Money for nothing, G Wilson

Tags: formal advice, James Hardie, Geoff Wilson, Australian equities, offshore assets, commodity prices, Australia, tax deduction, Charlie Aitken, LICs, appropriateness, government, Australian dollar, financial situation, Ron Bewley, income, cash rate, Australian government bond, cash rates, Betashares USD Exchange Traded Fund, diversified markets, Federal Reserve, Janet Yellen, Peter Switzer, Paul Rickard Switzer Super Report, foreign currency account, SAPTO, income threshold, unused portion, Paul Rickard, carry trades, global stocks, interest rate, Switzer Financial Group Pty Ltd, building construction, interest rates, Deutsche Bank, investment portfolio, LIC, investing, investment portfolios, relative performance, the government, tax deductions, taxable income, Government co-contribution, retail investors, investment, iron ore price, JP Morgan, product development, steel manufacturing business, Listed Investment Company, share market, commodity currency, Investment Trends, investments, Australian Bureau of Statistics, Macro factors
Content: Issue 297, 19 June 2014 Money for nothing All the action was happening offshore overnight but don't think for a minute that it won't affect you. The Federal Reserve cut back its US growth forecast and tapered back its monthly bond buying by $US10 billion but US stocks were relieved by governor Janet Yellen's continued dovish stance on interest rates and ended higher. Closer to home, even Charlie is getting cautious. But his sell in May and go away is exactly that. He'll be back in July and will be ready to take advantage of any dips to buy good stocks at cheap prices, as will I. In Part 1 today he walks us through his strategy. In Part 2 next week he'll get more stock specific. Also in the Switzer Super Report today, we have Ron Bewley's bucket list, but for readers who have been asking for more information about his yield portfolio, looks like Ron is ready to tell us all about that too. Sincerely,
Peter Switzer
Inside this Issue Why you need global stocks and how to get them by Geoff Wilson 05
02 Wait for the buying opportunities ­ part 1 by Charlie Aitken 05 Why you need global stocks and how to get them by Geoff Wilson 07 Buy, Sell, Hold ­ what the brokers say by Staff Reporter 08 Buy a portfolio building block with James Hardie by George Boubouras 10 Ron Bewley's investment bucket list by Ron Bewley 12 Super money for nothing ­ from the government! by Tony Negline 15 How to buy US dollars by Paul Rickard
Switzer Super Report is published by Switzer Financial Group Pty Ltd AFSL No. 286 531 36-40 Queen Street, Woollahra, 2025 T: 1300 SWITZER (1300 794 8937) F: (02) 9327 4366
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual's objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Wait for the buying opportunities ­ part 1 by Charlie Aitken
I am taking my own advice and selling in May and going away with my family for a few weeks. Hopefully, when I return, Australian equities will offer broader bottom-up value and we can deploy some of the cash we have built up over recent months at better risk-adjusted entry prices. On that basis today I offer a part 1 of a strategy note in which I will cover quite a few different macro topics that I believe will combine to drive the trading correction. Still wary As you are well aware I remain tactically cautious on Australian equities, looking for a trading correction back to the 5100 to 5200 index level range, where shorter-term technical support lies. So far that tactically cautious positioning since May has been correct (In fact the ASX200 is where it was nine months ago in Australian dollar terms and where it was three years ago in US dollar terms), but I tend to think the bigger move down at the index level will occur when I am on holidays (as it always seems to) as equity risk premium gets priced back into leading equities. The bigger correction has played out in the next few weeks for the last five consecutive years when the market is devoid of bottom up news.
compression trade. While I think the RBA will do nothing on rates for an extended period (*refer to this week's dovish RBA Board minutes), last week you saw the Kiwi's lift cash rates, the Bank of England Governor Mark Carney say "rate hikes could start sooner than markets currently expect" and you will also get notes from the FOMC that may also hint towards US cash rates moving up, or at least what mechanism the Fed will use to raise cash rates. US two-year bond rates have already started moving up. All I know is ANY bringing forward of Central Bank cash rate rises in the eyes of investors will be bad for equities, but particularly, any stock priced purely off its dividend yield. Below are graphs of the US two-year bond yield and UK five-year guilt yield: note the spike in yields. This is a precursor to cash rate increases from the FED and BOE.
