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June Edition 2009
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UPA Newsletter
In this issue:
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Contact UPA
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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.
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Introduction
Welcome to our first email edition of the UPA newsletter. We are pleased to inform you of a new look
to the UPA branding; you’ll begin to notice changes in our stationery and advertising starting in June.
Also exciting to mention is our new look website which is due for completion this month.
This newsletter will be sent quarterly and will cover areas such as new features, leading issues across
our various business areas, service offerings and other general topics of interest. We hope you enjoy
the new format and would welcome your feedback or article suggestions to newsletter@upa.com.au.
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2009-10 Budget - The Aftermath
It is impossible to provide a complete Budget “wrap up” in a just a few paragraphs, but we will highlight
a few areas of interest for you. Please note that these are merely announcements and are not yet law.
You should exercise extreme caution when making major decisions based upon what might happen.
It is proposed that the current investment allowance for small businesses will be increased to
50% for expenditure on equipment that is contracted for prior to 31 December 2009 and installed before
31 December 2010. This is a significant improvement on the 30% allowance already announced and a huge
improvement on the 10% allowance applying from 1 July 2009.
For anyone drawing a superannuation pension the Government has announced that the minimum pension
limits will be halved for the year ending 30 June 2010. This is a measure designed to help protect superannuation
capital and means that the minimum withdrawal will be 2% of the account balance for someone aged between
55 – 64 and 2.5% for someone aged between 65 – 74.
One of the biggest disappointments to come out of the Budget was the decision to reduce the deductible
superannuation contribution limits which have been slashed by 50% with effect from 1 July 2009.
The new maximum limits will be $25,000 for someone aged less than 50 and $50,000 for someone aged 50
or more.
You may also pay more for private health insurance with the 30% Government rebate being reduced
to 20% where family incomes exceed $150,000 ($75,000 for singles), further reduced to 10% where family
incomes exceed $180,000 ($90,000 for singles) and removed completely where family incomes exceed $240,000
($120,000 for singles). For those who opt out of private health insurance altogether the Medicare Levy
Surcharge will apply at 1%, 1.25% and 1.5% for the respective income ranges outlined above.
By Warren Meiklejohn & Leanne Saunders
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Buying or Selling a Business in a Recession
 Even if today’s market deals which are mutually beneficial to both buyer
and seller can still be achieved.
Both buyer and seller can take advantage of an economic slowdown; however it is important to remember
that viable businesses can still be worth large sums even in today’s market.
Although lending institutions have tightened up their lending policies there are still other options
available to buyers. One option being used to help buyers raise finance and sellers achieve fair market
is vendor financing.
The advantage of vendor financing to the vendor, is that if structured properly, the vendor can achieve
a good price for their business and can often negotiate interest rates that are higher than prevailing
market rates.
Advantages to the buyer include being able to buy a business they would otherwise not be able to with
tight credit markets, changing bank policies and high bank fees. There is also the added sense of security
that the seller still believes in the long term future of the business.
An experienced business broker will be able to negotiate a payment schedule that is attractive to both
parties and still allow the buyer to reinvest earnings back into the business.
By Brett Kochner
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Travel Consultant vs. ATO
The Administrative Appeals Tribunal (“the AAT”) has recently allowed an employee sales consultant working
in a travel agency a deduction for most of his holiday travel expenses incurred in connection with two
overseas trips and a domestic trip.
The AAT allowed the taxpayer’s claims on the basis that the travel expenses not only directly contributed
to his knowledge and skill as a travel sales consultant (which was used for the benefit of his customers),
but also contributed to him earning increased income from employment.
This decision is significant for employee travel agents who undertake so called “educational”
or “familiarisation” trips. This is because the decision largely challenges the Commissioner’s views
on claiming deductions for travel expenses incurred in connection with these types of trips.
The Commissioner has traditionally taken the view that there is not a sufficient nexus between the expense
and the employee’s work duties.
