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Let's face it - no one likes tax, but how do we pay less of it? · The Money Puzzle

• 0:13
  Speaker 1: Hello and welcome to today's episode of The Money Puzzle.
• 0:15
  Speaker 1: I'm your host, James Gerrard, standing in for James Kirby
• 0:18
  Speaker 1: this week for another special episode. Last week, we covered
• 0:21
  Speaker 1: the world of private equity and heard some very insightful
• 0:24
  Speaker 1: tips from a seasoned private equity investor, Rudy Engelbrecht. If
• 0:28
  Speaker 1: you haven't listened to that episode, I'd really encourage you
• 0:30
  Speaker 1: to do so. It was well worth listening. It's called
• 0:33
  Speaker 1: Private Equity Playbook, Tips from an Insider. And today, we're
• 0:37
  Speaker 1: going to cover tax. The thing is that tax probably
• 0:39
  Speaker 1: isn't the most exciting thing in the world, but it's important.
• 0:42
  Speaker 1: So what we're going to do is we're going to
• 0:44
  Speaker 1: try and tackle it in a structured way. We're going
• 0:46
  Speaker 1: to break it up into discussion by different age groups
• 0:48
  Speaker 1: so that regardless of how old you are and who
• 0:51
  Speaker 1: you are, hopefully you can take something away from today's episode.
• 0:54
  Speaker 1: And we're going to finish with the top tax deductions
• 0:57
  Speaker 1: you didn't know that you could claim. And to help
• 0:59
  Speaker 1: us with this very special mission, we've got a very
• 1:01
  Speaker 1: special guest. He's been on the show before, so his
• 1:04
  Speaker 1: name may be familiar to a couple of you. Timothy
• 1:07
  Speaker 1: Ricardo is the principal at Central Coast-based accounting practice, Accounting
• 1:11
  Speaker 1: Advisor Group. Now, something you might not know about Tim
• 1:14
  Speaker 1: is that he doesn't mind the occasional round of golf.
• 1:16
  Speaker 1: So in his day job as an accountant, Tim's very
• 1:18
  Speaker 1: good at writing things off. But when it comes to golf,
• 1:21
  Speaker 1: a lot of people say that Tim's golf game is
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  Speaker 1: a bit of a write-off. So without further delay, let's
• 1:26
  Speaker 1: give Tim from Accounting Advisor a very big money puzzle welcome. Welcome, Tim.
• 1:31
  Speaker 2: Thanks, James. I think a bit of creative accounting in
• 1:34
  Speaker 2: golfing is always helpful, though.
• 1:36
  Speaker 1: That's the way. We've had many rounds of golf together,
• 1:40
  Speaker 1: and we have been... Occasionally creative, but we'll stop talking
• 1:43
  Speaker 1: about that because other people on the same golf day
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  Speaker 1: may be listening to this. So before we get started,
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  Speaker 1: I just want everyone to know that what Tim and
• 1:50
  Speaker 1: I discuss is general advice and it's not seen to
• 1:52
  Speaker 1: be personal advice. So as is always the case on
• 1:55
  Speaker 1: The Money Puzzle, listeners should seek professional advice before acting
• 1:58
  Speaker 1: on anything they hear on today's episode. So let's get started, Tim,
• 2:02
  Speaker 1: and let's have a chat about the younger age group.
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  Speaker 1: So what we'll do is we'll break it up into
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  Speaker 1: three different age groups. We'll talk about people who are
• 2:09
  Speaker 1: between 18 years old and 40. and some of the
• 2:11
  Speaker 1: tax issues that they face and how they can potentially
• 2:14
  Speaker 1: optimise things and think about things they may not have
• 2:16
  Speaker 1: thought about before. We'll then jump into people between 40
• 2:19
  Speaker 1: and 60 years of age, and then we'll jump through
• 2:22
  Speaker 1: to the retirees. So starting with the age bracket of
• 2:25
  Speaker 1: 18 to 40, let's have a chat about the private
• 2:29
  Speaker 1: health insurance, Medicare levy surcharge. Talk us through why is
• 2:33
  Speaker 1: that important for people in that age bracket, Tim?
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  Speaker 2: Okay, so yeah, the younger generation, I don't think we
• 2:39
  Speaker 2: fit into that one anymore. James, unfortunately.
• 2:42
  Speaker 1: We're on the other side of the big four zero now, Tim.
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  Speaker 2: So yes, what wisdom can we give to these young people? Okay,
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  Speaker 2: so private health insurance is one of those topics that
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  Speaker 2: I think the young people think that they're all fit
• 2:55
  Speaker 2: and healthy and they don't need it. So what the
• 2:57
  Speaker 2: government does is they make it more of an incentive
• 3:01
  Speaker 2: for you to get it when you're younger. So basically
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  Speaker 2: after the age of 30, a loading of 2% adds
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  Speaker 2: to your premiums every year. So if you're starting to,
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  Speaker 2: you know, if you feel like you're fit and healthy
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  Speaker 2: and you don't need private health insurance, the older you get,
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  Speaker 2: you might actually require that insurance. And without giving any
• 3:22
  Speaker 2: advice on that, from a tax perspective, you can also
• 3:26
  Speaker 2: save a little bit of money. If you're starting to
• 3:28
  Speaker 2: earn more income, you also pay more tax if you
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  Speaker 2: don't have private health insurance. So there's an incentive there that,
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  Speaker 2: you know, to get that insurance when you're younger and
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  Speaker 2: you know, 30 or below so that you can, you know,
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  Speaker 2: think about.
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  Speaker 1: The future, I suppose. Yeah. So what's the maximum surcharge
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  Speaker 1: that can be charged? I assume it goes up the
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  Speaker 1: more you earn, the higher the surcharge that you get charged.
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  Speaker 2: I think it's a maximum of 40%, but I'd have
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  Speaker 2: to double check that one, James. Thanks for throwing a
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  Speaker 2: wildcard question at me.
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  Speaker 1: That's all right. What I meant was about what gets
• 4:03
  Speaker 1: added to your tax, like that Medicare surcharge levy.
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  Speaker 2: Okay, on the levy side, yeah. Well, so basically, the
• 4:10
  Speaker 2: more you earn, the more tax you pay. But if
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  Speaker 2: you're over, as an individual, $ 97, 000 in income, or as
• 4:16
  Speaker 2: a family, they double it, so $ 194, 000, then you pay 1%
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  Speaker 2: surcharge on your income. So if you're earning $ 200, 000 between
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  Speaker 2: the two of you, you pay $ 2, 000 extra in tax.
