make money

4 Ways to make money from other people’s old stuff

27 Apr, 2017

Maybe you are wondering how to make money  from other people’s unwanted items. If you have the inclination and time, recycling could be a full time job, so here’s some inspiration with a few items which can be recycled and turned into cash.

 

1. Bottles

Almost everywhere, bottle recycling is an excellent way to be environmentally friendly and is a great way to make money. You need to be saving all your bottles and cans as the refund is ten cents. There are several ways to add to your collection; you can pick up cans and bottles from the roadside by taking a bag and using some gloves; or ask your neighbours if they would save their bottles and cans for you and you can arrange collection on a specific day. A month’s worth of bottles and cans from a few households may make this worthwhile. For some, this may prove to be a lucrative business to make money and can even start their own recycling businesses like this 7-year-old boy.

 

2. Scrap metal

Small amounts of scrap metal won’t be worth a lot of money but bigger items like dishwashers, washing machines or a fridge could yield significant income. Ask other people to see if they have anything they no longer want before you arrange to take your own items. Copper is worth more than most other metals so look out for old rusty pots or discarded tap ware lying around in the shed.

 

3. Sculptures

Some of the most striking (and highly valued) sculptures have been made out of junk. Old bicycle wheels and tyres – even garden tools – can be made into something incredibly beautiful when welded together. If you have any artistic tendencies or welding skills this could be perfect for you, but even if you’re a novice the results might surprise you. A basic welder costs about $150.00, but you can make a lot more once you get settled into sculpting.

 

4. Make money clearing gardens ready for landscaping

This is something that’s frequently advertised on listings sites like Gumtree. Someone may just want to have a garden cleared of existing shrubs and rocks and doesn’t have the time or ability to do it themselves. Sometimes specialized digging equipment like a mini loader or bobcat may be required, so you will need to work out any expenses for hiring machinery before taking on the job.

 

make extra cash buying and selling

11 Ways to make extra cash by buying and selling

20 Apr, 2017

It’s easy to get started buying and selling items for a profit without having any experience or training. However, you’ll see that there are some areas where it helps to really know your stuff if you want to make extra cash in this way.

Here are some ideas for you if you’re looking for ways to boost your income and you love to shop or sell:

 

1. Become a garage sale organiser

Lots of people have things they want to sell but lack the time or skills to pull off a successful garage sale. You can help them out by advertising the event, setting everything up and deciding prices to get the biggest profit possible. You might even man the sale itself. Offer your services on a commission basis so the seller has nothing to lose.

 

2. Hunt for op shop bargains

Check out your local op shops and keep an eye out for pottery, dinnerware and anything that looks like it could be old or collectible. Check for stamps or emblems on anything that catches your eye, then Google it to see if it has any value. You can also quickly check Gumtree or eBay to see if any similar pieces have sold recently – all while you shop thanks to the wonders of smartphone technology!

When deciding whether it’s worth buying something, remember to factor in the time it will take to list it, as well as any listing fees. You may not make your millions this way, but occasionally you’ll come across a real gem that can triple or quadruple in value when you sell it on.

 

3. Sell at a market stall

Whether you make your own products and crafts or have a lot of unwanted items to get rid of, for a one-off fee you can set up a stall or table at a local market. The fee might be around $80 so you’ll need to consider how much you can really make, but if you have a lot of items to shift you can still easily turn a profit.

 

4. Supermarket product demonstrator

You’ve no doubt seen people at your local Woolworths or Big W doing short product demos and promoting special offers on new products. If you think that’s something you could do, check out Demo plus to find out how to get started and make extra cash this way.

 

5. Franchise/MLM business

With a low start-up cost and flexible working hours, these kinds of businesses are very popular with stay-at-home parents. There is also the potential to make a lot of money from them, particularly if you sign up more sales reps to become part of your “team”. Even if you rely on your own sales alone, if you have a good network of friends and contacts to sell to, you can make a decent income without the commitments of a regular job.

