Monday, September 28, 2009

Snork Maiden's Tax Assessment

Just got the tax assessment and the amount payable is less than half of what I expected: $A301.45. not payable till 23 November either and conveniently payable by BPay too.

I had the wrong tax free threshold (too low) and maybe other mistakes in computing the tax payable. I did have the correct taxable income and offsets. I calculated these things correctly on my own tax calculation.

Thursday, September 24, 2009

Another Job Opportunity?

My chairman told me today that they'll finally be able to readvertize soon a position that might be relevant to me. The position has been frozen for about a year while a "reorganization" has been proceeding. Any potential opportunities are welcome news. Especially as both Snork Maiden and I would like to stay here in Canberra if possible.

Other news: We're planning a trip to the Northern Territory for a conference and some travel to national parks. We haven't decided whether to head to Kakadu, which is a world heritage area or whether to head south from Darwin to Litchfield and Katherine Gorge National Parks. Any recommendations?

In the annoying but weird department our car was crashed into in a shopping mall car park last week while we were shopping. The damage does not appear to be too bad - the window still goes up and down OK in the door which was damaged. It turns out that the person who ran into us was the wife of the Iranian ambassador.

Saturday, September 19, 2009

More Leaks from the Henry Tax Review

Needless to say almost that I don't like any of these proposals personally except the pay as you drive road tax perhaps and I don't like the privacy implications of that.

Company Tax A lower rate might sound good, but for Australian taxpayers who receive "imputation credits" for corporation tax paid it doesn't change their inclusive tax burden and it increases the personal income tax they have to pay on dividends and reduces the franking credits that some people manage to use to offset other tax liabilities or like me even end up with a negative net tax burden.

Higher Resource Taxes Something I think makes sense nationally. but of course will reduce the value of shares in Australian resource companies...

Abolishing the Long-Term CGT Discount The discount makes sense for two reasons - it reduces the double taxation on reinvested profits - if companies pay out dividends we get the credits for the corporation tax but not if they reinvest profits; and second - with no discount we end up paying tax on purely inflationary gains in asset values.

Stamp Duties These are very inefficient transaction taxes. As a potential first time home buyer we would be exempted from the tax anyway.

Inheritance and Wealth Tax Of course, I am opposed to these on a personal basis though from the discussion in this article it's likely the exemptions would be set very high (an inheritance tax obviously would be worse news to me than an estate tax). I think they are unfair taxes as again they are double taxation. I would support a final capital gains tax being levied on estates though to cover asset value increases that weren't previously taxed. At the moment, Australians are meant to pay CGT when selling assets that they inherited using the original cost basis of their benefactor. OTOH estate taxes are probably pretty economically efficient as taxes go. They don't interfere with incentives to work or invest (at least in the short-term) and in the US at least encourage lots of donations to the public good. And those who bear the taxes are going to inherit some of the money and thus be relatively wealthy and have a low marginal utility of wealth.

Payroll Taxes I don't have a strong opinion here. Unemployment doesn't seem to be a big issue here in Australia so the taxes don't seem to be having a detrimental impact on employment.

Raising the Superannuation Access Age From 60 to 67 is a huge jump. The previous government allowed people to get their money out of super tax free from age 60. Rather than reversing that decision this government is heading to increasing the age dramatically to reduce the reduction in taxes that resulted. I think that is a bad move.

Pay as You Drive We don't drive much so I don't have a problem with this :)

In summary the goal seems to be to improve the playing field a bit for foreign investors and raise the tax burden incrementally on Australians. It is disappointing that they didn't take the opportunity to do something dramatic like a consumption tax. Of course that is unlikely politically under a supposedly left-wing government. The government of course is unlikely to take everything on board from this review. So we should expect fairly little tax reform. I'm more and more likely to vote Liberal at the next federal election (I voted Green with second preferences * to Labor at the last Federal election and Green with second preference to Liberal at the last Territory election). Of course it will make no difference to anything what any of us vote. Since time immemorial the ACT has been represented by Labor in the lower house and by one Liberal and one Labor senator in the upper house of parliament.

* Here in Australia we have preferential voting - you list candidates or parties in order of preference. If your first choice doesn't get in your vote is transferred to your second choice and so forth. Voting is also compulsory.

Wednesday, September 16, 2009

More Details on Moom's Taxes

I now submitted my tax return and as promised here are all the details. You can compare these numbers to last year's too. The main differences are that I earned a salary for four months this tax year and no salary last tax year (in Australia our tax year ends on 30th June). But this year my net capital gain for tax purposes was zero versus almost $10k last year (1 AUD = 0.80 USD on 30th June). And dividend income declined due to selling stocks and companies cutting dividends. Deductions were a bit bigger. Supplement deductions are foreign margin interest and derivative losses by the way. Australian dividend deductions are Australian margin interest and depreciation costs on my computer etc. So I actually ended up earning less for tax purposes than last year.

Adjusting income to actual income rather than taxable - the main change is due to the fact that you can't deduct capital losses against other income - I really lost a pile of money. I end up getting a net 4.5% of my loss back from the ATO (Australian Tax Office). This is due to ending up with surplus franking credits - credits for corporation tax paid by Australian companies - which you can then claim back as cash. $3,700 was withheld from my wages. I get all of that back too. So we're expecting a $6,000 refund.

As I've got a salary for at least 8 months this year I may even end up paying some tax this year :)

Saturday, September 12, 2009

August 2009 Report

This report is based on the available data as a couple of funds as usual won't report till near the end of the month. As usual everything is in US Dollars unless otherwise stated.

