1
00:00:10,119 --> 00:00:13,280
Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

2
00:00:13,400 --> 00:00:17,560
Speaker 1: James Kirkby. Welcome aboard everybody. I notice we haven't had

3
00:00:17,600 --> 00:00:22,920
Speaker 1: many questions about this week's federal budget. That's probably because

4
00:00:23,000 --> 00:00:26,520
Speaker 1: there wasn't an awful lot in it that is compared

5
00:00:26,560 --> 00:00:30,639
Speaker 1: to a conventional budget. Don't be mistaken, though, because there

6
00:00:30,880 --> 00:00:33,599
Speaker 1: was issues in it, right, I mean, keep an eye

7
00:00:33,680 --> 00:00:36,240
Speaker 1: on that. There was a tax cut, Yes it was tiny,

8
00:00:36,640 --> 00:00:38,440
Speaker 1: Yes it was at the lower band, but it was

9
00:00:38,479 --> 00:00:42,760
Speaker 1: a tax cut. Nonetheless, there's a very interesting expansion of

10
00:00:42,800 --> 00:00:46,559
Speaker 1: the plan to have shared home ownership that could be

11
00:00:46,640 --> 00:00:48,960
Speaker 1: really interesting. That's the biggest sort of thing in the

12
00:00:49,000 --> 00:00:51,640
Speaker 1: first home buyers market we've seen for a long time,

13
00:00:52,280 --> 00:00:54,680
Speaker 1: and with anyone can up to one hundred thousand a

14
00:00:54,760 --> 00:00:57,400
Speaker 1: year you can apply for that. So I think that's

15
00:00:57,440 --> 00:01:01,160
Speaker 1: going to be a major feature of the residential property

16
00:01:01,200 --> 00:01:04,240
Speaker 1: market going forward. There was also some very interesting sort

17
00:01:04,240 --> 00:01:08,240
Speaker 1: of side steps inside the budget, in other words, things

18
00:01:08,240 --> 00:01:10,960
Speaker 1: that were not mentioned but were important because they weren't.

19
00:01:11,920 --> 00:01:14,880
Speaker 1: Give you an example, the deming rate. The deming rates unchanged.

20
00:01:15,000 --> 00:01:18,280
Speaker 1: The deming rates is unchanged since twenty twenty. This is remarkable.

21
00:01:18,480 --> 00:01:21,600
Speaker 1: Basically the rate that controls pension access is unchanged since

22
00:01:21,600 --> 00:01:24,080
Speaker 1: twenty twenty. That's a giveaway, folks, it's a giveaway to

23
00:01:24,120 --> 00:01:27,920
Speaker 1: older Australians. On the other hand, the coup, we call

24
00:01:27,959 --> 00:01:33,360
Speaker 1: it notorious. Notorious plan to introduce a new super tax

25
00:01:33,800 --> 00:01:37,960
Speaker 1: of fifteen percent on earnings above three million was nowhere

26
00:01:38,560 --> 00:01:41,160
Speaker 1: mentioned in the budget papers. And I mean anywhere, because

27
00:01:41,200 --> 00:01:43,880
Speaker 1: we were really digging and looking for it, myself and

28
00:01:43,920 --> 00:01:46,400
Speaker 1: my colleagues inside the lock up, and we didn't see

29
00:01:46,600 --> 00:01:49,200
Speaker 1: any mentioned at all. That well, I'm going to infer

30
00:01:49,480 --> 00:01:51,800
Speaker 1: that it means that plan as we know, is never

31
00:01:51,840 --> 00:01:53,760
Speaker 1: going to see the light of day. That doesn't mean

32
00:01:53,800 --> 00:01:56,520
Speaker 1: they won't try something, but I'd like to think they're

33
00:01:56,560 --> 00:01:58,560
Speaker 1: never going to try that. We talk about that in

34
00:01:58,600 --> 00:02:01,520
Speaker 1: a moment with my guest today. One thing just before

35
00:02:01,560 --> 00:02:06,200
Speaker 1: we start. As we speak, news has just come out

36
00:02:06,240 --> 00:02:12,480
Speaker 1: that Trump has introduced a twenty five let me read

37
00:02:12,480 --> 00:02:14,800
Speaker 1: this again. I got to be sure about this. A

38
00:02:14,919 --> 00:02:20,440
Speaker 1: twenty five percent tariff on foreign made automobiles in the US.

39
00:02:20,520 --> 00:02:23,120
Speaker 1: Can you believe this? This is how believable. Imagine if

40
00:02:23,160 --> 00:02:24,840
Speaker 1: it was in Australia. It would be like bring us

41
00:02:24,880 --> 00:02:27,280
Speaker 1: back to a hold and everybody driving a hold in

42
00:02:27,400 --> 00:02:30,240
Speaker 1: or a Ford as we were back in the nineteen eighties.

43
00:02:30,720 --> 00:02:36,359
Speaker 1: This is huge. This Trump tariff play. The big day supposedly,

44
00:02:36,440 --> 00:02:38,880
Speaker 1: if he can stop leaking it before the big day

45
00:02:38,919 --> 00:02:41,560
Speaker 1: is supposed to be Tuesday, April second. That's like the

46
00:02:41,600 --> 00:02:45,400
Speaker 1: tariff day that he's supposed to deliver all the entire package.

47
00:02:45,760 --> 00:02:49,160
Speaker 1: And that is just for our next show, which would

48
00:02:49,160 --> 00:02:52,640
Speaker 1: be ideally timed. My guest will be Cameron Stuart. He's

49
00:02:52,680 --> 00:02:55,880
Speaker 1: the chief international correspondent at the Australia and he's a

50
00:02:56,000 --> 00:02:59,079
Speaker 1: Trump expert. He's covered the Trump elections, He's been at

51
00:02:59,080 --> 00:03:03,680
Speaker 1: those Trump rallies. He really understands this controversial figure who's

52
00:03:03,919 --> 00:03:07,359
Speaker 1: dictating the tempo of world investment markets. So look out

53
00:03:07,400 --> 00:03:09,760
Speaker 1: for that one in a few days time. Now there

54
00:03:09,800 --> 00:03:12,280
Speaker 1: is only one person I talked to about the budget

55
00:03:12,360 --> 00:03:14,320
Speaker 1: each year, and we're going to talk about the budget.

56
00:03:14,320 --> 00:03:16,360
Speaker 1: We're also going to talk about where we are this

57
00:03:16,400 --> 00:03:17,840
Speaker 1: time of the year now that we know what was

58
00:03:17,880 --> 00:03:20,240
Speaker 1: in the budget. It is of course Will Hamilton of

59
00:03:20,280 --> 00:03:21,880
Speaker 1: Hamilton Investment Partners.

60
00:03:21,919 --> 00:03:24,480
Speaker 2: How are you will very well, James, thank you for

61
00:03:24,520 --> 00:03:24,840
Speaker 2: having me.

62
00:03:25,520 --> 00:03:28,440
Speaker 1: You're very welcome. Great to have you. I mentioned the

63
00:03:28,520 --> 00:03:31,720
Speaker 1: issues there on the budget, there was another tax cut.

64
00:03:31,760 --> 00:03:34,359
Speaker 1: We've had a batch of tax cuts from the ALP.

65
00:03:34,560 --> 00:03:40,320
Speaker 1: Now does that to some extent undermine the original ambitious

66
00:03:40,480 --> 00:03:44,920
Speaker 1: multi year tax cut program that Josh Rodenberg and Morrison had.

67
00:03:46,600 --> 00:03:48,160
Speaker 2: No, I don't think it does, because I think what

68
00:03:48,200 --> 00:03:51,600
Speaker 2: you're saying is it's they're calling it the cup of

69
00:03:51,600 --> 00:03:55,160
Speaker 2: coffee tax cut. It doesn't start for sixteen months, and

70
00:03:55,200 --> 00:03:57,320
Speaker 2: then it does come in at five dollars a week,

71
00:03:57,320 --> 00:03:59,680
Speaker 2: and then it goes to ten dollars twelve months after that.