 

6. Buy in bulk and sell individually

This is a bigger commitment both financially and in terms of time, but you can turn a big profit by buying items in bulk and then marking them up as individual items. You may source your items from overseas, but if you have the storage space you can also look out for businesses closing down and demolition sales. Here you can pick up all kinds of furniture and other items at rock-bottom prices with the potential to make extra cash when you sell them on.

 

7. Sell unwanted or broken electronics

You’d be surprised how much money people will pay on eBay for a broken phone or faulty laptop. Have a clear-out of your old electronics and ask around family and friends to see if they have anything that’s just gathering dust. There are also services such as Cashaphone which offer free shipping and usually give you a price for your items upfront. Do be sure to wipe all your information properly before selling your items to keep your details secure.

 

8. Sell unwanted trees and building materials

If you’re having work done at home and need to get rid of trees or old pavers and bricks, try advertising them for sale as “buyer to dismantle and transport.” This can be a double win because instead of having to pay someone to remove the items for you, you actually make a bit of money from them. Do just check any council requirements or processes, particularly with trees, before you start.

 

9. Upcycle used furniture

If you have an arty streak and need to justify your Pinterest addiction, consider getting hold of some old furniture or other home décor and injecting a new lease of life into it before selling it on for a profit. People are often happy to give away bulky items that they have no use for or need fixing, so this could turn into quite a profitable trade if you have a talent for it and the right tools.

 

10. Sell your hair

Yes, really. If you’re going for a drastic cut and your hair is in good condition and uncoloured, ask your hairdresser to chop it off from the top of a ponytail so you can keep it and sell it to a company that makes wigs.

 

11. Product sourcing and research

If you’ve got a bit of time on your hands you can find ways to help out others who don’t. For example, a busy friend may have no time to compare car insurance prices when their renewal is due. Offer to do this for them and take a cut of whatever they save.

Alternatively, you could offer your services to people who are about to move to your state and need to research the best school for their children to attend, for example.

When you start thinking about it, you’ll probably come up with a ton of other ways you can make extra cash buying and selling. All you need is a bit of time to get that money rolling in.

 

 

minimising tax on shares

Minimising tax as a share trader or investor: which are you?

11 Apr, 2017

If you hold any shares, it’s important to know whether you’re classed as a share trader or a share investor for tax purposes. This lets you stay on the right side of the ATO while minimising tax on your shares. The main differences between the two are to do with how you treat gains and losses.

 

Share traders

The ATO will treat you as a share trader if you carry out business for the sole purpose of earning income from buying and selling shares. You may treat any losses incurred in the same way as any other losses from business; as long as you satisfy the non-commercial losses rules, you may claim an immediate deduction against other taxable income.

If you wish to be classed as a share trader, the ATO may require evidence to prove you are carrying on a share trading business. You could be asked to provide evidence that shows:

  • the regular purchase and sale of shares
  • the use of any share trading techniques
  • decisions based on thorough analysis of relevant market information
  • a contingency plan in the event of a major shift in the market
  • a trading plan showing analysis and research on each potential investment and the market, plus any formula for deciding when to keep or sell your shares

This means you cannot call yourself a share trader simply because it helps with minimising tax; you must fulfil these criteria.

 

Share investors

You will be classed as a share investor if you:

  • invest in shares with the sole intention of earning income from dividends and capital growth
  • are eligible for the 50% discount on any capital gain
  • claim losses incurred as a capital loss and not as an immediate deduction
  • carry forward capital losses to be offset against capital gains in future years

In financial years when shares take a hit, it’s more beneficial to be classed as a trader as you can claim any losses immediately. When share prices soar, however, being an investor is preferential as you are eligible for the 50% discount on any gains (as long as you have held the shares for over 12 months) thereby minimising tax.

Unfortunately, you can’t keep switching from one to the other according to what best suits your situation.

 

Changing your status

Usually, the way you treated your investments in previous years will determine how you should deal with them in the current year. Unless there has been a significant change in your investment activity, your status should remain the same.