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  Speaker 2: And then if you're going up to more than $ 302, 000,
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  Speaker 2: then you can actually pay 1.5%. as a loading on
• 4:37
  Speaker 2: your tax. So yeah, not a great sort of tax
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  Speaker 2: to be paying. It's a penalty. So good idea to
• 4:43
  Speaker 2: have insurance when you start earning more money.
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  Speaker 1: All right. Well, there we go. So the more you earn,
• 4:47
  Speaker 1: the more you should consider private health insurance, and maybe
• 4:51
  Speaker 1: not even so much for the core benefits of it,
• 4:54
  Speaker 1: but getting hospital cover. Because I've seen situations where people
• 4:57
  Speaker 1: pay less premiums for hospital cover than they would in
• 5:00
  Speaker 1: the Medicare levy surcharge. So financially, it could be better
• 5:04
  Speaker 1: just to get that private health insurance, plus you get
• 5:05
  Speaker 1: the free cover if you need it. Now, moving on
• 5:08
  Speaker 1: to another one for our younger age bracket, why do
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  Speaker 1: you think it might be important to get an accountant
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  Speaker 1: earlier in life? Okay.
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  Speaker 2: So look, I think it's for these kind of points,
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  Speaker 2: because if you get over a certain age, you start
• 5:20
  Speaker 2: losing some benefits. And it's more about the things you
• 5:24
  Speaker 2: miss out on when you're that young. You might think
• 5:28
  Speaker 2: the digital you know, this digital generation, everything's at your
• 5:31
  Speaker 2: fingertips and the ATO make it really easy to lodge
• 5:34
  Speaker 2: your own return. And I looked up some stats here,
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  Speaker 2: but at the end of August, 6.5 million individual returns
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  Speaker 2: were lodged. Three and a half million were by self-preparers
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  Speaker 2: and only 2.9. So they've sort of eclipsed the agent-prepared returns.
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  Speaker 2: But there's these new returns called push returns, which basically
• 5:54
  Speaker 2: the ATO prepares your return for you and says, do
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  Speaker 2: you want to go ahead with this return? It's for
• 6:01
  Speaker 2: those simple taxpayers. So the DIY trend of returns is
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  Speaker 2: going to be increasing, I think. But essentially, if you
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  Speaker 2: are looking for tax advice, it is easy to get
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  Speaker 2: things wrong on your tax return. And a lot of
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  Speaker 2: the returns I see that come to me after they've
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  Speaker 2: prepared it themselves, I can usually pick up quite a
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  Speaker 2: few things they've gotten wrong. So it's good to get
• 6:24
  Speaker 2: an accountant to start providing some of those specialized advice pieces,
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  Speaker 2: especially when you start getting into some areas that are
• 6:31
  Speaker 2: outside those very simple salary and wage returns.
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  Speaker 1: What about paying HECS? People often ask me, should I
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  Speaker 1: focus on repaying my HECS debt or should I put
• 6:43
  Speaker 1: it onto my mortgage or onto my investment property loan?
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  Speaker 1: So these people will who've gone through university, they're in
• 6:50
  Speaker 1: their 20s, 30s, still have a residual HECS debt. What
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  Speaker 1: are your thoughts there from a tax perspective?
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  Speaker 2: Okay. Well, on the HECS debts, this is something in
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  Speaker 2: this age bracket, they've usually got quite large HECS debts.
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  Speaker 2: And every year you get a compulsory payment that comes
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  Speaker 2: on when you complete your tax return. So one of
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  Speaker 2: the things that is a misconception, I suppose, is that
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  Speaker 2: I can sort of make a voluntary repayment and then
• 7:16
  Speaker 2: that'll save me on my compulsory repayment. But you don't
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  Speaker 2: actually get any reduction on your compulsory repayment for any
• 7:22
  Speaker 2: voluntary repayments. So it sort of becomes a bit of
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  Speaker 2: a black hole there. And the fact that it's only
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  Speaker 2: increasing by CPI means that you'd be able to give
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  Speaker 2: the advice on that as to whether CPI is better
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  Speaker 2: than getting a loan outside or putting it on your mortgage.
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  Speaker 2: But yeah, it's something to consider.
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  Speaker 1: Yeah. So in the past, it was generally advisable to
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  Speaker 1: not prioritize HEX repayments because the indexation rate was quite
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  Speaker 1: low and people's mortgages, investment loans, car loans, personal loans
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  Speaker 1: would be of a higher interest rate. But we had
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  Speaker 1: a bit of surprise for the last 12 months. It
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  Speaker 1: was 7.1% indexation. So that's been higher than it has
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  Speaker 1: been for quite a long time. So every year people
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  Speaker 1: just need to think about and be conscious that they
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  Speaker 1: have a HECS debt if they do, and then just
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  Speaker 1: work out in the order of priority, should they make
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  Speaker 1: an extra repayment or focus their cashflow in other areas? Tim,
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  Speaker 1: what about first home super saver scheme? What should we
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  Speaker 1: understand for people in that 18 to 40 year old
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  Speaker 1: age bracket with regards to this?
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  Speaker 2: Yeah, so this was brought in back in the Turnbull
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  Speaker 2: government days of 2017. And it was a little bit
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  Speaker 2: more popular than co-investing with the government on your first
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  Speaker 2: house for some reason. And basically this one is, it
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  Speaker 2: allows you to pull out of super any sort of
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  Speaker 2: contributions that you've made, voluntary contributions into super. So it
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  Speaker 2: can be a real help for these young taxpayers that
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  Speaker 2: are trying to get into a house. It allows them
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  Speaker 2: to save and put some money into super. And then
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  Speaker 2: they can withdraw up to $ 50, 000 of their voluntary contributions
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  Speaker 2: up to 15,000 a year in their, of their voluntary
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  Speaker 2: contributions that they make. So they can get a bit
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  Speaker 2: of a tax deduction on the way in. And then
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  Speaker 2: when they pull it out, you do get a, a
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  Speaker 2: tax offset of, I think it's 30% that you can
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  Speaker 2: get when you pull that out of super. And the
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  Speaker 2: best thing about this is that it's actually per person.
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  Speaker 1: So.
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  Speaker 2: If there's two of you, you can pull out $ 100, 000
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  Speaker 2: out of your super if you've been putting it in
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  Speaker 2: as voluntary contributions. So it's something that you can get
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  Speaker 2: a bit of a tax benefit to help you save.
