Posted in Wealth Creation

Housing finance, June - Hints of rising new housing demand; investment housing flatter

Posted by medicalfinancial on 8 August 2012

The Headline approvals for housing finance were up 1.3% in June and investment approvals up 4.9%; both largely as payback after weaker figures in May

There are some signs that finance demand for new housing has been tweaked by mortgage rate cuts. There are however limited implications for monetary policy which suggests interest rates will remain steady.

Interestingly fixed rates are still currently lower than the discounted variable rates offered by the big banks. So now may not be a bad time to think about fixing a rate. However the reason for fixing should always be to have certainty of your payments rather than trying to beat the banks variable rate.

If you would like to discuss how this would relate to your personal situaiton please contact us.

The full release is below.

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Medical Financial client education evening...

Posted by medicalfinancial on 4 June 2012

Investing in an Uncertain World…

We held the first of our client education events at the Fireworks Gallery on Thursday evening. Michael Ether opened the evening with an informative tour of the gallery including some great commentary around some of the artists currently exhibiting.

Sean and Neal presented ‘5 Myths towards Financial Independence’. Sean explains.

“We wanted to outline some of the misunderstandings that our clients have before engaging with us around what they need to do to achieve financial independence. So we put together our top 5 based on the new Medical Specialists that we have been working with in the last 12 months”.
Glen Hart, Head of Australian Equities, then presented on “Investing in an Uncertain World” including how he saw the global markets, Australia and then some specific investment opportunities.

Sean and Neal completed the evening by outlining two strategies being used with clients to help them along the path towards financial independence.

We will advise you shortly of our next event will be our annual property evening in November.

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The real cost of free property advice...when 'free' is anything but...

Posted by medicalfinancial on 1 June 2012

Do you know how your property adviser is getting paid?

It’s often said the most expensive advice is that purported to be free. We are champions of conflict free, flat dollar fee for service advice. It is important to us that all members of our deliverables team share this philosophy.

We spent some time researching the property advice space before we were comfortable with the firm we now partner with. As you would expect, they charge flat dollar fees for the advice they give, paid by the clients. So whose interests are they representing? Well our clients of course, as if they don’t deliver, they don’t get paid.

Compare this with the conflicted model of a Buyer’s Agent conjucting with the selling agent. In this scenario the Buyer’s Agent finds a property, agrees a share of commission with the selling agent and then recommends this property to the person they are advising. Whose best interest are they acting in if they are getting paid by the seller of the property?

Potentially even more conflicted is the “professional” adviser who is recommending property and getting paid by the developer, often without disclosing this to their client. We listened with interest on Monday morning to Simon Pressley being interviewed by Steve Austin on 612ABC about this issue. A link to the podcast is below:

We are serious about clients receiving true conflict free advice in every area of their financial life, including property. So if you are not sure how your professional advisers are being paid it might be time to speak to us.

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Superannuation contributions tax changes proposed

Posted by medicalfinancial on 1 May 2012

The budget announcements will include a doubling of the contributions tax on concessional contributions to 30% for individuals who earn at least $300,000 in income from the 1 July 2012.

The definition of income will be broad and includes taxable income, concessional superannuation contributions (both superannuation guarantee charge contributions and salary sacrifice contributions), adjusted fringe benefits, total net investment losses, some foreign income, tax-free pensions and benefits less child support.

Where the $300,000 limit has been breached because of the level of concessional contributions the 30% contribution tax rate will only be applied to the amount of the contribution which caused the breach. On this basis an individual with $280,000 in taxable income who has made a $25,000 concessional contribution would pay the 30% contribution tax on $5,000.

No indication has been given as the manner in which this measure is to be administered.

David Busoli B Sc, Dip Ed, Dip FP, SSA
Cavendish Superannuation

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I can pay my mortgage off how fast......

Posted by medicalfinancial on 26 March 2012

You may of heard of "Part IVA", but whats it's purpose? When is it applied? And how can it spoil what seemed like a great idea?

Part IVA operates as a general anti avoidance provision to protect the integrity of Australia's tax system. To apply there must be a 'scheme' and a 'tax benefit' obtained in connection with the scheme. It must also be reasonable to conclude that the person entered into the scheme for the 'sole or dominant purpose' of enabling a taxpayer to obtain a 'tax benefit'.

There are certain loan arrangement schemes that are specifically marketed to enable people to 'own their own home sooner' or 'pay their home loan off sooner'. It is important to understand how the ATO views such arrangements as detailed in TD 2012/1.

One scheme entails the taxpayer meeting interest repayments on an investment loan from a line of credit. Under these schemes, the line of credit is used to meet repayments on the investment loan. The interest on the line of credit is generally higher than the investment loan and therefore increases the tax deduction for the interest expense.

For these types of arrangements, it would be reasonable to expect that if the scheme had not been entered into, the taxpayer would meet the interest payments on the investment loan out of their own cashflow and not incur additional interest or incur a smaller amount of interest on the line of credit. As a result, the taxpayer would not have been entitled to any deductions in relation to such interest or would be entitled to a smaller deduction.

In summary, upon examination of the facts in each situation, if a reasonable person could conclude that the arrangement was entered into for the dominant purpose of obtaining a tax benefit, Part IVA applies to the scheme and the ATO would be entitled to cancel any deductions attributable to the line of credit. Very painful when you consider they can go back retrospectively and also impose a fine!

Assistant Treasurer Mark Arbib has announced the Government would act to protect the integrity of Australia's tax system by introducing amendments to Part IVA of the income tax law that will ensure that the general anti-avoidance rule continues to be effective in countering tax avoidance schemes that are carried out as part of broader commercial transactions.

The message is clear, be careful with schemes of this nature and if in doubt ask your advisor to obtain a tax determination from the ATO specific to you. 


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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)