Sentiment headwinds are building for Australian equities, not abating. That is why I am increasingly confident that my cautious tactical strategy will continue to prove correct in the weeks and months ahead.
Obviously with pure value hard to find, low volatility and low volumes, Australian equities are highly vulnerable to the slightest change in sentiment. I suspect at the top-down level the biggest risk to Australian equities, remembering the majority are being priced like fixed interest instruments (inverse to dividend yield), is from central banks. Yes, the same central banks that engineered the global yield
AGB 3yr Bond yields vs. ASX200
Don't fight the FED, in either direction This is why I am cautious on all forms of short US dollar carry trades, but particularly highly priced on P/E equity carry trades. What we all always underestimate is the amount of leverage being used in these carry trades, but particularly carry trades that have been successful for many years. Personally I think short US dollar carry trades are, in baseball terms, at the bottom of the Ninth innings and I continue to urge caution, particularly with the risk of central bank (ex ECB) cash rate rises increasing. Put it this way, it's ok to leave a baseball game at the bottom of the Ninth innings when the score is 100-nil. Flattening yield curves are also a concern for equities. That flattening yield curve has been 100% right in Australia predicting deteriorating East Coast consumer conditions (post Federal Budget) and I continue to feel that the divergent views implied by bonds and equities in Australia will converge in the weeks and months ahead in terms of price. Below is the three-year Australian Government bond yield (green) versus the ASX200 (blue). A re-correlation would see the ASX200 in the 5100 to 5200 range.
We need to talk about China But outside of interest rate expectations that could affect around 70% of the Australian equity market in terms of the price paid for dividend yield, the other 30% is either directly or indirectly China facing. Everything I look at as a macro indicator of Chinese ECONOMIC ACTIVITY remains sloppy. It could just be that the world is pricing in lower sustainable Chinese GDP Growth Rates, but just have a look at this overlay of price charts in China-facing indicators. There is a very consistent trend and I pay more attention to these indicators than any broker forecasts or "data" Beijing puts out. In the chart below the spot 62% FE iron ore price, Baltic Dry ship index, Shanghai rebar steel price, milk powder index and fine wine index over the last six months. Very simply they have all headed from the top left to the bottom right corner of the chart.
These spot commodity price falls are clearly a result 03
of the supply response from iron ore through to milk powder and fine wine, but it also indicates a broader reassessment of demand growth based off Beijing's reticence to fire any "shock & awe" stimulus bullets. Interestingly over the same six-month period, the Renminbi (Yuan) has been allowed to trade in a wider (weaker) trading band to the US Dollar. Lower sustainable Chinese GDP growth rates are a good thing in the longer-term, but in the shorter term they are clearly a problem for China-facing commodity producers. What I worry about the most is not Beijing engineering a GDP growth slowdown, that's ok, but could they be engineering a spot commodity price correction for their own benefit? This could be an episode of The Empire Strikes Back after enduring a decade of record commodity prices. The China demand-growth driven low cost supply response has arrived in commodities and I can't help but wonder whether the recent "inquiry" into commodity stockpile (port) financing is really an attempt to withdraw trader finance from the spot commodity markets, see forced selling of trader/warehouse/port inventories, and let the state owned enterprises deal directly with the major commodity producers in the spot markets. As the biggest marginal buyer of most commodities, China can become the price maker via reducing/eliminating "trader noise" in spot markets, particularly now the supply response has arrived and everything trades on spot price, not contract price. Spot prices of copper and iron ore have already fallen further in response to the "inquiry" with industry commentary suggesting letters of credit and broader financing are drying up as Chinese banks become more cautious. I am not a conspiracy theorist but this all needs very careful monitoring. The Chinese are long-term thinkers and they may well have put up with a decade of being a price taker of very high prices to get many decades of very low (stable) prices based off dramatically increased supply. I hope I am wrong, but the joke could be on us. Quite simply, if Beijing can engineer a way to starve