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  Speaker 2: And then if you're wanting to get into that first home,
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  Speaker 2: you can go in with someone else and obviously pull
• 9:39
  Speaker 2: out and get a bit of a deposit together.
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  Speaker 1: Perfect. So on the way in, 15% tax. On the
• 9:44
  Speaker 1: way out... Some people may not realise that it's not
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  Speaker 1: fully tax-free, that depending on your level of taxable income,
• 9:51
  Speaker 1: there is a 30% tax offset there. But if you're
• 9:53
  Speaker 1: on the highest marginal tax rate, there still might be
• 9:55
  Speaker 1: a bit of top-up tax payable on that super money
• 9:59
  Speaker 1: coming out. to fund your deposit. All right, well, I
• 10:02
  Speaker 1: think we're done with the younger age bracket. Unless there's
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  Speaker 1: anything else you wanted to run through with them that
• 10:05
  Speaker 1: comes to mind?
• 10:06
  Speaker 2: No, not off the top of my head. I think
• 10:08
  Speaker 2: that's a good snapshot of a few issues to consider.
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  Speaker 1: All right, good. Let's move on to the middle-aged taxpayer
• 10:15
  Speaker 1: and maybe a little bit older than that as well.
• 10:17
  Speaker 1: So between 40 and... 60. So let's kick it off
• 10:21
  Speaker 1: with negative gearing. Now, the thing is that negative gearing
• 10:24
  Speaker 1: is pretty rare globally. Tim, do you know much about
• 10:28
  Speaker 1: negative gearing with regards to how we do it versus
• 10:31
  Speaker 1: other countries?
• 10:32
  Speaker 2: Look, I don't know a whole lot because we mostly
• 10:35
  Speaker 2: focus on the Australian tax, seem to be bogged down
• 10:38
  Speaker 2: in that. But interestingly, just to look at a couple
• 10:40
  Speaker 2: of other countries, New Zealand has sort of phased out
• 10:44
  Speaker 2: their negative gearing for a few years now. So they're
• 10:48
  Speaker 2: moving away from it. And then Canada, they have more
• 10:53
  Speaker 2: like a future offset where you can't offset the negative
• 10:58
  Speaker 2: gearing against your other income, but you can against future
• 11:01
  Speaker 2: rental earnings. So they isolate that as a deduction, which yeah,
• 11:06
  Speaker 2: I'm sure the government's been considering all of these different
• 11:09
  Speaker 2: options and it's a bit of a hot topic with them.
• 11:11
  Speaker 2: But yeah, so more focusing on the Australian side of things, though,
• 11:15
  Speaker 2: I think it is here. Is it here to stay?
• 11:18
  Speaker 2: I don't know the answer to that question, but it
• 11:21
  Speaker 2: is certainly something that is pretty common. It's about one
• 11:24
  Speaker 2: in 10 were the stats that I saw of Australians
• 11:27
  Speaker 2: that use negative gearing, which, yeah, I don't know where
• 11:31
  Speaker 2: that comes from, but that's pretty high.
• 11:33
  Speaker 1: All right, well, Negative gearing, maybe jumping back a step
• 11:36
  Speaker 1: to the basics of it. Explain to our listeners why
• 11:40
  Speaker 1: someone would want to buy an investment asset that costs
• 11:43
  Speaker 1: them more money to maintain each year than the income
• 11:46
  Speaker 1: they're getting from it. Why would that make financial sense
• 11:50
  Speaker 1: or taxation sense to have a loss-making investment?
• 11:54
  Speaker 2: Yeah, so when you're talking about negative gearing, it's basically...
• 11:58
  Speaker 2: an asset that's got a loan on it and it's
• 12:01
  Speaker 2: creating a loss that is then tax deductible in our
• 12:04
  Speaker 2: tax system. So from that point of view, it can
• 12:07
  Speaker 2: look at the whole idea here, James, is that you're
• 12:11
  Speaker 2: doing it for investment, obviously, and that's your area. You're
• 12:14
  Speaker 2: picking an investment that you're hoping is going to go
• 12:17
  Speaker 2: up in price, but you can save a bit of
• 12:19
  Speaker 2: tax in the meantime on the costs associated with holding
• 12:23
  Speaker 2: onto that property. But as far as things to consider,
• 12:26
  Speaker 2: I think depreciation and sort of those non-cash deductions are
• 12:30
  Speaker 2: things that do help in this regard. So there are
• 12:34
  Speaker 2: a few different types of non-cash deductions that you can
• 12:38
  Speaker 2: get when you've got a rental property. So they're not
• 12:41
  Speaker 2: actually things that you're having to pay for, but you
• 12:43
  Speaker 2: can claim them in your return.
• 12:47
  Speaker 1: And what about the decision as to who owns the property,
• 12:51
  Speaker 1: the negatively geared property? Should it be in joint names
• 12:55
  Speaker 1: if it's to partners who are married? Should it be
• 12:58
  Speaker 1: in the higher income, the lower income? Does it depend
• 13:01
  Speaker 1: on whether the property is making a loss or cash
• 13:03
  Speaker 1: flow positive? How do people start to, and again, not advice,
• 13:06
  Speaker 1: but generally how should people be thinking about, is there
• 13:09
  Speaker 1: any rule of thumbs there when it comes to ownership
• 13:11
  Speaker 1: of geared, leveraged investment property or geared share portfolios?
• 13:16
  Speaker 2: Yeah, so as far as gearing is concerned, if you
• 13:20
  Speaker 2: need to look at it on a property buy perspective,
• 13:22
  Speaker 2: property or case-by-case basis. Obviously, some assets grow a lot
• 13:28
  Speaker 2: more from a capital point of view, but are in
• 13:31
  Speaker 2: a cash negative position on a year-to-year basis. Obviously, in
• 13:36
  Speaker 2: the short term, having that in the name of the
• 13:40
  Speaker 2: higher taxpayer would be a good idea, just generally speaking.
• 13:46
  Speaker 2: But then you need to consider that CGT at the
• 13:48
  Speaker 2: end because if you have a capital gain that's all
• 13:52
  Speaker 2: in one person's name, you could be paying a lot
• 13:55
  Speaker 2: more than if it's divided by the two of you
• 13:58
  Speaker 2: at lower marginal rates, say, when you retire. You're going
• 14:01
  Speaker 2: to sell that later on. So it's really a case-by-case
• 14:05
  Speaker 2: situation there, James, but certainly something that you get advice
• 14:08
  Speaker 2: on for each asset that you're purchasing and just to
• 14:12
  Speaker 2: look at the mix of what sort of a loss
• 14:14
  Speaker 2: position that would be in. and what you're planning on
• 14:17
  Speaker 2: doing with that asset and how long you're going to
• 14:20
  Speaker 2: hold on to it.
