Stamp duty rated as the most inefficient tax in Australia

Across all levels of government, whether federal, state or local, the current stamp duty regime is the most inefficient and should be abolished, according to Housing Industry Association chief economist Tim Reardon.

HIA recently joined a chorus of industry groups calling for the abolition of stamp duty after the NSW treasury proposed replacing the longstanding regime with an annual property tax.

Reardon pointed to the Henry tax review published in 2010 which found that the cost of stamp duty equated to 70 cents out of every dollar raised, making it, not only inequitable, but, the most inefficient tax in Australia.

“Almost any other form of tax will achieve a more efficient outcome,” he told MPA. While he wouldn’t comment on whether the annual property tax proposed by the NSW government would be the best solution, he said the abolition of stamp duty in the state was a good thing.

“The objective is to abolish stamp duty, and this certainly moves towards that outcome,” he said.

Stamp duty as it currently stands is both inequitable and unreliable, he explained. Those who were required to move last year to seek new education or employment opportunities because of the pandemic incurred a punitive rate of tax if they purchased a new home.

“With retirees or elderly Australians that might like to move to be closer to family or to be closer to medical services, they likewise would be penalised if they were to buy a home to locate to,” he said. “It’s unreliable – as we saw both in 2018 and again last year, at a time when the government needed a reliable source of revenue, stamp duty revenue fell away very quickly. It particularly happened in NSW in 2018 where a small slowdown in house prices led to around a $500 million reduction in stamp duty revenues.”

While not reviewed by the Henry tax review, an annual property tax could potentially reduce the efficiency costs that are currently involved through a number of factors, he said.

“Because it doesn’t distort household behaviour, such as influencing your propensity to move, the efficiency costs are significantly lower,” said Reardon. “Because it encourages efficient use of land, its efficiency costs are much lower. Because it then means for other factors, such as allocation of public health resources and the allocation of expenditure on infrastructure, because those two also become more efficient, you get a significant efficiency improvement over and above the stamp duty regime that currently exists.”

REINSW CEO Tim McKibbin recently commented that an annual property tax wouldn’t benefit all segments of the market, especially cash-poor retirees who may not be able to afford the extra yearly cost.

“We have people in properties that don’t respond to their current needs, but they are going to stay there,” he said. “Stamp duty or property tax is not providing any incentive to move.”

Reardon said the transition from stamp duty to any other form of tax would be difficult, but that the benefits of abolishing the current regime were clear.

“I think all political parties, governments and economists certainly agree that abolishing stamp duty is a good outcome, but it is that transition that is the difficult part,” he said. “The community benefit, the economy-wide benefit, from abolishing stamp duty is sufficient that any individual households that are worse off can be appropriately compensated.

“The ACT have provided the slow transition model and they are doing it over a course of 20 years. NSW are looking at an opt-in model, which would mean that only those households that elected to defer that payment would incur that ongoing annual cost – which would mean that the impact on retirees that are asset rich and cash poor would be minimised.”

by Kate McIntyre

How to consolidate debt

Struggling to manage your debt is an enormous strain. The lack of control, worry and fear can seep into every part of your life. For some it’s a temporary blip, like an unexpected change in circumstances, while for others it has become overwhelming over many years.

Through careful debt consolidation, you can take back control of your finances – and your life.

What is debt consolidation?

Many Australians experience debt stress, so the first thing to remember is that you’re not alone. It’s in your lender’s best interests to help you manage it.

When you consolidate debt, you fold several outstanding debts into one loan. Everyone’s circumstances are different, but you might have a couple of credit card balances, a car loan and a personal loan. Some of these attract really high interest, so you might feel like it’s impossible to get on top.

With a consolidated debt loan, you just have one repayment to make each month. With a lower interest rate, making the same repayments will actually clear your debt faster, and you’ll be able to keep track of what’s owing.

Understand your debt position first.

While it’s understandable to want to avoid looking closely at your debt, understanding it is the best first step you can take.

Look at things like:

  • How much do you really owe across all of your debts?
  • How much interest are you paying each month in total?
  • Are you paying too much in fees?
  • What are the exit conditions of each debt?
  • Is there anything you can pay off right away?

