Your Money & You – July 2012
CHOOSING AN ACCOUNTANT
As an ADF member you may be entitled to certain tax and other benefits, and may want to engage a professional accountant to help you with your taxes or other financial arrangements. Choosing an accountant is much like choosing any other professional, such as a lawyer or plumber. Take some time to shop around and choose an accountant that meets your needs.
What accountants can do for you
Accountants offer a range of services.
Tax returns
For most of us, the word ‘accountant’ is closely associated with tax time. This type of accounting service is widely used and typically offered by suburban accountants and large accounting firms with local offices. Look out for the advertisements come tax time. Make sure your accountant is a registered tax agent by checking online at the Tax Practitioners Board website: www.tpb.gov.au.
If your finances are straightforward you can fill out a paper tax return or use the Australian Tax Office’s (ATO) online E-tax system. If you have more complex finances you may want to engage an accountant to give you general advice on specific tax situations.
Accountants may also be able to help you with investment issues, provided they have an Australian Financial Services Licence. Check if they have a licence on ASIC Connect’s Professional Registers.
Business accounting
If you or your family run a business, you’ll need the services of an accountant or bookkeeper because there are specific laws about the records that businesses must keep. Search the ATO website for information on record keeping essentials.
How to find an accountant
Once you’ve decided on the type of accounting service you need, the next step is to find an accountant in your area. You can search the websites of professional bodies such as the Certified Practising Accountants of Australia, the Institute of Chartered Accountants in Australia, or the Institute of Public Accountants. You can also ask for recommendations from family and friends.
Questions to ask
- Specialisation – what services do they offer? Do they regularly deal with people in similar situations to you? If you have specific needs, make sure your accountant has experience in that area. If not you may have to pay for a more specialised service.
- Customer service – do they provide a good service? Make sure your accountant responds to phone calls and emails promptly. You may also want an accountant that communicates in plain language, not financial jargon.
- Fees – what will you be charged, and when?
- Qualified – are they a member of one of the professional associations mentioned above? If they are, they have to meet the standards of the association. It also means you can complain to the association if you’re not happy with your accountant or the service provided.
If you’re satisfied with the answers to all these questions you can feel confident about working with your accountant.
For more information on choosing an accountant go to www.moneysmart.gov.au.
Greg Medcraft
Chairman
Australian Securities and Investments Commission
PROTECTING YOUR PERSONAL PROPERTY
In the June edition of Your Money and You we wrote about how you can avoid buying someone else’s debt when you are in the market for an expensive item of property like a car or a boat.
The article introduced you to the new national Personal Property Securities Register (PPS Register) and how you are able to search the register to see if there are any registered loans against the property before you buy it.
The PPS Register allows people to register an interest in most types of personal property (other than real estate) in order to secure the repayment of a debt. For instance, where a finance company provides you with a car loan and retains the right to repossess the car if you default on your loan. Importantly, individuals may also be able to register an interest in personal property in some situations, for example, where a long term relationship breaks down and the partners own valuable property together.
In this edition we will discuss what you can do if someone has a registered interest against your property that you think is unreasonable or is no longer justified. This may happen, hypothetically, if a finance company mistakenly registered an interest without having lent you money.
What is the effect of registration?
The Commonwealth Personal Property Securities Act 2009 lays down rules about how registered interests are prioritised. The default rule is that it’s first in best dressed. So, if finance company A registers an interest first it will have a right to have the money it lent against the property paid back before anyone else lower down the pecking order. Given that, it is really important not to allow a registration against your property to remain on the PPS Register if it should not be there.
How to check for registered interests against your property
You can search the PPS Register for any securities registered against your property. The relevant search is call a search by ‘grantor’ – or the person granting the registration – in this case, you. To find out more about searching the PPS Register you should see the PPS Register website at:www.ppsr.gov.au or telephone the PPS Registrar on 1300 007 777. The PPS Registrar charges fees for searches on a cost recovery basis.
How to get things off the register
What if something was unreasonably placed on the register and you want to get it off? If you notice a mistake in a registration, there is a step by step process laid down whereby you can demand that the person who wrongly created the registration fixes it. Very briefly, you will need to give the person what is called an ‘amendment demand’ that they either remove or amend their registration. If they fail to do so within five business days you can then apply to have the registration amended or removed. If the person disagrees with your demand they are able to go to court to seek an order that your demand is not valid. Obviously if you are going to go down this path it is important that you get all the information you need from the PPS Registrar first. You should also consider seeking independent legal advice, particularly if there is a lot of money or valuable property at stake.
WHY IS INFLATION A BIGGER CURSE FOR RETIREES THAN WORKERS?
Workers generally deal with inflation automatically because their wages increase over time. Obviously some people are better at negotiating wage increases than others but that’s not the point.
Whilst working we use our mental and physical labour to earn a living. Once we retire we cease using our skills and begin to rely solely on the ‘labour’ of our investments to generate our income needs.
Once we retire inflation doesn’t magically stop. And many of us will be retired for at least 20 years. If inflation averages 3% per annum over 24 years then prices will double.
Who will a retiree negotiate with when they need an increase in income to take into account inflation?
The added danger with inflation for retirees is that its awful impact is ignored until the horse has bolted.
For example the Association of Super Funds of Australia estimates that to have a comfortable retirement a couple would need over $55,000 per annum – or about $1,060 per week.
When planning many people work out how they might generate that level of income over the medium to long term. Over 20 years without taking into account inflation many people would try and pay themselves about $1.1 million in income in total (20 times $55,000).
This is a fundamental mistake. To maintain purchasing power over twenty years we would actually need almost $1.5 million in income assuming inflation is 3% each year.
How do retirees build inflation into their retirement planning? Generating inflation linked income over the indefinite long term appears complex but in actual fact it’s more simple than it often appears. We’ll discuss the important five steps to generating inflation linked income in our next newsletter.