Am I covered if my business partner is incapacitated?
Business is running smoothly, and you and your business partner have an amazing working relationship. You’re dealing with day-to-day tasks, forecasting results, and anticipating challenges to your business. It is probably the last thing on your mind to plan for what you would do if something were to suddenly happen to your business partner.
If you don’t have legal documentation in place to determine what would happen in the tragic event that your business partner was to die or become permanently incapacitated, there could be significant negative impacts to your business and to your personal relationship with your business partner and/or their family.
With enough foresight and the necessary legal agreements in place, some anguish and disruptions to your business can be circumvented.
What are the possible damaging outcomes for my business?
Unfortunately, without legally documented agreements in place, the death or incapacitation of a business partner can have disastrous consequences for your business.
- You may not have insurance in place and be unable to pay their share of the business to their estate.
- You may be unable to find a replacement for their role and responsibilities, resulting in the closure of your business.
- Insurance may not be adequate to cover your partner’s share of the value of the business, their share of any debt that the business is carrying, capital gains tax, GST as well as many other unforeseen costs.
- Life insurance that you intended to use to pay for their share of the business, may instead be paid to other beneficiaries.
- Their family members may have different expectations to you about their ongoing role in the business.
How can I protect my business and all parties involved?
In the unimaginable circumstance that your business partner dies or is permanently incapacitated, best practice is to have in place legal partnership agreements and formal succession planning drawn up by a legal professional.
You should address the following throughout the process:
- Have a legal partnership agreement drawn up which formalises the rights and obligations of two or more people who are going into business together as partners.
- Methodical succession planning and clear processes to follow are well-documented and drawn up by a legal professional.
- All parties involved will require an up-to-date Will and estate plan that outlines plans for their business interests.
- Ensure sufficient insurance is taken out and legal documentation is drawn up outlining how that insurance is to be managed.
- Arrangements are made to pay out an estate or family members expediently.
- The process for valuing the business is clearly outlined and documented.
- Taxation, such as capital gains tax & GST is taken into consideration.
How we can help.
It is important to have a legal professional draw up these items for you:
- A legal business partnership agreement
- A formal succession plan for your business
- A legal Will or estate plan
Our legal professionals can help you draw up a business partnership agreement to ensure that each partner knows their rights and responsibilities. It will also define policies for what should happen in this worst-case scenario.
Our succession planning experts can help you ensure that you retain financial security and minimise tax liabilities during the transfer of ownership or management.
We can guide you through the Will & estate planning process, answering any questions you may have along the way, giving you the confidence that you will be leaving your business and family secure.
We have vast experience in business valuations that take into consideration all aspects of your operations.
If something has already happened to your business partner without legal agreements in place, we can also offer legal advice.
With some forward planning and formal legal agreements in place, some distress and interruptions to your business can be avoided in the heart-breaking event that something were to happen to your business partner.
Take control of your future today by meeting with the Geelong-based Legal team at The Hrkac Group. Call us today on 03 5224 2366.
A couple of new funding initiatives for Victorian businesses have been announced by the Victorian government recently.
There have also been updates to Workcover’s COVID-19 reporting regulations.
Here’s a brief outline of each of these updates:
Small Business COVID-19 Hardship Fund
The Victorian Government’s Small Business COVID Hardship Fund will assist eligible small and medium businesses with a grant of $10,000. This includes employing and non-employing businesses.
To be eligible, your operations must have been severely impacted by COVID-19 restrictions that have been in place since 27 May 2021; you must have experienced at least a 70% reduction in turnover because of the COVID-19 restrictions; you must have been ineligible for other key COVID-19 Victorian Government business grant programs that have been announced since 27 May 2021.
To learn more, see this link.
Business Costs Assistance Program Round Three 12 August 2021 Top-Up
The Business Costs Assistance Program Round Three 12 August 2021 Top-Up from the Victorian government offers further support to eligible small to medium businesses in sectors affected by metropolitan Melbourne’s current restrictions.
An automatic payment of $2,800 will be made to successful recipients of the Business Costs Assistance Program Round Two or the Business Costs Assistance Program Round Two July Extension that operate a business in metropolitan Melbourne.
This payment will be processed and paid automatically.
