November 2016 – The Hopkins Group

12 Days of Christmas

Posted on 30/11/201625/10/2023 by daniel-admin

We’re well and truly into the festive spirit here at The Hopkins Group, and have asked around our teams to give you our very sensible yet sometimes outside-the-square take on the traditional 12 Days of Christmas.

From our family to yours, we wish you all the happiness this holiday period.

On the first day of Christmas, my financial planner gave to me … a handy glossary of terms to get my head around some investment jargon.

On the second day of Christmas, my property manager gave to me … ten reasons why their team is the best choice to look after my investment property.

On the third day of Christmas, my accountant gave to me … tips for how to determine whether or not my Christmas holiday is actually tax deductible.

On the fourth day of Christmas my property adviser gave to me … the best locations in Melbourne to see festive lights shining brightly.

On the fifth day of Christmas my mortgage adviser gave to me … a recipe to build my own house #mustkeepsaving

On the sixth day of Christmas, my financial planner gave to me . . . a link to download the TrackMySPEND app so I could monitor my festive budget.

On the seventh day of Christmas my property manager gave to me… ways to “décor-rent” this festive season while keeping my landlord happy.

On the eighth day of Christmas my accountant gave to me … answers to some frequently asked questions that could help me realise my financial potential.

On the ninth day of Christmas my financial planner gave to me … four tips to survive Christmas and stay debt free.

On the tenth day of Christmas my property investment adviser gave to me … hope that apartment living may be the answer to living happily.

On the eleventh day of Christmas, my financial planner gave to me … access to the Bubbles, Beers and Budgeting Facebook Group to connect with fellow Gen Ys starting out on their financial journey.

On the twelfth day of Christmas, The Hopkins Group gave to me … a playlist of festive tunes to enjoy with my family.

Ten reasons why you should select The Hopkins Group to manage your investment property

Posted on 27/11/2016 by daniel-admin

It’s hard to believe the Christmas season is already upon us. Wasn’t it only yesterday we said goodbye to 2015?

We know that this is a busy time of year – and we also suspect that if you’re the owner of an investment property, the last thing you probably want to think about is the care of your rental. Which is why it pays to have a good team by your side; Santa certainly wouldn’t be where he is without the help of his elves.

So if you’re considering calling in the experts to take the fuss out of leasing, or change the guard on your current property managers, let me outline the reasons why you should look no further than The Hopkins Group to help lift a weight off your shoulders this silly season.

Let’s start with the first reason, shall we?

1. We’re leasing champions. We will find you a suitable tenant to rent your property.

At The Hopkins Group, we’re lucky enough to have a dedicated leasing consultant to help us find amazing new tenants to put forward to our landlords.

For every application we receive on your property, we will process them by checking all of the potential tenant’s references, including their current employment details, current and previous rental history. We want to make sure everything checks out with the applicant before presenting them to you, so that with our professional guidance we can help you make an informed decision.

2. We take the stress out of moving.

We get it. Moving is hard work – so we try to make the process as smooth as possible. Our property managers are on board to assist your new tenants move into their new home with ease.

Before your tenant moves in we complete detailed reports, with photos, to document the condition of the property. That way everyone is on the same page for about the general state we expect the property should be maintained.

We also make sure there are no existing maintenance issues and in the event that there are, we will seek your permission to have everything in good repair before the tenant moves in.

And as if it couldn’t get any better, we can even make sure water and utilities are set up for the tenants, should they opt in to this service.

Peace of mind during moving? We can make it happen!

3. We’re about the whole journey, not just the start and end. Your property will be maintained under our care.

Throughout the life of a lease, we will look after your tenants and the property by completing scheduled routine inspections.

We will go through the property and make note of any repairs that need fixing or any cleaning issues that need to be addressed with your tenants. The earlier we catch any potential problems, the quicker we can get on top of them and ensure they don’t escalate unnecessarily.

We keep all of our landlords informed throughout the tenancy and update regularly on how the tenants are tracking.

4. We keep you up to speed on the current rental market.

Our property managers have their finger on the pulse and know what’s happening within local rental markets. We have access to a wide range of statistics and reports, to assist us in educating our clients on the current state of the market.

Each year, we will conduct a review of the rent you’re earning on your property. Where appropriate, we can advise on and implement rent increases so we can make sure your return on investment is the best it can be.

5. Get out the fine china – we’re all about the silver service!

We promise to service our clients to the best of our ability. Whether it’s returning phone calls, emails or attending private appointments – you’re our number one priority.