72
00:04:00,240 --> 00:04:02,400
Speaker 2: It's at the lower tax band, and I think this

73
00:04:02,760 --> 00:04:05,040
Speaker 2: goes from sixteen to fifteen and then to fourteen percent.

74
00:04:05,200 --> 00:04:07,760
Speaker 2: So the thing is it doesn't erode bracket creep. That

75
00:04:07,840 --> 00:04:10,360
Speaker 2: the brecker creep at the top end. There's no erosion. Yeah,

76
00:04:10,440 --> 00:04:14,400
Speaker 2: so it we've still got very substantial bracket creep and

77
00:04:14,440 --> 00:04:15,480
Speaker 2: it's a big issue.

78
00:04:15,320 --> 00:04:18,920
Speaker 1: Bracket creep, folks. I hope everyone is across a before

79
00:04:18,960 --> 00:04:22,400
Speaker 1: we go any further. Bracker creep is that if the

80
00:04:22,440 --> 00:04:27,000
Speaker 1: tax rates remain fixed at percentages, then what happens is,

81
00:04:27,040 --> 00:04:29,800
Speaker 1: as you get a pay rise, you graduate into those

82
00:04:29,839 --> 00:04:34,920
Speaker 1: tax bands and that means that you continually pay more tax.

83
00:04:35,160 --> 00:04:38,120
Speaker 1: And actually if you look marvelous couple of slides from

84
00:04:38,279 --> 00:04:41,320
Speaker 1: saul eslike the Independent Economist I saw this morning where

85
00:04:41,360 --> 00:04:45,279
Speaker 1: he showed how the tax revenue year upon year upon

86
00:04:45,440 --> 00:04:48,800
Speaker 1: year and into the future increasingly depends on income tax.

87
00:04:49,720 --> 00:04:52,200
Speaker 1: So bracket creep is this controversy and the only way

88
00:04:52,240 --> 00:04:56,080
Speaker 1: to plug it would be if they indexed the bands.

89
00:04:57,320 --> 00:05:03,160
Speaker 1: Do you think either party whatever index to bands because

90
00:05:03,200 --> 00:05:06,640
Speaker 1: it means either party could never announce the tax cut again.

91
00:05:06,800 --> 00:05:10,039
Speaker 2: Really, I see there's an article in The Australian today

92
00:05:10,080 --> 00:05:13,560
Speaker 2: that Dunton's being urged to do this. I think that

93
00:05:14,120 --> 00:05:17,240
Speaker 2: I know he's been everyone's everyone, everyone's urging him to

94
00:05:17,240 --> 00:05:22,120
Speaker 2: do and I think tax personal taxpayer contribution. When Morrison

95
00:05:22,160 --> 00:05:24,120
Speaker 2: went out of power, I think it was about forty

96
00:05:24,120 --> 00:05:27,760
Speaker 2: eight point three percent. In this budget, it's forecast now

97
00:05:28,000 --> 00:05:31,440
Speaker 2: for twenty eight twenty nine to peak at fifty four percent.

98
00:05:31,920 --> 00:05:34,600
Speaker 2: So that's the effect of bracket crep. Now we need

99
00:05:34,720 --> 00:05:38,200
Speaker 2: major we need tax reform and I think one of

100
00:05:38,240 --> 00:05:41,600
Speaker 2: the things that the Tier member and Wentworth elector Spend

101
00:05:41,600 --> 00:05:43,000
Speaker 2: has been really calling for.

102
00:05:42,960 --> 00:05:44,520
Speaker 1: Is indexation of the bands.

103
00:05:44,600 --> 00:05:47,800
Speaker 2: Eah correct is that? But bigger tax reform and the

104
00:05:47,839 --> 00:05:51,760
Speaker 2: thing is the people listening to this as individuals are

105
00:05:51,800 --> 00:05:54,320
Speaker 2: being urged to contribute more and more to the total

106
00:05:54,360 --> 00:05:57,760
Speaker 2: tax take, and that's wrong. It really is wrong. And

107
00:05:57,800 --> 00:06:01,560
Speaker 2: I think that one of the biggest reasons is because

108
00:06:01,600 --> 00:06:04,200
Speaker 2: there's two sides naturally to a budget. There's the revenue

109
00:06:04,200 --> 00:06:08,240
Speaker 2: side and there's expenditure side, and both sides aren't tackling

110
00:06:09,240 --> 00:06:12,520
Speaker 2: the spending side, and they're spending like drunken sailors.

111
00:06:12,839 --> 00:06:15,680
Speaker 1: They're spending like drunken sailors. Okay, folks, you heard it

112
00:06:15,760 --> 00:06:20,839
Speaker 1: here first from Will Hamilton, and actually I don't disagree

113
00:06:20,880 --> 00:06:25,960
Speaker 1: with that. And the coalition's tactical electoral election policy of

114
00:06:26,120 --> 00:06:31,080
Speaker 1: matching LP giveaways, particularly on the medical side, is well,

115
00:06:31,400 --> 00:06:34,240
Speaker 1: basically it rulls into every time you spend, we spend too.

116
00:06:34,680 --> 00:06:37,280
Speaker 1: So on that three million tax I think we have

117
00:06:37,360 --> 00:06:40,200
Speaker 1: a question later on that, but it was nowhere to

118
00:06:40,279 --> 00:06:41,880
Speaker 1: be seen. Do you think it's dead?

119
00:06:42,920 --> 00:06:45,240
Speaker 2: It's surprising, was probably the number one question we got

120
00:06:45,320 --> 00:06:49,240
Speaker 2: yesterday from people, because you know, look, our client base,

121
00:06:49,320 --> 00:06:52,560
Speaker 2: this is a very relevant proposal that was put forward

122
00:06:52,880 --> 00:06:56,120
Speaker 2: and there was no mention of it, and as we

123
00:06:56,160 --> 00:06:59,280
Speaker 2: all know, it's sort of stuck in the center, killed

124
00:06:59,320 --> 00:07:02,479
Speaker 2: by the Senate at the moment, everyone's expecting they'll have

125
00:07:02,520 --> 00:07:05,120
Speaker 2: a go at it or but there's just no mention

126
00:07:05,279 --> 00:07:09,640
Speaker 2: whatsoever about resurrecting that legislation in the Upper House or

127
00:07:09,720 --> 00:07:13,480
Speaker 2: trying to alter it amend it. So where does it stand?

128
00:07:13,560 --> 00:07:16,080
Speaker 2: And I think that's the big thing as far as

129
00:07:16,080 --> 00:07:20,200
Speaker 2: our clients are concerned. So unless they can change the

130
00:07:20,280 --> 00:07:23,520
Speaker 2: minds of Jackie Lambia at all, this thing's dead.

131
00:07:24,360 --> 00:07:26,360
Speaker 1: Okay, I have to say, will I don't think it's dead.

132
00:07:26,360 --> 00:07:28,280
Speaker 1: And I think they can change the minds of those

133
00:07:28,320 --> 00:07:33,520
Speaker 1: people simply by offering them something that I didn't offer before.

134
00:07:33,560 --> 00:07:35,600
Speaker 1: So for instance, you could package it. This is how

135
00:07:35,600 --> 00:07:38,080
Speaker 1: they do these deals in Senate. You say, Okay, you

136
00:07:38,160 --> 00:07:40,520
Speaker 1: might be crazy about this tax, but we want it through.

