily claimed fortnightly through reduced child care fees based on an estimate of family adjusted taxable income. Centrelink then calculates the correct entitlement to CCB on an annual reconciliation once it has received child care usage data and the family??s annual adjusted taxable income when tax returns are lodged. This is usually before the end of November.
The correct amount of out-of-pocket child care expenses can only be calculated once the final reconciliation of CCB is completed. The 30 per cent Rebate will be claimed on the succeeding year??s tax return. This means that the Rebate entitlement for the 2004-05 year will be claimed in the return for the 2005-06 year.
This procedure will allow the calculation to be quick and avoid the complexity of trying to claim a rebate before the final amount of CCB is known.
In recognition that payment will be made in a subsequent year??s tax return, the start date for eligibility has been brought forward from 1 January 2005 as originally proposed to 1 July 2004.
The Child Care Rebate will be payable up to a maximum rebate of $4,000 per child. According to calculations of current usage and fees very few parents will hit this maximum level.
The Rebate is non-refundable, however to ensure families obtain the maximum benefit possible, taxpayers with insufficient tax liability to absorb the whole rebate will be given the option of transferring any unused amount to their spouse.
The Child Care Rebate will provide additional child care assistance to around 640,000 families with a total cost of around $1 billion over four years.
The Child Care Rebate builds on the current Child Care Benefit system, which is paid on the basis of a family??s income, the number of children in care and the type of care. Families using approved child care services and on the lowest incomes receive the highest rate of CCB.
Over the next few months, the Tax Office, Centrelink and the Department of Family and Community Services will work closely with approved child care providers to develop a package of information to help families claim the child care rebate.
| Back to top |
NSW Mini-Budget Announcements
Tuesday, 6 April 2004
The NSW Treasurer, the Honourable Michael Egan, today announced the following revenue measures in the mini-Budget:
First Home Plus
An increase in the thresholds for First Home Plus to $500,000 phasing out at $600,000 for the purchase of new or established dwellings anywhere in NSW and the increase in the threshold for the purchase of land anywhere in NSW to $300,000 phasing out at $450,000 effective from midnight on 3 April 2004.
Apart from the increases in thresholds, changes to the eligibility criteria for First Home Plus will be introduced with the legislation. These changes will more closely align the First Home Plus scheme with the eligibility criteria for the First Home Owner Grant scheme.
Vendor Transfer Duty
A Vendor Transfer Duty of 2.25% will apply to consideration received on the sale or disposal of property, other than on the sale or disposal of a principal place of residence or farm. Liable properties will be exempt from the duty where the vendor??s sale price or value on disposal does not exceed the purchase price or value on acquisition by more than 12%. This exemption phases out between 12% and 15%.
There will also be an exemption for the first sale by builders or developers of new dwellings. This will include ??off the plan?? sales.
Vendor Transfer Duty applies to liable contracts executed on or after 1 June 2004.
Transfer Rate of Duty
Increasing the marginal rate of purchaser transfer duty from 5.5% to 7.0% on that part of the purchase price of a residential property in excess of $3 million. This duty will replace the Premium Property Tax.
The increased rate of duty applies to liable contracts executed on or after 1 June 2004.
Premium Property Tax
Abolition of the Premium Property Tax from the 2005 tax year.
Land Tax
Abolition of the current land tax threshold effective from the 2005 land tax year.
Replacing the current single marginal rate of 1.7% with the following marginal rate scale:
u A land value of less than $400,000 will pay a land tax rate of 0.4%
u A land value of between $400,001 and $500,000 will pay a land tax rate of $1,600 plus 0.6% on the value of land above $400,000.
u A land value above $500,000 will pay a land tax rate of $2,200 plus 1.4% on the value of land above $500,000
The provision of relief from land tax where the amount of tax owed is less than $100.
Introduction of a deferral mechanism for low income earners with taxable properties below $300,000 in value that do not generate income.
| Back to top |
Workers Compensation update
[ 52 kb ] -
| Back to top |
| Back to top |
Home | Services | About Us | Online payments & purchases | Careers
News, Publications & Downloads | Client Login | Archive | Subscribe | Contact Us
Software solutions for accountants by Acclipse | Copyright 2003– © LBW & Partners