We strive to be as punctual and as responsive as we possibly can. We will issue statements each month and keep your rental payments on time through our direct debit facility.

6. Down to the heart, we’re all about Melbourne.

You might be thinking, “Why would I go to a city based property manager when I can go somewhere local?”

We have a breadth of experience and location specific knowledge to draw from.

Our inner city location is exactly the reason why you should consider us – it means we’re central to a broad range of inner urban and suburban areas. It also means our property managers can be experts across a number of local areas, not just one.

7. We can pay your bills for you

Our accounts department will not only disburse your rental income to you each month, but they can even pay some of your bills for you. We can pay your council rates, water rates and body corporate fees related to your investment property.

Aside from one less thing to think about, the benefit of having us paying your bills is that we can collate your payments into one simple statement. Your accountant will love you for this, come tax time.

8. Zero percent vacancy? We made it happen.

In August 2016, we had a 0% vacancy rate across our property portfolios. A low vacancy rate means more money in your pocket.

When it comes time to your tenant vacating, we’re equipped to re-lease your rental property in a timely manner.

We will conduct open for inspections while your outgoing tenant is still in possession of the property, to minimize your vacancy and hopefully secure a new tenant in time for your current tenant’s vacate.

9. We’re more than just your average property management business.

In fact, property management is only one part of what we do.

The Hopkins Group is a boutique financial services company. We pride ourselves on offering all the services you might need in order to take control of your financial future, all in one place. To help guide our clients on their financial journey, we provide them with access to a range of services including financial planning, tax and accounting, mortgages and finance, property investment advice, and of course property management.

Having all of these areas of business under one roof means we can take a holistic approach to securing your financial future, and ensure your investments are working for you.

10. We’re putting the love into leasing this Christmas with six months FREE property management.

The Hopkins Group are offering six months free property management in the lead up to Christmas 2016, to all those who transfer the management of their investment property over to us. We also have a number of incentives available to those who refer their friends.

Unwrap free property management this Christmas and make the switch to The Hopkins Group today!

If you have any questions regarding The Hopkins Group property management services or how you can make the switch, please do not hesitate to give our office a call on 1300 726 082 and ask to speak to someone in our property management team today!

Upcoming Centrelink concerns for Australian retirees

Posted on 23/11/2016 by daniel-admin

While a majority of the Australian population will be ringing in the new year with grand plans and resolutions, hundreds of thousands of retirees aged 65 and over who currently receive a government Age Pension, will be feeling the full effect of changes to their Centrelink payments as of 1 January 2017.

More than 50,000 of this cohort will happily welcome the changes as they will be eligible to receive the full age pension – an increase from their current benefit; but roughly 300,000 people will see their part pension considerably reduce and a further 100,000 will lose their entitlements all together.

The government and mainstream media have focused on the good news that 50,000 more Australians will receive a full age pension, but what they have downplayed – or neglected to discuss at all – is the concern that the majority of retirees receiving a part-pension will be impacted negatively.

What’s the fallout?

If you are currently a couple who own your home and have a superannuation pension and other assets outside your family home with a value of $500,000, you would currently receive 76% of the maximum full age pension. As of 1 January 2017, that same couple will receive 71% of the age pension.

At first glance, this seems like a minor change and that $73 per fortnight should not worry a couple with $500,000 in investable funds available. But looking a little further into this scenario, concerns certainly present themselves.

The challenge to create wealth

With interest rates at record lows with no sign of rising, and share markets with extreme volatility, retirees are finding it harder than ever to create wealth.

The days of 6% term deposit rates are long gone and there is little confidence that a balanced superannuation fund will provide 8% in current global and domestic markets. Add this to our increasing cost of living where currently a comfortable lifestyle for a couple is up to $59,160 per annum. This doesn’t include travel, or any vehicle upgrades, or home renovations that may and probably will arise throughout retirement years.

An ageing population

The Australian Government has major concerns in regards to our ageing population. Between now and 2050, the number of:

older people (65 – 84 years) is expected to more than double, and
very old people (85 and over) is expected to quadruple.

This means the proportion of people aged 65 and over will increase from 13% to 23% – that’s less and less tax payers as the years go on, which will result in more pressure on the federal budget. The government is aware of this predicament and is looking at different ways to tackle this problem.

A contingency plan

Having an increased taper rate of $3 for every $1,000 (compared to the current $1.50) over the asset test limit will provide government savings; but at what cost?