137
00:07:40,560 --> 00:07:42,320
Speaker 1: And what we'll do is we'll do a double bill,

138
00:07:42,520 --> 00:07:44,760
Speaker 1: you know. And they took in other goodies with it,

139
00:07:44,800 --> 00:07:47,960
Speaker 1: which the others will find it resistible. That's political. More

140
00:07:48,000 --> 00:07:51,200
Speaker 1: to the point that three m tax three million tax

141
00:07:51,280 --> 00:07:53,840
Speaker 1: aren't super That is still on the agenda, and Jim

142
00:07:53,920 --> 00:07:56,400
Speaker 1: Chalmers has reiterated that he wants to push it through

143
00:07:56,680 --> 00:07:59,240
Speaker 1: put that on the agenda. It's not indexed either, right,

144
00:08:00,760 --> 00:08:03,520
Speaker 1: so bracket creep would kick in there big time, wouldn't it.

145
00:08:03,560 --> 00:08:06,120
Speaker 2: And the transfer balance cap is indexed and like it

146
00:08:06,280 --> 00:08:08,600
Speaker 2: was interesting. Okay, So the transfer balance cap which you

147
00:08:08,640 --> 00:08:10,800
Speaker 2: have will Flagg James is going from one point nine

148
00:08:10,840 --> 00:08:14,360
Speaker 2: to two million a concessional and non concessional contribution, So

149
00:08:14,520 --> 00:08:17,480
Speaker 2: the way to get money into Super has not been altered.

150
00:08:18,560 --> 00:08:20,360
Speaker 1: Yeah, and I think that's really unfair. That was the

151
00:08:20,360 --> 00:08:22,600
Speaker 1: point I'd brought up on budget coverage, even though it

152
00:08:22,640 --> 00:08:24,560
Speaker 1: wasn't in the budget papers, but I wasn't going to

153
00:08:24,600 --> 00:08:27,640
Speaker 1: ignore it, which is folks, I think this is really relevant.

154
00:08:27,680 --> 00:08:31,760
Speaker 1: If you are older and if you have one point

155
00:08:31,840 --> 00:08:35,000
Speaker 1: nine million this is individually per head in Super, and

156
00:08:35,040 --> 00:08:38,560
Speaker 1: you've taxed free earnings on that, that cap is going

157
00:08:38,559 --> 00:08:42,800
Speaker 1: to rise to two million on July one two million, okay. Now,

158
00:08:42,840 --> 00:08:46,000
Speaker 1: but if you are in accumulation stage. Any of our

159
00:08:46,000 --> 00:08:48,719
Speaker 1: listeners who aren't retired, which is a vast majority, let

160
00:08:48,760 --> 00:08:51,560
Speaker 1: me tell you the most they can put into Super

161
00:08:52,679 --> 00:08:57,320
Speaker 1: pre tax each year is thirty thousand dollars. Now, a

162
00:08:57,320 --> 00:08:59,720
Speaker 1: couple of things you could put in thirty thousand dollars

163
00:08:59,760 --> 00:09:04,640
Speaker 1: ten years ago, twenty years ago, and how many years

164
00:09:04,720 --> 00:09:07,199
Speaker 1: would it take to get two million? How many years

165
00:09:07,360 --> 00:09:10,160
Speaker 1: must do the calculation of that. But basically it's loaded

166
00:09:10,160 --> 00:09:11,640
Speaker 1: towards older people, isn't it. Really?

167
00:09:11,960 --> 00:09:15,960
Speaker 2: It isn't the thing that we've argued since from the

168
00:09:15,960 --> 00:09:19,720
Speaker 2: point that Kelly I do ar Alter, this was the

169
00:09:19,800 --> 00:09:23,600
Speaker 2: issue actually is getting money into super and that still

170
00:09:23,840 --> 00:09:26,200
Speaker 2: and what they're doing and not altering these levels is

171
00:09:26,240 --> 00:09:27,280
Speaker 2: making it even harder.

172
00:09:27,880 --> 00:09:31,840
Speaker 1: Yes, that's right. It's really contradictory that you're letting the

173
00:09:31,880 --> 00:09:35,440
Speaker 1: amount you can have tax free swell and you're not

174
00:09:35,600 --> 00:09:38,800
Speaker 1: changing year after year the amount you can put in.

175
00:09:39,080 --> 00:09:41,120
Speaker 1: But we'll put that to one side. But I want

176
00:09:41,120 --> 00:09:43,160
Speaker 1: people to be aware of it. I'm sure listeners are

177
00:09:43,240 --> 00:09:45,560
Speaker 1: aware of it, and it's I think it's crucial in

178
00:09:45,640 --> 00:09:48,640
Speaker 1: terms of again one of these things that the budget

179
00:09:48,640 --> 00:09:52,760
Speaker 1: did not cover. Okay, let's take a short break and

180
00:09:52,800 --> 00:09:54,360
Speaker 1: we want to come back and just pick up one

181
00:09:54,440 --> 00:09:59,000
Speaker 1: or two I think very important pre election issues for investors,

182
00:09:59,040 --> 00:10:02,199
Speaker 1: because we have an election coming up in May, and

183
00:10:02,440 --> 00:10:05,800
Speaker 1: we don't normally have a budget during an election campaign,

184
00:10:05,800 --> 00:10:08,760
Speaker 1: and there is an election campaign on for all intents

185
00:10:08,800 --> 00:10:10,800
Speaker 1: and purposes. I know it hasn't been called yet, but

186
00:10:10,960 --> 00:10:12,760
Speaker 1: it will be called in a matter of days. Okay.

187
00:10:12,840 --> 00:10:26,240
Speaker 1: Back in the moment. Hello, Welcome back to the Australians

188
00:10:26,400 --> 00:10:31,080
Speaker 1: Money Puzzle podcast. James Kirby here talking to Will Hamilton

189
00:10:31,120 --> 00:10:34,880
Speaker 1: of Hamilton Wealth Partners. We cover the budget every year together.

190
00:10:35,400 --> 00:10:37,520
Speaker 1: Often we've so much in the budget we could talk

191
00:10:37,559 --> 00:10:39,160
Speaker 1: for an hour. We're not going to talk for an

192
00:10:39,160 --> 00:10:41,360
Speaker 1: hour on the budget this year we will because really

193
00:10:41,400 --> 00:10:43,679
Speaker 1: there isn't an hour's worth in it. There is barely

194
00:10:43,760 --> 00:10:47,320
Speaker 1: ten minutes worth. I think we've touched off the big issues.

195
00:10:47,360 --> 00:10:49,640
Speaker 1: I just want to zone in one one issue that

196
00:10:49,720 --> 00:10:53,360
Speaker 1: I think our listeners will find very interesting. For first

197
00:10:53,360 --> 00:10:56,079
Speaker 1: home buyers. If you are one, if you want to

198
00:10:56,120 --> 00:10:58,560
Speaker 1: be one, or if anyone related to you wants to

199
00:10:58,559 --> 00:11:00,360
Speaker 1: be one, or a friend of yours wants to one.

200
00:11:00,400 --> 00:11:03,280
Speaker 1: There's a couple of grants you can choose from. The

201
00:11:03,360 --> 00:11:06,720
Speaker 1: most popular is the Home Loan Guarantee Grant Federal. These

202
00:11:06,760 --> 00:11:11,000
Speaker 1: are federal grants where the government will cover will guarantee

203
00:11:11,280 --> 00:11:13,800
Speaker 1: the deposit you don't have, basically so you can have

204
00:11:13,840 --> 00:11:17,199
Speaker 1: a small deposit. This is the most popular off the schemes.