It is possible to change from an investor to a trader (or vice versa) but this will put you under greater scrutiny from the ATO.

It’s likely that the ATO will request evidence to show the change is accurate and that you have been treating your income correctly in previous years. If they find that you have been claiming trading losses in the name of minimising tax while not carrying on an investment business, your deduction claim will be refused and you may be hit with penalties.

The ATO has issued a specific warning to taxpayers who want to change their status from share investor to share trader. More information can be found in the ATO’s Taxpayer Alert 2009/12.

 

To recap on minimising tax as a share trader or investor:

  • If you intend to earn income only from buying and selling shares (not from dividends) then you are classed as a share trader
  • If you make a loss as a share trader you may claim this as an immediate deduction rather than as a capital loss
  • You must be prepared to provide the ATO with sufficient evidence to support your status as a share trader, including detailed research and market analysis
  • As a share investor, you make money from share dividends and capital gains, and you can claim a 50% discount on capital gains from shares held for over 12 months
  • Share investors may record capital losses which can then be offset against capital gains in future years
  • Your status shouldn’t change from one year to the next unless your investment activity is significantly different
  • It is possible to register a change in status, but you may be penalised if the ATO discovers you’ve been claiming incorrectly

 

self-managed superannuation fund

Making super fund contributions? Know your annual limits

10 Apr, 2017

The more super fund contributions you make, the faster your balance will grow and the sooner you’ll be able to enjoy watching your money make money for you. However, there are some limits on superannuation funds that should be taken into consideration.

Contributing to your super fund can be a tax-efficient way to save your income – especially if you’re taxed at the higher marginal rates for income – thanks to the generous tax concessions applied to super funds.

However, limits on superannuation funds put in place by the ATO is something you should consider.

 

What are the limits for super fund contributions?

Super fund contributions fall into two categories:

  • concessional contributions (before tax)
  • non-concessional contributions (after tax)

 

Concessional super fund contributions

Concessional or ‘before-tax’ contributions are taxed at 15% (or 30% for individuals earning more than $300,000), but the contributor (usually an employer) is able to claim an income tax deduction for them. Contributions of this type include all compulsory super guarantee contributions, salary sacrifice contributions, and any personal contributions that are later claimed as a tax deduction.

Limits on superannuation contributions are $30,000 per year if you’re under 50. If you’re over 50, this limit rises to $35,000.

If you have more than one super fund, the concessional contributions cap is applied to the total contributions you make, rather than to each fund individually.

If you earn less than $50,454 and make personal super fund contributions but don’t claim a tax deduction for them, you may be eligible for the super co-contribution.

 

Non-concessional super fund contributions

Non-concessional contributions have no additional tax applied since tax has already been paid on the amount contributed. These include personal contributions you make after tax.

Non-concessional contributions are capped at six times the concessional contributions limit ($180,000) before additional tax is due. In the 2015-16 financial year the maximum benefits that could be held within a super fund without having been subject to contributions tax was $1,000,395.

Providing you are under 65 years old for at least one day of the financial year, the ATO will allow you to bring forward two years’ worth of contributions, meaning you have a total non-concessional contributions cap of $540,000 over a three-year period instead of a $180,000 cap in each of those three years. The first year that you contribute above the non-concessional contribution cap will count as the first year in this period.

 

Exceeding your cap

Any super fund contributions made over the concessional contributions cap will be subject to an additional 32% in tax while any amount exceeding the non-concessional cap will be taxed at 47%. The tax liability falls with you, but instead of paying from your own sources you may opt to use a release authority from the ATO to pay the amount from your super fund.

 

Timing it right

Any contributions will be counted in the financial year in which they are received and credited by your super fund. If you send funds at the end of June it’s possible they won’t be received until July, by which time they will count towards your contributions for the next financial year. It’s important to consider this timing carefully so as to make the most of your contribution caps and avoid any tax penalties.

