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The dreaded and controversial stamp duty tax could soon be a thing of the past, with calls for it to be abolished gaining momentum.

The Property Council of Australia is the latest body to add their voice to the chorus this month after both the NSW and Victorian state governments ramped up calls for stamp duty reform.

Axing the controversial tax is a key measure being proposed in the Property Council’s Seven Point Plan for Economic Recovery, released this week, to help kickstart economic recovery across the nation.

“Stamp duty is a terrible tax,” the Property Council’s chief executive Ken Morrison recently explained to the AFR, “every economic analysis puts it at the top of their list of worst taxes. For every $1 raised it does about 80c of harm.”

What is stamp duty and how much does it cost?

Stamp duty is a government tax on certain transactions, including when you buy a motor vehicle, an insurance policy, or for the purposes of this article: a piece of real estate.

In a nutshell, state treasurers and many economists want reform in this space because stamp duty is volatile – it rises during property booms and shrinks during downturns.

Now, how much it costs will depend on where you live, and the value of the property you’re buying.

Most states have stamp duty exemptions or concessions in place for first home buyers, but that doesn’t help out those looking to expand their property portfolio.

The tax also acts as a barrier to older Australians who want to downsize and unlock their wealth.

So how much does stamp duty usually cost? Well, as luck would have it, Domain just released a summary of the stamp duty costs for median-priced homes in each capital city:

Sydney: $49,586 (house) or $28,942 (unit)
Melbourne: $50,171 (house) or $28,328 (unit)
Hobart: $18,847 (house) or $15,351 (unit)
Adelaide: $23,663 (house) or $12,522 (unit)
Perth: $19,063 (house) or $10,679 (unit)
Canberra: $23,914 (house) or $9396 (unit)
Brisbane: $12,165 (house) or $4342 (unit)
Darwin: $4,868 (house) or $0 (unit)

Those figures are for non-first-home buyers who are purchasing established properties.

So what would replace stamp duty?

The NSW government is considering a broad-based property tax (aka land tax).

Victorian Treasurer Tim Pallas meanwhile, says a review of the state’s revenue base after the COVID-19 pandemic is needed, but he’s not sure that switching from stamp duty to land tax is the way to go.

“It’s a bit like a Mills & Boon novel: it might be satisfying and uplifting to read, but getting to that point without causing major trauma to the community is a very serious consideration,” he said.

Another option being floated by the Property Council is to replace stamp duty revenue by broadening the GST base.

What to do in the meantime?

As mentioned earlier in the article, most states and territories already have certain exemptions and concessions that apply when it comes to stamp duty, particularly for first home buyers.

Generally, it depends on the price of the property you have purchased, or if it was off-the-plan, as to whether you’ll be eligible.

And obviously, the less stamp duty you pay, the more of your hard-earned-money you can put towards your home loan deposit.

So if you’d like a hand figuring it all out please get in touch – we’re happy to help you crunch the numbers.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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Promising news for SMEs this week: supply chain financing provider Greensill has given late-paying companies formal notice that it will ditch them if they continue to extend their payment terms beyond 30 days.

This is good news for SMEs because cash flow problems – which are often caused by, or exacerbated by, late payments – are one of the biggest reasons for small businesses failing.

So what exactly has happened?

Well, back in February, supply chain financing (SCF) provider Greensill informed all Australian clients that they must not push out payment terms to SME suppliers beyond 30 days.

The multi-billion-dollar company, founded by Bundaberg-born, London-based financier Lex Greensill, says virtually all of its clients in Australia have complied (keyword: “virtually”, but more on that soon).

“Greensill has allowed a period for the remaining clients to complete their internal reviews stemming from our request,” a Greensill statement says.

“We have given formal notice to those clients that their SCF facilities will be discontinued unless they ensure that they do not use our SCF facilities to push out payment terms to SME suppliers beyond 30 days.”

So, who’s still holding out?

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has the answer on that one.

She says it’s clear Greensill’s statement is in relation to its dealings with contractor UGL, owned by construction firm CIMIC – Australia’s biggest construction company.

“UGL has reportedly extended its payment terms to its small business suppliers to 65 days from the end of [the] month the invoice is lodged, offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount,” Ms Carnell explains.

“This is an example of clear misuse of supply chain finance as outlined in our recently released Supply Chain Financing Review. Practices such as this are harmful to small businesses, especially in the current challenging environment.”

The promising news is that according to the AFR, CIMIC has now put its controversial SCF scheme “under review”.

So what exactly is supply chain financing?