domestic commodity traders of finance, this could really unravel and all our (and the market's) long-term assumptions on commodity prices are wrong (ditto stock valuations). I have written before that the super price cycle in copper and iron ore is over and the sidelines remains the place to be here in terms of pure plays. This is another reason I remain bearish on the Australian Dollar, a commodity currency currently priced as a yield currency. We need to watch this space, but either way consensus FY15 earnings & dividend forecasts for the Australian mining sector remain too high, significantly too high. Ditto mining services/engineering. 100% of Charlie Aitken's fees for writing for the Switzer Super Report are donated to The Sydney Children's Hospital Foundation. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Why you need global stocks and how to get them
by Geoff Wilson
An increasing number of retail investors are seeking exposure to global equities as part of a strategy to diversify their investment portfolios. Statistics show a trend towards investing offshore with the latest Australian Bureau of Statistics figures revealing that for the first time in at least 25 years the total capital Australians have invested in offshore equities surpasses the amount invested by foreigners in Australia. Australians now own $889 billion in overseas equities, exceeding the $884 billion foreigners have invested in the local share market. Recently reported findings from research house Investment Trends also show that more than 31% of assets of financial advisers' clients were invested overseas (in shares and property) over the last year. This figure had jumped by a remarkable 19% over the previous 12 months. Why invest offshore? The primary reason investors are motivated to invest in overseas assets is to diversify their investment portfolio to reduce risk and increase their returns. Given Australia's share market accounts for around 2% of the market capitalisation of the world's equity markets, investing solely in Australian equities limits the opportunities to diversify. According to Investment Trends' analysis, demand for offshore investing is driven, in part, by investors seeking exposure to an improving US economy. Another factor contributing to more international investment is the persistently high Australian dollar and a belief that it cannot remain at current levels over the long term. In my view, our currency is overvalued and I expect that it will fall against the greenback in time. If this happens as we predict and if investments are unhedged, then investors' offshore assets will rise in value in Australian dollar terms.
Superior offshore exposure through LICs The best opportunity for investors to gain diversified international exposure is through a Listed Investment Company (LIC). Australian LICs are a superior investment structure for a variety of reasons, including their ability to pay fully franked dividends. LICs provide investors with a diversified portfolio of assets with shares in LICs bought and sold `on market' like other listed companies. As LICs use a company structure, they have a board that oversees corporate governance. Unlike other managed funds that use a trust structure, LICs provide a high degree of transparency and accountability. In assessing a LIC, investors should review the track record of performance and consider the investment manager's commitment to marketing the company to ensure its Share Price fully reflects the value of the company's underlying assets ­ these are often referred to as the net tangible assets or `NTA' and are made up of the investments held by the LIC. The prospective investor should also give consideration to the LIC's historical total shareholder return ­ the change in the share price together with the dividends expressed as a percentage. Currently, there is a small, but growing pool, of capital invested in global markets by a handful of LICs including the following: Magellan Flagship Fund (ASX: MFF); Platinum Capital (ASX: PMC); Templeton Global (ASX: TGG); PM Capital Global Opportunities Fund (ASX: PGF); and Hunter Hall Global Value (ASX: HHV). In addition to these, Global Value Fund Limited (ASX: GVF) is a new IPO set to close on 4 July 2014 and lists next month ­ it will focus on investing in undervalued assets and employing active and passive investment strategies (Geoff Wilson will be an investor in and a director on the board of Global Value Fund Limited (GVF).