 

To recap:

  • Contributing to superannuation provides a tax-efficient way to save for your retirement, but the ATO has limits on super fund contributions within the lower tax rates
  • Concessional (before-tax) contributions are capped at $30,000 per year or $35,000 if you’re over 50 and are taxed at 15% (or 30% if you own over $300,000). These include compulsory contributions, salary-sacrifice contributions, and any personal contributions you claim as a tax deduction
  • Non-concessional (after-tax) contributions are not subject to any additional tax as the amount has already been taxed (for example any contributions you make from taxed income)
  • For non-concessional contributions the cap is $180,000 per year, although those under 65 may pool 3 years’ worth of allowances meaning a total contribution cap of $540,000 over 3 years
  • Any amounts exceeding these caps will be taxed at marginal tax rates with an interest fee, but this may be paid from your super fund

 

dividend reinvestment plans

Understanding tax on dividend reinvestment plans

07 Apr, 2017

Dividend payments are not always made in cash. A private company may credit dividend payments to a shareholder’s loan account, or you may opt to receive new shares in lieu of the dividend through ‘dividend reinvestment plans’ (DRPs).

 

Dividend reinvestment plans: not tax dodging

Shareholders may think that receiving additional shares in place of a cash payment means the dividend is not taxable, but this is not the case. All dividends paid to you, whether in cash or via a dividend reinvestment plan, must be included as assessable income on your tax return for the year they were received.

In addition, any capital gain you make when you dispose of shares received under a DRP will be subject to tax. To calculate this, the cost base is taken to be the market price on the date of the dividend as shown on your statement.

Make sure you keep a record of all reinvested dividends so you can calculate any capital gains or losses you make when you dispose of shares. The cost base used for the calculation must match the amount that you previously declared as a dividend.

 

Tax on bonus shares

Aside from dividend reinvestment plans, companies may sometimes issue shareholders with bonus shares based on their existing shareholding. If you receive extra shares as a bonus, they are not taxable on receipt. However, bonus shares received after 19 September 1985 will be subject to capital gains tax upon disposal. The cost base for these shares will be taken as an average of the cost base of your existing shares in the company.

 

To recap:

  • If a company issues you with new shares under dividend reinvestment plans (DRPs) instead of a cash dividend, you must still declare these shares as assessable income for the tax year
  • The value of these shares will be taken as the market value on the day they were issued, and this will form your cost base when calculating capital gains tax upon their disposal
  • Keep a record of all your dividend statements to make it easier to do these calculations when you dispose of the shares
  • Shares issued as a bonus are not assessable income but are still subject to tax on any capital gain when you dispose of them

 

investment property tax deductions

Investment property tax: Claiming a tax deduction for borrowing expenses

05 Apr, 2017

Let’s talk investment property tax. Or, more specifically, tax deductions. If you take out a loan to purchase a property to rent out as an investment, some of the expenses you incur in on the loan may be tax deductible.

However, the expenses can’t all be claimed in one tax year unless they total less than $100. If your deductible expenses amount to more than $100, you’ll have to spread the claim over five years or the term of the loan, whichever is shorter.

If you take out the loan part-way through the income year, you must apportion your claim for the first year according to the number of days in the year that you had the loan (see the example below for what this means in practice).

 

What can be claimed as borrowing expenses?

When you claim for an investment property tax deduction for borrowing expenses, you may include the following types of expense:

  • costs for preparing and filing mortgage documents
  • lender’s mortgage insurance
  • loan establishment fees
  • mortgage broker fees
  • stamp duty charged on your mortgage
  • title search fees charged by your lender
  • valuation fees required for loan approval

Mortgage discharge expenses – especially painful when you end a fixed-term mortgage early – are deductible in the year they are incurred, so long as the mortgage was used as security for the repayment of money you borrowed in order to produce assessable income.

 

What is excluded from a borrowing expenses claim?