205
00:11:18,000 --> 00:11:20,599
Speaker 1: Roughly fifty thousand people have used it, maybe more. This

206
00:11:20,679 --> 00:11:22,920
Speaker 1: is the last time I saw the figures. The other

207
00:11:22,960 --> 00:11:26,040
Speaker 1: one is the first Home super Saber scheme. Some of

208
00:11:26,080 --> 00:11:29,960
Speaker 1: our listeners have used that. They are heroes to use

209
00:11:30,000 --> 00:11:32,960
Speaker 1: that because it is the most ghastly complicated scheme I've

210
00:11:33,000 --> 00:11:36,560
Speaker 1: ever come across. However, thirty five thousand people or more

211
00:11:36,600 --> 00:11:40,640
Speaker 1: have used it. They've used it because people will jump

212
00:11:40,679 --> 00:11:43,680
Speaker 1: on anything that gets them into the market. The majority

213
00:11:43,679 --> 00:11:46,319
Speaker 1: of people who don't have rich mom and dads who

214
00:11:46,360 --> 00:11:49,160
Speaker 1: will give them quietly one hundred grand or two hundred

215
00:11:49,160 --> 00:11:51,120
Speaker 1: grand to get them going. Most people don't have that.

216
00:11:51,360 --> 00:11:54,120
Speaker 1: They depend on these grants, or they depend on whatever

217
00:11:54,160 --> 00:11:56,959
Speaker 1: initiatives they can have. So will The point I'm making

218
00:11:57,080 --> 00:12:01,680
Speaker 1: is the government's expanded shared home ownership scheme I think

219
00:12:01,720 --> 00:12:04,480
Speaker 1: will go like hotcakes. I think it will be instantly popular.

220
00:12:04,920 --> 00:12:07,200
Speaker 1: The deal is you can earn up to ninety thousand,

221
00:12:07,280 --> 00:12:10,000
Speaker 1: up to one hundred thousand, and you can buy a

222
00:12:10,040 --> 00:12:13,280
Speaker 1: house up to one point three million, which is quite something.

223
00:12:13,360 --> 00:12:18,200
Speaker 1: That's it's regionally sectoralized. Basically Sydney's the highest makes sense,

224
00:12:18,840 --> 00:12:22,360
Speaker 1: and it drops from there. The government will pay will

225
00:12:22,400 --> 00:12:25,680
Speaker 1: put in thirty percent of an existing house and forty

226
00:12:25,720 --> 00:12:30,200
Speaker 1: percent of a new house, right so you don't have

227
00:12:30,320 --> 00:12:34,760
Speaker 1: to you share ownership. What do you think of the idea.

228
00:12:35,840 --> 00:12:38,280
Speaker 2: Well, look, it's going to get people in. And the

229
00:12:38,320 --> 00:12:41,160
Speaker 2: fact that they've also lifted the single salary cap from

230
00:12:41,240 --> 00:12:44,199
Speaker 2: ninety two hundred thousand, you going to see this allow

231
00:12:44,200 --> 00:12:47,160
Speaker 2: a lot more people in as well. So you're right,

232
00:12:47,360 --> 00:12:49,920
Speaker 2: it's going to assist this market, and it's going to

233
00:12:49,960 --> 00:12:52,079
Speaker 2: assist that you're up to that one point three million,

234
00:12:52,080 --> 00:12:53,520
Speaker 2: it's going to assist it substantially.

235
00:12:54,480 --> 00:12:56,880
Speaker 1: The only forty thousand spots will and that's over the

236
00:12:56,960 --> 00:12:58,080
Speaker 1: budget papers.

237
00:12:57,840 --> 00:12:59,760
Speaker 2: Twenty thousand places initially. Yeah, that's right.

238
00:12:59,800 --> 00:13:02,840
Speaker 1: Yeah, th I notice demand will be strong. The demand

239
00:13:02,840 --> 00:13:05,280
Speaker 1: will be strong, and I noticed real estates a councilors,

240
00:13:05,320 --> 00:13:09,760
Speaker 1: et cetera yesterday asking from more spots already. So I

241
00:13:09,800 --> 00:13:11,400
Speaker 1: think it will be. But let's just look at it

242
00:13:11,400 --> 00:13:13,439
Speaker 1: for a moment. If you did this, so the upside

243
00:13:13,440 --> 00:13:15,520
Speaker 1: would be that you could buy a house that you

244
00:13:15,600 --> 00:13:21,920
Speaker 1: could not have bought previously, and that's substantial. The downside

245
00:13:22,000 --> 00:13:24,600
Speaker 1: is you share, you're in a joint venture, and you're

246
00:13:24,600 --> 00:13:29,040
Speaker 1: a joint venture with a government agency. What could go wrong?

247
00:13:29,360 --> 00:13:32,200
Speaker 1: What could go wrong? A lot of things. What could

248
00:13:32,200 --> 00:13:32,560
Speaker 1: go wrong?

249
00:13:34,000 --> 00:13:36,760
Speaker 2: First one is if if it's reversed, but I don't

250
00:13:36,760 --> 00:13:38,800
Speaker 2: see that happening. They may see if they stop, they

251
00:13:38,840 --> 00:13:42,679
Speaker 2: may stop it. The other thing is is they're going

252
00:13:42,679 --> 00:13:47,440
Speaker 2: to put some effectively interest rate or carry on it.

253
00:13:47,600 --> 00:13:50,040
Speaker 2: I doubt that as well. So I think, what if

254
00:13:50,040 --> 00:13:51,960
Speaker 2: you've got to change your government and they didn't like

255
00:13:52,000 --> 00:13:54,199
Speaker 2: the scheme. I think it would just be worth ceasing it.

256
00:13:54,679 --> 00:13:56,600
Speaker 1: Yeah, it would wither on the vine. But you wouldn't

257
00:13:56,640 --> 00:13:59,000
Speaker 1: care about that if you were in and I noticed that.

258
00:13:59,040 --> 00:14:02,280
Speaker 1: I don't want to preach George, but governments don't necessarily

259
00:14:02,320 --> 00:14:05,359
Speaker 1: do that. Like the ALP got in. They are absolutely

260
00:14:05,440 --> 00:14:09,120
Speaker 1: against using your super for buying a home. The Coalition

261
00:14:09,200 --> 00:14:12,560
Speaker 1: is totally for it. But the first Home super Saver

262
00:14:12,679 --> 00:14:15,960
Speaker 1: scheme which was introduced by the Morrison government was not unwound.

263
00:14:16,320 --> 00:14:19,440
Speaker 1: It wasn't advertised, but it certainly wasn't unwound and continues

264
00:14:19,520 --> 00:14:22,760
Speaker 1: under the EARP. So that's a precedent. I think. One

265
00:14:22,800 --> 00:14:26,360
Speaker 1: of the things that perhaps is an issue with the

266
00:14:26,400 --> 00:14:29,480
Speaker 1: shared ownership scheme, like any joint venture, is how does

267
00:14:29,520 --> 00:14:33,240
Speaker 1: the partnership end. Would you ever actually get to completely

268
00:14:33,280 --> 00:14:35,600
Speaker 1: own the house to be able to buy out that

269
00:14:35,680 --> 00:14:38,840
Speaker 1: part that you that the government owns, and if the

270
00:14:38,880 --> 00:14:42,840
Speaker 1: price went down, you'd be in a terrible pickle, wouldn't you.

271
00:14:43,000 --> 00:14:45,320
Speaker 1: You'd be stuck in a half government own't house for

272
00:14:45,480 --> 00:14:47,480
Speaker 1: who knows how long. How would you say that?

273
00:14:47,520 --> 00:14:51,560
Speaker 2: So is there effectively imagine call we don't know that. Yeah,

274
00:14:51,600 --> 00:14:53,520
Speaker 2: I look, I need to see the fine print.