SCF, also known as supplier finance or reverse factoring, can free up cash flow for both the SME business that sends the invoice to be paid, and the company that owes the money.

It does this by the SCF provider acting as a facilitator between the two.

Here’s a quick example: let’s say Big Business Inc (buyer) orders some machine parts from Little Joe Traders (supplier).

Little Joe then sends the invoice to Big Business Inc, which approves the invoice and confirms that it will pay the SCF provider for the invoice at the invoice’s maturity.

Little Joe then has two options: 1) Patiently wait for the invoice’s payment terms to be met and paid in full; or 2) Get paid earlier by the SCF provider, but at a discounted rate.

Often Little Joe’s decision will depend on his cash flow requirements at the time.

So what’s the problem?

Normally nothing. When done right “it’s an excellent concept for both buyer and seller”, says Clive Isenberg, chief executive of Octet, which specialises in supply chain financing for smaller companies.

But the risk, as Mr Isenberg points out, is that if your business is supplying the big end of town, you can become overly reliant on them and have to play by their rules.

“You are being constantly pressurised to follow the way they’re going. You’ve got to agree to their payment terms,” he told the AFR.

Need a cash flow solution for your business?

As you’re well aware, business cash flow solutions aren’t exclusively for the big end of town.

There are plenty of products that cater to SMEs’ many different needs.

So if you’d like to explore some of the options available to your business, then please get in touch – we’re happy to run you through them.

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Every now and then a bank does something that bucks the trend and takes customers by surprise. Today we’ll look at two cases that recently made national headlines and how you can reduce your chances of getting caught out.

While the below two examples may not relate to your home loan specifically, they do serve as important lessons nonetheless.

Why? Because there’s every chance banks will make other changes to loan products in the months ahead as COVID-19 continues to put pressure on the economy.

MEa culpa

The first example we’ll discuss today is ME Bank’s decision to reduce limits on its customers’ redraw accounts without giving any prior warning.

The move came as a complete shock to customers, with many publicly expressing their anger at no longer having access to thousands of dollars needed to help them get through difficulties they were facing due to COVID-19.

While ME Bank says it stands by the decision, it admits it messed up and didn’t do the right thing by its customers in terms of communicating the move.

“The job we did to explain a complex product, what we were doing and why we were doing it, was simply not good enough,” ME Bank said in a statement.

“Please accept our most heartfelt apology.”

The financial regulator APRA has since gotten in touch with ME Bank to request a “please explain”, as have the trustees and chief executives of major super funds that are ME Bank’s shareholders.

So, what’s the take-out?

Well, redraw accounts certainly have their benefits.

But like most products, they can come with certain terms and conditions that can catch you out, such as the example highlighted above.

So when you’re deciding on a home loan product for you and your family, we can inform you of any catches buried deep within the T&Cs that you should be mindful of.

CBA automatically reduces monthly repayments

The other big move made by a lender this month is Commonwealth Bank automatically reducing repayments for 730,000 of its customers to the minimum required under each loan contract.

The bank recently sent an email advising its customers of the change, saying customers must opt-out if they wanted to continue to make repayments above the minimum amount.

This goes against the grain of what usually happens, which is where the onus is on the customer to contact the bank and ask for their monthly payments to be reduced when interest rates fall.

Now, on the face of it, it kinda looks like good news, right?

After all, CBA says the move will release an average of $400 a month for customers and inject up to $3.6 billion cash into the economy over a 12-month period.

But as ANZ CEO Shayne Elliott pointed out in November, he strongly believes in not automatically reducing the repayment amount because it allows customers to repay their debt sooner, and pay less interest over the life of the loan.

“It’s the responsible thing to do, as a bank. It’s in [customers’] best interest in the long term to repay their debt,” he says.

Put yourself first

CBA and ME Bank justified their moves by saying they were implemented to “help” and “protect” customers.

But the best way to truly help and protect yourself is by being proactive and informed – not relying on the banks to roll out one-size-fits-all policies they say are in your best interests.

For families doing it tough right now, CBA’s decision to automatically reduce payments will come as a welcome relief.

But if you were meeting your monthly repayments fine until now and would like them to stay as they were, then it’s important to let CBA know so you don’t pay more interest on your loan over the long run.

If you’d like a hand reviewing your loan and exploring your options in light of COVID-19, please don’t hesitate to get in touch – we’re always here to help when you need us.

Loyalty is an admiral trait when it comes to our friends, family and loved ones. But if you’re extending that virtue to the banks, then there’s a good chance it’s costing you thousands of dollars.

That’s the takeout from the ACCC’s latest Home Loan Price Inquiry interim report.