Trend to continue In our view, the demand from investors for exposure to offshore assets through LICs will continue to grow steadily driven by Australia's swelling pool of superannuation assets, including investments held by self managed superannuation funds (SMSFs). Assets held by SMSFs have surged 68% since the GFC to reach a value in excess of $530 billion today. By 2033, assets held by SMSFs are estimated to increase to $2.23 trillion. Alternate strategy for offshore exposure Anther opportunity for investors to get exposure to overseas assets is through Australian companies that have overseas earnings, albeit this type of direct investment is a higher risk approach. An investment portfolio can gain exposure to global industries such as: global media, through News Corporation (ASX: NWS); global insurance, through QBE Insurance (ASX: QBE); a global registry business, through Computershare (ASX: CPU); and global logistics and transportation, through Brambles Limited (ASX: BXB). Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. 06
Buy, Sell, Hold ­ what the brokers say
by Staff Reporter
There were more upgrades than downgrades in the first half of the week with the retail sector and IT getting some positive re-ratings. JB Hi-Fi was upgraded on expectations that the company will be able to handle the challenges ahead while iiNet was also upgraded to Buy partly based on its M&A potential.
growth in the medium term and investors are being more than compensated for the near-term risks, despite the near-term pressures on spending. The broker considers the engineering base and history of working on complex projects leaves the company well placed to win new work over time. In the not-so-good books
In the good books Macquarie upgraded JB Hi-Fi to Outperform from Neutral. Macquarie has looked at the issues affecting the company over the next few years. While near-term sales are likely to remain under pressure, the broker thinks the group is well placed to grow earnings with the store roll-out and incremental earnings from HOME. Citi has upgraded iiNet to Buy from Neutral. Citi thinks iiNet is benefitting from positive momentum as the fixed broadband market continues to grow. The broker upgrades earnings forecasts by 7% for FY15 and 15% for FY16. Citi previously hesitated on the stock because of a lack of subscriber growth but the company appears to have addressed this. The broker considers the stock attractive with positive free cash flow and potential upside from M&A. Credit Suisse upgraded Super Retail (SUL) to Neutral from Underperform. The company is downgrading expectations for FY14, because of a sharp downturn in sales in the fourth quarter. Credit Suisse thinks the slowing momentum is suggesting downgrades to FY15 forecasts of 5-10% but has downgraded its target to $8.60 from $9.50 and the stock is now sitting at $8.40.
Deutsche Bank downgraded Arrium (ARI) to Sell from Hold because of the significant iron ore price risk, and risk to the balance sheet associated with reduced earnings. The steel manufacturing business is also continuing to underperform. The target is lowered to 65c from $1.00. Deutsche Bank's FY15 iron ore price expectations have declined 10% to US$89.3/t, 4.5% below the current spot price. The broker does not think Arrium is at risk of breaching covenants but an iron ore price of US$75/t would require an equity raising. The above was compiled from reports on FNArena, which tabulates the views of eight major Australian and international stock brokers: BA-Merrill Lynch, CIMB, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Macquarie and UBS. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
JP Morgan upgraded Worley Parsons (WOR) to Overweight from Neutral. JP Morgan believes the company now presents a clear path to earnings
Buy a portfolio building block with James Hardie
by George Boubouras
How long have you held the stock? We've had an overweight position versus benchmark since early 2013.
producers), cost controls and ability to maintain margins over the cycle are also robust. What do you like about its management?
James Hardie Industries (JHX)
An experienced senior management and supportive board in recent years have ensured they can compete in a number of different markets. Macro factors are either a big tailwind or headwind at different stages of the cycle, so the focus on costs, margins, sales and product development add value over the medium to longer term.
What is your target price on James Hardie?
