Presented by Smiljan Jankovic, alongside guest speakers from Lantern Advisory and Archers - The Strata Professionals, the evening provided MLR owners with an update on the trends involved with MLRs across Accounting, Financial Planning, and Body Corporate perspectives.
We've summarised each speaker's key discussion points & insights from the event for your perusal below:
Management Letting Rights - Preparation for Sale, and Tax & Audit Complexities - Presented by Smiljan Jankovic, Director - Archer Gowland
Preparation for Sale - MRL Business
When preparing your MLR business for sale, it is important to consider the following in order to showcase your property and instill confidence with your perspective buyer:
- Profit & Loss for Sale Report
Our February blog post discusses these in greater detail, providing useful tips for MLR owners considering a potential sale - Preparing Your Management Rights Business for Sale
Tax Implications on Sale of MLR & Audit Issues
It is key to remember that as a MLR owner, the sale of your business will be subject to Capital Gains Tax (CGT).
Whilst there are a number of CGT exemptions available, there are four Small Business Concessions which will allow you to disregard or defer Capital Gains. These are included below:
- 15 Year Exemption
- 50% Active Asset Reduction
- Retirement Exemption
- Rollover Exemption
Please note, these concessions are conditioned by Age, Turnover, and Net Asset Value criteria.
In order to benefit from the Small Business Concessions listed above, it is important to ensure you have the correct structures established and in place.
To address these as soon as possible, see a Management Letting Rights specialist such as Archer Gowland, who will be able to review and advise on the correct structure.
Additionally, as we travel on-site to meet with MLR owners and conduct regulatory audits, a number of commonalities and issues arise during the process.
These issues can include:
- Three-Way Reconcilitation
- RTA Bonds
- Record Keeping: Hard Copies vs. Soft Copies
Financial Planning Standpoint - Presented by James Cavanough, Director - Lantern Advisory
As a MLR owner, when working with your accountant to address Tax Compliance and Audit obligations, it is also important to seek advice from a Financial Planner - considering your Financial Planning strategy and future wealth goals.
It is essential that as part of your overall strategy you envision where you want to be, adapt in an ever-changing economic & competitive environment, and implement the necessary strategies to grow & preserve your wealth.
Lantern Advisory outlined the top Financial Strategies identified for Management Letting Rights owners below:
- Cash Flow Management - ensuring that you identify surplus cash available and use this on your business.
- Continually reviewing your current situation - are your current arrangements suitable or can they be improved?
- Wealth Target - defining what your wealth target is and mapping how you will achieve this. Do you need assistance in formulating your goals?
- Debt Management
- Make deposits on a regular basis - ensuring you are commencing as soon as possible and being disciplined with continuous deposits through planning and review.
- Ready your business for sale - big opportunity for MLR owners if completed correctly.
- Tax Savings = Wealth - all parts need attention, management, and action.
- Risk Management - identify your financial, environmental, and health risks. Remember as a business owner your goal is to work ON your business, not IN it.
- Personal Financial Plan - developed alongside your business plan (tailored and integrated)
- Revisit - continually review and measure your plans
Body Corporate Standpoint - Presented by Wayne Hewitt, Partner & Sam Gleeson - Archers - The Strata Professionals
A growing trend throughout the Body Corporate and Management Rights industry over recent years has been the increasing resistance MLR owners face against Body Corporate Committees.
As MLR business owners, it is essential to understand that it is no longer a given that Letting agreements will be renewed or extended. Additionally, it is important to recognise the value & benefit of maintaining an updated schedule or agreement, especially when interacting with your Body Corporate Committee.
So, what can be done to assist Management Letting Rights owners moving forward?
- Establish an open and transparent relationship with your Body Corporate Committee
- Develop and document a list of duties and schedules / Formalise processes and procedures
For More Information
A special thank you to Smiljan Jankovic - Archer Gowland, James Cavanough - Lantern Advisory, and Wayne Hewitt & Sam Gleeson - Archers - The Strata Professionals for sharing their expertise and insights on the evening.
For more information, please contact Smiljan Jankovic on (07) 3002 2699 to discuss Archer Gowland's Management Rights Services, as well as how the above may impact you.
Throughout the year, Archer Gowland will be hosting a number of similar events and seminars to assist business owners and provide our insight across key changes and trends.
If you would like to register or be involved in future events, please contact our office on (07) 3002 2699 or visit www.archergowland.com.au