275
00:14:53,920 --> 00:14:56,040
Speaker 1: Yes, we don't know the details. One other thing, folks,

276
00:14:56,040 --> 00:14:59,400
Speaker 1: by the way, is in the nature of these things,

277
00:14:59,440 --> 00:15:02,320
Speaker 1: which are so times sort of perverse incentives, or you

278
00:15:02,400 --> 00:15:06,480
Speaker 1: might say disincentives. Sometimes if you earn, if you go

279
00:15:06,600 --> 00:15:08,760
Speaker 1: in let's say you're around ninety eight thousand, and you

280
00:15:08,840 --> 00:15:12,320
Speaker 1: qualify for the scheme, and in the natural course of

281
00:15:12,360 --> 00:15:14,480
Speaker 1: event you are promoted or you make more money as

282
00:15:14,520 --> 00:15:17,600
Speaker 1: the years go buy then there is a close already

283
00:15:17,680 --> 00:15:20,160
Speaker 1: in the proposal that the government will want you to

284
00:15:20,240 --> 00:15:24,600
Speaker 1: buy them out faster than this planned. Under the conventional plan,

285
00:15:24,720 --> 00:15:26,800
Speaker 1: you only have to buy out the government, or at

286
00:15:26,920 --> 00:15:29,040
Speaker 1: least they have to get the money back for their

287
00:15:29,080 --> 00:15:32,480
Speaker 1: stake is when you sell the house. But if you

288
00:15:32,520 --> 00:15:35,520
Speaker 1: get promoted, you have to give them back some of

289
00:15:35,560 --> 00:15:38,880
Speaker 1: their steak faster. That's one of those classic sort of

290
00:15:38,920 --> 00:15:42,360
Speaker 1: disincentive things that you've got to watch that often get

291
00:15:42,360 --> 00:15:45,160
Speaker 1: built into these things by accident.

292
00:15:45,480 --> 00:15:47,720
Speaker 2: And you would expect that the people that weare the

293
00:15:47,720 --> 00:15:50,120
Speaker 2: demand is for this game, they're the ones that will

294
00:15:50,160 --> 00:15:53,480
Speaker 2: get Probably the cealariisers are going to be more rapid

295
00:15:53,480 --> 00:15:54,200
Speaker 2: as well, so.

296
00:15:54,440 --> 00:15:56,320
Speaker 1: They're the very ones, aren't they. Yeah, because they're first

297
00:15:56,360 --> 00:16:00,480
Speaker 1: home buyers, so by definition they are going to ascew younger. Okay,

298
00:16:00,640 --> 00:16:03,480
Speaker 1: very good. We don't know just yet. I don't want

299
00:16:03,520 --> 00:16:05,240
Speaker 1: to talk about the election just yet in terms of

300
00:16:05,280 --> 00:16:07,520
Speaker 1: the choices investors have, because we don't have all the

301
00:16:07,560 --> 00:16:10,960
Speaker 1: details just yet. I noticed a couple of things we're

302
00:16:11,120 --> 00:16:14,000
Speaker 1: coming to you before Dutton gives the budget reply. Budget

303
00:16:14,040 --> 00:16:17,560
Speaker 1: replies are normally completely boring and no one pays attention

304
00:16:17,600 --> 00:16:20,480
Speaker 1: to them. This time, people will pay attention because we

305
00:16:20,520 --> 00:16:22,680
Speaker 1: aren't the middle love it, as I say, a de

306
00:16:22,800 --> 00:16:26,800
Speaker 1: facto election campaign. Also, I notice that there is that

307
00:16:26,880 --> 00:16:30,200
Speaker 1: what's that famous little item in the budget which is

308
00:16:30,560 --> 00:16:35,240
Speaker 1: expenses on There's a phrase for it, but basically it's

309
00:16:35,320 --> 00:16:37,400
Speaker 1: money they've put aside, which they have in details what

310
00:16:37,440 --> 00:16:41,080
Speaker 1: they're going to do with. And there's two billion in

311
00:16:41,160 --> 00:16:46,080
Speaker 1: there still unused, which may well be used yet by

312
00:16:46,160 --> 00:16:51,760
Speaker 1: the government for some last minute election enticements in the

313
00:16:51,800 --> 00:16:55,360
Speaker 1: next month or so. But we'll see where we go

314
00:16:55,440 --> 00:16:58,200
Speaker 1: on that. I've got some terribly good questions I really

315
00:16:58,240 --> 00:17:02,480
Speaker 1: want to get to with Will. In fact, as often

316
00:17:02,520 --> 00:17:05,680
Speaker 1: the case, I've been saving these for a wik because

317
00:17:05,680 --> 00:17:10,640
Speaker 1: they're particularly difficult. Thank you, You're welcome. And also there's

318
00:17:10,680 --> 00:17:13,399
Speaker 1: a question that's about another guest. But that's the nature

319
00:17:13,440 --> 00:17:15,960
Speaker 1: of it. There'll be questions about you Will that another

320
00:17:15,960 --> 00:17:17,760
Speaker 1: guest will have to answer. That's just the nature of

321
00:17:17,800 --> 00:17:19,720
Speaker 1: a rolling show. All right, we'll be back in a

322
00:17:19,720 --> 00:17:31,440
Speaker 1: moment with some questions. Hello, welcome back to the Australians

323
00:17:31,480 --> 00:17:36,520
Speaker 1: Money Puzzle. James Kirby and Will Hamilton here with you. Okay, folks.

324
00:17:36,560 --> 00:17:41,680
Speaker 1: Now the first question is from declan I'm baffled by

325
00:17:41,760 --> 00:17:45,560
Speaker 1: Roger Montgomery suggestion. Now Roger Montgomery was on the show

326
00:17:46,560 --> 00:17:48,800
Speaker 1: two bad if you want to listen to it, very

327
00:17:48,840 --> 00:17:53,480
Speaker 1: good as always. Roger Montgomery suggestion that people should calculate

328
00:17:53,520 --> 00:17:55,960
Speaker 1: dividend heal based on the price they paid to acquire

329
00:17:56,040 --> 00:17:59,800
Speaker 1: their shares, and he used Comewell Bank as an exam

330
00:18:00,880 --> 00:18:03,639
Speaker 1: rather than based on the current value. The question and

331
00:18:03,720 --> 00:18:06,880
Speaker 1: the investors should be asking themselves is would it be

332
00:18:06,880 --> 00:18:09,800
Speaker 1: better off continuing to hold the shares I have or

333
00:18:09,840 --> 00:18:14,720
Speaker 1: should I sell them and invest elsewhere. Okay, I don't

334
00:18:14,720 --> 00:18:18,800
Speaker 1: really argue with that theoretical point brought up by Detton,

335
00:18:19,280 --> 00:18:21,919
Speaker 1: but I don't have a problem either with Rogers. I mean,

336
00:18:21,960 --> 00:18:28,240
Speaker 1: if I buy come Bank shares for thirty dollars, which

337
00:18:28,280 --> 00:18:30,480
Speaker 1: is I think what I paid for them thirty six,

338
00:18:31,000 --> 00:18:35,119
Speaker 1: and they're now nearly one hundred, and the dividend yield

339
00:18:35,240 --> 00:18:37,960
Speaker 1: on paper, when I look at the tables, tellt me

340
00:18:38,000 --> 00:18:40,960
Speaker 1: it's three and a half percent. But my dividend yield

341
00:18:41,400 --> 00:18:46,680
Speaker 1: on those shares is much much higher than that. If

342
00:18:46,680 --> 00:18:49,840
Speaker 1: I bought a property and you said to me, you know,

343
00:18:49,880 --> 00:18:51,879
Speaker 1: the rental yield is only three percent, but I know

344
00:18:52,000 --> 00:18:54,320
Speaker 1: that I bought that property, you know, for half half

345
00:18:54,400 --> 00:18:56,679
Speaker 1: the cost it is today, so the rent is terrific

346
00:18:56,720 --> 00:18:59,359
Speaker 1: on it, It seems to me. I think both points

347
00:18:59,359 --> 00:19:00,000
Speaker 1: are pretty relevant.

348
00:19:00,520 --> 00:19:03,159
Speaker 2: What do you think, will, I think you've got to

349
00:19:03,160 --> 00:19:06,840
Speaker 2: look look what Roger's saying in some respects is right.