What do you like about it? In the first half of 2013 we liked the potential for some additional exposure to the housing and, more broadly, the building construction cycle in the US and parts of Europe, Asia and the local market. Clearly the improving macro factors globally over the past 18 months have also been supportive for both business and household construction. Given they are focused on manufacturing and selling fibre cement building products for both interior and exterior building construction applications, there needs to be good streamlined cost controls and ability to raise prices through the cycle to expand margins. Combined with on going product development and effective marketing they have justified the circa 50% share price appreciation over the past year. How is it better than its competitors? They have a proven track record in diversified markets with expanding conditions for housing (both new and renovation market), they have a good price point versus substitutable materials (ie. brick, vinyl
Around AUD $15.50 by mid-2015. Target has been revised higher over the past year. At what point would you sell it? Current valuations, while not cheap, are justified following ongoing recovery within their markets. The building cycle continues to have upside and the current accommodative monetary policy will continue to act as a tailwind over the coming year. A stock like this would be a potential sell when global conditions require some tighter monetary policy. That would be more of a 2016 issue. How much has it added to your overall portfolio over the last 12 months? JHX is up around 55% over the past year and, not surprisingly, has outperformed the broader ASX200 benchmark, which is up around 19% (total return) over the same time period. We still see good upside in James Hardie in the year ahead but most of the re-rating is behind us. Anticipating a total return around 12-15% in the year ahead.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. 09
Ron Bewley's investment bucket list
by Ron Bewley
I planned to submit this piece (with this title) several months ago as the final in my latest series on contributions for this website. I didn't realise at the time I would be writing it the day after my 65th birthday ­ so it is unusually relevant! Even more of a coincidence is that earlier this week on Tuesday (June 16, 2014) an article appeared in the Australian Financial Review by Sally Patten on a new super product from Equisuper to stretch out savings in retirement. I have not studied the Equisuper product and so I will not comment on it but the AFR version makes it sounds exactly the same as the concept I proposed in a series of papers I published around July 2012 on Switzer Super Report ­ and the name `three buckets' of the strategy matches my writings! I will be commenting on my strategy and not Equisuper's in this present article. The bucket list A problem I have always grappled with is that various commentators talk or write about it being unfortunate when someone retires just as the market has turned bad. It was no surprise to me that I turned 65 yesterday so I have been planning my investment strategy in its growth and its exit for at least a decade. Of course I could have passed away before the date but, sensibly, I had that base covered through my will. The essence of my bucket strategy is that it hurts a fund when the investor sells down some asset for a pension payment at a low point. Therefore, I have always advocated having two to three years cash (or a closely related safe asset) at hand, or a virtually guaranteed distribution that will exceed the anticipated pension payment. In bad times, the pension is taken from the cash bucket until either there is less than one year's cash left, or the market is doing `well' and some profits
can be taken from the equities bucket to top the cash bucket back up to the desired two or three years level. In my more advanced analysis I have a number of buckets ordered by expected return and risk. I cascade funds down the bucket line as conditions warrant. Plan ahead So rule one is to start doing something at least two or three years before the desired retirement date. Of course illness can put the plan into disarray but perhaps, at the onset of illness if there is time, a potential retiree could bring forward plans. My personal situation is a little unusual. I do have a modest Defined Benefit pension from my early retirement from university. That, with the money I earn from my part-time business and dividends from my equity portfolio in superannuation is more than I currently wish to spend. Therefore I do not yet need my cash bucket. However, when I stop working and I might want some big holidays, or healthcare payments, or retirement home expenses, etc., I will need that cash bucket close at hand. Nevertheless, as I flagged many months ago, I intend to transition to a yield-conviction hybrid portfolio very soon. I am pretty sure I have nailed the software specification that will help me set and monitor my yield portfolio. Perhaps one more iteration will get me there! It's all relative One thing I have noted since I started building these portfolios each month from the 1st February 2014, is that my yield portfolios have done particularly well compared to the index while the conviction portfolios have slightly underperformed. I cannot stress too strongly that different types of portfolios do relatively