• 14:21
  Speaker 1: People between 40 and 60 often ask me about family trust.
• 14:26
  Speaker 1: They say, look, should I have a family trust to
• 14:28
  Speaker 1: buy this investment? And I usually recommend they seek professional
• 14:32
  Speaker 1: accounting advice. I suspect that you probably get the same question.
• 14:36
  Speaker 1: How do you approach that with regards to what are
• 14:38
  Speaker 1: the considerations for people to walk through as they decide
• 14:42
  Speaker 1: whether they should have a family trust or whether they
• 14:44
  Speaker 1: should just invest in their personal names.
• 14:47
  Speaker 2: Yeah, so family trusts are pretty common among the higher
• 14:52
  Speaker 2: wealth sort of individuals, ones that are trying to separate
• 14:57
  Speaker 2: assets for asset protection purposes, or just flexibility if they're
• 15:02
  Speaker 2: discretionary trusts to be able to split the income on
• 15:05
  Speaker 2: assets between, you know, more favourable, you know, tax rates
• 15:11
  Speaker 2: in the future, giving it to either the mum or
• 15:13
  Speaker 2: the dad or whoever the higher tax earner is, they
• 15:17
  Speaker 2: don't have to have that income coming into their tax
• 15:21
  Speaker 2: return when those gains come through. So we consider that. Also,
• 15:27
  Speaker 2: it depends on the asset and what you're wanting to
• 15:29
  Speaker 2: buy because ultimately a family trust, you're getting that so
• 15:32
  Speaker 2: that you can invest in assets. And if it's property,
• 15:37
  Speaker 2: we need to consider all sorts of other taxes like
• 15:41
  Speaker 2: state taxes and looking at the capital gains positions on
• 15:47
  Speaker 2: those assets in the future. So it's more for your
• 15:51
  Speaker 2: higher wealth individuals and something that's a very specialised area
• 15:55
  Speaker 2: that we do a lot of advice in.
• 15:58
  Speaker 1: Good. All right. Well, there's a few other things I
• 16:00
  Speaker 1: want to chat through for this 40 to 60-year-old age group.
• 16:03
  Speaker 1: But before we do that, let's take a quick break.
• 16:13
  Speaker 1: Hello and welcome back to The Money Puzzle. I'm James Gerrard, writer,
• 16:15
  Speaker 1: contributor to the wealth section of The Australian and also
• 16:18
  Speaker 1: financial advisor with financialadvisor.com.au. And this week on the show,
• 16:22
  Speaker 1: we have Timothy Ricardo from Accounting Advisor Group. So Tim,
• 16:27
  Speaker 1: salary sacrifice and carry forward super contributions. This one's quite
• 16:32
  Speaker 1: a popular thing for people in that 40 to 60
• 16:35
  Speaker 1: age bracket. So I'll tee up what the salary sacrifice
• 16:38
  Speaker 1: side is. The contribution caps have increased from $ 27, 500 to
• 16:42
  Speaker 1: $ 30, 000 per year, so people can salary sacrifice into super,
• 16:46
  Speaker 1: but it must take into account both employer contributions, which
• 16:51
  Speaker 1: are mandated at 11.5% of income, plus any voluntary contributions.
• 16:55
  Speaker 1: You can't just put in $ 30, 000 in salary sacrifice because
• 16:58
  Speaker 1: your employer contributions will push you over the cap, which
• 17:01
  Speaker 1: won't be great because you'll pay extra tax. So that's
• 17:04
  Speaker 1: what can happen from a pre-tax salary sacrifice standpoint. perspective,
• 17:09
  Speaker 1: but there's also these other rules around carry forward contributions
• 17:12
  Speaker 1: where you can make more than the $ 30, 000 in a
• 17:15
  Speaker 1: pre-tax super contribution in a given financial year. So Tim,
• 17:18
  Speaker 1: do you want to run us through that, but also
• 17:21
  Speaker 1: what is this div 293 tax as well and who
• 17:24
  Speaker 1: does that impact? Okay.
• 17:27
  Speaker 2: So basically just to cover the carry forward contributions, if
• 17:32
  Speaker 2: you've got a super balance of less than 500K, the
• 17:36
  Speaker 2: government allows you to catch up on that cap that
• 17:41
  Speaker 2: it's been unused for the last five years. So it's
• 17:44
  Speaker 2: now 30. It used to be 27 and a half,
• 17:47
  Speaker 2: as you mentioned. So if you'd only contributed, say, 17
• 17:51
  Speaker 2: and a half last financial year, you've got $ 10, 000 there
• 17:55
  Speaker 2: that you haven't made use of. You're allowed to utilize
• 18:00
  Speaker 2: that in the current financial year. And this has become
• 18:03
  Speaker 2: quite a good strategy for People that, say, have a
• 18:08
  Speaker 2: higher income year and they want to try to smooth
• 18:10
  Speaker 2: out their income in that financial year, they can utilize
• 18:14
  Speaker 2: the super threshold in the current year. So it's up
• 18:18
  Speaker 2: to $ 30, 000 this year. And then they can cash in on,
• 18:21
  Speaker 2: I suppose you'd say, the lost threshold of deductions in
• 18:25
  Speaker 2: the previous year that haven't been used. So we use
• 18:29
  Speaker 2: sort of this for capital gains tax management and for
• 18:33
  Speaker 2: other things sort of income smoothing to help people invest
• 18:38
  Speaker 2: and prepare for the future and manage their tax in
• 18:41
  Speaker 2: that regard.
• 18:42
  Speaker 1: All right. So what you're saying is that if someone
• 18:44
  Speaker 1: sells an investment property, for example, and there's a big
• 18:46
  Speaker 1: capital gain attached to it, it might push them up
• 18:49
  Speaker 1: into the 47% tax bracket. But if they've got this
• 18:52
  Speaker 1: unused super contribution that they can carry forward from the
• 18:55
  Speaker 1: last five years, let's just say they've got $ 50, 000 in
• 18:58
  Speaker 1: extra super contributions, they can make that super contribution, pay
• 19:02
  Speaker 1: in most cases 15% tax, on that super contribution, but
• 19:06
  Speaker 1: save 47% tax, which would be from the capital gains tax.