None of the following may be claimed as borrowing expenses on your investment property tax return:

  • stamp duty charged by your state/territory government on the transfer (purchase) of the property title (but you can include this when calculating the ‘cost base’ of your property for CGT purposes)
  • insurance premiums where under the policy your loan will be paid out in the event that you die or become disabled or unemployed (this is classed as a private expense)
  • borrowing expenses on the portion of the loan you use for private purposes (for example, if you use it to buy a house and a car)

Australian Capital Territory (ACT) properties are treated differently since they cannot be owned under a freehold title and are instead commonly acquired under a 99-year Crown lease. Stamp duty, preparation and registration costs incurred on the lease of an (ACT) property are deductible to the extent that you rent the property out.

 

Apportioning your claim for investment property tax deductions

Let’s look at an example to illustrate how this works. Say Neil takes out a 30-year loan of $450,000 to purchase a rental property on 16 September 2015. He incurs the following deductible expenses:

  • $950 stamp duty on the mortgage
  • $650 loan establishment fees
  • $250 valuation fees required for loan

He also has to pay $9200 stamp duty on the transfer of the property title, but this is not eligible for a tax deduction. This expense will, however, form part of the ‘cost base’.

This is how Neil would work out his expense deduction for these particular costs:

Borrowing expenses × number of relevant days in year ÷ number of days in 5 years = deduction for year

2015–16 (289 days) = $1850 × 289 ÷ 1826 = $293

2016–17 (365 days) = $1850 × 365 ÷ 1826 = $370

2017–18 (365 days) = $1850 × 365 ÷ 1826 = $370

2018–19 (365 days) = $1850 × 365 ÷ 1826 = $370

2019–20 (366 days) = $1850 × 366 ÷ 1826 = $371

2020–21 (76 days) = $1850 × 76 ÷ 1826 = $76

Source: © Australian Taxation Office for the Commonwealth of Australia.

So the claim is spread over five calendar years but six tax years.

 

Repaying your loan early

If your plan a five-year claim structure as in the example above but end up repaying your loan early,  you can claim a deduction for the balance of the borrowing expenses in the year you complete your repayments. So if Nigel pays off his loan in full in May 2019, he can claim $817 in the 2018-19 tax year.

 

In short:

  • Expenses occurred in the course of taking out a loan to finance an investment property may be claimed as a tax deduction
  • Expenses totalling over $100 must be spread over five years or the course of the loan, whichever is less. If the former, the deduction is calculated over five calendar years from the date the loan commenced
  • Certain expenses are not eligible, including insurance which pays out in the event of your death or unemployment and stamp duty charged by your state/government
  • If the loan is used for something other than your property purchase, the costs must be apportioned accordingly
  • If you repay your loan early you may claim the remaining balance of your expenses in the year you make the final repayment

 

tax on rights and options

Understanding tax on rights and options

03 Apr, 2017

From time to time, companies may issue their shareholders with rights or options to purchase additional shares. Therefore, it’s crucial to understand tax on rights and options.

A ‘one-for-ten’ rights issue, for example, gives shareholders the chance to purchase one extra share for every 10 shares that they already own. If they don’t wish to do this, they may sell the right on the stock exchange or simply allow it to lapse.

 

Tax on rights and options

The ATO doesn’t require you to include any rights you receive in your assessable income so long as:

  • the rights were issued to you because of your existing share ownership in the company
  • your shares, and the rights, were not traditional securities or convertible interests, or were being treated as revenue assets or trading stock at the time they were issued
  • the rights were not issued under an employee share scheme

While you may be exempt from paying income tax, any rights issued will still be subject to capital gains tax, if applicable. If your rights don’t meet the above criteria, you will have to disclose them as assessable income on your tax return.

If you are issued a right to sell your shares (that is, a put), you should include the market value of the right in your assessable income for the year of issue. This will later form part of your cost base for the rights or shares, if you decide to sell them.