well at different times and this relative performance should be monitored. Yield has done particularly well in the first half of this year in terms of unrealised capital gains so it is pretty easy to have a winning yield strategy at the moment. I had lunch with a prominent Australian equities fund manager last week and we discussed this relative performance. They seem to be expecting yield's advantage may soon dissipate (but not collapse ­ just market perform). I am not sure when the switch will start. I think it might take a little longer ­ until rates here and overseas start to rise ­ perhaps mid next year. My yield portfolio (as it is a hybrid of yield and conviction) should automatically navigate the switch but I will be watching performance carefully during that phase. As I wrote over recent weeks I sold a material portion of my SMSF portfolio towards the end of May and the beginning of June ­ including AGK, BHP, CBA, WBC and WPL. I did not think any of these stocks were bad. In fact I may even buy some back if there is a mini correction. Rather I wanted to go to cash first so I could buy the stocks for my yield portfolio when the time was right ­ in my opinion. I chose the stocks to sell using my sector mispricing measures and consensus recommendations. I obviously avoided selling stocks that I thought were cheap at the time. I went to cash early because `funny things' can happen at the end of the financial year due to fund managers' window dressing. I obviously did not predict the Iraq situation but I did believe the market was unlikely to rise much before July. I could start buying any day if the `price is right' but it is unlikely that I will before July 1, 2014 when I generate my next yield portfolio. That is about the time of my next contribution to this site when I will present those stocks that pass my current filters for inclusion in my portfolios. It will take quite a few issues for me to get my whole point across. I know some of our readers have been waiting for this new yield stock series. I hope it does not disappoint! Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the
appropriateness of the information in regards to your circumstances.
Super money for nothing ­ from the government!
by Tony Negline Everyone likes getting something for nothing. Of course we all know nothing is for free but money's harder to earn than it is to spend. So any freebie or discount can't be bad! Here I'm going to list five simple government benefits that you might not know about or know how to use correctly. 1. Government co-contribution By making personal super contributions that aren't claimed as tax deduction, you can get the government to pay a contribution into your super fund. There is a range of eligibility criteria to get this benefit. The maximum the Government will pay is $500 for those who earn less than $33,516 in the 2013/14 financial year. If you earn more than this threshold then the maximum the government will pay is reduced. In the 13/14 financial year, if you earn more than $48,516 then you will not receive any co-contribution. The Tax Office has the following helpful table on its website to show you what's available:
In the 2014/15 financial year, the $33,516 income level will increase to $34,488 which means the co-contribution won't be payable for incomes above $49,488. Earnings in this definition include assessable income, reportable fringe benefits and voluntary employer super contribution (such as, salary sacrifice contributions). To receive the co-contribution you must not be a temporary resident. In addition you must meet the following two rules: 10% or more of your total income needs to be from eligible employment, running a business or a combination of both. You were less than 71 years old at the end of the income year. You receive the co-contribution after you have submitted your tax return and the Tax Office has worked out if you're eligible to receive it.
2. Low income tax offset (LITO) The LITO is payable when you earn modest taxable income (note the different definition of income compared to the government co-contribution rules). LITO isn't payable when you have taxable income less than $66,667 in the 2013/14 financial year:
reportable fringe benefits and voluntary employer super contributions is less than $10,800. A partial tax offset is payable if income as defined here is less than $13,800. The contribution must be made before your spouse turns 65 years of age (it's technically possible to make this contribution after they turn 65 but they would need to satisfy a work test and other criteria).
4. Senior concession cards
I detailed many of these concessions in December 2012. Please read this article here.
LITO is in addition to the tax-free threshold of $18,200. In the past you could only claim LITO after submitting your tax return. You can still do this or can elect to receive it throughout the income year.
Since that time the federal government has reduced the funding it used to provide to the States and Territories for these discounts. Most of these governments have announced that they will maintain access to some of these concessions. Here's a summary of what's available (before the federal government's decision):
Please note that at this stage LITO will fall to $300 in 2015/16. Although there is some doubt whether or not this change will actually take place, nothing official has been announced.