To learn more, see this link.
Mandatory COVD-19 reporting under WorkSafe Regulations
Under extended WorkSafe regulations, businesses are required to report a confirmed diagnosis of COVID-19 within the workplace, and if that person has attended the workplace within the relevant infectious period
A failure to notify WorkSafe can lead to heavy fines.
To learn more about your obligations to report confirmed positive cases of COVID-19 relating to your employees and contractors, see this link.
New support programs targeting small and medium businesses have been announced in a joint venture between the Commonwealth and State governments. These include:
Business Continuity Fund
Businesses impacted by capacity limits will receive a $5,000 grant, thanks to the $156 million Business Continuity Fund. 24 sectors are covered by the fund, including gyms, cafes, restaurants, event businesses, catering services, and hairdressers.
Licensed Hospitality Venue Fund 2021 Boost
Licensed venues will receive grants of up to $20,000, owing to a $70 million boost to The Licensed Hospitality Venue Fund. These grants acknowledge that larger venues have higher operating costs, so need more support than smaller operations.
Small Business COVID Hardship Fund
Small businesses with a payroll of up to $10 million who have experienced a 70 percent or greater reduction in revenue will be eligible for grants of up to $5,000. This new $85 million fund will be established to support small businesses that have not been eligible under existing business support funds.
Commercial Tenancy Relief Scheme
The reinstated Commercial Tenancy Relief Scheme will provide rent relief for eligible tenants, while separate support will be provided to landlords. Landlords will be required to afford rent relief proportional to a business’s reduction in turnover. A mediation service for tenants and landlords will provide additional support.
COVID-19 Disaster Payment
Most microbusinesses or sole traders not registered for the GST are eligible for relief payments through the COVID-19 Disaster Payment.
Business Victoria is setting up a dedicated concierge service to help these businesses access support. You can call this service to discuss what support is available for your business. Call 13 22 15 and select the Concierge Service option.
See here for further information.
The Australian government has recently announced some significant changes to superannuation contributions affecting Australians saving for their retirement.
Concessional (pre-tax) Contributions Cap Increase
From July 1, 2021, the concessional contributions cap increased from the current limit of $25,000 per annum to $27,500 per annum.
This cap includes your employer’s compulsory Superannuation Guarantee Contributions, and voluntary contributions, including salary sacrifice and personal contributions for which you claim a deduction.
Those that take advantage of the increase in concessional contribution limits may benefit from a larger tax-deduction and therefore additional tax savings.
Carry-Forward Unused Concessional Contributions
Where your total superannuation balance is less than $500,000 as of 30th of June, and you are eligible to make superannuation contributions within the following financial year, you can utilise carry-forward unused concessional contributions.
Carry-forward concessional contribution rules allow you to access unused concessional contribution cap amounts from the 2018-2019 financial year onwards to make extra concessional contributions. Unused concessional contributions can be carried forward for 5 years.
An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap. This means you can make concessional contributions above the general concessional contributions cap for the year.
Non-Concessional (after-tax) Contributions Cap Increase & Transfer Balance Cap Increase
From July 1, 2021, the non-concessional contributions cap increased from $100,000 per annum to $110,000 per annum.
The transfer balance cap also increased from $1.6 to $1.7 million. This is the limit on the amount you can transfer into the tax-free retirement phase within superannuation.
Your total superannuation balance determines your eligibility to make non-concessional contributions.
This means that if your total superannuation balance at the end of the 2020-21 financial year was less than $1.7 million, you may be able to make non-concessional contributions of at least $110,000 in the 2021-22 financial year.
Increase to the Cut-Off Age for Accessing the Bring-Forward Arrangement
In certain circumstances, you may be eligible to make non-concessional contributions in excess of your annual cap. This is known as the bring-forward arrangement, which allows you to utilise the current and some or all of the subsequent two financial years’ non-concessional contribution limits.
Under the revised rules, those aged 66 and under as of the 1st of July of the financial year, can access the bring-forward rule, provided the contribution is made prior to their 67th birthday.
This means individuals aged 65 and 66 who were not previously able to access the bring forward non-concessional contributions cap may now do so.
