Interest-only loans: when are they best for you?

You’ve likely heard the adage: "The only certainties in life are death and taxes." While death and probate taxes were abolished in Australia by the early 1980s, a potential "inheritance tax by disguise" could still be lurking in your superannuation or pension fund… The good news? With the right planning, this tax burden is avoidable .  At Ascent Accountants, we’re here to empower you with the knowledge and strategies to optimise your financial legacy. Here's what you need to know about managing taxes on your super and leaving more for your loved ones. Why your super might be taxed after you’re gone. Superannuation funds enjoy generous tax concessions while you’re alive: Accumulation phase: Earnings are taxed at just 15%, with a reduced 10% tax on capital gains. Pension phase: Balances up to $1.9 million are completely tax-free. However, a tax trap arises when super funds are passed to non-dependent beneficiaries (e.g., independent adult children). In such cases, a lump sum death benefit can attract a tax of 15% or 30%, plus a 2% Medicare levy. On the other hand, funds transferred between tax-dependent beneficiaries, such as between spouses, are not taxed. Understanding this distinction is key to effective estate planning. Strategies to minimise or eliminate super taxes. 1. Understand the taxable component. Only the taxable portion of your super balance is subject to this tax. By assessing the taxable versus tax-free components of your fund, you can calculate the potential tax liability for your beneficiaries. For young, healthy retirees with a long retirement horizon, the tax savings from super's concessional tax environment may outweigh the risks of tax on their death. However, older retirees or those with health concerns might find the potential tax liability for beneficiaries outweighs the benefits. 2. Withdraw funds from super. If you decide the risk of tax to your beneficiaries is too high, consider withdrawing funds from the super environment. These funds can then be invested in your name or another structure. Just remember that this is a complex decision requiring tailored advice to ensure your financial security while managing tax implications. 3. Implement a re-contribution strategy. A re-contribution strategy aims to increase the tax-free component of your super balance. You simply withdraw funds with a high taxable component, then re-contribute them as non-concessional contributions. While this approach can significantly reduce the tax liability , it must be executed carefully due to restrictions like contribution caps , work test requirements (for those over 74), and total super balance limits. In some cases, contributing to a spouse’s super fund can offer additional benefits, such as improving Centrelink eligibility. 4. Nominate your estate. Funds paid directly to non-dependent beneficiaries from super are subject to the Medicare levy. By nominating your estate as the beneficiary and having funds distributed via your will, this 2% levy can be avoided. However, directing benefits via your estate has its drawbacks. It’s vital to weigh this option against alternative strategies, especially if direct beneficiary payments better align with your financial goals. 5. Appoint a power of attorney. While your will is essential, an enduring power of attorney is equally important. This person can make financial decisions on your behalf if you become incapacitated, ensuring the best outcomes for your beneficiaries. Take the next step towards financial certainty. Want to ensure your beneficiaries receive the maximum benefit from your hard-earned wealth? We specialise in helping individuals and families navigate these complexities . From re-contribution strategies to estate nominations, we provide personalised guidance to protect your financial legacy. Reach out to Ascent Accountants . Together, we can develop a strategy to minimise taxes and maximise your legacy for the people who matter most .

Managing finances can feel like a daunting task, but taking control of your spending and starting a savings plan is not just possible — it’s empowering. Let's explore some practical tips inspired by the story of Sarah and Liam, and their journey to regain financial stability. Sarah & Liam’s financial struggles. Sarah, 36, and Liam, 38, have been married for 13 years. They started with very little and haven’t made much financial progress since. Currently, they’re facing $227,785 in debt, including their mortgage, car loans, student loans, credit cards, and medical bills. With a combined annual income of $137,000, they’re struggling to balance debt repayments and living expenses for themselves and their daughter. This is a reality many Australians face, but with the right strategies, financial freedom is achievable . Ready to start saving? 1. Set a clear budget for yourself. The foundation of financial stability is having a budget. Start by tracking your income and expenses for a month to see where your money is going. Once you know your spending habits, divide your income into categories: Needs (50%) : Rent/mortgage, groceries, utilities, and debt repayments. Wants (30%) : Entertainment, dining out, and non-essential purchases. Savings (20%) : Emergency fund, retirement, and long-term goals. Sarah and Liam realised they needed to prioritise their goals over impulsive spending. By setting a monthly budget and sticking to it, you’ll have a roadmap to guide your financial decisions. 2. Align your spending with your goals. What do you want your money to do for you? Whether it’s building an emergency fund, saving for retirement, or affording occasional family holidays, your spending habits should reflect your aspirations. For Sarah, cutting down on impulse purchases helped her align her spending with her vision of financial stability. Consider pausing before buying non-essentials and asking, “Does this align with my goals and my budget?”. 3. Automate your savings. Create good saving habits ; automation is a game-changer when it comes to saving. Set up automatic transfers to your savings account as soon as your salary is deposited. This “pay yourself first” approach ensures you’re consistently building your savings without even thinking about it. For example, Liam set up an automatic transfer of $500 per month to their emergency fund. Over time, this became a habit, helping them grow their safety net effortlessly. 4. Reduce temptation. Unnecessary subscriptions and constant exposure to marketing can derail your financial progress. These simple steps can make a huge difference: Unsubscribe : Cancel streaming services or memberships you rarely use. Declutter your inbox : Unsubscribe from promotional emails and mailing lists that tempt you to spend. Be aware of social media ads : Be mindful of how often influencers and ads push you towards impulse purchases. By unsubscribing and reducing exposure to marketing, Sarah and Liam found it easier to stay focused on their financial priorities. 5. Review & adjust regularly. Financial planning isn’t a one-time task. Review your budget and spending habits regularly. Celebrate small wins — whether it’s paying off a credit card or saving for an exciting purchase! Adjust your strategy as needed to stay on track. Some additional support goes a long way! Getting your finances under control starts with intentionality and small, consistent changes. By setting a budget, aligning spending with goals, automating savings, and reducing temptations, anyone can enjoy financial freedom.  At Ascent Accountants, we’re here to help you navigate your financial journey. Let’s make your money work for you. Reach out today to get started!