3. Spouse contribution tax offset
The maximum payable here is a modest $540. This offset has been around for more than 15 years and its eligibility rules have never been changed.
You will only get this tax offset if you make superannuation contributions for a person who is your spouse at the time those contributions are made. The following rules also have to be met:
You don't make the contributions as your spouse's employer (as you would ordinarily be eligible to claim a tax deduction on those contributions). You and your spouse weren't living permanently apart when the contribution was made. Your spouse satisfies an income test that requires their assessable income for tax purposes (that is, income subject to tax including realised capital gains) before any tax deductions plus any employer provided
* ­ CSHC is THE COMMONWEALTH Seniors Health Card; PCC is the Pensioner Concession Card.
Also available is the Seniors Card in each State and Territory, which might provide access to discounts at private businesses such as cinemas and restaurants. 5. Senior and pensioner tax offset (SAPTO) There are four main eligibility criteria for the SAPTO: You must be eligible for the age pension. You must be eligible for the Centrelink age pension (or DVA age pension if a war veteran or war widow) because you pass the incomes and assets tests. A special rule exists for people who were eligible to receive the age pension but either chose not to apply for it or were ineligible to receive it because of the income or assets test. Must not in prison. Your taxable income (in the 2013/14 income year) if single must be less than $50,119 and if a couple your combined taxable income must be less than $83,580. Also from 1 July 2009 onwards the definition of income has been expanded to include reportable fringe benefits, reportable employer superannuation contributions (salary sacrifice contributions), personal deductible superannuation contributions and net investment losses. The relevant table for SAPTO is as follows for 2013/14:
Unused SAPTO If a couple were both eligible for SAPTO and one of them doesn't fully use it, the unused portion may be available for transfer to the other person. To work out eligibility the ATO uses the amounts written in the spouse details section of your tax return to see if the unused portion can be transferred. Note, however, that when working out if SAPTO can be transferred the ATO doesn't take into account any other tax offsets that a spouse might be eligible for. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
The maximum SAPTO is reduced by 12.5c for every dollar that "income" (as per the revised definition noted above) is greater than its lower income threshold. The income threshold amounts for 2014/15 haven't been released. 14
How to buy US dollars by Paul Rickard Question: What is the best way for an SMSF to buy US dollars? Answer (By Paul Rickard): Probably the easiest way for an SMSF to buy US dollars is to open a foreign currency account with one of the banks. All the major banks in Australia allow you to open a US dollar account. Global banks like HSBC or CitiBank also offer this service ­ in fact you can bank online in one of 10 different currencies. With US interest rates being around 0%, you won't earn any interest on these accounts ­ and the big cost will be the buy/sell spread on the foreign exchange transaction. So before deciding on which bank to open an account with, look carefully at this spread (for the size of the deposit), and any other fees or charges. Another easy, but less direct way, to purchase US dollars is to buy units in Betashares USD Exchange Traded Fund. This ETF is designed to track the US dollar and trades on the ASX under the code USD. It has a pretty tight bid/offer spread, good liquidity and a reasonable management fee at 0.45% pa. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. 15
Chart of the Week - ASX/S&P 200 When chartist and technical guru Lance Lai last appeared on the Switzer show on Sky Business on 1 May (marked M on the chart) he said the ASX/S&P 200 would consolidate at around the 200-day moving average, which is exactly what it's done, given some ups and downs along the way. Appearing on the show earlier this week Lance said that if the ASX holds at these levels, ie 5336, then the upside will look good. But if these levels, or the resistance level (r at 5,448 on the chart), are broken and the US suddenly turns, then things could go bad. Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Powered by TCPDF (

G Wilson

File: money-for-nothing.pdf
Author: G Wilson
Published: Thu Jun 19 11:20:29 2014
Pages: 16
File size: 1.1 Mb

, pages, 0 Mb

The American Revolution, 2 pages, 0.25 Mb

, pages, 0 Mb

, pages, 0 Mb
Copyright © 2018