• 19:10
  Speaker 1: Is that more or less what we're saying with this
• 19:12
  Speaker 1: CGT management with the carry forward contributions?
• 19:15
  Speaker 2: That's right.
• 19:15
  Speaker 1: Yeah.
• 19:16
  Speaker 2: So it's quite significant. However, as you mentioned before, there
• 19:20
  Speaker 2: is something called a div 293 tax. The government has
• 19:26
  Speaker 2: introduced for the people that earn over $ 250, 000, including super contributions,
• 19:34
  Speaker 2: they do your contributions into super go up from 15
• 19:38
  Speaker 2: to 30%. So there's still a benefit there, but it's
• 19:41
  Speaker 2: just not quite as good as the 15% tax in super.
• 19:47
  Speaker 2: So whilst there's benefits for the higher income, earner, the
• 19:51
  Speaker 2: government has sort of reduced the benefit there when you're
• 19:55
  Speaker 2: earning over $ 250, 000, including super contributions.
• 20:00
  Speaker 1: The last thing I want to chat about with this
• 20:02
  Speaker 1: middle-aged bracket is motor vehicle deductions. It's also a common
• 20:06
  Speaker 1: area that I discuss with people. They ask, How do
• 20:10
  Speaker 1: I fund my next motor vehicle? Should I use cash,
• 20:13
  Speaker 1: redraw from my mortgage, borrow against my mortgage, evaded lease,
• 20:18
  Speaker 1: car loan, personal loan? What are your thoughts there, Tim,
• 20:22
  Speaker 1: from a tax perspective?
• 20:24
  Speaker 2: Yeah, so look, I think that the family car upgrade
• 20:28
  Speaker 2: happens between 40 and 60 or maybe the midlife crisis car, James.
• 20:33
  Speaker 2: I think you've had a few of those.
• 20:35
  Speaker 1: Speak for yourself, Mr. Mitsubishi Evo.
• 20:39
  Speaker 2: That's the 18 to 40-year-old's car.
• 20:42
  Speaker 1: You were under 40. And to be fair, I did
• 20:45
  Speaker 1: have an equivalent sort of Subaru bright orange car in
• 20:48
  Speaker 1: that age bracket too, so I can't talk.
• 20:51
  Speaker 2: Yeah, so essentially salary sacrificing. Look, really when it comes
• 20:57
  Speaker 2: to that, there's the traditional looking at how you claim
• 21:01
  Speaker 2: that car with using a logbook and what use is
• 21:04
  Speaker 2: it for work and how much tax you're going to
• 21:07
  Speaker 2: be paying if you're salary sacrificing versus buying it privately.
• 21:11
  Speaker 2: And there is a little bit of a benefit sometimes
• 21:14
  Speaker 2: if it is just a private car and you can
• 21:17
  Speaker 2: salary sacrifice it, especially when you're on those higher tax brackets. However,
• 21:23
  Speaker 2: the main benefit that's come out in the last couple
• 21:25
  Speaker 2: of years has been the EV car exemption for FBT.
• 21:31
  Speaker 2: So That's one that if you're looking at upgrading a
• 21:34
  Speaker 2: car and utilising salary sacrifice, like a novated lease, an
• 21:39
  Speaker 2: EV is a tax-effective way to go. Nice one.
• 21:43
  Speaker 1: All right, well, let's move on to the retirees. So
• 21:46
  Speaker 1: we're talking 60-plus. Now, first thing we'll have a chat
• 21:50
  Speaker 1: about is super, putting money into super tax-free thresholds. Do
• 21:57
  Speaker 1: you want to run us through that, Tim?
• 22:00
  Speaker 2: Yeah. So essentially, when we're looking at how much money
• 22:05
  Speaker 2: you've got into super, so you're talking about total super balance, James, there?
• 22:09
  Speaker 1: Yeah, we should probably, well, I'll tee it up. So
• 22:12
  Speaker 1: you can have up to $ 1. 9 million in, push it
• 22:16
  Speaker 1: to the pension phase and conditions of release of 60
• 22:19
  Speaker 1: and retired or 65 and still working. So if you
• 22:24
  Speaker 1: stop working at 60, for example, you can move up
• 22:27
  Speaker 1: to $ 1. 9 million of your super into a tax-free pension.
• 22:30
  Speaker 1: And when I say tax-free, I mean that the income,
• 22:32
  Speaker 1: the gains inside of the account are tax-free. The drawing
• 22:36
  Speaker 1: from the super fund to your personal bank account is non-assessable,
• 22:39
  Speaker 1: tax-free income as well. It's the most tax-effective structure for
• 22:42
  Speaker 1: people in retirement age. But is there any little tips
• 22:46
  Speaker 1: and tricks and things relating to super that people should
• 22:49
  Speaker 1: be aware of or think about in this 60 plus
• 22:52
  Speaker 1: age bracket? So what about people who are 65, for example,
• 22:54
  Speaker 1: that they're still working? That triggers a condition of release.
• 22:59
  Speaker 1: So what's the potential play there for those people?
• 23:02
  Speaker 2: Yeah, that's right. So over 65, you can still be
• 23:06
  Speaker 2: working and you've got full access to your super. And
• 23:10
  Speaker 2: there's a lot of strategies that can come out of that,
• 23:12
  Speaker 2: which allow you to you know, redraw money from your
• 23:18
  Speaker 2: super tax-free, and then you can potentially recontribute to max
• 23:25
  Speaker 2: out the contributions, the contribution caps from year to year.
• 23:29
  Speaker 2: So you can try to, you sort of get the
• 23:32
  Speaker 2: best of both worlds. You get to pull it out tax-free,
• 23:35
  Speaker 2: earnings in the super fund are tax-free as well, and
• 23:38
  Speaker 2: then you can recontribute and only pay 15% on what
• 23:42
  Speaker 2: you are recontributing. Obviously, the government doesn't want this to
• 23:47
  Speaker 2: be abused, and so they put in a bit of
• 23:50
  Speaker 2: a cap here of $ 1. 9 million. Well, at the time,
• 23:54
  Speaker 2: it was lower than that. It's now at $ 1. 9 million
• 23:56
  Speaker 2: from 1st July. So $ 1. 9 million, if you've got money
• 24:02
  Speaker 2: over that, you can't put it into tax-free, into an
• 24:07
  Speaker 2: account-based pension. But you still have access to that over 65.
