Wednesday, June 15, 2011

Perth Dominates Australia Top 25 Suburbs Price Plunge

RP Data has released a report showing Perth suburb Mosman Park amongst eight other WA suburbs in the top 25 suburbs - top 25 for biggest drop in median house prices in the last three years.Here are Perth's biggest losers.

Mosman Park 43% now $1.25 million
East Fremantle 30% now $910,000
Jarrahdale 25.2% now $430,000
Nedlands 22.7% now $1.7 million
Cottesloe 21.6% now $2.05 million
Claremont 20.8% now $1.225 million
Cambridge 16% now $1.05 million
Subiaco 14.3% now $1.157 million
Kalamunda 12.2% now $430,000

Where are you going to buy your home in Perth?

Tuesday, June 7, 2011

Rates on hold again (this is getting repetitive)


Here is the announcement from the Reserve Bank of Australia as to why the cash rate has been left on hold. At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
The global economy is continuing its expansion, led by very strong growth in the Asian region, though the recent disaster in Japan is having a major impact on Japanese production, and significant effects on production of some manufactured products further afield. Commodity prices have generally softened a little of late, but they remain at very high levels, which is weighing on income and demand in major countries and also pushing up measures of consumer price inflation. In response, a number of the countries with stronger expansions have been moving to tighten their monetary policy settings over recent months. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility.
Australia's terms of trade are reaching very high levels and national income has been growing strongly. Private investment is picking up, led by very large capital spending programs in the resources sector, in response to high levels of commodity prices. Outside the resources sector, investment intentions have been revised lower recently. In the household sector thus far, there continues to be a degree of caution in spending and borrowing and a higher rate of saving out of current income. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.
The floods and cyclones over the summer have reduced output in some key sectors. As a result there was a sharp fall in real GDP in the March quarter, despite a solid increase in aggregate demand. The resumption of coal production in flooded mines is taking longer than initially expected, but production levels are now increasing again and there will be a mild boost to demand from the broader rebuilding efforts as they get under way. Over the medium term, overall growth is likely to be at trend or higher.
Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.
Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has expanded this year after a period of contraction. Growth in credit to households, on the other hand, has softened, as have housing prices. The exchange rate remains, in real effective terms, close to its highest level in several decades. If sustained, this could be expected to exert continued restraint on the traded sector.
CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset. The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months.
At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

Friday, June 3, 2011

FHSA holders can buy a house now

It has hardly recieved any news coverage but the First Home Saver accounts that have been offered by the federal government has just last week become more attractive (see 5 Reasons to get a First Home Saver Account for background information). The government has now allowed people who have a first homesaver account but not eligible to draw the money out just yet, to go and buy a house and when the first home saver account completes the four year requirement, you can use the money to contribute to the mortgage of that purchased house.

This seems to only apply for houses that were bought after 25th May 2011. Nothing has been said about the situation where you acquire an interest in a house after 25th May 2011. Anyone know whether that will qualify?

Thursday, June 2, 2011

New Law Passed for First Homesaver Accounts

Tax Laws Amendment (2011 Measures No. 1) Act 2011
 No. 31, 2011


An Act to amend the law relating to taxation and the First Home Saver Accounts Act 2008, and for related purposes
  
  

Contents
Schedule 3—First Home Saver Accounts                                                                9
First Home Saver Accounts Act 2008                                                                      9
Income Tax Assessment Act 1997                                                                            18




Tax Laws Amendment (2011 Measures No. 1) Act 2011
No. 31, 2011



An Act to amend the law relating to taxation and the First Home Saver Accounts Act 2008, and for related purposes
[Assented to 25 May 2011]
The Parliament of Australia enacts:
                   This Act may be cited as the Tax Laws Amendment (2011 Measures No. 1) Act 2011.
             (1)  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1.  Sections 1 to 3 and anything in this Act not elsewhere covered by this table
The day this Act receives the Royal Assent.
25 May 2011
2.  Schedule 1, Part 1
The day this Act receives the Royal Assent.
25 May 2011
3.  Schedule 1, Part 2
1 July 2014.
1 July 2014
4.  Schedule 2, Part 1
The day this Act receives the Royal Assent.
25 May 2011
5.  Schedule 2, Part 2
1 July 2014.
1 July 2014
6.  Schedule 3
The day after this Act receives the Royal Assent.
26 May 2011
Note:          This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
             (2)  Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
                   Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