Getting a copy of your credit report can help you see how your outstanding debt has affected your overall position, and put you in great stead to better manage it ongoing.

What are the options to help pay off debt?

There are several strategies for debt consolidation. It’s important to weigh up each to choose the right one for your situation.

1. A personal loan – handy for budgeting.

A personal loan can be a useful tool to consolidate debt. If you shop around, you may find you can get a low-rate loan with zero accounting keeping fees, which will help your available budget stretch further. Choosing the shortest loan term you can afford will also mean you pay less interest over time, but look for a balance between affordability and your own stress levels. Watch out for lenders that charge early payment fees – you shouldn’t be penalised for clearing the debt sooner.

2. Your home loan – the lowest rate of all debt

If you have a mortgage already, it might be possible to use your home loan for debt consolidation.

The main benefit is that a home loan comes with the lowest rate of all types of credit. Consolidating debt may be as simple as topping up the balance of your loan to pay out other debts, or refinancing to a new, bigger loan if you believe this lets you access a better loan rate or improved features.

This does mean your overall loan will take longer to pay down, but repayments on your debt consolidation will be much lower. If you can afford to, pay some of the extra you’re saving to bring the whole balance down sooner.

3. Financial hardship options.

COVID and life can throw unexpected surprises at us. If you have lost your job, suffered an illness or injury, or been affected by a natural disaster, lenders generally want to help you manage your financial position and have in place hardship assistance policies.

Juggling personal debt can make us feel powerless, embarrassed and anxious, but there are options available.

How important is land when buying apartments?

It is one of the so-called “golden rules of property”; the driver behind the price increase of any property is land value.

Mark Twain famously summed this up when he wrote that land is the best investment because “they are not making any more of it”.

That seems straightforward enough, but does this golden rule work when it comes to investing in apartments?

What is land content value?

According to this theory, the capital growth driver of an apartment is driven by the value of the land embedded in its price.

The mechanics of this approach are simple: if a complex of 20 units sits on land worth $4 million, each apartment has $200,000 worth of land value and if a unit sells for $450,000, its “land content value” is 44%.

Many property advisers will tell you to aim for an apartment with content value of at least 40%.

If you are an owner of a unit in areas like Brisbane’s Southbank or Docklands in Melbourne, this theory may come as a bit of a shock.

It is quite common for these owners to be told via council or bank valuations that their land content value is as low as 5%-15%.

Does that mean these properties will only experience low growth?  Well no, not necessarily.

It’s about market demand …

If high land content theory was an iron law of real estate, then many apartments in New York, Paris or even Sydney’s Potts Point for that matter would have proven to be a terrible investment.

Yet in many of the world’s most expensive cities, high-density units with low notional and values are the norm.

The reason units in some of these areas have had above average growth comes back to that other real estate rule: the mechanics of supply and demand.

If a market in a high-density location, like Monaco or central Sydney, has 4,000 apartments for sale and 6,000 interested buyers, the price of units will rise even if the notional land content value of these units is low.

In these markets, it’s the competition between buyers for “available space” which better explains what is really going on.

… and market supply

What happens when we reverse the equation: more units for sale than interested buyers – will values will stagnate or fall?

The short answer is that they can. We’ve seen some instances of this play out over the past 20 years in cities where there has been a big increase in high rise living. When the numbers of apartments for sale outpaces the numbers of buyers, prices
have stalled or fallen.

The problem here is not the low notional land value of units; it’s usually a case of development running ahead of demand. When you look at some of these precincts years after that over-development phase has ended, in many cases the sale prices of units is growing again.

Where it holds true

In suburbs surrounding most of our capital cities, detached houses are the dominant property type with just with a sprinkling of apartment complexes. In these markets, land content theory is a good guideline.

But in areas increasingly dominated by high and medium-density living, land content theory is not that helpful.

In these areas it is the “competition for available space” which is a much better guide.

  • Paul Thornhill (

Too loyal or time-poor for a better rate? Problem solved

Another month, another rate cut. Finance can be so tedious.

