Interest rates have hit record lows

Now may be the time to be pro-active and control your borrowing costs and financing arrangements for up to the next 5 years. With interest rates at historic lows, now is a good time to a think about locking in a fixed rate. As we said in our email flash last month, rates have hit a “sweet spot” which has not been the case for many many years.

Three and five year fixed rates are now competitive with the current variable rate and may not remain this way for long. There may be a further reduction by the Reserve Bank but this may not translate into trading bank rates.

Some major banks are advertising two-year fixed rates at 4.99 per cent and three-year fixed rates at 5.26 per cent, this is com-pared with the same major banks offering standard variable rates at around 6.40 per cent.

This could save you up to $250 per month in interest on a $300,000 home loan.

In an uncertain economic climate, this looks to be a rare opportunity to improve your fi-nancial security and provide you with peace of mind that your repayments will remain constant for the fixed rate period.

By reviewing your current financing ar-

rangements and scenarios, you can make sure you are taking advantage of the current market offering. Because the banks are so keen to lend at the moment, this may also be an opportunity to discuss with them your loan conditions, rates, fees etc – you might be surprised.

Ask yourself these questions:• Do you currently have any loans?• What is your current interest rate?• Is it competitive?

Fixed interest rates move independently of movements of the Reserve Bank cash rate. Each lender has their own team of econo-mists who forecast future interest rates and set their fixed rates accordingly. Therefore, it does not take a move from the Reserve Bank to affect fixed rates at the bank. If you have been considering switching all or part of your loan to a fixed rate, we recommend you contact Dan McMillan or Jason Webster to tailor a solution that will suit your needs.

To discuss a residential or commercial finance solution contact Dan McMillan at Powers Investment & Finance Services on 4995 6655.

To discuss an agribusiness finance solution contact Jason Webster at Powers Agri-business Services on 4995 6677.

March 2013 ISSUE

March 20121 Year Fixed 6.14%2 Year Fixed 6.19%3 Year Fixed 6.33%4 Year Fixed 6.64%5 Year Fixed 6.74%

March 2013*1 Year Fixed 5.19%2 Year Fixed 4.99%3 Year Fixed 5.29%4 Year Fixed 5.64%5 Year Fixed 5.69%

Fixed Rates on Offer

Is it time to review your borrowings and lock in your interest rate?

*Fixed rates current as at 7/3/2013. Subject to change.

Due to subdued demand for funds, banks are out to lend money at the moment. Powers Financial Planner Dan McMillan explains why, and how you can lock in a low interest rate.

IN THIS ISSUE...

• Interest Rates at record lows • Gone With The Wind. A superannuation love story

• Key dates for the quarter

• Frauds & Scams The importance of insurance

• Tax incentives - What’s New, What’s Not, What’s Available?

• Are you a Share Trader or a Share Investor?

• Disasters & Primary Producers • Changes to Living Away from Home Allowance

• On The Land

To discuss a strategy for reviewing your overall borrowing structure and strategy with your bank, contact one of our Direc-tors.

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Tony BemroseInsurance Brokers

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Is Gone with the wind a superannuation love story?

Key DatesApril-June 2013

BAS DatesTo assist us in helping you avoid late lodgement penalties and interest payable, please ensure you get your Business Activity Statement records in as soon as possible after the end of the month or quarter to allow us time for processing.

If you have any questions, phone us on 4995 6677 for Biloela or 3251 4444 for Brisbane.

Frauds & Scams

I guess you don’t see this when you become capitvated with Rhett and Scarlett, but there is so much more to it than “Frankly my dear, I don’t give a damn!”.

Small businesses are more vulnerable to fraud because they typi-cally employ fewer anti-fraud controls compared to larger firms.