350
00:19:07,000 --> 00:19:10,360
Speaker 2: I think that and CBA, the dividend you're late late

351
00:19:10,440 --> 00:19:13,960
Speaker 2: last year went down and then it's gone up because

352
00:19:14,000 --> 00:19:16,280
Speaker 2: the share price is adjusted, I mean, and the share

353
00:19:16,320 --> 00:19:20,080
Speaker 2: prices recently it's recently fallen twenty percent. So yeah, it's

354
00:19:20,240 --> 00:19:22,439
Speaker 2: by that nature gone up. But I think you've got

355
00:19:22,480 --> 00:19:26,359
Speaker 2: to look at I have an issue with people just

356
00:19:26,600 --> 00:19:29,879
Speaker 2: purely looking at dividend yield when they look at a stock.

357
00:19:30,080 --> 00:19:33,320
Speaker 2: At equities, you invest in equities for growth, so one

358
00:19:33,359 --> 00:19:37,080
Speaker 2: component of the return is income, the other is growth.

359
00:19:37,560 --> 00:19:41,640
Speaker 2: Now people were scratching their heads when CBA was going up,

360
00:19:41,680 --> 00:19:46,720
Speaker 2: and why is it going up? It's ten year EPs

361
00:19:46,840 --> 00:19:50,440
Speaker 2: growth average has been half a percent. So you look

362
00:19:50,480 --> 00:19:53,399
Speaker 2: at se earnings per share and you look at the yield,

363
00:19:53,600 --> 00:19:55,320
Speaker 2: and I think that's what You've got to look at

364
00:19:55,320 --> 00:19:57,960
Speaker 2: the total return that you're expecting from that and make

365
00:19:58,000 --> 00:20:01,560
Speaker 2: a judgment from it. Right, if you paid thirty six

366
00:20:01,600 --> 00:20:05,359
Speaker 2: dollars for the stock, the dividend you're getting is based

367
00:20:05,400 --> 00:20:08,159
Speaker 2: off that thirty six dollars, So it's relevant.

368
00:20:08,400 --> 00:20:11,360
Speaker 1: I know whatvant of course that there are. People will

369
00:20:11,359 --> 00:20:13,359
Speaker 1: always say that, look at your share portfolio, would you

370
00:20:13,400 --> 00:20:15,959
Speaker 1: buy that stock today? Very powerfuct point, of course, it is.

371
00:20:16,600 --> 00:20:21,240
Speaker 1: I think with dividend machine stock which come bank is

372
00:20:21,359 --> 00:20:24,960
Speaker 1: and all the banks are, that particular point is diluted

373
00:20:25,000 --> 00:20:27,520
Speaker 1: to some extent. That's where I would come from at least.

374
00:20:27,520 --> 00:20:31,320
Speaker 1: But it's a very good question. Thank you. Debt all right, James.

375
00:20:32,040 --> 00:20:34,560
Speaker 2: James asks about six months ago you had an accountant

376
00:20:34,560 --> 00:20:38,200
Speaker 2: on the show, Duncan Perkins tax Time Accountants. I believe

377
00:20:38,440 --> 00:20:40,800
Speaker 2: I found it very informative and with one eye on

378
00:20:40,880 --> 00:20:42,680
Speaker 2: the end of the financial year, I'd love to hear

379
00:20:42,720 --> 00:20:46,119
Speaker 2: more about putting the appropriate structures in place now to

380
00:20:46,160 --> 00:20:50,160
Speaker 2: minimize your tax liabilities down the line. In addition, I'd

381
00:20:50,160 --> 00:20:52,919
Speaker 2: love to hear more about debt recycling and the associated

382
00:20:53,000 --> 00:20:57,280
Speaker 2: tax benefits in additions to the risks involved. I think

383
00:20:57,720 --> 00:21:01,280
Speaker 2: appropriate structures aren't just for one James. You should be

384
00:21:01,359 --> 00:21:04,200
Speaker 2: looking if you're going to put a tax structure in place,

385
00:21:05,000 --> 00:21:07,600
Speaker 2: it's for a long term, not just for one year. Yeah.

386
00:21:07,720 --> 00:21:10,479
Speaker 2: So if you're presently investing in your own name and

387
00:21:10,520 --> 00:21:15,359
Speaker 2: you going forward and looking at a family trust, that's

388
00:21:16,040 --> 00:21:18,120
Speaker 2: you're with that trust for a number of years and

389
00:21:18,200 --> 00:21:22,560
Speaker 2: likewise transferring assets from your name into a trust realizes

390
00:21:22,640 --> 00:21:23,320
Speaker 2: capital gains.

391
00:21:24,480 --> 00:21:28,240
Speaker 1: Yeah, okay, but maybe perhaps you might explain to the

392
00:21:28,400 --> 00:21:31,600
Speaker 1: general listener of what debt recycling is.

393
00:21:34,520 --> 00:21:38,840
Speaker 2: So on debt recycling, it's are you moving debt for

394
00:21:38,920 --> 00:21:40,840
Speaker 2: also from one entity to another?

395
00:21:41,520 --> 00:21:42,440
Speaker 1: Why would you do that.

396
00:21:44,600 --> 00:21:50,840
Speaker 2: Due to tax? So, for instance, your mortgage that you

397
00:21:50,920 --> 00:21:54,000
Speaker 2: have in your own name is being paid in after

398
00:21:54,119 --> 00:22:01,240
Speaker 2: tax dollars. And whereas if you've got debts, this is

399
00:22:01,320 --> 00:22:05,840
Speaker 2: in you know that you put that in a family trust,

400
00:22:06,040 --> 00:22:09,040
Speaker 2: or it's on against an investment portfolio or property in

401
00:22:09,080 --> 00:22:13,840
Speaker 2: your own name that is being paid in pre tax dollars. Debt.

402
00:22:14,080 --> 00:22:17,000
Speaker 1: Yeah, correct, okay, yeah.

403
00:22:16,560 --> 00:22:20,000
Speaker 2: And that's the big thing to ensure that you efficiently run.

404
00:22:20,200 --> 00:22:23,560
Speaker 2: You have your debt structured in an efficient way. We

405
00:22:23,600 --> 00:22:25,080
Speaker 2: have a number we have a number of people, so

406
00:22:25,080 --> 00:22:27,240
Speaker 2: we have a number of people coming in and you

407
00:22:27,320 --> 00:22:28,919
Speaker 2: know that they've got that ability to pay off their

408
00:22:28,960 --> 00:22:33,439
Speaker 2: home loan and look at debt in other vehicles and

409
00:22:33,880 --> 00:22:36,600
Speaker 2: they never thought of it, that hold on that debt

410
00:22:36,640 --> 00:22:40,639
Speaker 2: of my home loan is in after tax dollars and

411
00:22:40,680 --> 00:22:42,119
Speaker 2: therefore there's no efficiency in it.

412
00:22:42,440 --> 00:22:43,840
Speaker 1: So what's the worst sort of debt?

413
00:22:44,400 --> 00:22:45,959
Speaker 2: It is the worst sort of debt if you can

414
00:22:46,000 --> 00:22:46,520
Speaker 2: afford it.

415
00:22:46,880 --> 00:22:49,359
Speaker 1: So is it by definition the first sort of debt

416
00:22:49,440 --> 00:22:51,199
Speaker 1: you should get rid of?

417
00:22:51,800 --> 00:22:52,200
Speaker 2: Correct?

418
00:22:52,720 --> 00:22:55,240
Speaker 1: Yes, So that's absolutely.

