After wild swings in the market the last few months, many readers that enjoy the advantage of employer shares may find their tax liability for the financial year exceeds the current value of the shares they received under the various employee share schemes (ESS).
Our ESS reporting rules represent an oddity in the tax system, whereby employees are expected to entirely self-assess their ESS income (unlike payments of salary, from which PAYG amounts are withheld and remitted to the ATO on the employee’s behalf and fringe benefits, which are taxable to the employer).
A smart move would be to sell a sufficient number of shares at the taxing point to ensure you have enough cash to pay the tax bill. If the share price goes up, you benefit from not having sold any of their shares at the taxing point because they would be able to cover their tax bill by offloading a smaller number of shares down the track. In today’s climate, however, if you chose not to sell some of their shares at the taxing point, you can get caught out.
As most of you know, I think employer share schemes are a fantastic way to create wealth and build momentum – if, and only if you have a clear employer share plan strategy in place. Feel free to book a call with our team if you’re looking to get a clear employer share plan strategy in place.
In the news: Biggest investing mistake 30-somethings make
It’s the most crucial decade to get ahead with money but in this article, I reveal the big error 30-somethings make. Click here to find out.
Crypto has been on a journey the last few months. If you’re still not entirely sure about what it all means, join me for a Crypto 101 chat this Tuesday.. Don’t leave it to the last minute, click through to register and join live:
Event schedule and links to book here:
- Cryptocurrency Investing 101 – August 02, 11am – 12pm
- Invest smarter when the market is crashing – 17 August 12.30pm – 1.30pm
- Buy property the smart way in 2022 – August 18, 12.30pm – 1.30pm
- How to Be Smarter With Money Through Your Career – September 1, 11am – 12pm
- Money and investing hacks – 14 September 12.30pm – 1.30pm
- How to Adult: Financing 101 – October 11, 12pm – 1pm
- How to FIRE without sacrificing your lifestyle – 12 October 12.30pm – 1.30pm
Share market wrap
Australian blue chips gained further ground on Friday, helped by a turn in investors’ appetite for risk and a growing belief that central banks will have to taper monetary tightening if large economies slow too quickly. The US economy shrank for a 2nd straight quarter (the official definition of a recession till about a week ago).
Key sharemarket numbers:
- The ASX ‘All Ords’ (top 500 shares in Australia) finished the week 2.4% higher than last Friday at 7,179.90 points.
- The US ‘S&P 500’ (Top 500 shares in America) finished the week 1.84% higher than last week at 4,072.43 points.
- The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week 1.15% higher than last week at 12,162.59 points.
- The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week 1.03% higher than last week (Friday AEDT) at 7,345.25 points.
- The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 2,605.36 for the month, up 36.99% for the month to date.
Investment story of the week: Prospa Group Limited (ASX: PGL)
Prospa Group Limited (ASX:PGL) is Australias #1 online lender to small businesses. Unlike traditional lenders, Prospa understands small business owners need faster finance solutions so they can make decisions quickly and seize opportunities with total confidence. Prospa offers business loans of between $5k and $300k. The ASX non-bank lender just had a record quarter, and its share price is soaring 12%. It was a strong period for loan originations, recording $104 million in June alone. As a result of this growth, there was an increase of 20% from the prior quarter. Prospa is now pushing higher alongside the ASX 200 bank share basket, securing a 21% gain this year to date. With interest rates rising and an uncertain future around loans to consumers, it’s definitely a company to keep an eye out for this financial year.
Smart Money upside #80
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story is from one of our clients to help you take your money game to the next level.
Couple; late 30’s with income of approximately $320K. Total assets worth $560k. Saving about $5k annually.
Not knowing what to do with their money or where to put it. Also managing enormous tax bills from running a small business.
What they wanted from us / the advice process
Get a clear plan and understanding on how to structure investments to provide us with enough passive income for them to retire earlier. Eventually buy a home in Sydney without stretching themselves.
What success looks like for them
Purchasing 1-2 investment properties and working towards a diversified portfolio of investments that drive passive income. Additionally, we want to supplement income for maternity leave, and have a clear plan around family planning.
What money strategy they were following before we went through the planning process
Ad hoc investing, slowly paying down their mortgage.
What money strategy they choose to pursue from our planning work
Banking structure, investment properties, superannuation rollover, investments into a diversified index portfolio
Key benefits of going through the process
Education, confidence and knowledge that by following the plan, they can achieve the goals they want.
Value of advice after all advice fees year one: $13k
Year 20 upside after advice fees: $3m
If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.
Giving update of the week
This week a couple of our amazing clients settled on their first investment property, and we’ve celebrated by providing 365 days of shelter to underprivileged people in India, as part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.
Money hack of the week: What outcomes can you expect from financial advice?
A financial advisor is like a passenger in your car. If you need to switch lanes, a passenger can help you see your blind spot better than you can. That’s precisely what we do with your money decisions. I sat down with Christine and Walter to hear about their experience of having someone help them with their big financial decisions. Check out our full chat here.
Money mistake of the week: Not looking at market uncertainty is your friend.
Here’s a hard truth, the action takers win in today’s economy. Chris Gray and I talked me through his journey of retiring at 31 by making some smart investments in a time where everyone was letting fear control their financial decisions. Is uncertainty in the property market holding you back from a potential opportunity? Check out our full chat here.
Jargon Buster of the Week: Capital (via Morgan Stanley)
Material wealth used or available for use in the production of more wealth.
Podcast from last week: #234 w. Harrison Dell – Chatting crypto tax law
In this episode, I chat with Harry Dell who is a tax lawyer that specializes in Crypto and Web3. We talked about crypto tax hacks, tax mistakes that people make, general sort of tax law and some of the opportunities for people to be smarter with their taxes.
This episode is perfect for anyone that wants to use the rules to their advantage, stay on the right side of the ATO, and keep more of their investment income.
I know you’re smarter than someone that would need me to write the words that come next, but our compliance peeps are real hard-asses so here we go… This information is not personal advice, poetry, or a map to where Jimmy Hoffa is buried. It may only be regarded as general advice and shouldn’t be considered something worthy of inclusion for Donna Hay’s next cookbook or the Archibald prize. This is actually just an email communication that has been sent to a bunch of people and doesn’t even have your name on it. Your personal objectives, needs or financial situation have not been considered when preparing this email, but I want you to know that I have spent a lot of time thinking about the Venn diagram intersection of poetry, landscaping, and essential oils – if you’re fascinated by this same phenomenon please reply so we can compare notes. You should consider the appropriateness of any general advice we have given you, regarding your objectives, financial situation and needs, and if necessary, seek advice before acting on it. You should also consider other people when getting on and off public transport, smiling more, eating healthy, and listening to your mum when she tells you that you’ve been working too hard. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Where the information relates to a hilarious joke I’ve made, you should consider belly laughing deeply. Worth noting also that past performance is not a reliable indicator of future performance when it comes to investments, and definitely not when it comes to the Wallabies. Financial services guide. All jokes aside and just to be clear, this information may only be regarded as general advice. Your personal objectives, needs or financial situations were not considered when preparing it. You should consider the appropriateness of any general advice we have given you, regarding your objectives, financial situation and needs, and if necessary, seek advice before acting on it. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Past performance is not a reliable indicator of future performance.