It shows that although interest rates charged by the big four banks on home loans fell during 2019, existing customers were stung by higher interest rates compared to newer customers, in no small part due to a lack of price transparency.

Price comparison confusion

The report found that the big banks’ home loan pricing practices make it pretty darn difficult for borrowers to compare different mortgage products.

That’s because the headline rates you see when you do your initial research don’t accurately reflect the price most big four bank customers actually pay for their home loans.

Indeed, the ACCC found there’s little difference in the headline variable rates of the big four banks, which on face value quickly deters borrowers from switching it up and refinancing to a lower rate.

But in reality, close to 90% of big four banks home loan customers receive discounts off the headline variable rate. And many of those receive non-transparent discretionary discounts.

So how big are the discounts?

We’re talking pretty big differences here, especially compared to advertised rates.

For example, a borrower with an average-sized principal and interest mortgage of $386,000 could save about $5000 on interest payments in the first year if they went from having no discount to receiving the big four banks’ average discount of 128 basis points.

The report also found the big four bank customers whose principal and interest loans were greater than five years old were paying an average 40 basis points more than those with similar new loans.

That means for a loan of around $200,000 (the average size of a loan more than five years old), a borrower who refinances could save around $850 in interest in the first year.

So what’s the next step?

That’s easy: you owe the bank nothing – in terms of loyalty – so it’s time to see what your options are.

And we can help because we know what rates lenders are really offering – despite what their “headline” rates say.

So if you’re keen to find ways to save interest on your home loan, please get in touch. We’re happy to walk you through your refinancing options any time.

Two months and counting (down). That’s how long your business has to make use of the $150,000 instant asset write off before the end-of-financial-year June 30 deadline.

Early last month, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.

Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent threshold increase – heavy vehicles, tractors and machinery.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

Is your business eligible?

Not only was the threshold increased, but the scheme can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million).

Assets that could be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business.

But it’s not enough to simply purchase the asset to be eligible. The new or second-hand asset must also be first used, or be installed and ready for use, this financial year.

Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.

Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.

Bruce’s tractor: a case study

Say ‘gday’ to Bruce, who runs Fair Dinkum Farms in the Darling Downs and has an aggregated annual turnover of $25 million for the 2019‑20 income year.

In May, Bruce finally splashes out and purchases the second-hand tractor he’s had his eye on for a while now for $140,000, exclusive of GST, for use in his business.

Under the new $150,000 instant asset write‑off, Fair Dinkum Farms can claim an immediate deduction of $140,000 for the purchase of the tractor in the 2019‑20 income year.

This is $136,101 more than he could have immediately claimed under normal arrangements, as Bruce would have only been able to claim $3,899 using the diminishing value method over a 12 year period.

At the company tax rate of 27.5%, old mate Bruce will pay $37,427.78 less tax in 2019‑20 than he would have if the instant asset write-off scheme wasn’t in place.

This will improve Fair Dinkum Farms’ cash flow and help Bruce’s business withstand the economic impact of the coronavirus.

Limits relating to cars

Now, there’s a limit relating to cars that we should note.

If you purchase a car for your business, the instant asset write-off is limited to $57,581 (the business portion of the car limit) for the 2019-20 income tax year.

You cannot claim the excess cost of the car under any other depreciation rules.

Also, say the vehicle will be used 80% of the time for business purposes and 20% for personal usage, you can only claim deductions for 80% of the asset.

Getting finance that’s right for your business

When purchasing an asset under this scheme, it’s crucial to select the correct finance product.

And that’s where we can help out. We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.

So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch this month well ahead of the deadline – we’d love to help out.

You don’t need us to tell you how much the world has changed – there’s been no shortage of news bulletins updating you on that. So rather than telling you about more changes, today we’re going to explain how we can help.

While we can’t babysit your child so they stop shouting out and interrupting that important call you’re trying to make in your new home office, we might be able to reduce the number of important calls you need to make instead.

Here are four ways we can take a load off your shoulders right now.

1. We can help you stay inside (and sane)

As you’re probably aware, many bank branches around the country have recently closed temporarily.

And the ones that are open? Well, it’s not really a great time to visit them in-person about your mortgage or business loan.

Bank call centres aren’t much help either – they’re inundated. A whopping three-hours on hold is pretty much the standard wait time at the moment (that’s enough elevator music to drive anyone crazy!).

Now – we’re not huge fans of on-hold music either – but we’re more than happy to jump on the phone to your lender to help sort out any matters relating to your loan at this time.

2. Need to refinance or consolidate your loans?

When was the last time you did a home loan review?