419
00:22:54,600 --> 00:22:57,480
Speaker 2: You get rid of that after the debt that's been

420
00:22:57,520 --> 00:23:02,280
Speaker 2: paid off in after tax dollars. And if you wanted

421
00:23:02,320 --> 00:23:05,080
Speaker 2: to take on debt, make sure and you've got the

422
00:23:05,119 --> 00:23:08,640
Speaker 2: ability to make sure that it is therefore in tax

423
00:23:08,680 --> 00:23:11,640
Speaker 2: deductible or pre tax on the repayments.

424
00:23:12,200 --> 00:23:15,679
Speaker 1: What about the reciting part. Is there something more that

425
00:23:15,720 --> 00:23:19,879
Speaker 1: he's alluding to there? Maybe when rates change or whatever.

426
00:23:20,480 --> 00:23:23,080
Speaker 2: That's another thing. Yeah, as well, when you're looking at

427
00:23:23,119 --> 00:23:25,960
Speaker 2: your locking when rates change, and we are going through

428
00:23:26,000 --> 00:23:28,560
Speaker 2: a rate changing at the moment, so you're not wanting

429
00:23:28,600 --> 00:23:32,160
Speaker 2: to know you've had fixed rate loans as interest rates

430
00:23:32,160 --> 00:23:34,320
Speaker 2: go up, as rates go down. You want it to

431
00:23:34,359 --> 00:23:38,159
Speaker 2: have variable but our rates. But the gamble there is

432
00:23:38,200 --> 00:23:39,239
Speaker 2: how farabile rates go.

433
00:23:40,040 --> 00:23:41,640
Speaker 1: You're skeptical about them dropping.

434
00:23:42,320 --> 00:23:44,280
Speaker 2: I think there'll be one more, but I don't one.

435
00:23:44,280 --> 00:23:47,040
Speaker 1: More zero point two five percent cut? That means the

436
00:23:47,200 --> 00:23:49,320
Speaker 1: entire site think cutting is a half a percent.

437
00:23:49,840 --> 00:23:52,640
Speaker 2: Yeah, we didn't go We didn't go up as far

438
00:23:52,720 --> 00:23:55,560
Speaker 2: as others did. James. Yeah, we were one hundred basis

439
00:23:55,600 --> 00:23:58,640
Speaker 2: points less on our aid increases. Yeah.

440
00:23:58,880 --> 00:24:02,000
Speaker 1: Yeah, very interesting. But the economists are still hanging on

441
00:24:02,040 --> 00:24:05,879
Speaker 1: to two or three more cuts. You skeptical about that?

442
00:24:06,480 --> 00:24:08,600
Speaker 2: I am skeptical where if we're going to get more cats,

443
00:24:08,600 --> 00:24:10,920
Speaker 2: it means that the economy is struggling.

444
00:24:11,560 --> 00:24:12,959
Speaker 1: To say, Yeah, I was going to say, why are

445
00:24:13,000 --> 00:24:16,560
Speaker 1: you skeptical because the economy.

446
00:24:16,840 --> 00:24:21,960
Speaker 2: I think it's it's effectively going sideways. I'm just not

447
00:24:22,040 --> 00:24:25,080
Speaker 2: saying that. Yeah, that extreme weakness was I'm not, don't

448
00:24:25,080 --> 00:24:27,359
Speaker 2: get me wrong. I actually think on a relative basis,

449
00:24:27,359 --> 00:24:29,560
Speaker 2: Australia is a under performing the rest of the world,

450
00:24:30,280 --> 00:24:32,399
Speaker 2: and that's a that's for a different podcast. But I

451
00:24:32,440 --> 00:24:34,760
Speaker 2: think that it's effectively flat lining.

452
00:24:35,040 --> 00:24:38,440
Speaker 1: And it's tipping along. And I suppose on the upside,

453
00:24:38,720 --> 00:24:41,600
Speaker 1: unemployment or employment, whichever way you look at it is

454
00:24:41,600 --> 00:24:44,199
Speaker 1: also flat lining in and around four percent, and the

455
00:24:44,240 --> 00:24:47,320
Speaker 1: forecast and the budget leave it there. Okay. I hope

456
00:24:47,320 --> 00:24:52,720
Speaker 1: that's useful to you, James. Now Sam says, I am

457
00:24:52,800 --> 00:24:56,199
Speaker 1: struggling to find had to then there's an answer to

458
00:24:56,240 --> 00:24:59,399
Speaker 1: the following question, Sam and all the Sam's out there.

459
00:25:00,119 --> 00:25:02,639
Speaker 1: We never give advice on the show. This is information only.

460
00:25:03,240 --> 00:25:06,199
Speaker 1: Is interest on a loan taken out to pay a

461
00:25:06,200 --> 00:25:12,000
Speaker 1: sole trader's tax debts tax deductible? Is interested on a

462
00:25:12,080 --> 00:25:14,399
Speaker 1: loan taken out to pay a soul traders tax debts,

463
00:25:15,440 --> 00:25:18,440
Speaker 1: including quarterly payments with bas tax deductible.

464
00:25:19,080 --> 00:25:21,400
Speaker 2: You need to get accountants advice on this one. We can't.

465
00:25:21,800 --> 00:25:26,240
Speaker 2: We're not let your text advice James. Sorry, Sam, that's

466
00:25:26,280 --> 00:25:30,200
Speaker 2: really it's legally we're going down a dangerous pass.

467
00:25:30,320 --> 00:25:32,440
Speaker 1: I made the assumption i'd get an answer there. That's

468
00:25:32,480 --> 00:25:34,760
Speaker 1: all right. Put that on the put that to one side.

469
00:25:34,840 --> 00:25:37,280
Speaker 1: I will come back to you, Sam, don't worry. I

470
00:25:37,320 --> 00:25:40,000
Speaker 1: will be so organized that I will put this back

471
00:25:40,080 --> 00:25:43,600
Speaker 1: into the questions folder that we get all the time.

472
00:25:43,840 --> 00:25:46,320
Speaker 1: Every day we get questions, and I'm delighted to see

473
00:25:46,320 --> 00:25:51,320
Speaker 1: them all right now. Bouncing along to Andrew. If you

474
00:25:51,600 --> 00:25:55,560
Speaker 1: have a loan or loans from a bank, fully offset

475
00:25:55,600 --> 00:25:59,680
Speaker 1: with deposits at the same bank and not paying any interest,

476
00:26:00,320 --> 00:26:03,199
Speaker 1: and the bank goes busted, are you still liable for

477
00:26:03,320 --> 00:26:06,320
Speaker 1: the loan? Oh my, Look two parts to that. Let's

478
00:26:06,359 --> 00:26:08,320
Speaker 1: just answer it straight first of all, and then we'll

479
00:26:08,359 --> 00:26:10,480
Speaker 1: answer it in a more realistic way.

480
00:26:10,440 --> 00:26:12,320
Speaker 2: For the net ad standing balance. You're liable.

481
00:26:13,000 --> 00:26:16,359
Speaker 1: You're liable, yeah, correct. But if the bank went under,

482
00:26:17,000 --> 00:26:19,520
Speaker 1: it would have included your loan, wouldn't it. And it

483
00:26:19,680 --> 00:26:20,960
Speaker 1: still would have gone under.

484
00:26:21,400 --> 00:26:24,200
Speaker 2: And there's a thing that code a receiver or liquid

485
00:26:24,240 --> 00:26:26,000
Speaker 2: ida that will be appointed, and the first thing they'll

486
00:26:26,040 --> 00:26:27,240
Speaker 2: be doing is chasing your date.

487
00:26:27,560 --> 00:26:30,880
Speaker 1: The first thing they do is is chase your date

488
00:26:31,359 --> 00:26:36,280
Speaker 1: if the bank was in receivership. However, in the real world, Andrew,

489
00:26:37,040 --> 00:26:39,960
Speaker 1: and we don't mean to be complacent. Don't be complacent

490
00:26:40,119 --> 00:26:43,600
Speaker 1: at all. However, Number one, there's a bank guarantee, which

491
00:26:43,600 --> 00:26:46,400
Speaker 1: I'm sure you know about, and that's on the positive course,

492
00:26:46,400 --> 00:26:49,000
Speaker 1: two hundred and fifty thousand per person per bank. But

493
00:26:49,320 --> 00:26:54,200
Speaker 1: also there isn't an explicit guarantee about loans, et cetera.

