Tuesday, April 30, 2024

Why it’s worth selling your investment property before you retire

 Why it’s worth selling your investment property before you retire

Reviewing your investment property portfolio before retirement could save you serious tax dollars and potential headaches. Timing the sale of your investment property before retirement might save you even more with superannuation contribution caps set to rise for the first time in three years.
While owning an investment property might form a key part of your wealth building strategy, it is worth reviewing its long-term plan and how it fits into your overall strategy for achieving your income needs once you stop working.
On their own, property rental yields are generally not enough to cover your lifestyle needs in retirement and there are some considerations you need to be aware of:
  • If you lose a tenant, you won’t have income coming in.
  • If you need more income or need to pay for a large expense, you can’t sell part of a property.
  • If you have to sell, property is illiquid and slow to transact.
  • Once you stop working, your tax benefits are reduced as your taxable income has dropped.
  • Capital gains tax payable relative to your ownership interest in the property.
Many people plan to sell their investment property once they are retired so that they can minimise the tax consequences, seeing as they won’t have employment income putting them in the higher tax brackets.
A strategy worth considering is the lesser known  “carry-forward” concessional contributions to super. If you are considering selling your investment property as part of your retirement plan, this could be one for you. The increased super contribution limits from July 1 will make this more attractive.

These are the two main super contribution strategies to consider.
Concessional contributions to super: These are “before tax” top-ups to super that help to increase retirement savings. They include the super paid by your employer, salary-sacrifice contributions and personal contributions for which a tax deduction has been claimed.
The concessional contributions cap for the 2023-24 financial year is $27,500. This is set to rise to $30,000 from July 1, 2024.
You also have the ability to “carry forward” the unused amount for use in subsequent financial years. Unused amounts accrued from July 1, 2018 can be carried forward on a rolling basis for five years.
Two things you need to know:
  • When concessional contributions go into super, they attract 15 per cent contributions tax.
  • You are only eligible to make carry-forward contributions if your total super balance is below $500,000 on June 30 of the previous financial year
Non-concessional contributions to super: These are generally “after tax” contributions. The current non-concessional limit is $110,000 per financial year. This will rise to $120,000 from July 1, 2024.
Up to and including the year you turn 75, a bring-forward provision applies. This allows you to contribute up to $360,000 in that year. However, the total non-concessional contributions in that year and the next two financial years cannot exceed $360,000.
To access this $360,000 limit, your total super balance at the end of the previous financial year must be under $1,660,000. If your balance is higher, a lower cap may apply.
Unlike concessional contributions, when non-concessional contributions go into super, there is no contributions tax deducted.

Case study

Max and Heather are in their early 60s, they are still working and intend to do so for another couple of years to keep building their retirement assets. Max earns a salary of $190,000 a year plus super, he has a super balance of $490,000. Heather’s annual salary is $60,000 plus super, she has a super balance of $270,000. They have an investment property they own in
joint names, generating annual rental income of $40,000.
They sell the property during the 2023-24 financial year, realising a capital gain of $800,000. Selling the property increased their taxable incomes by $200,000 each (the gain is split equally and they held the property for longer than 12 months so they are eligible for the capital gains tax discount of 50 per cent).
After paying down the investment property loan, they had proceeds of $1 million available.
After checking their concessional contribution histories and the unused cap available, they made concessional contributions of $57,000 for Max and $121,000 for Heather. They also made non-concessional contributions of $330,000 for Max and $330,000 for Heather.
By selling the investment property and making super contributions in the 2023-24 financial year, the overall tax payable will be around $210,000. This takes into account the additional 15 per cent contributions tax. The couple can get a total of $838,000 into the super environment.
However, if they delay the sale of the investment property and make super contributions in the 2024-25 financial year (ie, implementing both in the same financial year), the overall tax payable will be around $203,000. Again, This takes into account the additional 15 per cent contributions tax.
They can get a total of $896,000 into the super environment in the 2024-25 financial year. By delaying the strategy, there is a tax saving of around $7000 as a result of the revised stage three tax cuts from July 1, 2024, and they can get an additional $58,000 into the concessionally taxed super environment. (Note the concessional contributions are reduced to take into account the increase in the employer super guarantee rate, and the high-income earner (Division 293) tax has been excluded as this would not change.)
The examples are also simplified to assume the couple is only utilising one financial year to get as much of the proceeds into super (ie, not doing one year of non-concessional contributions followed by the bring-forward in the following year).
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Woman, former US army soldier, gets 40 months prison for laundering money for romance frauds; much money went to Ghana


Uber driver killed by 81 year old man over grandparent fraud when she refused to turn over phone showing who had called her to pick up funds

 
Canada: CBC reports that Grandparent frauds in Canada have ties to the Italian mafia
 