That is until you realise it could mean more money in your pocket. But how?

For many, matters of personal finance are so dull and/or difficult, they are immediately filed in the too-hard basket.

And for their trouble, or lack thereof, these people are often slugged with a ‘lazy tax’ – the price paid for staying put.

Loyalty too, or simply being time-poor, can also be offences punishable by debt in the world of finance.

But it doesn’t have to be this way.

A 2018 Australian Competition and Consumer Commission (ACCC) report showed that new borrowers with an average-sized residential mortgage paid up to $850 less a year in interest than existing borrowers with the same lender.

However, despite the apparent benefits, actively ensuring an interest rate remains suitable is a practice that continues to elude many.

Fortunately, there are people out there whose job it is to assist in this process.

Mortgage brokers can play a vital role in assisting borrowers through the process of ensuring their mortgage is competitive.

We at Brickhill Financial Solutions in North Sydney are just a phone call away and are ready to guide you through the task of refinancing your loan.

What’s your home really worth?

Type your address into any number of free ‘what’s your home worth’ websites and an approximation of your home’s market value pops onto the screen in the blink of an eye. Easy.

But no matter whether the figure you see sends your heart soaring – or sinking – take a minute to consider how accurate that value could be. What about the bathroom upgrade?  The new kitchen? The barbecue area? All that money has to account for something.

Unlike other assets like your super, your home doesn’t come with an annual statement that shows what the place is worth at any point in time. But there are times – like when you need to refinance your home loan, that it can be extremely helpful to have a reasonable idea of your property’s market value.

There is a range of valuation options to choose from beyond the freebie websites. Each offers varying degrees of accuracy, and as is often the case, you get what you pay for.

A market appraisal

One cost-free option is to have your home assessed by a local real estate agent. This gives you the benefit of a local expert walking through the property in person. The downside is that a market appraisal is not the same as a formal valuation, and the final figure could be bumped up if the agent thinks a listing could be gained.

Automated valuation models

Further along the scale are ‘automated valuation models’. These are a user-pays service usually provided by property research companies.

For a small fee, you provide your address, and a value for your home is computer generated based on recent sales figures in your neighbourhood.

It’s a budget-friendly option though the figure you end up with is based on a wide number of previous sales – and the homes sold may be nothing like your own.

Electronic valuation

If you’re willing to pay a bit more, a desktop assessment or ‘electronic valuer review’ can crank up the accuracy factor.

An estimate of your home’s value will be provided by a property research firm based on recent local sales data backed by either a current photograph of your home or a phone discussion between you and a valuer.

This type of valuation lets you provide more detail about your home but without a physical inspection of the place the valuation is far from watertight.

Go pro – call a registered valuer

If you’re looking for a rock-solid estimate of your home’s value, the most accurate (and costly) option is to have your home checked inside and out by a registered property valuer.

These guys are experts, and the valuation you receive is based on local sales results combined with an analysis of current market conditions, reviews of any proposed council developments in your area and of course the quality of your home (so it’s worth giving the place a spruce up before the valuer arrives).

The figure you will end up with is an estimate of what a willing buyer would pay for the property on the day of the valuation. Sounds fair.

Do you really need to pay for a valuation at all?

You can expect to pay upwards of several hundred dollars for a formal valuation of your place. But here’s the thing. While it is always interesting to know, or at least have a reasonable idea, of your home’s value, chances are you may not need to pay for a valuation at all.

If you are refinancing or topping up your loan, it’s likely the lender will conduct an independent valuation of their own.

Rental yields – what you need to know

Rental yield – essentially the rate of rental income returned against the costs of an investment property is a great indicator of a property’s investment potential. But you need to keep things in perspective when you factor it into your decision to purchase property.

Calculating rental yield

A good first step in examining rental yield’s impact on the investment potential of a property is to recognise that there are two types of rental yields, gross and net, and they are calculated differently.

In property, gross rental yield is calculated by dividing the annual rental income you receive by the property value, and then multiplying this figure by 100.