• 24:12
  Speaker 2: So you can still access that money. But there's a
• 24:15
  Speaker 2: lot of strategies there that we can look at and
• 24:17
  Speaker 2: your financial advisor can look at. And like, for example,
• 24:21
  Speaker 2: if you're still working between the ages of 67 and 75,
• 24:26
  Speaker 2: there is still the ability to claim on personal contributions
• 24:31
  Speaker 2: if you're meeting that work test and things like that.
• 24:35
  Speaker 1: And What about people throughout their working lives? They're accumulating assets,
• 24:39
  Speaker 1: they're buying investment properties, they have personal share portfolios. As
• 24:44
  Speaker 1: I've mentioned, superannuation is the most tax effective environment in retirement.
• 24:49
  Speaker 1: So we probably want to try and transition some of
• 24:51
  Speaker 1: this wealth out of personal names into super. Is there
• 24:55
  Speaker 1: an ideal time to do that? Is it before people
• 24:57
  Speaker 1: stop working, after they retire? What are your thoughts there
• 25:01
  Speaker 1: thinking about tax?
• 25:03
  Speaker 2: Well, I think the biggest thing that people have with
• 25:07
  Speaker 2: super is, you know, when can I access it? So
• 25:10
  Speaker 2: over 60, you can access your super if you stop working.
• 25:14
  Speaker 2: Once you get to 65, you know, there's no holds barred.
• 25:18
  Speaker 2: You can get access to that. So essentially there's no
• 25:23
  Speaker 2: restriction to– if there's no restriction on access and it's
• 25:27
  Speaker 2: the most tax effective place to have your money, then–
• 25:32
  Speaker 2: you should be utilizing those sort of contribution thresholds to
• 25:36
  Speaker 2: get money into super. And currently they're sitting at $ 120, 000
• 25:39
  Speaker 2: per year. Probably something that we could mention there, James,
• 25:45
  Speaker 2: is a bring forward contribution where you can put in
• 25:49
  Speaker 2: up to three times the non-concessional contribution threshold. So you
• 25:56
  Speaker 2: can put in, what is it, 360,000 in one year.
• 26:00
  Speaker 2: which I'm sure you do a lot for your clients
• 26:02
  Speaker 2: with their estate planning and all that sort of thing.
• 26:06
  Speaker 1: We do. And sometimes if we're near the end of
• 26:09
  Speaker 1: a financial year, we might put in $ 119, 000 in June
• 26:11
  Speaker 1: and not trigger that bring forward rule. And then in July,
• 26:16
  Speaker 1: we've still got the full $ 360, 000 to put in. So
• 26:19
  Speaker 1: we've snuck in a little bit more in there. And
• 26:22
  Speaker 1: then also we have a chat about when to sell
• 26:24
  Speaker 1: the assets. So if somebody's working, say they're earning $ 80, 000
• 26:27
  Speaker 1: a year, if it does it make a difference with
• 26:31
  Speaker 1: regards to the sale price of the shares or the property,
• 26:35
  Speaker 1: all things being equal, all other things being equal, it
• 26:37
  Speaker 1: can make better sense to sell it when they're retired
• 26:41
  Speaker 1: because they don't have their employment income anymore. So their
• 26:43
  Speaker 1: base marginal tax rate starts from zero and the only
• 26:46
  Speaker 1: thing that will build on that will be the accessible
• 26:49
  Speaker 1: gains that they have on the assets that they're disposing.
• 26:52
  Speaker 1: So is that a fair call? Yeah, absolutely.
• 26:55
  Speaker 2: Managing when you sell your Assets outside of super is
• 26:59
  Speaker 2: a massive part of tax planning. If you've got that
• 27:02
  Speaker 2: investment property that you've been negative gearing for many years,
• 27:05
  Speaker 2: you need to plan to use those lower thresholds once
• 27:10
  Speaker 2: you've stopped working to minimise that CGT when you do
• 27:14
  Speaker 2: eventually sell that asset to fund your retirement. So yeah, absolutely.
• 27:19
  Speaker 1: We don't have DEF taxes in Australia, but non-financial dependents
• 27:24
  Speaker 1: who receive our super are Part of it, they'll have
• 27:26
  Speaker 1: to pay 17% on the super payout for that taxable component.
• 27:30
  Speaker 1: Is there any strategy there to reduce the potential tax
• 27:34
  Speaker 1: payable from super to our non-financial dependents?
• 27:38
  Speaker 2: Yeah, so that's that estate planning we were talking about
• 27:42
  Speaker 2: a minute ago. The ability to pull out money after
• 27:45
  Speaker 2: you're 65 and not working or 60 when you're not
• 27:49
  Speaker 2: working or 65 whether you're working or not, sorry. does
• 27:53
  Speaker 2: allow you to look at that balance you've got in super.
• 27:56
  Speaker 2: And there's two sides to that balance. One is a
• 28:00
  Speaker 2: two major ones is the taxable component, which is made
• 28:03
  Speaker 2: up of contributions that have been made by your employer
• 28:08
  Speaker 2: or earnings in the fund. And that side of your
• 28:12
  Speaker 2: super balance, if you pass away and that goes to
• 28:16
  Speaker 2: a non-dependent, which might be a grown up child, one
• 28:19
  Speaker 2: of your children, then they pay that extra 17% tax.
• 28:25
  Speaker 2: So in thinking about that balance early and getting your
• 28:29
  Speaker 2: financial planner involved in looking at your super balance before
• 28:33
  Speaker 2: you lose the ability to re-contribute means that you can,
• 28:37
  Speaker 2: I suppose, come up with a strategy that will allow
• 28:40
  Speaker 2: you to pull money out of the super, re-contribute it
• 28:43
  Speaker 2: as what they call tax-free contributions and manage that potential
• 28:48
  Speaker 2: tax in the future for your children.
• 28:51
  Speaker 1: Sounds good. Otherwise, if you know you're going to die,
• 28:53
  Speaker 1: just pull all your money out of super tax-free and
• 28:55
  Speaker 1: distribute it that way.
• 28:57
  Speaker 2: That's right.
• 28:58
  Speaker 1: A bit morbid, but that's the reality of it. Now,
• 29:00
  Speaker 1: the final thing for our retirees I want to have
• 29:03
  Speaker 1: a chat about or ask you is, do they still
• 29:06
  Speaker 1: need a self-managed super fund in retirement, or should they
• 29:09
  Speaker 1: close it down and move to a simpler quote-unquote arrangement?