It was another good month month. The MSCI World Index gained 3.62% in USD terms and the SPX gained 3.61%. The Australian Dollar again appreciated a little against the USD. We gained 7.90% in USD terms (6.76% in AUD terms and 7.02% in currency neutral terms). Our spending was normal. Returns in annualized terms over various periods:

We have weaker performance than the indices in the 12 months to 3 years time frame but better at longer and shorter time frames as I recently showed in a chart.

We spent $3,492 ($A4,145):

All other categories of net worth accumulation were strong. Net worth reached $336k ($A399k). It feels good to be above $A400k again now early in September. Asset allocation moved away from our target but there were no dramatic changes this month:

Australian stocks moved further above target while foreign stocks remain considerably below target. The target is a very long term target, I don't plan on selling Australian stocks soon, but I do plan to keep adding to foreign stocks as much as possible. The following is estimated performances for this month (net of forex movements) by asset class:

Private equity and Australian stocks continued to peform strongly. The above market returns this month boosted estimated alpha and beta. Alpha measured against the USD MSCI was 5.3% with a beta of 1.23 currently. Beta remains very high and will have to come down at some point. Performance in AUD terms is similar. Performance against the S&P 500 is ridiculously strong...

Friday, September 11, 2009

Moom's Australian Taxes 2008-9

I just did my tax return. It only took 2 1/4 hours because I prepared a spreadsheet last year when I did our first tax returns after returning to Australia. The numbers aren't final because my employer never sent me my "PAYG Payment Summary" (equivalent to U.S. W2) and so I requested that today. Anyway, it looks like I should pay negative tax of about $A2,500 (due to the low income offset and surplus franking credits). About $A3,700 was withheld from my salary, so I should get a refund of about $A6,200. My taxable income was around $A10,000. Of course I really lost about $A50,000 but capital losses have to be carried forward to be set against capital gains in future years. I'll do a detailed analysis and comparison to last year when I have the final salary information.

What I'm confused about now is how the government will know I contributed $A1,000 to superannuation and so pay me a $A1,500 co-contribution? There wasn't anything on the tax return to mention that. Do they just get the info from my fund manager and then check that against my tax return? I guess so.

Credit Suisse/Tremont Early Returns for August 2009

Are 1.68% with a very similar overall picture to HFRI. I'll post more detail with the final numbers.

Thursday, September 10, 2009

Optimism Hits a Record High in Australia

It's probably hard for my American readers to imagine this is possible. I guess because we missed out on any kind of recession really (so far), just had a bit of a slowdown, when most of the rest of the world went into recession, has made Australians ultra-optimistic. We haven't had a recession for 19 years now...

Wednesday, September 09, 2009

HFRI August Numbers are in

About a week earlier than normal:
They confirm the general picture shown by HFRX but the overall index came in stronger as did many styles such as macro.

Saturday, September 05, 2009

Initial Hedge Fund Performance for August 2009

First off the blocks HFRX reports a 1.25% gain for hedge funds in August. The distribution across "styles" is pretty similar to that in July:

Friday, September 04, 2009

More Unisuper Glitches

I was actually sent a statement by Unisuper yesterday, but the glitches continue. I noticed that my account was about one month behind where it should be given the contributions that have gone in. In July, I just assumed they were behind a bit in crediting things. In preparing this month's accounts I noticed the same thing and went in to examine the transactions in detail. I found negative transactions exactly cancelling all my June contributions! They told me that they will investigate this. The average person who ignores their superannuation statement (as people have told me) would never catch this kind of thing. We can't assume that this will be automatically corrected at some stage. That this whole company seems so "buggy" I think is a sign of lack of competition. They have a monopoly over providing superannuation services in the university sector.

Carbon Planet

More details of the scandal. I'm glad I didn't invest in it.

Tuesday, September 01, 2009

Snork Maiden's Investment Account

It's doing pretty well (in AUD):

Most of the gains are savings of course but net profit is now $A1,166. Against the MSCI World Index in Australian Dollars beta is 1.23 and alpha 2.2%. The allocation is as follows:

Moominmama Performance August 2009

Equities, bonds, and hedge finds had positive returns. The MSCI World Index was up 3.62% this month and the S&P 500 seems to have had a similar gain, so all but Moominmama's Brazilian fund underperformed the markets, which is a bit disappointing.

Moominmama hasn't been feeling well recently, but tomorrow she is scheduled for a cataract operation. Hopefully, it will go smoothly and then when she can see properly again she'll feel a lot better.

Long-Term Under- and Out-Performance

As things continued this month to bounce back from the depths of the GFC I thought it was time for an update on how we're performing relative to the market:

The chart shows the average annual rate of out- or under- performance relative to the MSCI World Index of money we invested in the month given. This is the rate of return of the entire portfolio since that month relative to the market. So investment from mid-2004 to mid-2008 has underperformed the market. Investments since the the the peak of the crisis last northern Autumn have strongly outperformed the market. The 1998 to 2004 period also was one of out-performance in retrospect. We've slightly underperformed the market (-1.31%) over the entire almost 13 year period.

Annoying Changes to Australian Immigration Rules

After the previous government raised the residency requirement in Australia to 4 years from 2 for those seeking to become Australian citizens, this government has now lowered it, but only for athletes it seems. Travel rules might have been relaxed more generally for other potential migrants - details aren't clear. I'd like Snork Maiden to become an Australian citizen as fast as possible. The change to travel rules is sensible, but why should athletes wait less than others just so Australia can win more medals. It's a cynical move. They should just slash the period back to what it was for everyone who qualifies to be an Australian citizen.