Risk On – Risk Off, and why do we care about Greece?

We don’t like to use ‘jargon’ unless it is well understood by all of our readers. One term you will have heard recently is ‘risk-off’ and its inverse ‘risk-on’. It used to be enough to use the terms “Bullish” to describe optimism and a market that was going up, and “Bearish” to describe a market in decline, or when people were generally pessimistic. But now, we have the ‘risk-on’ and ‘risk-off’ descriptions.

You will be hearing the talking heads discussing ‘risk-off’ right now which seems to be a euphemism for, ‘your portfolio is going down’.

Budget 2012 – Need to know…

The 2012 budget is in; and it was mostly in line with what had already been selectively leaked, with few real surprises. Some of the changes affect a very small group of people, and other changes are more of a tweak than a major change.  Contribution caps for superannuation was a change that we were particularly watching for and the outcome was simply more delaying.  Small business got a nice concession in the form of the ability to claim back prior tax paid (over two years) when a full year trading loss is incurred.

Promises made in previous budgets were reversed, as one might expect.  The company tax rate will not fall to 28% as promised, but will remain at 30%.  The standard tax deduction of $1,000 for work related expenses is now scrapped and you will have to be able to substantiate these claims.  The 50% tax discount on the first $1,000 of interest income has also been scrapped.

Let’s have a look at some of the detail of what’s in for 2012/13.

Fee reductions on key Quill Group investment administration platform

Quill Group is committed to making a difference and as such we are pleased to announce a fee reduction on one of the key investment administration platforms that we use.

Want a 38.5% Return on Investment? Tax Free and Government Guaranteed?

Sounds like a scam, doesn’t it?  What is the catch? Remember the sage advice that your dad used to give you, ‘…if it sounds too good to be true, then it probably is’.

Well we can assure you that this deal is true, but there is a catch which we will get to later.

First of all, it seems hard to believe that we have just finished the Easter break, and that means only ten weeks to go till the end of the financial year.  That sort of time frame gets us thinking about all of the tax planning strategies that are available to help our clients pay the least amount of tax, and get the most of the available government hand outs.

Tax Audit Insurance: What you need to know

The rise of tax audits
With the ATO committing $337 million over a four year period as part of its Compliance Program, small businesses are coming under increased scrutiny and pressure to ensure fulfilment of taxation requirements. Taxation compliance has been thrust into the spotlight and as such audits and reviews into taxation reporting are on the rise.

These tax audits are known to place entities under considerable scrutiny. The audit can be a costly, stressful and time consuming process for those involved. The fear for many taxpayers is that a simple audit could quickly evolve into a complex process, with the extra financial burden of accountancy fees.

ATO crack down on failure to lodge tax returns

The ATO has recently published its annual 2011 prosecution figures for tax and superannuation related offences. Of particular note was their crackdown on people and entities who are failing to lodge their income tax returns and business activity statements on time.

The ATO lists some of its most significant catches in 2011 of those failing to lodge returns:

• A takeaway food services company from Melbourne was convicted and fined $10,000 for five offences for failing to lodge income tax returns. The solicitor indicated this was the third case involving the same accountant that he had to defend for failure to lodge returns in the last two months. The Magistrate said it is not the responsibility of the accountant, but rather the entity and it’s directors to ensure lodgement occurs.
  

The second coming of the GFC?

Much has been made in the media about Australia surviving the global financial crisis (GFC) or Eurogeddon as some of the finance crowd labelled it.  On the ground however, the headlines concealed the reality of a patchwork economy where some industries pushed ahead while others were flailing in a sea of weakening consumer confidence, heavy discounting, tight lending conditions, and billowing debt cycles.

Rumours are rife that we’re heading for a continued period of global economic turbulence and recession despite improvements in the European sovereign debt financing conditions.  So, what does all of this mean for Australia?

Chasing last decades returns

Statistics, if sufficiently tortured, will confess to anything.

Private asset consultant Jonathan Pain uses that phrase to describe the process of selective use of statistical data.

Sometimes the torture is pre-meditated, other times it is just a result of ignorance.

We are not sure if it was pre-meditated or ignorant, but a recent article in the Financial Review was a great example of such torture. It spoke glowingly of fixed interest returns, highlighting a Morningstar report showing that returns from fixed interest since 1989 had matched the return from shares at 9.00% per annum.

Without repeating the whole article here, it is enough to say that one could easily form the opinion that the learned writer was implying that it would be difficult for shares to outperform fixed interest in the years ahead.  The article included the comment that “returns from shares are constrained by their total earnings (and nominal growth in gross domestic product)”.

Welcome to our new blog

Welcome to the new Quill Group blog.