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Why modern shopping habits are holding us back

I’m a Generation Y gal who has always loved to shop. Back when I was in school and university, I didn’t have the same sort of disposable income I’m fortunate enough to have now. That meant my shopping money was made up from my wages from my part time job along with my weekly pocket money. In other words, I didn’t have cash much to play with.

When I found an expensive item I couldn’t live without but also couldn’t afford straight away, I would turn to layby.

With layby I could put a deposit down on a big-ticket item and pay it off in installments when it suited me.  When I was finally able to take my goods home after paying off the balance, I not only had a hot new item, I also had the satisfaction of knowing that I had worked hard towards obtaining it. Yes, I had to wait – but the waiting made me motivated to make repayments quickly and kept me disciplined.

How the times have changed.

Nowadays there are new options such as Afterpay and Zip Pay to assist shoppers purchase goods through a credit facility.

When you subscribe to a payment method such as these, you receive your purchase straight away – unlike traditional layby. After you pay an initial deposit, interest free installments are automatically deducted from your debit or credit account for a specified time frame until the balance is paid off.

It sounds very appealing to receive your purchase straight away and not even have to think about the rest of it. But beware … it’s not without its potential risks.

For example, if you miss an Afterpay payment you’ll be charged a late fee of $10 followed by another $7 charge if your installment remains unpaid for more than 7 days. A similar late fee structure applies for Zip Pay. If you’re paying off these charges with a credit card, you could also be adding to this cycle of debt.

What’s frightening about these services is how easy it is to get caught up in the “I want it now” lifestyle. If you’re not careful, you can easily fall into the trap of spending beyond your means. Before you know it you have a couple of hundred dollars coming out of your account for purchases you don’t even remember.

The thing that troubles me most about these modern payment options is that it’s not teaching people that reward comes after the hard work. It’s much too easy to over commit to payment plans you can’t afford, when all you are thinking about is your shiny new thing.

Layby taught me how to save for something special and that’s something today’s generation just won’t get.

Disclaimer: This blog is general in nature and has been supplied for information purposes only. It contains opinion and readers should satisfy themselves through independent means that any decisions based on this material are appropriate. We recommend that you consult with your adviser who will be able to make a recommendation based on your specific circumstances.

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$600 million package to fix buildings with combustible cladding announced

The Victorian Government has today announced a $600 million package to fix privately owned buildings with combustible cladding across the state.

The grants will fund rectification works on hundreds of buildings, found to have high-risk cladding, to make sure they’re safe and compliant with all building regulations.

The program will be overseen by a new agency, Cladding Safety Victoria, which will manage funding and work with owners corporations from start to finish.

The State Government will directly fund half of the rectification works and will introduce changes to the building permit levy to raise the other $300 million over the next five years. This announcement comes off the back of recommendations made in the final report from the Victorian Cladding Taskforce, released today.

What does this mean for owners of affected properties?

Rectification of combustible cladding on buildings is complex and difficult – different solutions will be required for different buildings. There are many buildings requiring rectification and they come in many different shapes and sizes. Cladding may need to be removed to ensure safety in many but not all affected buildings. Rectification is a process that will take time, in large part due to the size and number of affected buildings and the nature of the building works to be carried out.

The Taskforce has worked with the Victorian Building Authority (VBA) to identify 15 buildings that will have their cladding fixed first. Work on these high-risk buildings will begin in the coming weeks.

How will I know if I am impacted?

The VBA has been engaged by the State Government to lead a Statewide Cladding Audit, assessing which privately owned apartment buildings are at risk. This audit is ongoing.

If the apartment building where you live or own is inspected as part of the project, you will receive a letter from the VBA. Building managers, building owners or owners’ corporations will also be contacted by the VBA prior to an inspection taking place. The results of these audits will be communicated to relevant parties, by the VBA, when available.

To be eligible for assistance from Cladding Safety Victoria, your property must first have been assessed as part of this audit.

Cladding Safety Victoria will be contacting owners corporations and property owners shortly, starting with those whose buildings are at the greatest risk.

Where can I learn more?

Further information regarding this announcement and the role of Cladding Safety Victoria can be found here.

The Hopkins Group is committed to keeping our clients informed of any updates/changes that may be relevant to them. We are interested to see how this initiative is executed over time and hope that it provides welcome support to those who may be at risk.

Donate your car and pay less tax

When you’re ready to offload your old or scrap car in Melbourne, you might be considering the best way to make some money out of the process. Often this might mean trying to sell or trade it in for some cash – but have you ever considered donating it instead?

Donating a car is a good option for people wanting to give back to a charity of their choice – but also claim a nice little tax deduction in the process.

