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August 2016

Office News
Financial Planning - Insurance 
Business and Tax
Financial Planning - Investment
Super
Lending


Office News

Team UpdateThis month, we welcome 5 new staff to the Pursuit Advisers team;

Ben Harrison

Ben joins our Business & Tax team in the position of Intermediate Accountant and comes from a firm in the Eastern suburbs. Working in public practice for 6 years, Ben has a strong connection with small business – specialising in transport, building and construction.

Aaron Kittelty

Aaron is currently completing his final year of university at RMIT, where he is majoring in Accounting – and joins our Business & Tax team as a Cadet Accountant.  Aaron will be also working with our Pursuit Super Division where he will be learning how to process self-managed superannuation funds.

Rachel Gallagher

Rachel is currently completing her final year of university at Monash University, where she is majoring in Accounting – and joins our Business & Tax team as a Cadet Accountant. Rachel will be focusing a lot of her attention on the salary and wage tax returns that come into our office.

Karly McGrath

Karly has recently joined Pursuit Advisers and will be studying a Certificate 3 in Business Administration. You will find Karly within the Financial Planning Division as first point of contact for our Clients.

Erin Kennedy

Erin has just recently joined the Pursuit team in the Lending Division assisting our Mortgage Broker while studying Certificate 3 in Business Administration. Erin had spent the past 5 years working in the hospitality industry.

Baby News

We are also pleased to report the safe arrival of Kade Cooper Meyer for our staff member Niki Bryce & her    partner Clint Meyer.  Niki will be taking some time off to take on her most challenging role yet – motherhood! 

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Financial Planning - Insurance

"It won't happen to me, I'm too young"

 So often when I discuss the need for Personal Insurance with clients the common response is "why would I need it, I'm too young". In fairness when I was younger I had similar thoughts myself. However having now provided Personal Insurance advice for over 10 years I've certainly come to realise that when it comes to serious illnesses, it doesn't matter how old, how fit or how healthy you are, it can happen to anyone.

A few weeks ago I had a client tell me how they had been diagnosed with Diabetes. A fit, healthy person in their 30s. "Luckily" it has been diagnosed very early, but it will still require day to day management for the rest of their life to ensure that it doesn't lead to serious complications. There will also be some substantial costs incurred for the rest of their life. An Insulin Pump for example is going to cost upwards of $10,000 and then there are the  ongoing costs of having to consult specialists on a regular basis.

Fortunately, the client had the sense to  take out some Trauma insurance cover whilst they were still relatively young and healthy. To their surprise I advised  them that they could make a Partial claim against their Trauma policy which resulted in them receiving a benefit in the 10s of thousands of dollars. This will more than cover the cost of the Insulin Pump as well as provide some funds to assist with ongoing expenses. Should the condition become more severe, another claim could be made against the remainder of the benefit.

I was also saddened to hear in recent days of a local school aged child who is about to undergo treatment for a serious condition and the need to have a fund raiser to support the family. Now some may wonder what a sick child has to do with Trauma insurance cover? However speak to any client of mine who has come to see me about insurance and they will tell you how passionate I am about ensuring that parents are at least made aware of the Children's Trauma insurance option. This type of cover provides a lump sum benefit upon a child over the 2 years of age being diagnosed with one of many conditions. Just like adult cover, it's purpose is to provide a family with much needed funds at a time when it would be needed most.

The points below show the typical conditions that a Trauma insurance policy will cover. Unfortunately there is a fair chance that one of them could happen to anyone of us. Should you have any questions in regards to Trauma insurance cover or would like to obtain a quote, please call the office and we will be happy to speak to you,

 Full payment conditions include:

  • Alzheimer's disease             
  • dementia
  • aortic surgery                       
  • encephalitis
  • aplastic anaemia                  
  • heart attack
  • benign brain tumour             
  • heart valve surgery*
  • benign tumour of the spine intensive care
  • blindness                              
  • loss of independent existence
  • cancer                                   
  • loss of speech
  • cardiomyopathy                   
  • loss or paralysis of limb
  • chronic kidney failure          
  • major head trauma
  • chronic liver disease           
  • major organ transplant
  • chronic lung disease           
  • medically acquired HIV
  • cognitive loss

 

 

                       

