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Speaking as someone who has had to report losses in income from a business in the past when my first business went belly up around the time our daughter was born, I fail to see how a net investment loss can be deemed as anything other than a negative income (after all, it's reduced your income for the year).
I mean, for those of you with shares, you would have to declare that investment and any income on it regardless.
Say for example you have $5K in shares and because of the downturn you have lost 50% of their value: well you had to declare the value of those shares in your income estimate anyway, and your tax return etc will prove that you went backwards by $2500. So hey presto, you can take more money from them because your annual income estimate has gone down. That is *really* what happens, and I would be surprised if this announcement actually changes anything major (although if I had seen this before I rang them this afternoon, I would have asked for you, but I can't sit on the phone for another half hour!)
Not having ever made salary sacrificed contributions to my super fund, I am not really in a position to comment. I guess, like the rest of us, you'll have to declare your annual income in full.
I mean: how many parents with combined incomes under 90k can honestly say that they are able to salary sacrifice anyway? The FTB A +B cuts out at $90K altogether, drops to a grand total of $48 per fortnight at around $60p/a, and family assistance cuts out at around $35K from memory. If you're not struggling to hold a mortgage on that kind of income while parenting, I would be surprised.
So what is the point of whingeing about income punishments that you probably a) can't get because you're above all of these thresholds or b) can't afford to take part in anyway?
Once again, the question has to be asked: how many people in this income bracket (knowing the impact of CGT on their investments are part of Australian law – crappy though that is…) are going to realise an end of FY capital gain of anything more than $20K? In this climate? Even Steve says now is the time to buy positive geared and rent out, not sell for a quick "gain" (more like a loss right now!)
Please don't think I am having ago. I am simply being pragmatic here.
Personally, I think that FTB A+B should be given out (in full) to every family under, say a $250,000p/a income threshold. Then you can be darned sure that you're not screwing any of the little income earners. Having quite recently experienced being taxed at 56% (8% higher than the highest tax bracket, which cuts in at $180K anyway) while earning less than $25K p/a as a new mum, and not much better while earning higher (and then HECS cuts in… and extra childcare payments… hence the whole 56% thing in the first place…), yes, there is *definitely* room for improvement.
FWIW I hate Centrelink and having to deal with the idiots that run it as much as the next person (and I don't work for them!), but I really did have to think about how much that really was going to affect the average Joe, having quite recently been through the exercise of juggling an ever-changing set of goalposts handed out by them as my income changed over 18 months. My answer has to be "not much".
Hi Mooki,
I don't live in WA, but you might find some of the ideas on my new property investing site useful.
I'm still working on adding pages about heaps of topics from design on a budget to improving rental returns and getting finance creatively, and I'll be adding book recommendations soon too.
There shouldn't be an income test issue as Dad is self-funded… Thanks, this has been such a help!
The other thing I forgot to mention was that we can't really buy new and get a big enough house. Our home business takes up too much space, so the 1956 fibro that we can do up and add on to is a much better option than a 3 bedroom townhouse which we could get new for the same price. And then there's also the option to knock down and rebuild if we decide that that's a better way to go down the track. It's not a huge block, but there is potential there to at least build a duplex and maybe even three or four two storey townhouses like the ones next door.Yes, Dad still works, but in five years, he's hoping to be retired (being 61 this week)
We are already aware of the negative gearing possibilities of the house, so this does help a little. Good to know that CGT is less with income! Thanks!So I was right about the fair market value, not sale price? Do I need to ask the Tax Office about this "agreed market price in 2007 vs 2012"?Hi Terry,
Afraid it was a case of getting a leg into the market any way we could: and that meant the safest thing to do was have the house in Dad's name. Our credit is very poor right now. Not hopeless, but we owe too much from starting our business to get another loan as well, even with Dad as guarantor.I would have preferred to get the FHOG now too, but at least now we have five years to improve the capital worth of the house. And the govt are talking about doubling it again, not axing it. I can't see that Labor would take it away if they got in either, but that's me digressing into politics!Also, Stu, I thought I read in Property investing (and heard from our broker) that he'd have to pay CGT on the whole market value as it stands in five years time, which is why it can get quite nasty for people wanting to sell property on the cheap to family.It occurred to me that a contract for the lower price on Vendor Finance at the start of the five years might be a way to get around it, as the property is, in a way, already sold again at the start, not at the end. Am I right?