• 29:13
  Speaker 2: Self-managed super is one of those vehicles that you can
• 29:17
  Speaker 2: use throughout your And I think that it really depends
• 29:24
  Speaker 2: on whether you're utilizing the capabilities of the self-managed super fund.
• 29:28
  Speaker 2: And what I mean by that is, I guess, whether
• 29:31
  Speaker 2: you've got a proactive advisor, you know, that likes to
• 29:34
  Speaker 2: look at various investments that maybe are outside the normal,
• 29:39
  Speaker 2: you know, retail super offerings like shares or cash investments.
• 29:44
  Speaker 2: But also, we do a lot of small business tax
• 29:48
  Speaker 2: and small business owners often, they've got a specific exemption
• 29:54
  Speaker 2: there that allows them to purchase business real property in
• 29:58
  Speaker 2: their super funds, which can be a large benefit to them.
• 30:01
  Speaker 2: And so it's just whether or not you're using those
• 30:04
  Speaker 2: capabilities in the self-managed super, but also it can become
• 30:09
  Speaker 2: quite cost-effective the more and more appropriate the more you
• 30:12
  Speaker 2: have in super for that retirement management. But what are
• 30:16
  Speaker 2: your thoughts on it, James?
• 30:18
  Speaker 1: Yes, it's really horses for courses. If you're using the
• 30:21
  Speaker 1: flexibility given to you for a self-managed super fund in retirement,
• 30:24
  Speaker 1: so if you're buying a kilo of gold, if you're holding...
• 30:29
  Speaker 1: bespoke bond investments that you can't get inside of a
• 30:31
  Speaker 1: retail or industry super fund, then yes, absolutely. Property assets,
• 30:35
  Speaker 1: physical property assets have an SMSF. But if you have
• 30:39
  Speaker 1: an SMSF and you're just invested in managed funds and ETFs,
• 30:43
  Speaker 1: it doesn't really need an SMSF. You could do that
• 30:45
  Speaker 1: in most industry funds and retail funds these days. So
• 30:49
  Speaker 1: it really just comes down to are you using the
• 30:51
  Speaker 1: benefits of the self-managed super fund? And that probably applies
• 30:53
  Speaker 1: across all age spectrum as well, not just for people
• 30:56
  Speaker 1: in retirement. Now, Tim, I'm excited. The next thing we're
• 30:59
  Speaker 1: going to have a chat about is tax deductions you
• 31:02
  Speaker 1: didn't realize you could claim. But before we do that,
• 31:04
  Speaker 1: let's just take a short break. Hello, and welcome back
• 31:22
  Speaker 1: to The Money Puzzle. I'm James Gerrard, writer, contributor to
• 31:25
  Speaker 1: the Wealth section of The Australian, and also financial advisor
• 31:28
  Speaker 1: with financialadvisor.com.au. And on this week's show, I have Timothy
• 31:32
  Speaker 1: Ricardo from Accounting Advisor. Now, before we get into this
• 31:35
  Speaker 1: last section, I just want to remind everybody that this
• 31:38
  Speaker 1: is general advice, not personal advice, so please seek out
• 31:40
  Speaker 1: a qualified advisor before making any decision. Timothy, top five,
• 31:46
  Speaker 1: maybe we'll make it six, tax deductions you didn't realize
• 31:50
  Speaker 1: that you could claim. Number one, tell me about income protection.
• 31:55
  Speaker 2: Okay. So income protection is one of those things where
• 32:00
  Speaker 2: we put it in at label D15 on your tax return.
• 32:03
  Speaker 2: So it's something that, you know, it's looking after your,
• 32:07
  Speaker 2: you know, in those situations when you unexpected things crop
• 32:12
  Speaker 2: up and you might hurt yourself or you might not
• 32:15
  Speaker 2: be able to work for some reason and income protection
• 32:19
  Speaker 2: because the The earnings from that policy are assessable income
• 32:24
  Speaker 2: when they come in. The deduction is available for the
• 32:28
  Speaker 2: premiums you pay. Now, this is something that probably applies.
• 32:34
  Speaker 2: It's a good thing to think about in that 80
• 32:36
  Speaker 2: to 30-year-old range because if you had a financial advisor
• 32:40
  Speaker 2: like me back in that age, which James Durard, my
• 32:44
  Speaker 2: friendly neighborhood financial advisor got me into a policy back then.
• 32:49
  Speaker 2: I'm able to just claim that every year. And yeah,
• 32:53
  Speaker 2: you gave me some good advice back then, James.
• 32:56
  Speaker 1: Thank you, Timothy. And I didn't even invoice you for it.
• 33:01
  Speaker 1: Your friendship to me is the payment for that advice
• 33:04
  Speaker 1: I gave you. Now, the next one is handbags and
• 33:08
  Speaker 1: luggage for work purposes. So can I go off and
• 33:12
  Speaker 1: buy a $ 2, 000 luxury bag that I will carry my
• 33:17
  Speaker 1: laptop in and my working papers for work purposes.
• 33:21
  Speaker 2: Okay. So you can claim a work bag, a bag
• 33:24
  Speaker 2: that you're using for work purposes. And that's the key thing.
• 33:28
  Speaker 2: The main thing here is removing any private use. You
• 33:31
  Speaker 2: can't just take your flashy $ 3, 000 bag out and utilize
• 33:36
  Speaker 2: it on the weekend. If you're claiming it for work,
• 33:38
  Speaker 2: you've got to allow for the private use. So allow
• 33:41
  Speaker 2: for your private use. And if it's over a certain level,
• 33:44
  Speaker 2: then it might need to be depreciated a certain cost.
• 33:48
  Speaker 2: So they're the two main considerations, but yes, it is deductible.
• 33:52
  Speaker 2: All right.
• 33:52
  Speaker 1: What about claiming meals? What are the parameters there around
• 33:55
  Speaker 1: how can we claim a meal as a tax deduction? Okay.
• 33:58
  Speaker 2: So under a lot of awards and employee benefits, you
• 34:03
  Speaker 2: often get a meal allowance. Now that meal allowance is
• 34:07
  Speaker 2: deductible to the extent of what you're paying out for
• 34:10
  Speaker 2: the meal. The ATO publishes a rate every year, which
• 34:13
  Speaker 2: this year is about 35, 35.65. So if you have
• 34:18
  Speaker 2: meals up to that price, you don't actually need to
• 34:21
  Speaker 2: keep the receipts for those meals, but you are able
• 34:25
  Speaker 2: to claim for your meals when you have overtime meal allowances.