If you’re interested in discussing how these changes may benefit you, please contact the financial planning experts at HG Financial Services. Make an appointment today to see a superannuation advisor via Contact Us, or phone 03 5221 2355.
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither Alliance Wealth Pty Ltd nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
Last week the Victorian Government announced new cash grants for businesses affected by the latest lockdown, to support a stronger recovery on the other side of the public health restrictions.
Businesses that applied for the latest Business Costs Assistance Program and Licensed Hospitality Venue Fund should have received an automatic support payment of $2,000 & $3,000 respectively in the last few days.
The total funding behind these initial grants is $201.8 million. Eligible businesses include restaurants, cafes bars, event suppliers, tourism and accommodation providers, and non-essential retailers.
The Victorian Government also reached an agreement with the Commonwealth Government to fund income support payments for employees who have lost hours due to the July 2021 lockdown.
Workers affected by the public health restrictions are now eligible for the COVID-19 Disaster Payment.
You’ll get the following amount for relevant periods starting from:
- 15 July 2021 for people in parts of Sydney
- 18 July 2021 for people in Greater Sydney
- 18 July 2021 for people in all other areas in NSW
- 23 July 2021 for people in Victoria.
If you’re eligible, you’ll get $600 for each relevant period if you lost:
- 20 hours or more of work per week
If you’re eligible, you’ll get $375 for each relevant period if you lost either:
- between 8 and less than 20 hours of work per week
- a full day of your usual work hours per week.
You can make a claim from 23 July to 12 August 2021, for the period 16 to 22 July 2021.
You can make a claim from 25 July to 19 August 2021, for the period 23 to 27 July 2021.
You are not able to claim prior to these dates.
See here for more information on these initial support payments.
See here for more information on the covid 19 disaster payment.
Yesterday further support payments were announced; businesses who received these recent support payments will now receive another automatic payment.
Eligible Business Costs Assistance Program recipients will receive a further $2,800, increasing the total grant to $4,800 while Licensed Hospitality Venue Fund recipients will receive a further $4,200, taking the total payment to $7,200. There is no need to reapply for these programs. These payments should arrive in bank accounts in the next week or so.
For businesses that are registered for GST and meet the eligibility criteria but did not apply for the above support payments, an application will be made available for all July payments – $4,800 for Business Costs Assistance Program and $7,200 for Licensed Hospitality Venue Fund. Applications for the Business Costs Assistance Program Round 2 will be opening by the end of July.
Smaller businesses not registered for GST are expected to be eligible to apply for the Covid-19 Disaster Payment via their MyGov ID account.
There is also an extension of the Impacted Public Events Support Program along with a new round of both the Live Performance Support Program and the Sporting Clubs Grants Program.
Eligible public events and public events suppliers affected by the lockdown will receive support of up to $25,000 and $10,000 respectively through the extension of the Impacted Public Events Support Program.
The new round of the Live Performance Support Program, provides additional funding of up to $7,000 for presenters and up to $2,000 for suppliers.
For events that have been unable to proceed or will have to be cancelled or postponed, the new round of the Sporting Clubs Grants Program will provide $2,000 grants for community sport and active recreation organisations.
See here for more information on these top-up support payments.
Workplaces that have been required to undergo a deep clean may be eligible for an 80% rebate to help with this cost.
The COVIDSafe Deep Cleaning Rebate is available for small and medium-sized businesses, where anyone suspected or confirmed to have coronavirus (COVID-19) has been on the premises or worksite when they may have been infectious.
The rebate will cover up to 80 percent of the cleaning costs at each worksite, capped at a grant of $10,000 (for a total cleaning cost of $12,500).
See here for more information on the deep cleaning rebate.
The Victoria Events Industry has certainly been among the most negatively impacted by the state’s COVID-19 restrictions. The $20 million dedicated Victorian Events Support Package will support event organisers, hosts and suppliers as they manage the ongoing impacts of the COVID-19 pandemic.
The package provided by the Victorian State Government is now available and delivers five streams of support:
- The Sustainable Event Business Program will provide up to $250,000 to major event organisers, hosts and suppliers who have suffered a loss as a result of the recent restrictions that began in late May, and the ongoing viability of their event or business has been significantly affected by the pandemic.