UK police take down major website that helps users engage in phishing scams; dozens arrested worldwide
 

Fraud Studies: Here are links to the studies I’ve written for the Better Business Bureau: puppy fraud, romance fraud; BEC fraud, sweepstakes/lottery fraud,  tech support fraud, romance fraud money mules, crooked movers, government imposters, online vehicle sale scams, rental fraud, gift cards,  free trial offer frauds,  job scams,  online shopping fraud,  fake check fraud and crypto scams
 
Fraud News Around the worldHumor FTC and CFPBVirus Benefit Theft Kidnapping and forced to scamBusiness Email compromise fraud Ransomware and data breachesBitcoin and cryptocurrency  ATM SkimmingJamaica and Lottery FraudRomance Fraud and Sextortion 
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Ashramas - the stages of life

Tell me what it’s like to live without
curiosity, without awe. 


Solomon laid out this conundrum succinctly Ecclesiastes 5:10 - "A lover of silver will never be satisfied with silver, nor a lover of wealth with income. This too is futility."


"A few years ago, I saw a cartoon of a man on his deathbed saying, “I wish I’d bought more crap.” It has always amazed me that many wealthy people keep working to increase their wealth, amassing far more money than they could possibly spend or even usefully bequeath. One day I asked a wealthy friend why this is so. Many people who have gotten rich know how to measure their self-worth only in pecuniary terms, he explained, so they stay on the hamster wheel, year after year. They believe that at some point, they will finally accumulate enough to feel truly successful, happy, and therefore ready to die.


Lyrical Bohemians: 

In order to be born, you needed:

  • 2 parents
  • 4 grandparents
  • 8 great-grandparents
  • 16 second great-grandparents
  • 32 third great-grandparents
  • 64 fourth great-grandparents
  • 128 fifth great-grandparents
  • 256 sixth great-grandparents
  • 512 seventh great-grandparents
  • 1,024 eighth great-grandparents
  • 2,048 ninth great-grandparents

For you to be born today from 12 previous generations, you needed a total sum of 4,094 ancestors over the last 400 years.

Think for a moment – How many struggles? How many battles? How many difficulties? How much sadness? How much happiness? How many love stories? How many expressions of hope for the future? – did your ancestors have to undergo for you to exist in this present moment…

Ashramas - the stages of life




A ROGER SCRUTON SAMPLER:

The great Roger Scruton would have been 80 this past February 27th, and to commemorate the event, Jash Dolani, a poster on X, put up a list of 11 Scruton quotes, which I repost below:

1. Scruton on the fundamental right-wing impulse: “Conservatism starts from the sentiment that good things are easily destroyed, but not easily created.”

2. The hypocrisy of liberals: “Liberty is not the same thing as equality, and that those who call themselves liberals are far more interested in equalizing than in liberating their fellows.”

3. Scruton on when to ignore a writer: “A writer who says that there are no truths, or that all truth is ‘merely relative,’ is asking you not to believe him. So don’t. Deconstruction deconstructs itself, and disappears up its own behind, leaving only a disembodied smile and a faint smell of sulphur.”

Beyond the Culture of Repudiation


“This Mozilla AI Intersections Database searchable AI database maps intersections between the key social justice and human rights areas of our time and documented AI impacts and their manifestations in society. 

Further, the database catalogs civil society organizations, social movement actors, researchers, and other entities that are either actively doing work at these intersections, or are well suited for engagement on these issues via partnerships.”

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White-collar crime goes unpoliced due to lack of funds: ASIC boss - ATO told scam victim he owed $46k tax refund sent to fraudster

White-collar crime goes unpoliced due to lack of funds: ASIC boss

Corporate watchdog chairman Joe Longo says he would love to run more court cases against badly behaving companies and dodgy directors, but his hands are tied because he does not have enough money.
Mr Longo on Tuesday was asked why the public lacked confidence in the Australian Securities and Investments Commission’s efforts to police the business world.


ATO told scam victim he owed $46k tax refund sent to fraudster

Tax Office officials demanded that the victim of a scam repay a $46,000 tax refund that it sent to a fraudster who stole his identity, insisting the taxpayer was responsible for the dodgy refund.
The man – identified only as “Mr B” in a new independent report – went to an accountant to lodge tax returns for financial years 2019, 2020 and 2021, only to find fake data had already been submitted in his name, including $80,000 in fake income and $37,000 in withholding credits.