• 34:31
  Speaker 1: What about claiming interest on things? So what are the
• 34:35
  Speaker 1: things that I can claim interest on? So for example,
• 34:37
  Speaker 1: if I have a tax debt, Can I borrow money
• 34:41
  Speaker 1: to pay the tax office and claim an interest on
• 34:43
  Speaker 1: that loan that I used to pay my tax bill?
• 34:46
  Speaker 2: Yes, and there's lots of strategies that people like to
• 34:49
  Speaker 2: come up with on this one. But yeah, interest on
• 34:52
  Speaker 2: any income earning.
• 34:53
  Speaker 1: Asset is tax deductible.
• 34:54
  Speaker 2: So if you draw down on your mortgage to buy
• 34:58
  Speaker 2: a share portfolio, for example, you can claim the interest
• 35:01
  Speaker 2: on that against the dividend income. But yeah, like you said,
• 35:05
  Speaker 2: on tax expenses and tax management costs associated, the interest
• 35:11
  Speaker 2: is deductible on that. So that's something that a lot
• 35:15
  Speaker 2: of people might not have known.
• 35:16
  Speaker 1: All right. Well, traveling to workplaces, I know that usually
• 35:21
  Speaker 1: from home to your normal place of work, if you drive,
• 35:24
  Speaker 1: catch a bus or train, you can't usually claim that
• 35:27
  Speaker 1: as a tax deduction, but Is there some scope or
• 35:31
  Speaker 1: avenue to be able to claim travel to a workplace?
• 35:34
  Speaker 2: Yeah, okay. So the common one that everyone knows about
• 35:37
  Speaker 2: is driving between workplaces. Or if you go to work
• 35:40
  Speaker 2: and then you have to go out to a client's place,
• 35:42
  Speaker 2: you can claim that trip. But what they might not
• 35:45
  Speaker 2: know is that to an alternative workplace, even from your home,
• 35:49
  Speaker 2: you can claim a deduction to go there. So it
• 35:53
  Speaker 2: has to be somewhere that's not your regular workplace. workplace
• 35:57
  Speaker 2: or there's no regular pattern of attending that alternative location.
• 36:01
  Speaker 2: But if you're going to somewhere that isn't your normal location,
• 36:07
  Speaker 2: then yes, you can claim that between your home and
• 36:11
  Speaker 2: the workplace.
• 36:12
  Speaker 1: All right. And final one, let's just say you're an
• 36:15
  Speaker 1: accountant and we won't name names, but let's just call
• 36:19
  Speaker 1: them Tim, this random accountant and say Tim's terrible at
• 36:23
  Speaker 1: golf and golf's an important part of his because he
• 36:27
  Speaker 1: meets clients on the golf course, new clients, existing clients,
• 36:30
  Speaker 1: but he's just absolutely terrible at golf. Can we claim
• 36:32
  Speaker 1: the cost of golf lessons as a tax deduction? Okay.
• 36:37
  Speaker 2: Why would I be claiming these?
• 36:38
  Speaker 1: Not you. It was just an anonymous accountant called Timothy. Okay. Okay.
• 36:43
  Speaker 2: So golf lessons, it's got to be attached to, it
• 36:46
  Speaker 2: falls into possibly like self-education, James, or sort of that
• 36:51
  Speaker 2: kind of a category category. I love your curveball questions,
• 36:55
  Speaker 2: and I will add here no preparation was given for
• 36:58
  Speaker 2: this one. Yeah, so you'd have to have an income
• 37:04
  Speaker 2: association to be claiming that lesson, James. So no, unfortunately,
• 37:09
  Speaker 2: I won't be claiming any lessons anytime soon, and neither
• 37:13
  Speaker 2: will you, unfortunately, because I think last time we played,
• 37:16
  Speaker 2: we're still waiting on that $ 100 bet, but I don't
• 37:19
  Speaker 2: think you've ever beaten me whenever that bet's come up.
• 37:23
  Speaker 1: On that inside joke, Tim and I have this run-in
• 37:25
  Speaker 1: bet for about 10 years that we're going to play
• 37:27
  Speaker 1: each other in golf, and whoever wins will have $ 100
• 37:31
  Speaker 1: as the prize. And we play together, but we've never
• 37:33
  Speaker 1: called in that particular bet, so maybe the next time.
• 37:37
  Speaker 2: Well, I've added there that it's only not being called
• 37:40
  Speaker 2: in because you lose every time, James.
• 37:42
  Speaker 1: Well, that's true, yes. I do say, all right, let's
• 37:44
  Speaker 1: do it this round, but then I go, oh, it's
• 37:46
  Speaker 1: a bit windy today, let's defer it to next time. But...
• 37:50
  Speaker 1: Getting back to business, thank you so much for joining
• 37:51
  Speaker 1: us today, Tim. We've covered a lot. I'm sure our
• 37:53
  Speaker 1: listeners now have some good ideas they can go explore
• 37:56
  Speaker 1: regarding taxes, regardless of how old they are.
• 37:59
  Speaker 2: Thanks for having me, James.
• 38:01
  Speaker 1: And to our listeners, thank you for tuning in to
• 38:03
  Speaker 1: today's episode of The Money Puzzle. Send us a question
• 38:06
  Speaker 1: and James Kirby will answer it when he's back in
• 38:08
  Speaker 1: two weeks. Now, coming up on our next episode, you'll
• 38:11
  Speaker 1: get me again, and we're going to interview a lawyer,
• 38:14
  Speaker 1: which I'm very excited to do We've got lots of
• 38:16
  Speaker 1: interesting questions to go through because there's a very big
• 38:19
  Speaker 1: intersection between finances and legal. So we're going to explore
• 38:22
  Speaker 1: some of the most interesting areas such as not losing
• 38:26
  Speaker 1: your property deposit to scammers. What happens there? How does
• 38:29
  Speaker 1: that happen? Handling finances for blended families and lots of
• 38:33
  Speaker 1: other issues to cover. But for now, you can tweet
• 38:36
  Speaker 1: us your thoughts. Just use the hashtag TheMoneyPuzzle, all one word,
• 38:39
  Speaker 1: or email us on themoneypuzzleattheaustralian.com.au. Until next time, I'm James Gerrard.
• 38:45
  Speaker 1: Talk to you soon. Thank you.