As the popularity of cryptocurrencies continues to grow, so does the complexity of understanding their tax implications. One common question we get is whether a crypto asset can qualify as a personal use asset and what that means for your tax obligations. Here at Ascent Accountants, we aim to provide you with clear and concise guidance to help you navigate this often-confusing area. What is a personal use asset? A personal use asset is something you keep or use primarily for personal purposes, such as buying items for personal use or consumption. In the context of cryptocurrency, this can include using crypto to purchase goods or services directly. However, whether a crypto asset qualifies as a personal use asset depends on how you use it and the circumstances of its acquisition and disposal. Determining if your crypto is a personal use asset. The key time for determining whether your crypto asset is a personal use asset is when you dispose of it. For example: If you acquire crypto and use it shortly after to buy personal items, it’s more likely to be considered a personal use asset. If you hold crypto for an extended period, with only a small portion used for personal purchases, it’s unlikely to qualify as a personal use asset. Your original intention when acquiring the crypto may be relevant, but it’s not the deciding factor . Instead, your actual use of the asset will determine its classification. That’s why maintaining accurate records of your crypto transactions and usage is essential. When is a personal use crypto asset exempt from CGT? If your crypto asset is classified as a personal use asset, certain tax exemptions may apply: Capital Gains Tax (CGT) Exemption : A capital gain on the disposal of a personal use crypto asset is exempt from CGT if: The crypto asset was acquired for less than $10,000. Capital losses exclusion : Any capital losses made on personal use assets, including crypto, cannot be used to offset other capital gains or carried forward to future income years. Example: Crypto asset for personal use. Michael wants to buy concert tickets that are discounted for payments made in crypto. He spends $270 on crypto assets and uses them to purchase the tickets on the same day. Because the crypto was acquired and used in a short period for personal use, it qualifies as a personal use asset and is exempt from CGT. When crypto is not a personal use asset. In most cases, crypto assets are not personal use assets when they are: Held as an investment : For example, holding crypto to sell at a favourable exchange rate. Part of a profit-making scheme : Such as actively trading crypto for profit. Used in a business : For example, accepting crypto payments for goods or services. Used as top-ups. For example, topping up prepaid debit cards or gift cards, or if a payment gateway (e.g., PayPal) is used to facilitate purchases. Example: Crypto held as an investment. Emma regularly buys crypto intending to sell at a favourable rate. After some time, he decides to use a portion of his crypto to purchase goods. Since Emma’s primary purpose for holding the crypto was investment, it doesn’t qualify as a personal use asset. Record-keeping is essential. To ensure you meet your tax obligations, it’s important to keep detailed records of: Your intention when acquiring the crypto. How and when the crypto was used. The value of the crypto at the time of each transaction. For more detailed guidance, check out this ATO resource on keeping crypto records . Here’s how we can help. At Ascent Accountants, we’re committed to helping you understand your tax obligations and make informed decisions about your crypto assets. If you’re unsure whether your crypto qualifies as a personal use asset or how tax rules apply to your situation, reach out to us for tailored advice .  By working with us, you can ensure your crypto compliance while maximising any potential tax benefits.

