Friday, 9 May 2014

Net Worth: April 2014

A fairly quiet month, aside from a good increase in my retirement account value (which was partly due to January employer contributions being deposited during April). The Feb and Mar superannuation contributions were paid by my emplyer on 28/4 and should be hitting our SMSF bank account "any day now" according to the payroll department. Still not sure why it takes BT super (that handles the company superannuation payments) more than two weeks to deposit funds into the member accounts! But as our annual SMSF tax bill was paid in early May there won't be much impact overall this month.

The contribution payment delays can really be a pain at the end of the financial year, as having one or two of the Apr/May/Jun payments appear in our SMSF bank account before the end of FY can push me over the concessionally tax contributions (Salary Sacrifice plus SGL) limit if all three payments arrived late the previous year. With all the payments being processed electronically (from employer to BT Super, and then from BT Super to ANZ bank) there is no reason for the payments to take more than two business days to arrive in our SMSF bank account.

I've continued to report the 'hobby farm' valuation as the nominal "purchase" cost ($325,000) which was used to calculate the stamp duty, but I'll make a separate note of it's monthly valuation estimate (the valuation is based on house price sales in the nearby township, which may not be a very good guide to changes in values for a nearby 25 acre rural property). This month my estimation increased from $354,900 to $357,000 (+0.86%).

Assets$ Amount$ Diff% Diff
Stocks *$235,503-$951n/a
Debts ^$ Amount $ Diff% Diff
Home Mortgage(s)$102,365$90.01%
Net Worth$1,536,614$13,1020.86%
* the Stocks figure is portfolio value - margin loans. The LVR is around 80% overall.
^ doesn't include the ~$675,000 of investment loans, as these are already deducted when calculating the value of my geared stock portfolio.

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Anonymous said...

Are there substantial tax benefits with a hobby farm?

Financial Independence said...

Congrats on getting closer to your goals. It is good to see somebody's is making it there.

Anonymous said...

A hobby farm can provide some tax benefits (in the form of deductible expenses that reduce your current income tax), but the rules are more strict than other negative gearing opportunities (eg. investing in rental housing). You basically can only claim expenses if the farm is making a profit (so it's the same as any normal business expense deduction) or has a large amount of capital invested in it and good prospects of making a profit soon. Many start-up costs are not deductible immediately, and are treated as capital costs for establishing the farm, and only get deducted from future net profits, or are part of the cost base when calculating capital gains upon eventual sale of the farm.

My parents ran it as an Alpaca Stud for many years (before moving to their new, larger hobby farm property (100 acres), but as I won't be living on the hobby farm I 'inherited' until my retirement, I probably won't run it as a 'farm' or claim any tax deductions until retirement. Although there may be possibilities for some small-scale income eg. planting some timber or crop trees (eg. hazelnuts) for eventual farm income, or adding some extra rooms to allow for bed&breakfast or 'farm stay' accomodation as a side line when I'm retired there.