If Mr and Mrs Jones need to draw down further on their own assets as a result of these pending changes, how long will it be before they will be solely reliant on a government funded age pension? Many commentators have seen this as extremely short sighted.

Of course, there’s also the 100,000 retirees who will lose all payments, creating further need to draw down on personal assets much quicker.

A summary of the changes

For full pensioners

For a homeowner (couple), the asset limit will increase from $296,500 to $375,000
For a homeowner (single), the asset limit will increase from $209,000 to $250,000
For a non-homeowner (couple), the asset limit will increase from $448,000 to $575,000
For a non-homeowner (single), the asset limit will increase from $360,500 to $450,000
A taper rate will increase from $1.50 to $3 for every $1,000 over the asset lest test limit

On the other end of the scale part-pensioners will see a limit of:

For a homeowner (couple), the asset limit will decrease from $1,178,500 to $816,000
For a homeowner (single), the asset limit will decrease from $793,750 to $542,500
For a non-homeowner (couple), the asset limit will increase decrease from $1,330,000 to $1,016,000
For a non-homeowner (single), the asset limit will increase decrease from $945,250 to $742,500

Every retiree should have already spoken to an authorised representative about how these changes will affect their situation. If you haven’t, you are encouraged to immediately speak to your financial planner about how these changes will affect what you receive from the government, and what strategies can be put in place to limit the effects that they may have on your financial situation.

Please contact The Hopkins Group on 1300 726 082 or drop us a line if you’d like to make an appointment with a financial planner to discuss the pending Centrelink changes.

Sources:

https://www.amp.com.au/news/2016/october/changes-to-the-age-pension-assets-test
https://archive.treasury.gov.au/igr/igr2010/Overview/pdf/IGR_2010_Overview.pdf

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Disclaimer: John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL: 326450.

General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

How do you do Christmas?

Posted on 22/11/2016 by daniel-admin

Christmas is an expensive time of year; it can be difficult to find the extra cash to pay for all those presents, the Christmas feast and travelling to see family and friends.

We took to the streets to find out how busy Melburnians (and some happy tourists!) celebrate Christmas, and what they’d do if they were treated to some extra spending money this festive season.

Fancy a cash windfall yourself?

Transfer your investment property into our management – or refer a friend to do so – and we’ll say thanks with a handy little Christmas bonus.

Find out more

Parlez-vous investment?

Posted on 16/11/2016 by daniel-admin

Excusez-moi! Où puis-je acheter de la bière? Sound French to you? That’s because it is! It might be hard to get your head around the grammar and intricacies of a foreign language, but once you know the basics, you can at least find out where to buy a beer.

Knowing your way around the language of investing is the same. Sure, there might be some concepts you will never have the time or patience to understand, but with some base level knowledge in your tool belt, you’ll have the confidence to contribute to a dinner party conversation . . . and perhaps take your financial future a bit more seriously.

The financial planning team at The Hopkins Group fancy themselves as some skilled linguists when it comes to the language of investment. They know how daunting it may seem for a first-timer to consider taking an active role in investing – but everyone has to start somewhere. Just like how you need to negotiate the male and female versions of nouns in French, you also need to get a feel for investments inside or outside of superannuation and how they will react to the volatility of the markets, to be able to get ahead in your financial future.

Our advisers have dug into their bag of tricks to share some handy tips that – like a tourist in a foreign city – might just help get you from A to B . . . or at least to the closest pub!

Know yourself

The first step to investing is to know how much risk you are comfortable taking on. Are you a ‘throw everything at it’ kind of person, or more a ‘slowly but surely’ player?
Your propensity to take risk can be decided by completing something known as a risk profile with your financial planner. It outlines a series of questions that have been specifically developed to evaluate your willingness to take risks.

If you’re more of a row boat on a lake, than a jet boat down the rapids character – that’s okay! This discussion with your planner and the nature of your answers will help identify what type of assets classes – and how much of each asset class – you should be comfortable investing in when diversifying your own investment portfolio.

Block out the noise

Probably the most important part about investing is to try and rise above the doom and gloom stories that are strewn across every media outlet, day in and day out.

Here’s what AMP’s Chief Economist, Dr Shane Oliver, had to say on the subject:

“The problem for investors is that the worry list seems more worrying than it used to be. Yes, there is a fundamental element: the normal return potential from most asset classes are lower than they used to be, global growth is slower than it was pre GFC and the world seems awash in geopolitical risks”.