If it was more than a year ago, now’s a good time because the finance and lending landscape has undergone several big changes over the past 12 months – including five RBA cash rate cuts.

So if you’re having trouble meeting your monthly repayments reach out to us and we can discuss some of your refinancing options.

And don’t forget to consider consolidating your debts – including your credit card, car loans or personal loans – so you have fewer debts to keep track of each month.

3. Need to pause your loan repayments due to hardship?

If COVID-19 has impacted your income to the point where you may need to pause your loan repayments, then we can help break down your lender’s deferral policy and support package policy for you.

Six-month loan repayment deferrals are available for both business loans and mortgages (but it may depend on your lender’s hardship policy for the latter).

We can also talk you through some of the other options that might be available to you to reduce your home loan repayments each month.

4. Want a pretend work colleague for a few minutes?

This one is a little left-of-field, but no less important in the current climate.

For many people, this is their first time working from home and we brokers know better than most that making that transition can be a tough gig.

So, if isolation is getting you down and you just want to chat to someone friendly for a few minutes, feel free to pick up the phone and give us a call.

Not only can we share some tips with you when it comes to nailing work/life balance in a home setting, we promise not to put you on hold for three hours beforehand.

And hey, it’s all good with us if the kids are running amuck in the background!

Found yourself with extra time on your hands? Slightly worried about meeting your home loan repayments? Want to make use of those back-to-back rate cuts? While the world has changed significantly over the past month, it’s possible to use some changes to your advantage.

Before we go any further though, we want to say we understand there’s no shortage of Aussie families doing it tough right now. And we want to reassure you that we’re here to help you any way we possibly can – including helping you apply for support packages with your lender.

So where does refinancing fit in?

Well, the many social and financial changes that have been thrust upon us recently have combined to make it a good time to consider refinancing your home loan.

Here are five reasons why you may want to consider doing so.

1. Payment relief

When was the last time you refinanced your home loan?

If your answer was ‘one year ago’ (or longer), the finance and lending landscape has changed dramatically since then and it might be time to catch up.

There have been five RBA cash rate cuts since then since June 2019 – including two last month.

And while we’re on the RBA, a recent study of theirs found that borrowers who refinance with another lender, or negotiate a better deal with their existing lender, do in fact achieve interest savings.

So if you or your partner have recently had your work hours cut back and you’re starting to worry about how you’ll meet your monthly mortgage repayments, refinancing could be a more suitable option than applying for a hardship variation on your loan.

2. Consolidate your debts

Refinancing can also help you consolidate your other debts – including your credit card, car loans or personal loans – by combining them into a refinanced mortgage.

Not only will this give you one simple repayment to make each month (reducing the risk of forgetting payments and being slugged with a late fee), but all your debts will be charged at your home loan interest rate – which is usually much lower than credit card rates, for example.

3. Low interest rates: time to lock one in?

Fixed rates have recently experienced a big drop.

In fact, Domain’s David Hyman has described the current batch of fixed interest rate loans as “staggeringly cheap”.

“Only a couple of months ago the cheapest headline rate started with a three. If you look back to this time last year rates were in the high threes,” Hyman explains.

“For someone with a half a million dollar mortgage, that is well in excess of $10,000 a year in savings. It’s never been a better time to refinance quite frankly.”

And with the official RBA cash rate now at a record low 0.25%, there isn’t a great deal of room for it to go much lower.

4. Time on your hands

One of the more common reasons home owners give for not refinancing is that they simply don’t have the time do so.

But, without pointing out the obvious, I think it’s fair to say that we have far fewer social commitments taking up our time at present.

So, if you’ve compiled a list of things to do to keep busy at home, consider adding refinancing to the list.

Once you get the ball rolling on it and get in touch with us you’ll be surprised how little you actually have to do – after all, that’s our job, right?

5. We’re available to help you, whenever you need us

Finally, rest assured that we’re available and here to help you any way we can.

During trying times like these we know that we need to support each other now, more than ever.

So if you’d like us to help you explore your refinancing, hardship variation, or support package options then please get in touch – we’re ready to jump into action and make it happen for you.

Non-major lenders have started offering another 5,000 slots for the First Home Loan Deposit Scheme, which allows first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

The scheme, which is overseen by the National Housing Finance and Investment Corporation (NHFIC), kicked-off on 1 January but only 5,000 spots were initially available through two major banks – NAB and CBA.

NHFIC CEO Nathan Dal Bon says the additional 25 lenders are located around the country and will provide first home buyers with a range of choices.

“More places are now available to help first home buyers purchase a modest home sooner,” Mr Dal Bon adds.