 

Rights vs. options

Companies may issue options to shareholders and non-shareholders (as opposed to rights, which may only be issued to shareholders). Options give you the right to acquire or sell shares in the company at a specified price on a specified date. As with rights, options may be exercised, traded on the stock exchange or allowed to lapse.

Options usually come with a longer period of time to be exercised or traded before they lapse than rights do.

Exchange-traded options are a type of option created by an independent third party rather than the company in question. They are traded on the stock exchange and any option trading you are involved in will typically be classed as a business activity subject to the normal business income rules.

While option trading does present a way to make a fast buck, money can be lost equally quickly this way. It’s certainly not a route to go down without proper thought.

 

A summary of tax on rights and options:

  • Rights are issued by companies to shareholders to give them the chance to purchase additional shares
  • Options are similar to rights but may be issued to non-shareholders as well
  • Rights and options may be exercised, sold on the stock exchange or allowed to lapse. Options are generally held for a longer period before lapsing
  • Providing your rights meet certain criteria, you’re not required to include them as assessable income on your tax return. Any subsequent sale will still be subject to capital gains tax
  • If you purchase exchange-traded options, such activity will usually be classed as a business activity

 

maximise your uber profit

4 ways to truly maximise your Uber profit

02 Apr, 2017

What’s the appeal of becoming an Uber driver? For some, it’s the flexibility to work entirely on your own schedule. For others, it’s the ability to make some extra money from an asset you already own (or are perhaps still in the process of paying for) through ridesharing services. With over 13,000 active drivers in Australia alone, Uber is an undeniably popular source of income for many car owners. If you’re already driving for Uber or are considering signing up to increase your income, here are some tips that will help you maximise your Uber profit.

 

1. Don’t overpay for fuel

Fuel prices fluctuate all the time, so it’s hard to know whether a particular petrol station is offering a good deal on any given day.

Fortunately, there are apps such as MotorMouth which do the research for you and show you the best fuel prices around. Even saving a few cents at the pump each time can quickly make a difference to your profits.

Also make sure you sign up to any fuel cards available so you benefit from any discounts or reward schemes they offer.

 

2. Pick your times carefully

Uber drivers earn more money at peak times since prices are based on demand. In this way, Uber encourages more drivers to get out when it’s busy so that customers aren’t waiting around for too long.

Hourly earnings for Uber are higher than a lot of other driving professions, and driving at high-demand times of day will put even more money in your pocket.

And it’s not just regular peak times such as rush hour and bar closing times to consider. Special events like sports matches and concerts can also cause demand to soar, so it’s worth keeping abreast of what’s going on in your area.

 

3. Shop around for insurance

Insurance is another inevitable cost of driving, but you can maximise your Uber profit by making sure you’re not paying over the odds. Check prices on comparison sites to find the best deal for you.

Some factors that influence insurance prices are beyond your control, such as your age, address and driving history. But you should still check prices from at least three providers to find a competitive rate. An increasing number of insurance companies are now providing policies specifically for ridesharing drivers; these can be a good option as they ensure you’re fully covered for the kind of driving you’re doing.

 

4. Know your tax deduction entitlement to maximise your Uber profit

Since you’re essentially running your own business when you provide ridesharing services, you’ll almost certainly have to pay tax on your earnings.

The good news is, this means you’ll be eligible to claim some of your driving expenses as tax deductions. This could save full-time drivers thousands of dollars a year, so it’s worth knowing exactly what you’re allowed to claim.

Possible deductions include:

  • Depreciation
  • Loan repayments
  • Fuel
  • Servicing and maintenance
  • Insurance
  • Mobile phone usage
  • GST

Only the proportion of these costs that relates to work usage may be claimed, and you’ll need to keep detailed records to back up any claims you make. Speak to a financial advisor if you’re unsure what you’re allowed to claim as a tax deduction.

It turns out making money isn’t all about your revenue; it can be just as much affected by cutting costs wherever possible. In this way you can truly maximise your Uber profit as well as income from other ridesharing services.

Want more tips for making money on Uber?