It’s easy to be caught up in the negative talk and be consumed by worry and fear, but by seeking advice from an expert, you can block out the noise and focus on the facts. It’s incredible what a newfound grasp of investment knowledge and impressive suite of vocabulary can do to allay your fears – just like landing in a new city armed with trusty tour guide!

Patience is a virtue

A popular shampoo brand was on to something in the 90s when it coined the term “it won’t happen overnight, but it will happen”. Same can be said for investing.

When you invest – particularly within superannuation – it is for the long haul and you need to keep your eye on the horizon. Short term rises and falls (known in the industry as ‘volatility’) should not sway you from your objectives. Over the years, we have seen several economic downturns, but history dictates that the market returns to normal and recovers – you just need to be patient.

By remaining patient and staying invested during these downturns, you can take advantage of lower unit prices and reinvest more income and distribution than you could if the market was higher. Sure, you may have lost some capital value in the short term, but ultimately, when the market recovers, the uplift is greater over the longer term.

Share the love

You’ll hear people say ‘diversification is the cornerstone of any sound investment portfolio’. Okay, but ‘mi no comprende’. What is diversification?

Diversification basically means not putting all your eggs in one basket – it’s a risk management technique that mixes a wide variety of investments within a portfolio. Diversifying allows you to reduce the overall risk to your portfolio by gaining exposure to different asset classes which could include property, bonds and global investments – assets often ignored by the average ‘DIY’ Australian who tends to invest primarily in the Australian stock market.

If we refer to the 2014/2015* financial year, Australian equities (i.e. ‘shares’) were in fact the worst performer, delivering a 5.6% return for the financial year. No, not all bad, but with some expert advice from a financial planner, you could diversify your investments and benefit from having some interest in a range of asset classes which could deliver higher returns.

Asset classes investment 2014/2015 financial year

Unhedged international shares – 25.2%
Australian listed property – 20.2%
Unlisted property – 10.6%
Hedged international shares – 8.5%
Australian Bonds – 5.6%
Cash – 2.6%

The Lonely Planet of the investment world

So as you’ve seen, you can learn a few words and wing it on your journey to financial freedom, or you can engage a professional and take it to the next level. Our team of financial planners at The Hopkins Group speak fluent ‘investment’ and love playing tour guide to new – and existing – investors.

If we’ve whet your appetite for digging deeper into your investment potential, give us a call to organise a free financial health check. We can have a chat about your goals and objectives and do that all important – and sometimes revealing – risk profile.

Call 1300 726 082 to book in a no obligation appointment with an adviser, or drop us an online enquiry and we’ll be in touch.

* https://www.superguide.com.au/boost-your-superannuation/asset-classes-investment-2014-2015-financial-year

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Disclaimer: Shane Light is an Authorised Representative and John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL: 326450.

Personal Services Income – Contractors beware!

Posted on 13/11/2016 by daniel-admin

So, you’re a contractor who runs your business through a company, partnership or trust in order to take advantage of tax planning opportunities, right? Think you’ve got it sorted? Nothing to worry about? Maybe not.

Enter the fun police

Just when you think you’ve got your business structure under control and are enjoying the tax benefits of using an entity, along comes the personal services income (PSI) rules to ruin the fun.

Personal service income is a significant tax issue for contractors. The application and implications of this important set of rules is often misunderstood. The PSI rules simply allow the ATO to ‘look through’ your business structure and tax you as an individual.

The rules concerning the alienation of personal services income were introduced to prevent arrangements where individual taxpayers earning personal services income through a company, partnership or trust structure are able to split income with other family members and claim deductions that otherwise are not available to other taxpayers.

Have we rained on your parade?

Are you worried you’re breaking all the rules and fear this structure will no longer work for you? It’s not necessarily all bad news . . .

We simply need to identify if you are affected by these rules and help you manage your obligations. At The Hopkins Group we work with our clients affected by the PSI rules to manage regular activity statement and PAYG obligations making the process as stress free as possible. Below is a brief summary of when the PSI rules apply and the implications.

The rules are complex and certainly an area where help should be sought! If you believe you may be affected – or not sure if you are – please contact one of our accountants to discuss your personal circumstances.

What is personal services income?

Personal services income (PSI) is income produced mainly from your personal skills or efforts as an individual.

This could be writing copy for a website as a freelance journalist, mowing lawns as a gardener, doing bookkeeping for a few casual clients . . . you get the drift. Anything where the work you do (and not the products you supply) gets the job done. In our experience, professions most commonly affected by the rules are IT consultants, medical practitioners and lawyers.