The 25 other lenders

The NHFIC says the 25 non-major participating lenders below are supporting the scheme by committing to not charging eligible customers higher interest rates than equivalent customers outside of the scheme.

Australian Military Bank

Auswide Bank

Bank Australia

Bank First

Bank of us

Bendigo Bank

Beyond Bank Australia

Community First Credit Union

CUA

Defence Bank

Gateway Bank

G&C Mutual Bank

Indigenous Business Australia

Mortgageport

MyState Bank

People’s Choice Credit Union

Police Bank (including the Border Bank and Bank of Heritage Isle)

P&N Bank

QBANK

Queensland Country Credit Union

Regional Australia Bank

Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)

Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)

The Mutual Bank

WAW Credit Union

Details on eligibility can be found on the scheme’s website here. You can also check out the property price caps here.

Want to find out more?

If you want to apply for this new scheme then it’s best to give us a call sooner rather than later, as the major banks have already registered more than 3,000 potential first home buyers for the 10,000 spots up for grabs this financial year.

We’d be more than happy to run you through the scheme in more detail and, if you’re eligible, help you apply through a participating lender.

Properties with high energy-efficiency ratings typically sell for up to 10% more, a review of international research shows.

The review, which was conducted by the University of Wollongong, compiled research undertaken in 14 countries and included data from the Australian Capital Territory (ACT), which is the only Australian jurisdiction to require that sellers disclose the energy-efficiency rating of their home.

What were the review findings?

In the ACT, the review found there was a 9.4% price premium for a house with a 7-star NatHERS rating (see below) compared to a house with 3-star NatHERS rating, and a 2.4% premium for a 6-star house.

If you consider that the ACT has a median house price of $773,635, that equates to potential price premiums of $72,721 (7-star) and $18,500 (6-star).

This latest review backs up similar research findings conducted by the University of Western Sydney in the commercial building sector, in which disclosing energy ratings is standard practice across Australia.

“Everybody wants an energy-efficient home. After all, an energy-efficient home is comfortable to live in, without large energy bills,” says Dr Daniel Daly, a research fellow at the Sustainable Buildings Research Centre, University of Wollongong.

“These can be important factors for prospective home-owners or renters.”

How can I improve my property’s NatHERS rating?

The Nationwide House Energy Rating Scheme (NatHERS) is a star rating system out of ten that rates the energy efficiency of a home, based on its design.

The government’s Your Home website is a great starting point when it comes to making your property more environmentally sustainable.

It includes information and tips on how to include more energy-saving features in your home, which may include solar panels, insulation, double-glazed windows, draught sealing, batteries, and rainwater tanks.

Need finance for your energy-efficient property project?

There are many advantages to owning a property with a high NatHERS rating.

So if you’re looking to build, renovate or simply upgrade your property, then get in touch. We’d love to talk to you about your financing options.

A question that’s been popping up a bit lately has been ‘why didn’t my lender reduce my repayments when the interest rate fell last year?’

It’s a good and timely question considering the big four bank economists all expect the RBA to cut the cash rate by 25 basis points to a new record low of 0.5% on February 4.

So why don’t lenders drop your repayments when the interest rate falls?

This question was debated in November by the House of Representatives’ standing committee on economics during its review of Australia’s four major banks and other financial institutions.

In the red corner you have Dr Andrew Leigh MP, the committee’s deputy chair. In the blue corner you have ANZ CEO Shayne Elliott.

Dr Leigh suggested the bank’s default position – to keep repayments at the same level until the customer requested that they be reduced – was not in society’s best interest.

Essentially, Dr Leigh’s argument was that if banks automatically reduced the repayments then customers would have more money in their back pocket to spend each month. As such, the flow-on effect would have a more positive impact on the nation’s economy.

However, Mr Elliott strongly disagreed.

Mr Elliot said the bank’s default position – to keep repayments at the same level, regardless of the interest rate cuts – was in the customer’s best interest because it helped them repay their loan quicker.

“I find it hard to imagine that I could ever push an argument that it is in my customer’s interest to have [a loan] for longer,” said Mr Elliot.

“Maybe we can be better at communicating. But we contact every single customer every single time there is a rate cut and offer them a chance to review their interest rate and lower their payments.”

According to Mr Elliot, just 7% of home loan holders opted to reduce their repayments off the back of the interest rate cuts last year.

Want to reduce your repayments?

Now, we don’t advocate any particular side of the argument. Basically it will boil down to your individual situation and what you believe is in your best interests financially.

But if you do decide that you’d like to reduce your repayments then get in touch and we can help you make the request with your lender.