There’s a little known way to save thousands on your tax return. It’s completely legal, you just need to know how to do it. Getting onto the property ladder can seem like a huge undertaking. And once you actually take the leap and make your property purchase happen, finding extra money to build assets and invest can seem almost impossible. Debt recycling is a strategy that can help you pay down your mortgage, build a share portfolio, and create a heap of tax deductions – all at the same time. For example, if you have a mortgage of $500,000, it could save you $6000 a year in tax. Even if you’re not on the property ladder just yet, being aware of this strategy now can help you understand what’s possible – something you can factor into your future property purchase plans.  What is ‘debt recycling’? Debt recycling is the process of replacing mortgage debt (which is non-tax deductible), with investment debt (which is tax deductible). Essentially, how debt recycling works is that you make extra payments on your mortgage , and invest the same amount into a share portfolio. A key part of this strategy revolves around the fact that instead of just investing money from your bank account into shares, you take money from another loan that’s set up solely for the purpose of this investment. The rules can get a little complex and confusing here but bear with me. The strategy works because you’re paying down your home loan (non tax deductible) debt, and at the same time drawing money from a separate loan for the purpose of investing, which makes the interest repayments on this loan tax deductible. How much could I save debt recycling? I’ve put together a practical example below showing debt recycling in action. In this example, you have a home mortgage of $500,000 against a property value of $1m, and have $500 per week you want to use to save/invest/get ahead. To set up a debt recycling strategy, the first step would be to speak to your bank or mortgage broker to set up a new loan. This loan is generally secured against your property, and would essentially sit there with funds available ready for you to draw against. In week one of the strategy, you pay your spare $500 as an extra payment on your mortgage. At the same time you would withdraw the same $500 amount from the new loan set up for investment purposes and invest this money into a share portfolio. What are the risks of debt recycling? The first key risk or downside of following a debt recycling strategy is that you don’t actually reduce your debt levels over time. This happens because you’re increasing tax deductible debt while reducing your non-tax deductible debt – this is clearly a good thing but the net result is that your debt levels remain the same over time. Carrying more debt means risk around increasing interest rates, the cashflow risk of having to fund your debt repayments, and the potential negative impact if you lose your job or want to change careers or roles. To minimise this risk, take the time to put together a clear exit plan for your debt, build up a solid cash buffer for emergencies, and think about insurance like income replacement cover to reduce the risk of the unexpected. You will also face some risk with this strategy driven by the fact you’re going to be investing money into the sharemarket which can be volatile. When there is disruption in the economy or the sharemarket, often even the best companies will suffer a drop in their share price. This means that it’s possible your share portfolio can end up being worth less than the amount of money you’ve invested. And because with debt recycling you’re essentially using borrowed money, you might be in a position where you owe more than the value of your investments. It’s critical in this case that you have a solid plan in place, choose good investments that will bounce back when markets recover, and that you put yourself in a position where you’re not going to be forced to sell your investments at the wrong time. Cover these bases before you get started and get some good help at the front end so you can set up your debt recycling strategy for success. Get some good help here if you need it, the support will pay for itself many times over when you get this right. Is debt recycling right for you? Debt recycling can be a powerful strategy to accelerate how quickly you get ahead. If you own your own home, have some equity in the property, and have a few spare bucks you’re wanting to use to invest, debt recycling is worth serious consideration. Debt recycling can help you become mortgage free, create some solid tax savings you can use to create more wealth, and build a share portfolio to help drive financial security and freedom for the future. But it’s not without risks; you’ll be maintaining debt levels for years into the future, be at the mercy of interest rates, and subject to the ups and downs of the share market – all risks that shouldn’t be taken lightly.

Business Activity Statements and Superannuation payments are used to report and pay different taxation obligations for your business including: Goods and services tax (GST) Pay as you go withholding (PAYG withholding) – if you have employees Pay as you go installments (PAYG installments). Most small businesses lodge their BAS and Super - any amount owing (or get a refund) quarterly. Quarter 1 (July, August, and September) – 28 October Quarter 2 (October, November and December) – 28 February Quarter 3 (January, February and March) – 28 April Quarter 4 (April, May and June) – 28 July On behalf of your team at Gold Medal Accounting, Doug, Brad, Lynn, and Chloe wish you all the best for the month ahead and look forward to hearing from you anytime we can assist. Gold Medal Accounting would love your feedback. We would love to see your review here on Google: https://g.page/r/CWM_h2YCF9KdEAo/review

Do you have any employees? Do you pay yourself a wage? Single Touch Payroll is now compulsory and reporting is now required. Do you know we offer Payroll and Bookkeeping services for our clients? We are Xero Certified Advisers and can do all your Bookkeeping and/or Payroll for you. Xero is great for keeping all your Accounting, Bookkeeping, and Single Touch Payroll obligations in order. If you would like to discuss this or set up a time, we can offer some free basic training for our clients and discuss the best way for your business to be successful using any of the Accounting software currently available. We also have access to a discount code that will allow you to get 50% off for the first 6 months. Give us a call to set up a convenient time when you’re ready.

Heard about the Instant Asset Write-Off but are not sure if your business is eligible?  We have summarised the eligibility criteria, benefits, and some fast facts to help your business benefit from this SME investment stimulus program. In October 2020, the federal government made enhancements to the Instant Asset Write-Off (IAWO) program including removing the $150,000 limit on purchases. In the May Federal Budget 2020-21 announcement, the program was then extended through to 2023. Here are some Fast Facts about IAWO: There’s no $$ limit on the cost of the new business asset purchased* Write-off claims can be made in the year in which the asset is used or installed You can claim multiple new eligible assets of any dollar value, and eligible improvements on new and existing assets Financed equipment and cars can still claim a deduction for the cost of eligible items Program end date extended from 30 June 2022 to 30 June 2023 If you are in search of a new vehicle, new equipment, or stock, we can help you with finance. We now have access to a variety of lenders and our software helps determine the best lender based on your individual circumstances! Car Loans, Business Loans, equipment finance can all be done through our office. We supply the financials to the lender to make the process as simple and easy as possible for our clients.