As our parents grow older, planning becomes more than a thoughtful gesture—it's a necessity. Whether preparing for a time when they can no longer manage their affairs, deciding on late-life care, or end-of-life arrangements, ensuring the following ten essentials are in order can make things easier when the time comes. 1. Prepare an Enduring Power of Attorney This legal document designates someone trustworthy to make financial and medical decisions on your parent's behalf if they become incapable of doing so themselves. Discussing and documenting who will be appointed is essential while everyone is of sound mind. 2. Update and Have Access to the Will Your parent's will is the key to handling their estate as they would want, so knowing its exact location allows you to act quickly if necessary. Ensure the document is easily accessible, valid, and up to date before it's needed. 3. List of Professionals Be sure to have a list of any professionals your parents use for their estate, including their lawyer and accountant. 4. Provide Access to Paperwork If your parents keep their paperwork somewhere, be sure to know where. If keeping the documentation in a safe, a deposit box, or with a professional, ensure that you have access to the code or the details of their representative when the time comes. 5. Update Financial and Legal Documents It's essential to ensure that your parents' financial and legal documents are up to date. This includes tax records, bank account details, and personal identification information. Keeping this documentation organised will make it easier for you to manage their affairs after they pass away, avoiding delays or complications. 6. Check Superannuation and Beneficiaries It's crucial to know whether your parents have a super account, who the non-lapsing binding death nominated individual is to handle the funds, and who the nominated beneficiaries are. Confirm the specifics and ensure that the beneficiaries are still relevant beforehand. 7. Make a List of Logins Creating a list of logins, passwords, PINs, online accounts, and parties to be notified after death will make the notification process much more manageable. Policies like life insurance should be documented, including premium details and the beneficiaries. This will prevent confusion later and ensure claims are processed smoothly. 8. Understand Assets and Debts Having a list of your parent's assets and any outstanding debts is essential in managing their financial affairs when they pass. A clear record of your parents' assets and investments may include any property, shares, bank accounts, and any other valuables or assets. Do the same for debts, and include mortgages, personal loans, credit card debt, or other financial obligations. Having a complete list of both will make it easier to handle the distribution of the estate and avoid misunderstandings. 9. Final Wishes and Health Care Preferences Ensure you understand your parents' final wishes regarding health care and end-of-life decisions are recorded. This may include having an enduring power of guardianship or an advanced health directive. One allows another person to make decisions on your parent's behalf while the other records their wishes. Any end-of-life wishes should be documented to avoid unnecessary stress or conflict when the time comes. 10. Pre-Plan Funeral Arrangements Discussing funeral arrangements and paying in advance can save the family financial stress at an already difficult time. Working with your parents to record their wishes or help them pre-plan and pay for their funeral will ensure everything is organised as they would like.

Investing in property can be a highly lucrative venture, but it requires dedication, time, and attention to detail. The key to maximising your returns and safeguarding the value of your asset lies in how well you manage the asset while protecting its value. Managing a property yourself can be overwhelming, and if you don't have the expertise or resources, you may be compromising the long-term success of your investment. That's where a professional property manager or management service can make all the difference. Why Hire a Professional Property Manager? A professional property manager offers several key benefits that make managing your property easy, efficient, and profitable while ensuring your investment thrives. A Property Manager Keeps You Compliant The rental market in Australia constantly changes. These shifts in the industry and reviews of the law can catch landlords, especially those who don't have the time to keep up and fail to realise they are not compliant. Having an experienced property manager sidesteps this issue as they must stay updated with compliance changes. Great Property Managers Bring Expert Knowledge and Experience Professional property managers have a deep understanding of the real estate market and know how to navigate maintenance, tenant selection, and property compliance issues. With years of experience in the industry, they can help you avoid costly mistakes and ensure that your property is maintained to the highest standard. Assist With Quality Tenant Selection and Retention Property managers have access to a broad network of potential tenants and are skilled at selecting those who are reliable and responsible. This reduces vacancies and provides you with a steady income stream. Provide Efficient Maintenance For Long-Term Value A well-maintained property is more attractive to tenants and can significantly improve its long-term value. A professional property manager oversees regular maintenance, repairs, and inspections, ensuring everything is in great shape. They also stay current with regulations and compliance requirements, reducing the risk of legal issues. Offer Time and Stress Management Managing a property is more than just collecting rent - it's also acting as a front line for tenants' property issues, saving the owner time. These issues may include handling tenant complaints, dealing with repairs, and managing emergencies. A property manager takes care of these tasks, giving owners the peace of mind that nothing is overlooked. The Best Property Managers Help to Maximise Your Investment A skilled property manager works to maximise your rental income. They do this by advising on a competitive rental price to minimise vacancies while selecting tenants that will keep your property in excellent condition. Their ability to handle all aspects of property management allows you to reap the full financial rewards of your investment. Secure a Quality Property Manager Get in touch with the team at Ascent Property Co to discover how our services can unlock your property investment's full potential. For more information or to get started, call Luke Langford at 0493 672 956 or Nigel Parker at 9356 8033. Alternatively, you can email Luke at luke@ascentpropertyco.com.au . Let us handle the hard work and enjoy leaving your property in expert hands.