A more telling line from the novel is, “Death, Taxes and Childbirth and there’s never any convenient time for any of them”. In the past these were three certainties, today I would say there are three other items that belong on the list. Superannuation is one of these items, we’ll leave the others for another newsletter. If you listen to what is said in the press - television, radio or written nowadays everyone seems to want to tax super for those that have too much, give more super to those that do not have enough but no one wants to provide a uniformity of NOT chang-ing the rules just because they can! Despite all the changing rhetoric about super did you know that in most situa-tions you can have all of your life insurance policies held within superannuation and that your super fund will get a tax deduc-tion for the premium. Finally, the payment

The number of fraudulent attacks and scams targeting small businesses has escalated over the past few years with the majority of these not coming from external cyber-criminals but from the businesses’ own employees. You can protect yourself and your business by being aware of the common examples of internal fraud. These include: • Personal use of business resources.• Fabricating or exaggerating reimburse-

ment claims.• Manipulating time sheets or financial data

to receive performance-based bonuses.• Allowing friends and family to have free or

discounted goods or services.• Use of business credit cards to make

private purchases.• Fraudulent invoicing by creating bogus

suppliers or bogus purchase orders of a bonafide supplier with the payments being made to the fraudster’s bank account.

Some suggested internal controls for busi-nesses to implement include the following safeguards:

of life insurance proceeds to your spouse is virtually certain of being tax free through superannuation. Take the time now to think about what life insurance you need for your family and consider using your superannuation fund to pay the premium. It may be your best opportunity to afford the level of cover you need. So thank Margaret Mitchell for her classic, you must start to “think for yourself instead of letting others think for you. That’s the begin-ning of wisdom.”. Truer words are rarely spoken, as the media can’t account for every individual’s situation.

For a better understanding of your finan-cial situation and a tailored solution for your super needs, contact Charles Page at Powers Superannuation Services on 07 3251 4444.

• Don’t allow sharing of passwords.• Ensure banking duties, particularly on-

line, are segregated with separate users having the authority to create and author-ise payments.

• Know your employees – Always conduct appropriate background checks at time of employment.

• Stay close to your staff - Be in the best position to know how their circumstances may change which could result in them being placed under pressure to perpetrate a fraud.

• Insist on all employees taking annual leave for a continuous minimum period each year. This allows another team member to take over their duties during that period.

• Conduct random checks and audits to ensure work is performed in line with established procedures.

• Bank cash and cheques daily - ensure the person doing the banking is not the same person collecting the money.

For further advice on how to protect your business contact Powers business partner, TBIB Insurance Brokers on 07 32525254 and ask for Steve Weil or Sean Bemrose.

March29 Mar Good Friday Public

Holiday31 Mar End of FBT Year

April1 Apr Easter Monday Public

Holiday21 Apr Monthly Activity

Statement due for March

25 Apr Anzac Day Public Holiday

28 Apr Super guarantee contributions due for March Quarter

28 Apr Activity statements due for March Quarter

28 Apr March PAYG instalment due and dead-line for variation instalments (two-instalment payers)

May12 May Mothers Day15 May Income tax returns

due for lodgement15 May Company and

Superannuation funds 2012 Income Tax Assessments payment due

21 May Monthly Activity Statement due for April

28 May Fringe Benefits Tax Return - lodgement and payment

June10 Jun Queens Birthday

Public Holiday30 Jun End of Financial Year

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Are you a Share Trader or a Share Investor

Disasters and primary producers

The past 6-12 months has seen the world equity markets experience a significant and sustained rally, with the US market in particular reaching record highs.

While the Australian share market is still approximately 25% down on pre-GFC levels, the upward trend caught the eye of cashed up share traders and investors who are once again entering the market.

The ATO will be monitoring this increased activity level, as the taxation difference between a share trader and a share investor can be significant. As a general guide, if you are a share trader a profit or loss incurred in share trading is treated like any other

Immediate Write off Assets. Small Business may now write off all assets valued under $6,500 (up from the old $1,000), and write off most other assets (except for non pri-mary production buildings) in a single pool at a rate of 30% (15% in the first year).