- The Impacted Public Events Support Program will deliver up to $25,000 to eligible event organisers and up to $10,000 to eligible suppliers of Tier 1 and Tier 2 public events under the Public Events Framework that were approved to take place between 11.59pm on 27 May 2021 and 11.59pm on 24 June 2021.
- Independent Cinema Support Program will deliver up to $12,000 to independent cinema operators unable to operate due to the COVID-19 restrictions that commenced at 11.59pm on 27 May 2021.
- Live Performance Support Program (Presenters) will provide up to $7000 to presenters of live performance events that have cancelled events between 11.59pm on 27 May 2021 and 11.59pm on 24 June 2021 because of COVID-19 restrictions.
- Live Performance Support Program (Suppliers) will provide a $500 grant per event for up to four different events for suppliers of goods and services to live performance events, including musicians and performers.
The eligibility criteria and guidelines are available here.
Please note applications close at 11.59 pm on Friday 16th July, 2021.
CIRCUIT BREAKER BUSINESS SUPPORT PACKAGE updated Monday June 7th
In response to Victoria’s latest 7-day stage 4 lockdown, the State Government has announced three grants to assist businesses feeling the impact.
These grants include:
- Business Costs Assistance Program
- Licensed Hospitality Venue Fund
- Temporary Covid Disaster Payment
- Victorian Events Support Package
Keep reading for more information on each grant:
BUSINESS COSTS ASSISTANCE PROGRAM ROUND TWO
Applications for the Business Costs Assistance Program Round Two are now open and remain open until 11.59pm Thursday 24th June, 2021.
Please see the links below for the guidelines and eligibility criteria along with the ANZSIC industry code listing for businesses deemed eligible to apply for this grant.
**Please note that we are able to complete grant applications on your behalf – fee applicable.
LICENSED HOSPITALITY VENUE FUND 2021
Applications for the Licensed Hospitality Venue Fund 2021 are now open and remain open until 11.59pm Thursday 24th June, 2021.
**Please note that applications for this grant will be sent via email from Business Victoria to those businesses with an eLicence email address.
If you do not currently have an eLicence email address you will need to set one up by 20th June, 2021 in order to receive a grant application.
Please see link below for the guidelines and eligibility criteria.
**Please note that we are able to complete grant applications on your behalf – fee applicable.
TEMPORARY COVID DISASTER PAYMENT
A Temporary COVID Disaster Payment has been announced by the Federal Government to help those unable to earn an income during the lockdown restrictions. This payment will be available as of Tuesday 8th June, 2021 through Services Australia and you can apply online through your MyGov account. There will also be a hotline number announced for those who do not have access to online services.
The eligibility criteria includes:
- Aged 17+
- Have less than $10,000 in liquid assets
- Australian resident or permitted to work in Australia
- Work or live in government determined hotspot
- Unable to attend work or earn an income because of restrictions
- You are not receiving income support or other pandemic payment
There are two levels of weekly payments available as follows:
Work more than 20 hours per week – $500 per week Work less than 20 hours per week – $325 per week
A person must also declare that they would have worked during the week(s) if there was no lockdown conditions and will lose income because of it. They must also declare that they do not have any access to special pandemic or sick leave , or if they do that they have used it all.
Please see the link below for more information:
We will update this post when further information is available.
For more information click on the link below:
Please contact our office for further support in relation to any queries you may have regarding these grants.
Buying a house is such an exciting time, that sometimes the most important pieces get glossed over, only to come crashing down later on in the purchasing process – with little you can do about them then.
We want the process of purchasing a house to be an exciting and happy one, so here are the top 5 questions you should be asking about the property you’ve got your eye on, to make sure it’s a good decision for your heart as well as your wallet.
Questions to ask before buying a house:
Do I need a building inspection done on the house I want to buy?
YES!
A lot of people sign contracts ‘subject to a building inspection’ which is a great way to safe guard yourself against uncovering major structural defects not visible from the outside. Although a contract signed with this condition will allow you to withdraw from purchasing the property if any major issues are found, it doesn’t safeguard you against any minor defects found.
Even though the word minor sounds ok, it could still mean you’re out of pocket thousands of dollars to fix so, we recommend getting a building inspection completed BEFORE you put in an offer. This way, you can adjust your offer according to what’s found, or you can walk away will your deposit still in your account.