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Indian spies booted out of Australia for trying to steal sensitive information

 

Indian spies booted out of Australia for trying to steal sensitive information


Australian authorities expelled two Indian intelligence operatives in 2020 for being members of an elaborate “nest of spies” that attempted to steal sensitive information about defence technology, airport security and trade relationships.
The revelation about the previously secret operations of India’s foreign intelligence agency, the Research and Analysis Wing (RAW), raises uncomfortable questions about Australia’s deepening ties with India, including through the high-profile Quad security grouping
X ELLING
As part of a detailed investigation into Indian foreign interference efforts across the globe, The Washington Post reported on the expulsion of the two RAW officers on Monday.
ASIO director-general Mike Burgess revealed in 2021 that ASIO had uncovered a “nest of spies” from a foreign intelligence service, whose operations included grooming politicians and a foreign embassy as informants, but did not identify the country behind it.
Two Australian sources with access to classified briefings and close connections to the intelligence community, but not authorised to speak publicly, confirmed the accuracy of The Washington Post report to this masthead.
In his 2021 annual threat assessment, Burgess said the spies developed targeted relationships with current and former politicians, a foreign embassy and a state police service.
“They monitored their country’s diaspora community. They tried to obtain classified information about Australia’s trade relationships. They asked a public servant to provide information on security protocols at a major airport.
“They successfully cultivated and recruited an Australian government security clearance holder who had access to sensitive details of defence technology.”
That tells you how incredibly significant India is, and how determined Australia is not to derail the relationship.”
While Australia and the US were determined to stay close to India for economic and strategic reasons, he added: “This kind of thing can fester away and generate mistrust.”
Hall said American anger at India’s attempt to assassinate Pannun on US soil helped explain why plans to hold a leaders’ meeting of the Quad – comprised of India, Australia, the US and Japan – in India this year were looking shaky.
“Some of the Quad initiatives, like quantum computing, require a lot of trust between the member nations, and this kind of thing does not help develop that,” Hall said.
Hall said India’s RAW was old-fashioned, underfunded and not as skilful as some other foreign spy agencies, such as Israel’s Mossad.
Ministry of External Affairs of India spokesman Randhir Jaiswal responded to the Post’s report on Twitter by saying: “The report in question makes unwarranted and unsubstantiated imputations on a serious matter.
“There is an ongoing investigation of the high-level committee set up by the government of India to look into the security concerns shared by the US government on networks of organised criminals, terrorists and others.
“Speculative and irresponsible comments on it are not helpful.”
Modi’s government is widely expected to be easily returned to power for a third parliamentary term in elections under way in India.

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Why are we so ill? The working-age health crisis BBC. ‘Tis a mystery! Also, working-ageclass

 Why are we so ill? The working-age health crisisBBC. ‘Tis a mystery! Also, working-ageclass.


"Nearshoring" explained


‘My hell in Myanmar cyber slavery camp’ BBC


Pittsburgh Tax Review Call For Papers: Combatting Poverty Through Federal Tax Policy


‘In the US they think we’re communists!’ The 70,000 workers showing the world another way to earn a living



Flaws of Nature: The Limits And Liabilities Of Natural Selection (book review) The Inquistive Biologist


Conflicts push global military expenditure in 2023 to ‘all-time high’ France24


$300,000 robotic micro-factories pump out custom-designed homes The New Atlas



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ATO’s systems vulnerable to tax fraud, IGTO report cautions - One big lesson from humanity's history is that pandemics happen all the time

Revenue NSW engaged in fines maladministration, says ombud


Tax Identity Fraud: an own initiative investigation Interim Report – The importance of bank account integrity By the Inspector-General of Taxation and Taxation Ombudsman 30 April 2024


ATO’s systems vulnerable to tax fraud, IGTO report cautions 

TAX

The IGTO has found the ATO’s controls for preventing fraud inadequate, with fraudsters managing to lodge fraudulent returns undetected.

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) has released its interim report focusing on the ATO’s risk management controls for preventing fraudsters from committing tax identification (TaxID) fraud.

The interim report is part of the IGTO’s investigation into TaxID fraud that commenced in December 2023 and identified a wide range of concerns from stakeholders concerning tax fraud.

Stakeholders raised concerns about the ability of fraudsters to access taxpayers’ online accounts, register for ABN/GST, change personal contact and banking details and then lodge returns/BASs which generate refunds to bank accounts that the fraudster controls, all without being detected by the ATO, ATO systems, taxpayers or their registered agents.

The investigation also found there was a perceived lack of ATO support where TaxID fraud occurred and that reports of fraud were not being actioned by the ATO or were not actioned promptly.

The ATO’s treatment of legitimate taxpayers as fraudsters when they are victims of fraud was another concern raised in the report.

It also found there was confusion about the requirement for a legitimate taxpayer to object to amendments made fraudulently to their tax returns and filings.

IGTO makes recommendations to improve ATO’s fraud management 

Within the report, the IGTO has called for improvements to make the ATO less attractive to fraudsters by making it harder for them to divert monies to the fraudster’s bank account, without impacting legitimate taxpayers.