494
00:26:54,359 --> 00:27:00,000
Speaker 1: But there is a de facto, extremely strong historical priests

495
00:27:00,720 --> 00:27:03,760
Speaker 1: in this country that banks are not allowed to go under.

496
00:27:04,240 --> 00:27:08,240
Speaker 1: And anytime banks have been in trouble right back, you

497
00:27:08,240 --> 00:27:10,119
Speaker 1: can go as far back as you like. Stay in

498
00:27:10,200 --> 00:27:13,800
Speaker 1: Bank of Victoria I think late nineteen eighties. Was it

499
00:27:13,840 --> 00:27:16,879
Speaker 1: Bank West in the GFC that comeback basically had to

500
00:27:16,920 --> 00:27:21,600
Speaker 1: takeover I think bank I say, sure, all the state

501
00:27:21,640 --> 00:27:24,760
Speaker 1: banks really, once upon a time, bank I say, spectacular one,

502
00:27:24,840 --> 00:27:28,199
Speaker 1: once upon a time. But the point I'm making is

503
00:27:28,240 --> 00:27:31,480
Speaker 1: that it doesn't happen. The government ensures that the big

504
00:27:31,520 --> 00:27:33,639
Speaker 1: four banks will take over a bank that's in trouble.

505
00:27:33,680 --> 00:27:35,280
Speaker 1: If one of the big four banks is in trouble,

506
00:27:35,320 --> 00:27:37,480
Speaker 1: another bank will take it over. If they don't, the

507
00:27:37,520 --> 00:27:40,480
Speaker 1: government will step in. If the banking system collapses, the

508
00:27:40,520 --> 00:27:44,560
Speaker 1: economy collapses. They don't let it happen. In the historical

509
00:27:44,640 --> 00:27:49,080
Speaker 1: precedent is that separately, there's a government guarantee on deposits. However,

510
00:27:50,000 --> 00:27:53,880
Speaker 1: strictly to answer your question, Andrew, you bet they will

511
00:27:53,920 --> 00:27:56,480
Speaker 1: be chasing you further loan if there was a receiver

512
00:27:56,720 --> 00:28:00,240
Speaker 1: appointed to the biggest receivership imaginable, which would be Big

513
00:28:00,280 --> 00:28:02,120
Speaker 1: four bank. But there have been times, haven't there will?

514
00:28:02,119 --> 00:28:04,680
Speaker 1: I mean Westpacland very close to the line, very close?

515
00:28:05,600 --> 00:28:07,640
Speaker 1: When was that ninety one two?

516
00:28:08,600 --> 00:28:10,280
Speaker 2: Yeah, Peka came in and bailed them out.

517
00:28:10,720 --> 00:28:13,879
Speaker 1: There you go, you see, But somebody will invariably come in.

518
00:28:13,920 --> 00:28:15,879
Speaker 1: Because the other thing is, of course, that there is

519
00:28:15,920 --> 00:28:20,120
Speaker 1: an oligopoly in the Australian banking system. There's four banks.

520
00:28:20,359 --> 00:28:23,920
Speaker 1: They don't even try to expand outside Australia. They're completely

521
00:28:23,960 --> 00:28:30,040
Speaker 1: domestically focused. It's a mortgage machine, it's government guaranteed. Really,

522
00:28:30,240 --> 00:28:31,240
Speaker 1: it's a pretty good.

523
00:28:31,040 --> 00:28:34,080
Speaker 2: Business on the dead side. Now they're a lot more

524
00:28:34,080 --> 00:28:37,119
Speaker 2: conservative than there were, especially even compared to the GFS.

525
00:28:37,640 --> 00:28:41,440
Speaker 1: Yes, because the capital adequacy rules have continually been ramped

526
00:28:41,520 --> 00:28:45,840
Speaker 1: up by APPRA, the regulator, the Australian prudential with Australian

527
00:28:45,880 --> 00:28:49,000
Speaker 1: Prudential Regulation Authority. Worth knowing all that, Andrew, what a

528
00:28:49,040 --> 00:28:52,600
Speaker 1: good question, which is in a way a theoretical question.

529
00:28:53,320 --> 00:28:55,840
Speaker 1: All right, terrific. Hey, thank you, Will.

530
00:28:56,640 --> 00:29:01,160
Speaker 2: You're welcome, James. You started the podcast in talking on terror. Yes,

531
00:29:01,200 --> 00:29:07,360
Speaker 2: And I found a great quote by Ivan Calhoun. Well,

532
00:29:07,440 --> 00:29:08,480
Speaker 2: Ivan Cahoune.

533
00:29:08,200 --> 00:29:10,280
Speaker 1: Posted remind our listens who he is.

534
00:29:10,760 --> 00:29:14,400
Speaker 2: He was a NAB but before that he was the

535
00:29:14,480 --> 00:29:19,240
Speaker 2: chief economist at Deutsche Bank, and he posted a quote

536
00:29:19,400 --> 00:29:24,520
Speaker 2: from David Kelly, the JP Morgan Asset Management Global Chief strategist,

537
00:29:25,040 --> 00:29:27,240
Speaker 2: and he said, the trouble with tariffs, to be descind

538
00:29:27,360 --> 00:29:31,280
Speaker 2: is that they raise prices, slow economic growth, cut profits,

539
00:29:31,640 --> 00:29:37,400
Speaker 2: increase unemployment, worseen inequality, diminished productivity, and increase global tensions.

540
00:29:37,960 --> 00:29:39,000
Speaker 2: Other than that, they're fine.

541
00:29:40,040 --> 00:29:43,240
Speaker 1: That's right. I used that quote about three weeks ago

542
00:29:43,520 --> 00:29:45,480
Speaker 1: on the weekend. I saw it somewhere and I said,

543
00:29:45,560 --> 00:29:48,080
Speaker 1: oh boy, that's a corker. But more than that, it's

544
00:29:48,080 --> 00:29:51,200
Speaker 1: not just that it's a corker, it's who it's from,

545
00:29:51,680 --> 00:29:54,360
Speaker 1: the heart of Wall Street, the heart of Wall Street

546
00:29:54,640 --> 00:29:56,800
Speaker 1: JP Morgan, and one of the biggest jobs in that

547
00:29:56,920 --> 00:29:59,600
Speaker 1: investment bank take it on board folks. A lot more

548
00:30:00,200 --> 00:30:02,160
Speaker 1: more coming on that one, and we will be talking

549
00:30:02,200 --> 00:30:04,560
Speaker 1: about that with Cameron Stewart in a few days. Okay,

550
00:30:05,000 --> 00:30:09,320
Speaker 1: thank you. Keep the emails rolling. You're very shy on

551
00:30:09,360 --> 00:30:13,280
Speaker 1: the voice memos. It's very easy, you know, it's very easy,

552
00:30:13,280 --> 00:30:15,680
Speaker 1: and we'd love to hear you. But we're always happy

553
00:30:15,720 --> 00:30:17,360
Speaker 1: to read you out of course, what we'd love to

554
00:30:17,360 --> 00:30:20,480
Speaker 1: hear you too, So think about that. Here's the email

555
00:30:20,720 --> 00:30:24,120
Speaker 1: the money puzzle at the Australian dot com dot Au.

556
00:30:24,280 --> 00:30:27,080
Speaker 1: Today's show was produced by Leah Samuel Gluuke. Talk to

557
00:30:27,080 --> 00:30:27,440
Speaker 1: you soon,