The first $5,000 of a motor vehicle pur-chase is also now an immediate deduction with the balance of the purchase price

profit or loss from business. Whereas a profit or loss made by a share investor must be treated as a capital gain or capital loss. As a share trader, you may be asked by the ATO to provide evidence that demonstrates that you are meeting the ATO definition of “a business”. There are a number of factors that help determine whether or not the “business” status has been met – these include, but are not limited to; • The number of share transactions

entered into • The total value of the trading • Having a trading plan • The use of a routine or regular method

With the advent of on-line stockmarket newsletters, increased use of smartphones and tablets and the increased ease of internet banking, the line between trading and investing can be grey at best.

Please contact your Powers Accountant if you have any doubt about your status as a share investor or share trader before the end of the financial year.

We can assist in determining how the ATO are likely to treat your situation, and advise a suitable course of action. Do not leave it too late as unfortunately, if these issues are raised at the end of year tax interview, it may be too late.

depreciated at the pooled rates noted above.

There is now a tax loss carry back concept in operation - from 1 July 2013 companies will be able to carry back up to $1 million of income losses per year and obtain tax refunds on tax paid up to two years earlier – call us for further details.

For this year’s tax – there are many existing

Abnormal IncomeForced Sales of LivestockIf you are forced to sell your livestock as a result of a disaster, you can elect to spread the profit from the forced disposal of livestock over a period of five years. Alternatively, you can defer the profit and use it to reduce the cost of buying replace-ment stock or to maintain breeding stock for the purpose of replacing the livestock, in the disposal year or any of the next five income years.Insurance proceeds for loss of trading stockGenerally, if you have claimed the cost of the insurance premium as a deduction, pay-ments you receive from a claim under the policy will be treated as assessable income. You can elect to include insurance payouts for loss of livestock in your assessable income in equal instalments over five years.

Elections must be made before or on the date you lodge the first tax return after receiving the insurance payment.Farm Management Deposit (FMD) SchemeSince 1 July 2010, primary producers af-fected by certain natural disasters, can now access their FMD’s within 12 months of making those deposits, without losing any tax concessions. Eligibility is limited to FMD holders who meet all of the following:• Made a deposit before the relevant natural

disaster• Withdrew the deposit after the natural

disaster (but within 12 months of making the deposit)

• Lived in an approved Category C Natural Disaster Relief and Recovery Arrange-ments (NDRRA) area at the time of the disaster.

Damage to property If farm improvements have been damaged by a disaster and a primary producer repairs the asset to a good condition by mending it and replacing damaged sections, the cost of this repair is fully tax deductible.

If however, the entire asset is replaced, the replacement cost would be considered to be an item of plant and depreciated. A more accelerated depreciation rate is available for small business entities.

If the disaster destroys or damages facilities for conserving or conveying water and you are only part way through the three-year tax deductible write-off, the remainder of the claim is available over the original time pe-riod. Any repair cost to bring the asset back to good condition will be fully tax deductible.

If you are a primary producer and have experienced the most recent flooding or are still in drought circumstances, there are a number of special rules which apply to income you receive, or expenses you incur in relation to these disasters.

concessions to assist – some are payment of bona fide wages to minor children for real work done via trusts or companies, PAYG Variations to reduce your wages tax and subsidise any negative gearing.

Other year-end planning could involve structured leasing products to accelerate deductions in the early years or use the depreciation concessions, prepayment of expenses before year end and Farm Man-agement Deposits for primary producers

Often you can’t rely on the Government to create tax concessions for you. You and your Powers accountant need to consider your affairs in advance. It is difficult to structure access to tax concessions after the event.

Tax Incentives - What’s New, What’s Not, What’s Available?

The Small Business sector received some concessions in last year’s budget and they are worth remembering in the lead up to the close of this financial year.

The information in this document is of a general nature and is provided for information purposes only. It does not take into account your particular objectives, financial situation or needs and should not be used as a substitute for independent advice from a qualified professional.Liability limited by a scheme approved under Professional Standards Legislation, except where financial services are provided by Authorised Representatives of Profes-sional Investment Services Pty Ltd (PIS) AFSL 234951 ABN 11 074 608 558.