  
1  At the end of subsection 15(2)
Add:
               ; or (e)  the FHSA was closed following the transfer of its balance to another FHSA as the initial contribution to the other FHSA.
2  At the end of section 15
Add:
Disregard requirement that person never held a qualifying interest
             (3)  Disregard paragraph (1)(c) if:
                     (a)  the person has given a notice under section 20 that contains a statement under paragraph 20(4)(aa) (about the person intending to seek an FHSA mortgage payment); and
                     (b)  the person has not given a revocation of that notice under subsection 20(5).
Note 1:    The following heading to subsection 15(1) is inserted “When person meets the FHSA eligibility requirements”.
Note 2:    The following heading to subsection 15(2) is inserted “Requirement for each FHSA that was closed”.
3  Section 16
Before “A”, insert “(1)”.
Note:       The following heading to new subsection 16(1) is inserted “When acquisition payments are ineligibility payments”.
4  At the end of section 16
Add:
When mortgage payments are ineligibility payments
             (2)  A payment from an FHSA held by a person is an FHSA ineligibility payment if:
                     (a)  the payment is an FHSA mortgage payment; and
                     (b)  the person did not satisfy the FHSA eligibility requirements when the payment was made.
Note 1:       For paragraph (b), the person’s acquisition of a qualifying interest in his or her main residence can be disregarded (see subsection 15(3)).
Note 2:       This Act does not provide for the consequences of the payment being an FHSA ineligibility payment. However, the FHSA holder will be liable for FHSA misuse tax in accordance with Subdivision 345‑C of theIncome Tax Assessment Act 1997.
5  At the end of subsection 17(2)
Add:
Note:          This Act does not provide for the consequences of a payment failing to satisfy the FHSA payment conditions. However, the FHSA holder will be liable for FHSA misuse tax in accordance with Subdivision 345‑C of theIncome Tax Assessment Act 1997.
Note:       The following heading to subsection 17(1) is inserted “Payment conditions for FHSA home acquisition payments”.
6  At the end of subsection 17(4)
Add:
Note:          This Act does not provide for the consequences of a payment failing to satisfy the FHSA payment conditions. However, the FHSA holder will be liable for FHSA misuse tax in accordance with Subdivision 345‑C of theIncome Tax Assessment Act 1997.
7  At the end of section 17
Add:
Payment conditions for FHSA mortgage payments
             (5)  An FHSA mortgage payment satisfies the FHSA payment conditions for a qualifying interest in a dwelling if:
                     (a)  no later than 28 days after the payment is made, the person who held the FHSA uses an amount equal to the payment in repaying all or part of a loan secured by a genuine mortgage:
                              (i)  over the qualifying interest; and
                             (ii)  for which the person is a mortgagor; and
                     (b)  for a continuous period that is at least 6 months long, and that starts within the period mentioned in subsection (6):
                              (i)  the person holds the qualifying interest; and
                             (ii)  the dwelling is the person’s main residence; and
                     (c)  if the construction of the dwelling is not complete when the payment is made—that construction is complete within a reasonable period after the payment is made.
             (6)  The period:
                     (a)  starts:
                              (i)  if the construction of the dwelling is not complete when the payment is made—when the construction of the dwelling is complete; or
                             (ii)  otherwise—when the payment is made; and
                     (b)  ends 12 months after the period starts, or at a later time that the Commissioner considers reasonable in the circumstances.
Note:          This Act does not provide for the consequences of a payment failing to satisfy the FHSA payment conditions. However, the FHSA holder will be liable for FHSA misuse tax in accordance with Subdivision 345‑C of theIncome Tax Assessment Act 1997.
8  Section 18
Insert:
arm’s length has the same meaning as in the Income Tax Assessment Act 1997.
9  Section 18
Insert:
associate has the same meaning as in the Income Tax Assessment Act 1997.
10  Section 18
Insert:
FHSA mortgage payment means a payment from an FHSA if the FHSA provider must make the payment under section 32A (about a payment for repaying a mortgage if a home is acquired before the qualifying period ends).
11  Section 18 (definition of FHSA payment conditions)
Repeal the definition, substitute:
FHSA payment conditions:
                     (a)  an FHSA home acquisition payment satisfies the FHSA payment conditions in the circumstances set out in subsections 17(1) to (4); and
                     (b)  an FHSA mortgage payment satisfies the FHSA payment conditions in the circumstances set out in subsections 17(5) and (6).
12  Section 18
Insert:
genuine mortgage: a mortgage is a genuine mortgage if:
                     (a)  when entering into the mortgage, the mortgagors and mortgagees deal with each other at arm’s length; and
                     (b)  none of the mortgagors is an associate of any of the mortgagees.
13  At the end of paragraph 19(1)(b)
Add:
                             (v)  if the person already holds an FHSA that is inactive only because of paragraph 23(1)(c) or (e)—the FHSA to be opened or issued will be inactive because of paragraph 23(1)(e); and