If you are donating your car to charity online, Kids Under Cover is pretty much your only option currently available in Melbourne. The good news is this charity not only accepts cars, but also vans, motorbikes, caravans, trucks, buses, tractors, boats on trailers and much more. After you submit your details, the charity arranges collection of the vehicle, before putting it up for auction. Once sold, proceeds are put towards projects on youth homelessness at Kids Under Cover – and you’ll get your tax-deductible receipt 8-12 weeks later as a thank you.

Of course – you may feel more strongly about another charity and want to focus any donations towards them. While you may not be able to donate your car directly to these charities, you’re not completely out of luck. You can still turn your car into a tax-deductible donation for your preferred charity.

Companies like Rapid Car Removal, which provide instant cash for cars in Melbourne, allow you to sell your car directly for cash and donate that amount directly to the cause you care for.

Companies like these also tend to care for the community, so you can tell them you want to transfer the proceeds to whatever cause you care for. In these situations they’ll work to maximise the value of the car and also deposit the proceeds to the charity of your choice, on your behalf.

Whatever direction you choose – as long as the proceeds from the car sale are donated to charity, and a tax-deductable receipt is provided, you’ll be able to make the deduction come tax time. It’s a great way to give back to the community.

Want to learn more about what other deductions you might be able to claim come tax time? Speak to one of our expert tax accountants about your options today!

Nominating Off The Plan Contracts – Care Needed

In Victoria, stamp duty applies on most transactions involving land.

One exception is when a purchaser nominates an additional or substitute purchaser to take his/her place under a Contract of Sale prior to settlement, provided the nomination does not involve extra consideration being paid (as opposed to an on-sale), amongst other things.

This arrangement has been in place for many years and was typically used between related parties. A common scenario is where Mr X signs a Contract of Sale then prior to settlement, nominates his wife Mrs X, as a co-purchaser or a family trust as a substitute purchaser.

It is important to note that if the State Revenue Office’s conditions of the exemption for nomination are not met, stamp duty will apply on both transactions – i.e. a transfer between the vendor to the first purchaser and stamp duty between the first purchaser and the nominee.

Due to a combination of credit becoming less available, restricted economic conditions, foreign purchaser restrictions and changes to off the plan stamp duty concession rules, nominations have been increasingly used between unrelated third parties in recent times.

Why would someone consider a nomination sale with an unrelated party?

A second hand purchaser may prefer to take a nomination instead of buying it direct from the Vendor to utilise off the plan stamp duty concession for Contracts dated prior to 1 July 2017. Similarly, a purchaser may prefer to nominate to a third party as he/she is unwilling or unable to obtain finance to complete the sale due to change of circumstances. Again, these transactions will be considered on-sales for stamp duty purposes if there is any extra consideration involved.

How are nominations treated in a Contract of Sale?

The standard form of Contract of Sale used in Victoria, is not equipped to handle nomination transactions adequately. The only provisions that are contained in the Contract dealing with nominations are:

  1. the first purchaser will remain personally liable for the Contract notwithstanding any nomination; and
  2. the nomination must be submitted 14 days prior to settlement.

In addition, it is not uncommon for an off the plan Contract to contain special conditions that deal with whether nominations can be made to foreign purchasers and the form in which it will be accepted by the Vendor.

It does not address important questions like:

  • Does the nominee pay the deposit upon receiving the signed nomination form or at settlement?
  • Who does the nominee pay the deposit to – the first purchaser or the Vendor?
  • Will the first purchaser be entitled to use the deposit before settlement?
  • Can the nomination be subject to finance approval?
  • Can the first purchaser change his/her mind and nominate someone else before settlement?
  • For off the plan properties, is the nominee aware of any changes to the Plan of Subdivision, Building Works or Specifications?
  • Has the nominee obtained advice about the conditions of the Contract?
  • Who will be responsible for paying the Vendor’s costs in relation to the nomination?
  • Who will be responsible for paying legal costs of the first purchaser or the nominee?
  • Who is responsible for any penalties or default interest if settlement is delayed?
  • Is the nominee aware of the terms and conditions of the contract?
  • Will additional stamp duty apply and who is responsible for it if it does apply?
  • Will the nomination be subject to finance or any other condition?

As you can see, this is not just a simple process and great care should be taken before entering into these arrangements. Each situation is different, so it’s worth seeking professional advice beforehand.

Over the last 20 years I have facilitated a number of nominations between unrelated third parties, but always only with the advice and guidance of independent, reliable and experienced property lawyers. The outcome has always been successful, while protecting my clients’ rights.

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The Hopkins Group

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Level 23, 500 Collins Street, Melbourne, VIC 3001

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GPO Box 4347, Melbourne, VIC 3001

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