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Contact us For further information on any of the articles in this issue contact your local office:

BRISBANEL7, 269 Wickham Street

(PO Box 310)Fortitude Valley QLD 4006

P 07 3251 4444F 07 3251 4422

8.30am — 5.00pm

MURARRIE6A/57 Miller Street Murarrie QLD 4172

PO Box 115 Morningside QLD 4170P 07 3890 1808F 07 3890 1809

8.30am — 5.00pm

MONTO3 Newton Street

(PO Box 69)Monto QLD 4630P 07 4166 1366F 07 4166 1343

9.00am — 3.00pm

BILOELA54 Callide Street

(PO Box 98)Biloela QLD 4715P 07 4995 6677F 07 4992 1787

8.30am — 5.00pm

www.powers.net.au mail@powers.net.au

On the land John’s CornerStaff ProfilesJuan Vega Business Consulting AssistantOriginally from Colombia, Juan has been working with Powers since August

2012 in our Brisbane office. He is currently studying a Master of Business in Applied Finance, and his work at Powers focuses on data analysis. Juan enjoys the people he works with, and is a key member of staff.

John Griffiths Business DevelopmentOver the last six months Powers have been creating ways for us to improve our clients experience.

By offering more seminars, events and webinars we’ve been working hard to make sure you that all of the information available to us, is also at your fingertips. Powers are proactive with our financial and taxation advice, it’s not enough to just offer you the basics.

A perfect example of this is our recent push to create events in Central Queensland aimed at promoting prosperity and information. We recently hosted a Women In Power event in Monto on March 20, shifting focus back onto women in rural communities and offering them the opportunity to learn and socialize.

Murray DavisThe purchase of rural property can be far less painless if you receive the right advice. There are currently low interest rate

loans available from the Queensland Rural Adjustment Authority to aid existing primary producers in expanding or improving their operation, or for young farmers working toward purchasing their own viable rural operation.

We have also recently been working with infrastructure depreciation when purchasing rural property. Historically depreciated at 2.5%, fencing, cattle yards, sheds and more can now depreciate at the same rate as normal equipment purchases, resulting in a far larger depreciation deduction for small businesses. Contact Powers Agribusiness on 07 4995 6677 to discuss what options are available to you and to get the right advice.

Katrina EngelAccounting ManagerWorking at Powers for over three years, Katrina manages the financial and taxation requirements of

small business and primary production clients. She enjoys giving tax saving advice through structural changes and employs over 14 years experience in accounting to aid clients achieve results. Katrina recently married Matthew Engel.

Changes for Living Away from Home AllowanceThe treatment of the Living-Away-From-Home-Allowances (LAFHA) has altered from 1st October 2012.Employers are now required to pay allowances for reasonable accommodation, food or drink, to certain employees, and the allowance is subject to PAYG withholding tax. This allowance is included in the employee’s taxable income. The employee is then entitled to claim a tax deduction for certain accommodation, food and drink expenses incurred.

Pre-conditions for these tax deductions are that the employee is required to live away from their usual place of residence for employment purposes and their dwelling continues to be available for the employee’s immediate use (not rented out) and the employee or their spouse has an ownership interest in the dwelling and it is reasonable

to expect that the employee will resume living in the dwelling once he/she returns. Employees can only claim a tax deduction for accommodation, food and drink expenses incurred for the first 12 month period of their away posting. This period cannot be reset until the away posting is complete.

The employee can claim accommodation expenses in the form of rent, lease or hotel expense but it excludes mortgage repayments. Reasonable food and drink expenses can be claimed provided they are substantiated or in certain circumstances statutory deduction formulas are available requiring no substantiation. If employees are travelling with relatives such as spouses and children, the LAFHA expense

deductions can be extended to cover these individuals. Expenses of a private nature such as education fees for children, souvenirs, private travel expenses fall outside of these concessions and are not deductible.

Always remember your Powers Accountant can apply for a variation of PAYG Withholding to reduce the impact of tax on your LAFHA.