Peta Muller reported this story 9 November 2009.
Companies seeking relief via the ATO’s tax payments deferral scheme may be shooting themselves in the foot according to Interlease Director Gary Wilkie.
Companies seeking relief from tax payable commitments are finding the ATO offer to defer payments extremely useful in easing the financial burdens.
Whilst this is good news from a cash flow perspective, Mr Wilkie warns that banks and financial institutions do not view companies making use of this program in a positive light.
"Companies, and their accountants, need to be aware that banks and finance companies take a very dim view of companies seeking funding that are unable to pay their tax obligations on time," he said.
Companies considering the tax deferral tool need to be fully aware of the financial consequences incurred by doing so.
“Once a company has gone down the path of deferring their tax debt, they are effectively warning their financiers that they are having cash flow difficulties,” Mr Wilkie said.
According to Mr Wilkie, banks, in particular, are more than likely to deny funding to any company that has recorded a tax debt on their balance sheet.
“A non-payment of tax will make it necessary for companies to provide, projections, cash flows and full disclosure of the problem when applying for extra funding for the next three to four years”, he said.
Whilst tax payment deferrals could be seen as a blessing to the company, once it is recorded on the balance sheet, it can remain on the company’s records for years.
“This may be the sole reason why a funding facility is not approved,” said Mr Wilkie.
Interlease strongly advises that companies need to realise that deferring tax liabilities can detrimentally affect their credit rating, which impacts capability to obtain funding in the future.
"Making an arrangement with the ATO should only be considered as a last resort in full knowledge that future funding may be compromised,” said Mr Wilkie.
Peta Muller reported this story 13 October 2009.
Australians are experiencing an increase in financial burdens thanks to a significant trend of under insuring.
Countless Australians do not have the financial capacity or existing funding to accommodate a long-term illness or potentially leave work for an extended period of time.
Financial Advisor Carla Benson said that inadequate insurance cover was a significant problem in Australia.
“It’s disturbing to think that many people are putting themselves at significant financial risk by not having an adequate level of insurance,” said Ms Benson.
For the largest part of the population, income is not something that can be jeopardised so it is important that people protect themselves by ensuring they have sufficient insurance cover.
Ms Benson believes many households retain policies to protect tangible assets, yet do not protect their main source of income or sufficiently prepare for the risk of experiencing a traumatic event.
“Trauma insurance is often overlooked as a priority because of the common misconception that savings, employment, government and health benefits provide a sufficient safety net," said Ms Benson.
The financial burden of medical costs and obligations is increasing, as are the chances of experiencing or recovering from a traumatic event.
Ms Benson claimed that Australians tend to believe that “It won’t happen to me”, however everyone knows someone who’s experienced a serious illness or accident, and it can happen at any age.
Statistics from Aviva indicate that 70% of the critical illness benefit payments made to their policy holders during the period of 1990 – 2008 were to sufferers of malignant cancer, followed by heart attacks.
“The harsh reality is that if these patients didn’t have trauma cover, they may have not been able to afford to pay for the upfront medical treatment required to save their lives," Ms Benson said.
“Everyone should reassess their financial circumstances and weigh up the risks," she said.
Peta Muller reported this story 13 October 2009.
The effects of the international credit crisis have well and truly hit home, with the recent battering of Australian Real Estate Investment Trust’s (A-REITs) and the downturn of many direct property assets.
With this misfortune comes opportunity for the cashed up investor to take advantage of distressed assets and short-term market turbulence.
Property Fund Manager Vaughan Hayne of WHK Horwath Securities Limited (WHKSL) and his team have been liaising with industry professionals to gain a feel for opportunities in the property market.
Mr Hayne believes the cycle has returned to an environment where investors are seeking transparent, plain vanilla products, with low gearing and a focus on yield.
“In times of market crisis, the philosophy “Cash is King” is evident through A-REITs raising capital to both strengthen the balance sheet and allow for strategic acquisition opportunities," said Mr Hayne.
“Capitalisation rates softening across all property asset classes has created opportunities for cashed-up buyers to acquire quality assets which would seldom reach the market, and are now selling at bargain prices," said Mr Hayne.
Mr Hayne claimed the positive feedback retrieved from industry participants, combined with the decline in interest rates has provided an opportunity for his organisation to launch new products in 2009.
“Our new products will take property investing back to basics where the investor clearly knows the underlying asset(s) and attributable income component," said Mr Hayne.
“Stringent risk management policies will be adhered to with an investment committee appointed to approve decisions," Mr Hayne said.
In times of market turmoil, a wise investor who can identify sound undervalued investment opportunities can create a strong investment portfolio for the medium to long term.
“This will be a big step for WHKSL in this current environment, however the support of investors will ultimately determine the success of these products," said Mr Hayne.