What do I need to know if the previous owners have renovated the house themselves?
With a plethora of home renovation shows on the box these days, it appears every second person thinks they’re a bona fide tradie. If there has been work done to a property by the owner in the six years and six months pre-contract, they automatically become an owner-builder and must, by law, include a Defects Report in the Section 32 for the property. Even if they didn’t need a Building Permit to complete the works – it doesn’t mean they can sell the house carefree.
If there is no Defects Report in the Section 32, you will almost certainly be able to withdraw from the contract at any time prior to settlement.
Can I sign the contract without engaging a conveyancer?
Although it may seem obvious, so many people sign contracts without getting legal advice first. You wouldn’t buy a second-hand car without getting it looked over by a mechanic, so why buy a house without having the contract looked over first? Conveyancers know what they’re looking for in property contracts and can identify hidden details before you sign your hard-earned money away.
Here at the Hrkac Group, we look over your contracts for free – so it’s really a no-brainer.
Where should I buy an investment property?
So you’ve worked hard and saved some money and you’re looking to invest in property. Great, but looking for an investment property and looking for a house to live in yourself are completely different.
Remember, if you’re looking for an investment property, you’re not planning to live in it yourself so you can expand your horizons. Look outside the suburbs you want to live in, you don’t even have to like it – that doesn’t mean it’s a bad investment.
You’ll need to decide what sort of investment property you’re after though – do you want high rental income, or capital growth promise? Looking for a low maintenance place, or are you capable of being the on-call handyman?
Should I put my name on the contract?
If you own a business, it could be a smart move to leave your name off the house contract. To protect your assets, so that if you get sued at work, putting your partner’s name on the contract will remove that asset from the proceedings, keeping it protected against being taken in the legal settlement.
Although this sounds simple enough, there are always other factors to consider – like the effects this will have on your, and your partner’s tax return. Here at the Hrkac Group though, we are a full-service firm so we have an accounting team, a legal team and a mortgage broking team to cover the entire process in house.
So, if you’re thinking about buying a new property and looking for Geelong conveyancing, look no further. You should start by calling the Hrkac Group and talk to our Legal Services team, and we can take care of things from there. Call us on 03 5224 2366 or contact us here.
The Full Federal Court has ruled the ATO’s discretion in denying certain businesses access to JobKeeper and the cash flow boost was applied narrower than it was intended to be.
This court ruling was handed down in March, with the ATO confirming they will begin a review of certain previous decisions, using the wider discretion deemed appropriate, to assess if a different outcome is possible.
This broadening of scope will grant further time for a business to hold an ABN, and further time to provide notice to the commissioner of assessable income or supplies. Robyn Jacobson from the Tax Institute expects ‘it [to] affect thousands of taxpayers’ who were told they weren’t eligible.
This automatic review of decisions by the ATO will only apply to applications that have met all other eligibility criteria for the COVID-19 stimulus payments. Each case will be reviewed by the commissioner and if overturned, ATO will contact taxpayers individually for more information.
For more information, including how this might affect you and what happens next, please visit the ATO’s website here.
Liability limited by a scheme approved under Professional Standards Legislation. Quote resource: Jotham Lian 30 April 2021
If you’ve been trading cryptocurrencies, you may have to report it on your tax return. Working out your cryptocurrency tax can be complicated, and there are a lot of different factors you need to consider when preparing your tax return. To help you out, we have developed a quick guide to break down everything you need to know about cryptocurrency and tax in Australia.
What are cryptocurrencies?
Simply put, cryptocurrency is a new form of digital money that operates on blockchain technology. They don’t physically exist. Like regular cash, digital currencies are accepted as a means of payment and can be used to purchase goods and services online. Bitcoin is the most popular cryptocurrency, but there are many others out there.
How they work
The Australian Tax Office (ATO) classifies cryptocurrency as an asset; therefore, you will need to assess your Capital Gains Tax every time you trade, sell or give away your cryptocurrency. Cryptocurrencies are subject to Capital Gains Tax (CGT) and income tax, however, exempt from the Goods and Services Tax (GST).