Some of the interesting factors in this case were:
- The taxpayer was on annual leave during the trips;
- He visited extended family for some of the time; and
- He took his girlfriend along on the Round-the-World trip (although the taxpayer stated that she “did
her own thing” on many days).
(With thanks to NTAA)
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Automatic Assessments for Non Lodgers
On 26 May 2009, the ATO sent letters to 5,000 taxpayers requesting lodgment of overdue income tax returns
by 7 July 2009.
The letter titled 'Lodge your overdue income tax return by 7 July 2009' advises that if overdue
returns are not lodged by 7 July 2009, the ATO will issue an assessment under section 167 of the Income
Tax Assessment Act 1936 based on income information obtained from Tax Office systems. The letter includes
a summary of the client's estimated taxable income on which assessment will be based.
Failure to lodge on time (FTL) and 75% shortfall penalties may be applied in these cases. The shortfall
penalty is calculated on the tax related liability after taking into account any pay as you go (PAYG)
or other tax credits available.
If you should receive such a letter, please contact us as soon as possible so we can advise you on the
best course of action.
By Gary Cooper
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Scan Business Brokers Website - New Look
 April 2009 saw the launch of our new Scan Business Brokers website. The website
has been re-launched with our fresh new branding, a vibrant new look, significant layout updates and
features the latest functionality including powerful and innovative facilities to view information.
The new site covers every area we specialize in. Whether you are selling or buying a business, you will
find the new website very user friendly with all the information you need including hot tips and resources,
a great new page to manage your enquiries and obtain further information on businesses of interest to
you, and access to share information with your professional advisors.
Our new website 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.scanbusiness.com.au
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Pricing Laws Impact Hospitality Industry
 On 25th May 2009, legislative changes to the way prices are represented to consumers came into effect. Section 53 of the Trade Practices Act requires
corporations to provide consumers with a prominent single total price for a good or service.
It is common among restaurants, cafes and bars to impose surcharges on all food and beverages on weekend and public holidays. Many establishments place notices on their menus and in their premises notifying patrons of any surcharges. The Australian Competition and Consumer Commission (ACCC) consider these pricing representations to be misleading.
Under the new requirements, restaurants, cafes and bars will need to provide patrons with a separate menu showing the surcharge inclusive prices. Penalties for non-compliance include
fines of up to $1.1 million for corporations and $220,000 for individuals.
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Investing in Difficult Times
 If the last year and a half has taught us anything, it’s that stock market
collapses don’t discriminate. Even the most affluent investors have lost large chunks of their fortunes.
Just look at local business people such as Matthew Perrin (ex-Billabong co owner) who has blown more
than $150 million on failed projects in China and mammoth gambling debts, or Jim Raptis (Raptis Group
Chairman), whose company owes creditors an estimated $1 billion. This shows you how much this crisis
has affected even the once rich.
As a result of these past 18 months, a new mentality seems to have emerged among some investors who
are rethinking the traditional approach to asset allocation. The upheaval in the markets and in the
economy has led some to question the principles of investing and to sound a death knell, at least for
now, for the buy-and-hold strategy.
This market will provide many trading opportunities ahead and long term investing is certainly beginning
to lose its appeal given this current uncertainty. There are many possible outcomes ahead of us and
you need to be in the position to structure your investment portfolio to reflect many possible outcomes.
We at UPA Investments have not been afraid to make the ‘big calls’ when it comes to investing. In August
2007 when the market was trading around 5,850 points, we advised many of our clients to sell all of
their existing portfolios into cash. With the market currently trading some 35% lower than when we sold
out it proved to be a significant call to make as we protected our clients’ capital from this downside.
Remember it’s not fact that you lose a battle that matters, it’s how you utilise your available resources
to make sure you win the next battle.
If you would like to have a free initial consultation and review of your investment portfolio, please
contact an authorised representative at UPA Investments Pty Ltd.
By Doug Henderson
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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