Moneybox. Home loans & insurance - Delivering financial products from your point of view.

Post Budget - Time to move on!

Post Budget - Time to move on!

 

I cannot recall a budget when so much of what it contained had been promulgated in the media in the days and weeks prior to the announcement! I believe that this has been a deliberate ploy by the government to “put a foot in the water” and test the reaction before setting any changes in concrete. A politically smart move I would have thought enabling them to test public reaction and fine tune the policies that they see as being appropriate for the immediate future. 

From our perspective, the changes to GST and to taxation rates will have little effect on our day to day core business of assisting clients with their financial solutions. Some in the higher income brackets will have additional funds for investment purposes or debt servicing. With Corporate tax rates reducing to 28 cents in the dollar this should encourage growth in the commercial sector. Average income earners will have fairly much a status quo situation with GST increases largely off set by taxation  savings so we are anticipating business as usual now the budget terms are known.

Property investment is an area closely allied to our core business of arranging mortgage finance and insurance solutions and although some of the attraction of property ownership has been lost with the removal of the opportunities for depreciation write offs, we still see residential property investment having its supporters as a means of gaining future financial security and independence.

At Moneybox we have always advocated the need to structure borrowings to take maximum benefit from any taxation incentives available at the time. In promoting this belief, we are simply recommending a planned approach to ensure that our clients maximize the opportunities available to them. Whereas in the past establishing a Loss Attributable Qualifying Company (LAQC) may have been the best option, this may or may not be so in the future. LAQC and QC (Qualifying Companies) rules will be tightened from income years starting on or after 1 April 2011 to prevent people choosing to have losses deducted at their marginal personal tax rate but having profits taxed at the lower company tax rate.

Going forward, it seems likely that LAQCs may lose their popularity and that investors will choose between partnership and corporate structures as alternatives depending upon the profit or loss expectations for their investment ventures. Planning still remains paramount however and our trained consultants will assist you with the loan structuring decisions that are best for you.

John Cameron

General Manager - Moneybox