Capital gains are the tax you pay when you make a profit on a transaction. For example, if you buy a Bitcoin for $3,000 and sell it six months later for $5,000 then you’ve made a capital gain of $2,000 and will need to pay tax on that amount.
On the other hand, when cryptocurrency service providers send free coins to users (also known as airdrops), this can trigger income tax. The value of those coins must be declared as ordinary income.
How does the ATO figure out how much crypto tax I owe?
In late 2019, the ATO started collecting records from Australian cryptocurrency service providers to ensure people were tax compliant. Each time you make a transaction, there is an electronic record that is reported to the ATO from your service provider. That’s why it’s more important than ever to know what you’re doing and report your income correctly.
Am I an Investor or Trader?
The first thing you need to do is to determine whether you’re classified as an investor or trader by the ATO.
An investor is someone who buys and sells cryptocurrency for long-term personal gain. The majority of people who engage in cryptocurrency are considered to be investors, therefore their transactions are subject to Capital Gains Tax.
On the other hand, a trader is someone who carries on a business to earn income from buying and selling cryptocurrency. Rather than putting a value on capital gains, they treat their profits as business income instead. For traders, different Income Tax rules apply compared to Investor CGT Events.
To give you a better understanding, in each scenario below, we determine the type of tax liability that applies.
Buying Cryptocurrency – There are no taxes involved when you buy cryptocurrency in Australian Dollars.
Selling Cryptocurrency – Selling cryptocurrency will trigger Capital Gains Tax. Capital gains or loss can be calculated by subtracting the amount you paid for a cryptocurrency from the amount you sold it for. This figure forms part of your income and needs to be declared on your tax return.
Trading Crypto for Crypto – Buying one cryptocurrency with another will trigger Capital Gains Tax. The ATO sees a trade as two separate transactions, first, you are selling your cryptocurrency for X amount, then buying another with those earnings. So, even though you never receive the money in hand, you still need to pay tax on the sale.
Gifting Cryptocurrency – Gifting crypto is considered the same as selling it, so it is a taxable event and subject to the Capital Gains Tax. You don’t have to pay taxes when you receive cryptocurrency as a gift. However, you will be subject to the Capital Gains Tax when you dispose of the gifted cryptocurrency.
What records do I need to keep?
Whether you’re an investor or a trader you need to keep clear records, including the following information:
- The value of the transaction
- The date the transaction was completed
- The purpose of the transaction
- The details of the other party involved
Examples of useful records to keep include:
- Receipts of your cryptocurrency purchase
- Records of agent, accountant, and legal costs
- Exchange records
- Digital wallet records
- Software costs associated with the management of your tax affairs
Where do I keep these records?
There are a number of different cryptocurrencies tracking software available in the marketplace that can help you keep track of all your transactions. (CoinTracker is one example of no doubt many – however, please be aware we are not recommending this product. You should conduct your own research and investigations before deciding on a specific product).
If you need assistance with your tax return or need more information about how cryptocurrencies may affect your taxes, please contact The Hrkac Accounting Team on 03 5224 2366.
Liability limited by a scheme approved under Professional Standards Legislation.
Are you looking at buying a property but worried about having the cash handy for a deposit? You could consider a deposit bond.
A deposit bond is a financial agreement that can be used in place of a cash deposit when purchasing a property, guaranteeing to the seller that the buyer will pay the full deposit at a later date.
Deposit bonds are used instead of cash to pay a deposit on a property. If you decide to use a deposit bond, you will pay the purchase price, plus the deposit and stamp duty at settlement.
Here are 10 things you need to know about deposit bonds:
1. Vendor Approval Is Essential
Before lodging your application, it’s crucial that you seek approval from the vendor/real estate agent to use a deposit bond to purchase the property, instead of a cash deposit.
2. Eligibility Requirements Must Be Met
To be eligible for a deposit bond:
- You must have a formal finance approval; or
- You must have at least a pre-approval that’s subject to valuation only; or
- If you’re selling a property and funds from the proceeds of the sale are enough to purchase your new property outright, then you are eligible.
If none of the above applies to you, please talk to one of our specialist mortgage brokers.
3. The Cost Of Deposit Bonds Vary
The cost of a deposit bond depends on the value of the property and the length of time to settlement.