When working out if you have received PSI, you need to look at each contract or job individually. If more than 50% of the income received for a contract was for your labour, skills or expertise, then all income from that contract is classified as PSI.

An example is Ben who is a computer consultant who provides his personal services through a family company, BenCom Pty Ltd.

The company has a contract to provide IT support services performed by Ben. This is personal services income because it is mainly a reward for Ben’s personal skills and efforts. BenCom Pty Ltd also operates a computer spare parts business that sells computer hardware and software.

Ben provides his personal services to install software for clients and the cost of installation is usually built into the price for the hardware, and represents a relatively small proportion of the price.

Income from these services would mainly be for the sale and supply of goods. It would not be personal services income of Ben, but would rightly be regarded as income of the company.

The fall out

If you have PSI income there are fewer deductions you can claim against this income, and you will need to report this income as your own individual income.

For example, you won’t be able to claim the following against PSI:

rent, mortgage interest, rates or land tax for your home (or your associate’s home)
payments to your spouse, or other associate, for non-principal work such as secretarial duties
expenses that you would generally not be able to deduct as an employee.

Will I save tax?

If you operate your business through a company, partnership or trust the PSI your business receives needs to be allocated (or ‘attributed’) to each individual who performed the services and the individual will need to declare the income in their individual tax return. Basically, income from your personal services is treated as your assessable income even through it was earned through a separate entity. This is achieved through paying and/or attributing wages to you from the business. As a result your business will also have additional PAYGW obligations.

The upshot is that because PSI income is ultimately assessed to the individual there is generally no tax saving in operating through a company or trust.

What if I’m a genuine business?

If you received personal service income but are able to pass the following tests then the PSI rules don’t apply and your business is a classified as a “personal services business” (PSB). When you are a PSB, there are no changes to your tax obligations.

You are considered a PSB if your business can pass one of the PSB tests:

1. The results test
2. The 80% test
3. The unrelated client test, employment test, and business premises test

Put simply, the income derived in these circumstances has the characteristics of true business income not that of salary or wage income earned by an employee. Therefore, the business is eligible for the usual business deductions and the income is assessed to the entity that earned the income if it is a company partnership or trust.

See here for a handy breakdown of the tests to help you work out if the rules apply to you.

“My employer requires me to contract through a company?”

This is something we see often and it usually has to do with Workcover obligations. If this is the situation you find yourself in then The Hopkins Group can help you with your monthly payroll and quarterly GST obligations.

Taming the wild beast

If you are reading this and have made it through to the end, well done! The PSI rules are a complex animal, but never fear as The Hopkins Group accounting team is here to wrangle your tax affairs into submission and help you to manage your obligations. You are not alone. If you would like to chat to an accountant, drop us a line or give us a call on 1300 726 082 to find out how we can help you.

Sources:
Income tax Assessment Act 1997 – SECT 84-87
Australian Taxation Office

A generational shift

Posted on 06/11/2016 by daniel-admin

Of course the world is changing.

It’s getting younger, or is it because I am getting older?

Well it could be a bit of both, but one thing for certain is the changes that are happening in regard to age and financial services. The proliferation of information and encouragement in the new age of technology and communications is driving younger and younger individuals to consider – and to take action in regard to – their financial wellbeing with the aim of becoming financially independent.

Anecdotally, we can say we have hundreds of young clients wishing to establish themselves. Many of them realise that marrying and having children later – and many more these days determining to stay single – has changed the ‘financial establishment’ starting point. They must start now.

Also the number of Gen Ys travelling the world for their careers means it is not a matter of waiting to ‘settle down’ and then starting.

An article recently published by BT made the point that compared to only three years ago, the age of individuals establishing self-managed superannuation funds has reduced by four years.

For many of our young clients whom may be first home buyers, they may be building their superannuation fund, or wish to utilise their incomes by gearing their investment portfolios and receiving substantial tax credits, the earlier they start the better.

It is our experience that the world of young Australians is well aware of the importance of acting early.

In the same vein, it is a pleasure to recount to you that there are now basically four generations in our organisation, The Hopkins Group.

There is Michael Williams, my business partner and our Managing Director, we have that group that have been with us for 10 – 15 years and we have successful graduate and intern programs that are nurturing and developing a developing a millennial generation.

Yes, we have existed 36 years and we have “the aged” like me and Stephen Phillips but is exciting to see our young professionals working to satisfy the younger generations of Australia with professionalism, enthusiasm and educated advice.