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September Edition 2009
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UPA Newsletter


In this issue:
Contact UPA

If you have any queries or comments in relation to this newsletter, please contact us. Any information that you submit to us or speak with us about is strictly confidential.
Phone: +61 7 5591 1661
Fax: Fax: +61 7 5591 1772
Email: newsletter@upa.com.au
Big Brother & Cooked Books - A Case Study
Section1 Ms Y and her husband were in the restaurant business. Ms Y was responsible for the business’s bookkeeping.

Information received by the ATO indicated that the business was paying cash wages that were not recorded in the books as well as cash purchases being made from the till. There were also allegations of a second set of books.

Being suspicious that fraud offences might have been committed, the ATO sought the assistance of the AFP to execute search warrants to obtain evidence of the potential offences.

The execution of the search warrants identified a second set of records that indicated sales in excess of those recorded in the books that Ms Y provided to her tax agent to prepare income tax returns.

An audit and investigation were carried out concurrently with the audit identifying that the cash sales were significantly higher than that reported to the ATO.

Amended assessments were issued based on estimating the percentage of cash sales compared with credit card transactions from the second set of books for the full financial year.

The behavior of the taxpayer was considered to be an intentional disregard of the tax laws and a base penalty amount of 75% of the tax shortfall was imposed. In addition, a general interest charge was applied for the relevant period.

Charges under the Crimes Act 1914 were laid alleging Ms Y had defrauded the Commonwealth of more than $300,000, and a formal prosecution began.

At trial, Ms Y was found guilty of fraud offences. Ms Y was sentenced to three years jail, with a minimum of 12 months to be served.

Courtesy of the Australian Taxation Office

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UPA Website - A New Look
Section1 July 2009 saw the launch of our new UPA website. The website has been re-launched with our fresh new branding, a vibrant new look and significant layout updates.

The new site covers every area we specialize in and represents our specialist approach to our clients and reflects our commitment to continue our solid reputation for providing excellent client service. Visit us at www.upa.com.au

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Current Lending Practices of Our Banks
Section4 Since the introduction of the Government Guarantee for bank deposits we have seen a swing away from the “second tier” lenders to a point where the big four have an even larger stranglehold on home lending. We have also seen merges/takeovers which has reduced the number of choices available.

The Government Guarantee has given the banks a huge borrowing advantage when seeking funds from overseas markets to prop up the funds they need for on-going lending because of their strong credit ratings. This advantage will continue until another “Aussie We’ll Save You” emerges to increase competition. Having said this, there are lenders in the home lending market who still offer very competitive products and interest rates.

In relation to business lending, banks are generally taking a cautious approach and borrowers need to present a very professional application backed up with all relevant data if they want to avoid disappointment.

In regards to interest rates we do not expect to see any further significant reductions and even if the Reserve Bank does cut rates further it is unlikely that the banks will pass on any further cuts. In fact, they have been progressively increasing fixed rates for a couple of months now. While fixed rates give borrowers some assurance they are quite inflexible and borrowers should consider their long term objectives before fixing rates.

Should you wish to discuss any aspect of borrowing please feel free to call Wayne Spelleken, UPA’s Finance expert.

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Wills & Superannuation Benefits
Section5 Most people know the importance of making a Will, but it may come as a shock to those who already have a Will to learn that that their superannuation entitlements may not be covered.

As a general rule, your superannuation entitlements do not form part of your personal estate. When you die your executor will divide your estate according to your Will, but the Trustee of your superannuation fund(s) will determine who gets your superannuation entitlements.

Many superannuation funds have the ability for their members to make Binding Death Benefit Nominations (BDBN), which are a set of instructions that compel the Trustees to act in accordance with your wishes. A BDBN can direct the benefit to be paid to the estate or to specific people (e.g. spouse, children etc), but in order to be a valid nomination numerous rules must be followed.

These nominations shouldn’t be confused with Non-Binding Nominations. As usual, UPA recommends seeking professional assistance when navigating this complex matter.

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Income Tax Rates
Investing with Foresight
Section3 Did your adviser recommend you invest in Timbercorp, Great Southern or other agribusiness products?

About 4 years ago, we conducted extensive research through the swathe of agribusiness products. In our view, not one of these products stacked up as a good long term investment opportunity and as such never recommended our clients have exposure to them. Great Southern are now in receivership and in April Timbercorp appointed administrators.

Did your adviser tell you to sell out of the share market two years ago?

In August 2007, cracks began to appear in the overinflated US housing market. We recognized that the liquidity taps that had fuelled enormous debt and asset bubbles across the globe were about to run dry and the implications would be felt in asset prices around the world. We advised our investment clients in August 2007 to sell out of the share market and managed funds and to go into cash. This decision saved our clients from being exposed to the sharemarket meltdown and protected their capital.

If you are worried about your situation and would like a review of your current financial position, please contact our office on (07) 5591 1661 to arrange an appointment with one of our representatives today.

Section6
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UPA Investments Pty Ltd
A.B.N. 37 102 708 725
AFSL No.226360

Disclaimer
This article is a private communication to investors and contains general information only. As the particular circumstances and needs of individual investors may vary greatly, the information herein should not be used as a substitute for personalised professional advice. Whilst every effort has been made to ensure that the information is correct, its accuracy and completeness cannot be guaranteed, thus UPA Investments Pty Ltd cannot be held responsible for any loss suffered by the party due to their reliance on the information or arising from any error or omission. The Directors and Representatives of UPA Investments Pty Ltd may have a financial interest in investments in this article by way of investment, brokerage or fees.

This article has been prepared for the private use of the clients of UPA Investments Pty Ltd (ABN 37 102 708 725) and its wholly owned subsidiaries (the “UPA Group”) and must not be copied (either in whole or in part) or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this article in any way. Nothing in this article shall be construed as a solicitation to buy or sell any security or any product, or to engage in or refrain from engaging in any transaction. In preparing this article we did not take into account the investment objectives, financial situation and particular needs of the reader. Before making an investment decision the reader needs to consider, with or without the advice of a securities adviser, whether this information is appropriate in light of their particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities does fluctuate, and any individual security may experience upward or downward movements, and may even become valueless.

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Phone: (07) 5591 1661
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