  • meningitis and/or meningococcal disease
  • coma                                      
  • motor neurone disease
  • coronary artery by-pass surgery*
  • multiple sclerosis
  • deafness                                               
  • muscular dystrophy
  • occupationally acquired HIV               
  • severe diabetes
  • open heart surgery                              
  • severe osteoporosis
  • out of hospital cardiac arrest              
  • severe rheumatoid arthritis*
  • parkinson's disease            
  • stroke
  • pneumonectomy                  
  • systemic sclerosis
  • primary pulmonary hypertension
  • terminal illness
  • severe burns triple                               
  • vessel angioplasty*

 

 

Partial payment conditions include:
 
  • adult insulin dependent
  • diabetes mellitus
  • hydrocephalus
  • angioplasty
  • melanoma
  • burns of limited extent
  • minor heart attack
  • carcinoma in situ (CIS)
  • partial blindness
  • chronic lymphocytic leukaemia
  • partial deafness
  • colostomy and/or ileostomy
  • severe endometriosis
  • critical care
  • systemic lupus erythematosus
  • (SLE) with lupus nephritis
  • diagnosed benign tumour

 

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Business & Tax

Technology is changing the way we do business

The world of IT is continue to go through rapid change, and there is no end in sight.  All businesses are being impacted by this forever evolving platform – 10 years ago the iPhone didn't even exist and the "cloud" was a pie in the sky idea – and if you have not yet embraced technology and what it can do for your business, then please do so today.

Here at Pursuit Business & Tax we have invested considerable time and resources in ensuring we stay up to date with all the latest technology in the accounting and advisory industry, including the recommendation to use a cloud based accounting software package.

Our preferred package is Xero, however we are also expert in implementing and using Reckon Hosted and   MYOB Live. 

We have not only introduced Xero & Reckon Hosted to our business clients, but have also moved our internal business systems from the traditional desktop and server based products onto cloud based platforms.

Given the confidential nature of our business and the information we have been paramount in safeguarding all the information we store in file, both from a backup and security perspective.

Since we started our business, we have trialled numerous software provides and have successfully implemented the following cloud based solutions:

· Xero Practice Manager: Cloud Based Work Flow, CRM, Time Management and Tax Software

· Xero Accounting Software: Bookkeeping Solutions for Clients and Financial Statement Preparation

· Reckon Hosted & MYOB Live: Bookkeeping Solutions for Clients

· BOX: Secure Document Storage Solutions

· Practice Ignition: Proposal and Invoicing Platform

· Crunchboards: Business Forecasting, Budgeting & Analysis Tools

· Office365: Email and Calendar Management

Not only do these online software solutions integrate, they also allow our team to work from anywhere, anytime and have real-time data at their fingertips. 

Implementation of the all the above and the move to a fully cloud based accounting business has not come without its fair share of headaches, sacrifices and hard work, and we would like to thank our dedicated team for everything they have done to make this happen.

We would also like to thank you, our clients, for the feedback (ongoing, ad-hoc and via our recent client survey) and patience while we have transformed our business into the "cloud".  We appreciate your support now and look forward to working with you into the future.

Finally, if you want to know more about how technology can help you and your business, please give us a call

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Financial Planning - Investment

The past financial year has been rather messy for investors with another long worry list, a bear market in most share markets and record low bond yields. However, returns for diversified investors were not disastrous and followed several strong years. More importantly there are nine reasons for optimism:

1. okay growth,

2. easier for longer monetary policy,

3. rising prospects for easier fiscal policy globally,

4. we may have seen the worst of the commodity bear market,

5. deflation risks are likely receding,

6. the global profit slump may be close to over,

7. share valuations are okay,

8. investors seem to be getting used to a falling Chinese Renminbi, and

9. there is still a lot of bearishness around.

 

The key things to keep an eye on over the year ahead are:

1. Global business condition PMIs – these currently point to constrained but okay growth,

2. Signs of European countries seeking to leave the Eurozone and investors demanding higher borrowing rates to lend to countries like Italy, seen to be at risk of leaving. Italian banks are also a risk worth keeping an eye on,

3. When/if the Fed starts to raise rates again later this year and the impact on the US dollar,

4. Chinese economic growth readings, and

5. Whether Australian non-mining activity keeps improving.

So expect investment returns to remain constrained and volatile but they are likely to be reasonable.