If you were to purchase a home for $500,000 and need a 10% deposit of $50,000. It would cost you around $600 for a deposit bond. If you’d like a rough estimate, contact our specialist mortgage brokers.
4. Deposit Bonds and Bank Guarantees Are Different
A deposit bond and a bank guarantee are similar in that they provide a guarantee to the vendor that the purchaser will pay the deposit at settlement. However, there are some key differences that you should consider before making a decision.
Security – Deposit bonds are unsecured, and bank guarantees are secured.
Although deposit bonds require an eligibility assessment to ensure you have the financial capacity to settle on your purchase, they are unsecured. Whereas bank guarantees are secured and require real estate or cash security to release.
Cost – Deposit bonds have a one-off fee, but bank guarantees have higher set up and ongoing costs.
Time – Deposit bonds are usually faster to obtain than a bank guarantee, as they require less paperwork and have a simple application process.
5. Time Needed For A Deposit Bond When You Have An Off The Plan Purchase
Most of time, when you buy an off the plan purchase a deposit bond is issued up to the ‘sunset clause’ date. A sunset clause date is found in your contract of sale and allows the vendor or purchaser to rescind the contract if the title of the property has not been created by a specific date.
6. First Home Buyers Are Eligible
As a First Home Buyer, you can obtain a deposit bond if you:
- Already have formal approval for your finance through a family guarantor loan, and
- Your property settles within six months.
If settlement is more than six months or you don’t have finance approval, your guarantor will need to apply with you for your deposit bond. You or your guarantor will need to have a property with the equity to release a deposit bond. This is to ensure the guarantor can pay back the deposit bond amount in the unlikely event of a claim on your bond.
7. No Repayments
If you use a deposit bond, you never actually pay back the deposit unless there is a claim. Its purpose is to provide reassurance to the vendor that you have sufficient funds to complete the purchase at settlement. Therefore, at settlement, you will pay the purchase price, plus the deposit and stamp duty.
The only cost involved is the deposit bond fee, which is provided to the lender up front.
8. No Interest Payments
No interest payments are required, besides the one-off deposit bond fee.
9. Deposit Bonds Can Be Issued Within 4-48 Hours
Once the lender has received your signed application with the bond fee payment, your deposit bond can be approved and issued within 4 to 48 hours. Once approved, the bond deposit is released immediately. The Hrkac Group typically have your deposit bond ready in less than one business hour!
10. The Best Way To Obtain A Deposit Bond Is Through A Mortgage Broker
The Hrkac Group make it easy to apply for a deposit bond. Contact our team and we will work with your deposit bond provider on your behalf, so you don’t need to add another thing to your list.
The supporting documents you need will depend on your application type, so we’ll tell you exactly what you need to provide. Then, when the application is ready, we’ll send it to you for electronic signing. It’s as easy as that!
If you have any questions about the topics discussed in this blog, feel free to contact our specialist mortgage brokers, who will provide a personalised and custom service based on your individual circumstances.
H G Financial Services Pty Ltd ABN 25 123 478 907 is a Corporate Authorised Representative no.401592 of Alliance Wealth Pty Ltd
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There’s a lot of talk about growing wealth and protecting assets when it comes to financial advice, but do you really know what that means?
When you engage a Financial Advisor, you expect them to give you advice on how to make your money work for you. Whilst this is true, it’s a broad description and doesn’t cover the nitty gritty of what they can do for you and your future.
Like anything, you are paying a Financial Advisor for their experience and knowledge, and ability to assist you in meeting your goals and ultimately leave you in a better position.
We all have goals to achieve; whether it’s buying your first house, retiring in style, paying debts or investing for long-term gain, Financial Advisors are here to help you manage your money, assets and expectations so you can plan for the future lifestyle you pictured.
So, what do financial advisors actually do?
For Superannuation
As we’ve written about previously, the second best time to start planning your retirement is now, so with that in mind when it comes to Superannuation a Financial Advisor does many things to help you, well before retirement:
- Choosing a super fund
- Investing your super
- Organising insurance through your super
- Contributing to your super
- Implementing tax effective strategies
Throughout your working life, you will accrue super to help you later in life when you no longer can (or want) to work. This money will be invested and continue to grow as you work, setting you up for the future.