14  Subsection 19(1) (note)
Repeal the note, substitute:
Note 1:       For paragraph (b), the person may still satisfy the FHSA eligibility requirements even though the person has acquired a qualifying interest in his or her main residence (see subsection 15(3)).
Note 2:       Making a false statement in the application may constitute an offence: see subsection 8J(9) and sections 8K and 8N of the Taxation Administration Act 1953.
15  After paragraph 20(4)(a)
Insert:
                    (aa)  if:
                              (i)  the FHSA holder does not satisfy the FHSA eligibility requirements only because of paragraph 15(1)(c) (about never holding a qualifying interest); and
                             (ii)  the FHSA holder wants the FHSA to remain open until an FHSA mortgage payment can be paid;
                            a statement to that effect; or
16  Paragraph 20(5)(a)
Repeal the paragraph, substitute:
                     (a)  if the notice contains a statement under paragraph (4)(a) or an authority under paragraph (4)(b)—the FHSA holder becomes satisfied that he or she satisfies the FHSA eligibility requirements; and
                    (aa)  if the notice contains a statement under paragraph (4)(aa)—the FHSA holder becomes satisfied that he or she satisfies paragraph 15(1)(c); and
17  Subsection 21(1) (note)
Repeal the note, substitute:
Note 1:       The Commissioner may give the provider a notice under subsection 67(2) if a correct TFN was not quoted for the FHSA holder.
Note 2:       The person may still satisfy the FHSA eligibility requirements even though the person has acquired a qualifying interest in his or her main residence (see subsection 15(3)).
18  After paragraph 21(3)(a)
Insert:
                    (aa)  if the FHSA holder does not satisfy the FHSA eligibility requirements only because of paragraph 15(1)(c) (about never holding a qualifying interest)—subparagraph 23(1)(b)(iii) (about holder needing to notify provider if wants FHSA to remain open until an FHSA mortgage payment can be paid);
19  Paragraph 21(4)(a)
Repeal the paragraph, substitute:
                     (a)  if paragraph (3)(aa) applies to the notice—the Commissioner becomes satisfied that the FHSA holder satisfies paragraph 15(1)(c); and
                    (aa)  if paragraph (3)(aa) does not apply to the notice—the Commissioner becomes satisfied that the FHSA holder satisfies the FHSA eligibility requirements; and
20  At the end of subsection 22(1)
Add:
               ; or (c)  the provider of an FHSA makes an FHSA mortgage payment from the FHSA on a particular day (also the trigger day), and the balance of the FHSA immediately after the payment is more than nil.
Note:       The heading to section 22 is replaced by the heading “FHSA provider to close FHSA if inactive in some cases or FHSA mortgage payment made”.
21  Subsection 23(1)
Repeal the subsection, substitute:
             (1)  An FHSA is inactive if:
                     (a)  the FHSA provider receives a notice from the FHSA holder under subsection 20(1) that contains:
                              (i)  a statement under paragraph 20(4)(a); or
                             (ii)  an authority under paragraph 20(4)(b);
                            (and does not receive a revocation of that notice under subsection 20(5)); or
                     (b)  all of the following subparagraphs apply:
                              (i)  the FHSA provider receives a notice from the Commissioner under subsection 21(1);
                             (ii)  the FHSA provider does not receive a revocation of that notice under subsection 21(4);
                            (iii)  within 30 days after receiving that notice, the FHSA provider does not receive a notice from the FHSA holder under subsection 20(1) that contains a statement under paragraph 20(4)(aa); or
                     (c)  the FHSA provider receives a notice from the FHSA holder under subsection 20(1) that contains a statement under paragraph 20(4)(aa) (and does not receive a revocation of that notice under subsection 20(5)); or
                     (d)  the FHSA provider receives a notice from the Commissioner under subsection 67(2) (and does not receive a revocation of that notice); or
                     (e)  the FHSA is opened or issued in response to an application to which subparagraph 19(1)(b)(ii) applies, where the other FHSA referred to in that subparagraph was inactive only because of:
                              (i)  paragraph (c) of this subsection; or
                             (ii)  an earlier application of this paragraph.
Note:          Paragraph (a) or (b) applies if the FHSA holder does not satisfy the FHSA eligibility requirements. However, neither paragraph need apply if the only one of those requirements not satisfied is the one about never holding an interest in a main residence. In that case, the FHSA holder can cause paragraph (c) to apply, keeping the FHSA open until an FHSA mortgage payment can be paid.
22  At the end of section 23
Add:
             (5)  An FHSA can become inactive under a provision even if it has already become inactive under another provision.
23  Subsection 26(2)
Repeal the subsection, substitute:
             (2)  The FHSA provider does not contravene subsection (1) if:
                     (a)  the provider repays the amount from the FHSA to the FHSA holder within 30 days after receiving it; or
                     (b)  the amount is a Government FHSA contribution; or
                     (c)  the FHSA is inactive only because of paragraph 23(1)(e), and the amount:
                              (i)  was the initial contribution to the FHSA; and
                             (ii)  immediately before being contributed, was the balance of another FHSA.
24  After subparagraph 31(1)(a)(i)
Insert:
                            (ia)  section 32A (FHSA mortgage payment); or
25  After section 32
Insert:
             (1)  This section applies if:
                     (a)  the holder of an FHSA acquires at a particular time (the acquisition time) a qualifying interest in a dwelling in Australia or Norfolk Island; and
                     (b)  before that time, the FHSA holder had never held a qualifying interest in a dwelling in Australia or Norfolk Island at a time when the dwelling was the FHSA holder’s main residence; and
                     (c)  the FHSA holder gives the FHSA provider an application in the approved form requesting an amount to be paid from the FHSA; and
                     (d)  the FHSA holder declares in the application that the payment will satisfy the FHSA payment conditions mentioned in subsection 17(5) for the qualifying interest; and
                     (e)  any of the following requirements are met:
                              (i)  the requirement in subparagraph 32(1)(c)(i) would be met if the FHSA holder were taken to have made a personal FHSA contribution of at least $1,000 for the financial year that includes the acquisition time and for each later financial year;
                             (ii)  the FHSA holder is in breach of the account balance cap, and has held an FHSA in at least 4 financial years (one of which may be the financial year in which the payment is to be made);
                            (iii)  the FHSA holder declares in the application that he or she holds the qualifying interest together with another FHSA holder in respect of whom the requirement in subparagraph 32(1)(c)(i), or in subparagraph (i) or (ii) of this paragraph, is met; and
                      (f)  the provider is satisfied that the requirements (if any) specified in the regulations are met; and
                     (g)  the FHSA is inactive only because of paragraph 23(1)(c) or (e) (about an FHSA remaining open until an FHSA mortgage payment can be paid), and is yet to be closed.
Note 1:       The FHSA holder will need to use the payment to repay all or part of a loan secured by a genuine mortgage over the qualifying interest (see subsection 17(5)).
Note 2:       Making a false or misleading statement in the application may constitute an offence: see subsection 8J(9) and sections 8K and 8N of the Taxation Administration Act 1953.
             (2)  The FHSA provider must pay the amount as requested:
                     (a)  as soon as practicable after the application is made; and
                     (b)  no later than 30 days after the application is made.
Offence
             (3)  A person commits an offence if the person contravenes subsection (2).
Penalty:  100 penalty units.
Validity of transaction not affected by contravention
             (4)  A contravention of subsection (2) does not affect the validity of a transaction.
26  Paragraph 35(1)(a)
After “of the FHSA”, insert “(the first FHSA)”.
27  Paragraph 35(1)(c)
Repeal the paragraph, substitute:
                     (c)  either:
                              (i)  the first FHSA is not inactive; or
                             (ii)  the first FHSA is inactive only because of paragraph 23(1)(c) or (e) (about an FHSA remaining open until an FHSA mortgage payment can be paid).
28  At the end of subsection 36(1)
Add:
Note:          A person’s acquisition of a qualifying interest in a dwelling after a personal FHSA contribution has been made for the person in that financial year, does not of itself stop a Government FHSA contribution from being payable for the financial year.
29  At the end of subsection 51C(2) (after the penalty)
Add:
Note:          For subparagraph (b)(i), the person may still satisfy the FHSA eligibility requirements even though the person has acquired a qualifying interest in his or her main residence (see subsection 15(3)).
30  Subparagraph 67(2)(c)(iii)
After “32,”, insert “32A,”.
31  At the end of subsection 128A(5)
Add:
Note:          The person may still satisfy the FHSA eligibility requirements even though the person has acquired a qualifying interest in his or her main residence (see subsection 15(3)).
32  Section 345‑100 (after the heading)
Insert:
Payments to acquire a home
33  Section 345‑100
Before “A”, insert “(1)”.
34  At the end of section 345‑100
Add:
Payments for repaying a mortgage
             (2)  A person is liable to pay tax imposed by the Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 in respect of an *FHSA mortgage payment from an *FHSA held by the person if:
                     (a)  the payment fails to satisfy the *FHSA payment conditions; or
                     (b)  the payment satisfies the FHSA payment conditions, but is an *FHSA ineligibility payment.
Note:          The Commissioner may make an assessment of the amount of the tax under section 169 of the Income Tax Assessment Act 1936.
35  Subsection 995‑1(1)
Insert:
FHSA mortgage payment has the meaning given by the First Home Saver Accounts Act 2008.
36  Application provision
The amendments made by this Schedule apply in relation to acquisitions of qualifying interests in dwellings on or after the commencement of this Schedule.


[Minister’s second reading speech made in—
House of Representatives on 24 February 2011
Senate on 25 March 2011]

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