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Super

Federal Election: the results are in – what could this mean for your super?

The votes are in, the Liberal-National Coalition has stayed in government however their budget and the superannuation reforms proposed are yet to pass. Luckily, the majority of the proposed reforms are not due to apply until the 2017/2018 financial year, however there is one change that must be considered now.

The $500,000 lifetime non-concessional contribution cap is yet to be legislated however given it takes effect from 7:30pm on 3 May 2016 (budget date) we need to assume it will pass.

What does this mean for you?

Previously, the non-concessional cap was set at $180,000 per year (or $540,000 for three years if you were aged under 65). The new lifetime cap of $500,000 takes into account all non-concessional super contributions made from 1 July 2007.

This means there is a good possibility you may have already reached or exceeded the $500,000 cap before budget date.

If this is the case, the ATO will take the view that you have used up your cap and the excess can remain in your super fund.

Any contributions made after budget date that exceed the cap will be required to be withdrawn from your super fund. If you choose not to withdraw the excess you will be subject to non-concessional contributions tax of 49%.

If you are planning on making any large non-concessional contributions to your super fund going forward, please contact us first so that we can ensure you won't exceed the lifetime cap.

If you are unsure of how much of your cap has already been used please contact us.

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Lending

Buying Property With a Loved One

Purchasing a property with a loved one can be a great way to enter to the property market, but taking on such a large financial responsibility with someone else does come with risks. These are some of the pros and cons to consider before you both sign your names on the contract.

PRO: Entering the property market earlier – or at all

Rising house prices, the need to save for a deposit and the risk of fluctuating interest rates can all make getting your foot in the home-ownership door very difficult. It may seem an impossible task at times, and it can take years before you're in a serious position to purchase. Buying property with a friend or family member means the dream of home ownership can be realised much sooner.

PRO: Buying where you want versus where you can afford

Sharing loan repayments with another person can be easier in terms of servicing the loan and may allow you to borrow more. It might mean the difference between buying that inner-city place you've always wanted and settling for a suburb you've never heard of. By pooling purchasing power you can find your ideal home, which otherwise might have been beyond your budget.

PRO: A burden shared is a burden halved

Buying a property with a friend or family member not only means costs are shared upfront, but also across the life of the loan. The proportion of costs taken on by each person in the arrangement will vary depending on individual circumstances, but as an example, each person might pay half the deposit, half the legal fees, half the monthly repayments, half the rates, half the utilities, and half the insurance.

CON: All care and all responsibility

Although you'll only need to pay an agreed percentage or amount of the monthly repayments while things are tracking as planned, the entire repayment may become your sole responsibility if your loved one suddenly can't make their monthly contribution. You are both liable to ensure the full loan repayment amount is paid when it falls due, for the term of the loan.

It's important to plan for the worst-case scenario: could you make the full monthly repayments if you had to? If your partner loses the ability to make their share of the repayments and you can't cover the full monthly amount, you may need to discuss your repayment arrangements with your lender.

CON: Restricted capacity to invest in more property

You may only be paying your part of the repayments each month, but if you wanted to apply for another loan you could be seen by the lender to be carrying the full risk of your joint loan. So if you decide you want to expand your property portfolio or take out a loan for a car, you might find you can't borrow as much as you thought.

CON: Life happens

While home ownership might be a great idea for you and your potential property partner right now, it's important to talk about what your goals are, both personally and for the property.

Do you both plan to live in the property? What happens if your partner wants to move out and rent out their room? What happens if they want to sell before you do? Will you be in a position to buy them out, and could you afford the costs of refinancing and possibly paying sizable loan fees and/or government fees and charges all over again? These are important questions to ask of each other, and yourself, as you consider making a joint investment.

It's wise to have things written down in a formal agreement before you actually buy a property; a property lawyer will be able to advise you on the best way to do this.

Buying a property with another person can reap great financial rewards, but it's important to have your eyes wide open and be as thorough as you can to ensure you're prepared for any scenario.

Speaking to an expert is crucial, at Pursuit Advisers we have all aspects of your purchase covered:

1. Mortgage Broker -  To organise your Finance

2. Accountant - To advice you on the best structure and tax issues relating to owning property whether an Owner occupy or Investment situation

3. Financial Planners - To ensure you have adequate insurance cover such as Life, Income protection, trauma and disability

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