Choosing the right super fund for you can be daunting, do I go for a Retail fund or an Industry fund or a SMSF? Can I choose where the money is being invested? Do I need to make personal contributions? All these questions can be answered by a Financial Advisor once they have gotten to know you and assessed your future goals.
Financial Advisors add value to your Superannuation by using their experience to educate you on the ins and outs of Superannuation, making sure that your individual set up is in alignment with what you want to achieve.
Financial Advisors will help you get involved early so that you can achieve your retirement lifestyle goals.
For Retirement Planning
As you approach retirement and the vision of your future comes more into focus, it might not look as you had pictured. If this is the case a Financial Advisor can help you to:
- Determined your retirement income needs
- Maximise super contributions
- Ensure you’re invested appropriately
- Regain control
- Or transition into retirement early
For those whose retirement is fast approaching, Financial Advisors can help you to figure out how much income you’ll need to generate from your Superannuation throughout retirement, to fulfil your lifestyle. If things aren’t aligning, they can take you through any adjustments that need to be made in order to bring you closer to your goals.
Not only do Financial Advisors look at whether you’ll have enough to sustain your lifestyle, they also provide you with the reassurance you need to reduce the stress of retiring and give you back control of your future.
For Post-Retirement Income Strategies
After retirement, your money doesn’t stop working for you. Although you are accessing your Superannuation, the funds continue to be invested and grow with you so, it’s important that they are monitored and adjusted on an ongoing basis – this is where Financial Advisors can help.
It’s not just Superannuation that can assist you in funding your retirement either. There are many income generating investments that can be utilised to build your bespoke retirement income plan, such as managed funds and annuities. A Financial Advisor can ensure that your entire financial position is incorporated to provide you with the best possible outcome to support you throughout retirement.
For Insurances
Often a daunting topic, Financial Advisors are well versed in which insurances are available to you through you Superannuation, or directly, and how to best to structure them. If you don’t know what insurances you might have, or even what you might need, Advisors will assess your situation and help you understand the levels of cover that you need in order to protect yourself and your family if the unexpected should happen. The types of insurance cover that should be considered are:
- Life
- Total and Permanent Disability
- Trauma
- Income Protection
Unfortunately, not all cover is made equal and with so many provider options, it is easy to settle for an insurance policy that may not give you what you and your family need. A Financial Advisor will undertake a full assessment of your personal situation, and recommend the right comprehensive cover for you.
For Personal Investments
So, you’ve got savings in the bank and you know that property is an option, but you’re wondering what else is out there to invest your money in for a good future return?
There’s a lot to think about when it comes to investment options:
- What do you want to achieve?
- How long do you want to invest for?
- How much risk do you want to take?
- Are you looking for tax effective investments?
- Do you have specific ethical preferences?
- Are you more cost conscious?
There are many investment options available, and each serve a different purpose. Whether it’s shares or ETF’s, managed funds or bonds, a Financial Advisor will have the skills and knowledge to recommend an investment strategy to achieve your goals.
So, do you need a Financial Advisor?
Planning for your future involves a lot more than writing down your financial goals and wishing they will come true. Creating a financial plan is all about making your money work effectively, by choosing the right strategies for your individual circumstances.
Daunting as it is, Financial Advisors are here to give you the tools you need meet your goals and take control of your financial future. Here at the Hrkac Group, we are a team of experienced, capable and respected advisors who are passionate about educating you on the strategies and options available to get the best possible outcome for you.
Why use Hrkac Group’s Financial Advisors?
Our Financial Planning team are here to bring you value through their experience and wealth of knowledge. They are here to educate you on how to make your money work for you and achieve the goals you’ve set together.
The team of experienced advisors will use the initial meeting to get to know you, do a deep dive to assess your situation and help you to realise your financial goals.
Once your goals are in place, they will create a bespoke financial plan that will leave you with the best possible outcome. But the process does not end here, you can feel assured that our team of advisors will monitor your financial plan closely and ensure that it continues to meet your goals at each annual review, so that you’re free to live your life with a little less stress.
Find out more information about our Financial Advice services here.
Contact us today to start your Financial Planning journey: email or phone 03 5221 2355.