One of the recommendations has called for ATO systems to monitor suspicious devices and bank accounts for further investigation and verification, and monitor devices and bank accounts known to be associated with fraud.

The IGTO report said the ATO should also develop tighter and more robust controls that pause the processing of suspicious filings – both original and amended lodgements – and suspend related refunds.

“For example, amendments to claim Pay-As-You-Go withholding (PAYGW) credits which exceed the PAYGW amounts recorded against the employee in the employer records should raise suspicion and investigation where the taxpayer’s ATO Online account information, such as contact details and bank account, have been changed (especially on an unknown device) before the refund is issued,” the report stated.

The IGTO noted that refunds that involve a high risk of TaxID fraud can include unusual lodgement behaviours and claims that generate refunds and that are coupled with recent changes in the taxpayer’s contact and bank account details.

“The IGTO recommends the ATO develop tighter and more robust controls which pause the processing of original and amended filings and lodgements for verification where the taxpayer’s ATO Online account information, such as contact details and bank account, have been changed at the time of or close to the time of lodgement (especially on an unknown device),” the report said.

“The ATO should not pay high-risk refunds unless and until there has been adequate authentication of the bank account details.”

The report said authentication of high-risk refunds may include:

▪ Verifying any amendments to filed returns and change of bank account details directly with the taxpayer;

▪ Verifying whether a change of bank account details was made by the taxpayer (or their registered agent);

▪ Verifying what information the bank has used to comply with the Australian Anti-Money Laundering/Counter-Terrorism Financing’s (AML/CTF)’s ‘Know Your Client (KYC) requirements as part of the bank account opening process;

▪ Scanning the ATO systems to identify if the bank account is registered on unrelated taxpayer accounts.

It has also recommended that the ATO bring its payment systems up to financial industry standards and develop a dedicated application for trusted devices to allow safe and trusted real time communications between the ATO and taxpayer for verification purposes.

The ATO said it is pleased that IGTO’s interim report recommendations align broadly with ATO-identified work in progress, and agree in principle with the majority of recommendations made.

“The ATO notes that some recommendations are dependent on matters for Government to consider,” it said in a statement.

“The ATO looks forward to IGTO’s final report with any remaining findings and recommendations from this investigation, and will provide an ATO response against each recommendation in both interim and final reports as a consolidated set at that time.”

IGT and Tax Ombudsman Karen Payne said the IGTO is urging the ATO to consult and advocate for legislative authority to implement these critical IGTO recommendations where it believes it currently does not have the relevant authority.


I lost $2.5m of my super to scammers - MAN MADE $85,000 CASH IN ATO SCAM, CAIRNS CROWN COURT HEARD


PwC set to become smallest big four firm


PwC tax scandal


One big lesson from humanity's history is that pandemics happen all the time


A STUDY IN SENATE COWARDICE

Republicans like Rob Portman could have ended Donald Trump’s political career. They chose not to.

By Jeffrey Goldberg

Fundraising website GiveSendGo defends decision to host Australian 'whites-only' community campaign on platform


Police and economics professor party.  And here is how the rest of the party played out.



Cops testing AI body camera that writes its own police report.


Is Rachel Reeves serious about tackling tax abuse?

I asked the question that heads this post in The Nationalyesterday, starting by noting that:

IN the 1960s the US writer and civil rights activist James Baldwin said “I can't believe what you say, because I see what you do.” His message was simple. He was saying that what people said about their attitude towards racism did not matter; it is what they did that counts. I think we should apply that lesson to Rachel Reeves, and her approach to tax abuse.

I concluded, having appraised the evidence, suggesting that:

So, to go back to James Baldwin and his instruction that we should not believe what someone says, but that we should look at what they do, is it really the case that Rachael Reeves is serious about tackling tax abuse?

Or has she, by choosing advisors on this issue people who appear remarkably poorly qualified for the task given their previous occupations or comments, sent out the very clear message that she might have filled the hole in her spreadsheet for the time being but that she has no real intention of tackling tax abuse in the UK?

I will watch what she does, but I am not optimistic. Labour seems to be in the habit of making policy claims that do not stack, and this looks like another one of them.

As is the case with so much that Labour is doing, nothing seems to add up on Reeves' new policy. I wish it were otherwise.


European authorities say they have rounded up a criminal gang who stole rare antique books worth €2.5 million from libraries across Europe.

Police rumble gang stealing antique books across Europe



Privatisation has failed. The only problem that we have is a shortage of politicians that will admit this.

The very slightest editing of an FT headline this morning makes it read as follows: Rail chaos on England’s West Coast line as Link to
Read the full article…


 

‘Netanyahu, Tear down that wall’: German official under fire for tweet i24


Palestinians tear down parts of West Bank ‘apartheid wall’ as Iran strikes Israel The New Arab


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