For example, if you collect $20,800 rent annually ($400 per week) and your property value is $450,000, it will look like this:

$20,800 (annual rent) / $450,000 (property value) = 0.0462

0.0462 x 100 = 4.622

The gross rental yield is therefore expressed as 4.622%

Presumably, the higher the rental yield percentage, the better, as it suggests a more efficient return on your investment – more bang for your buck.

Knowing a property’s gross rental yield is a quick way to make a rough comparison of how its rental returns fare with others in an area, but it does not give a full picture of the investment potential a property offers.

But the gross rental yield can be misleading.

Net rental yield, on the other hand, offers a more detailed picture of a property’s rental return. To calculate net rental yield, you also factor in the costs and expenses you incur in addition to your property’s value.

The list of costs and expenses is extensive and can include stamp duty, legal costs, building inspections and recurring expenses such as maintenance and repair work, council rates and loan interest repayments.

If you deduct $5,000 for annual costs and expenses from the annual rental income in the gross rental yield scenario in the example above, the net rental yield is 3.5%.

Of course, the credibility of net rental yield is dependent on the accuracy of assumptions you make about the cost of repairs, the property’s market value and the property’s occupancy rate.

A building inspection might reveal dormant issues that will drastically increase future repairs and maintenance expenses. Rental yield might be high for those properties occupied in the neighbourhood, but that doesn’t mean the property you have in mind will be occupied all year-round – vacancies in one street can vary from the next, too.

Rental yield is only one factor to consider

Calculating rental yield should only be part of your assessment of a property’s investment potential. To do due-diligence and ensure you’re making the right investment, it’s also important to consider the resale value, investigate market reports, demographics, sales and rentals history in an area, planning and infrastructure, and the story of the building.

Brickhill Financial Solutions can help you further evaluate the benefits and the issues to consider when purchasing your investment property in Sydney.

Make Working from Home Less Taxing

With no commute and casual Friday turning to casual every day, there’s a lot to love about working from home. But when the cat keeps hijacking your Zoom calls and Friday drinks end up being with said cat, it has its downsides too. Thankfully, the tax man is offering a bit of socially distanced relief for those of us still working from home in our pyjamas.

As you’d expect, more Australians than ever are working from home – 68% of the workforce, by one estimate. The Centre for Future Work, a leading think tank, reckons COVID-19 could spark the end of normal work patterns. (‘Good riddance’, we hear you say.)

The Australian Taxation Office is keeping up with these unprecedented times by offering new tax deductions. So a little of that extra money you’ve been spending on central heating and phone bills could find its way back into your pocket this tax time.

It’s not quite a full stimulus package, but it might help pay for the 72 toilet rolls you stockpiled (if you’re one of those).

The 80 cents method – for when you hate receipts

For anyone who has always maintained a home office, the general rule of thumb has been to keep receipts of relevant costs like household power and internet, then only claim the portion of those expenses that relate to work.

Sound tedious? We agree.

It’s a method that calls for plenty of receipt filing and a few calculations, and it typically applies to people who run a business from home.

The good news is, if you’ve been working from home because of the Coronavirus pandemic, instead of sorting through boxes of receipts you can just claim a flat rate of 80 cents per hour for every hour worked from home. This is designed to cover all your costs from internet access through to stationery.

All you need to do is record the hours worked from home. So be sure to keep time sheets. You don’t even have to have a separate or dedicated area of your home set aside for working, such as a private study.

Under this method, if you worked, say, eight hours a day from home, five days a week, you may be able to claim a tax break of $32 per week. But you can only use the 80 cents per hour rule for the period between 1 March and 30 June.

52Cent – better than wrapping up

Or, you can choose another method – claiming 52 cents per hour worked from home for costs like heating, cooling, lighting, and depreciation of your furniture. Then on top of this, you can also claim a deduction for work-related phone, internet, and stationery plus depreciation in the value of your computer.

This option may give you a bigger deduction if, for example, you’re a big internet user.

But you will have to keep that big box of receipts.

To get the dime, you’ve got to do the time

One pitfall to be aware of is that in order to claim work from home costs, you need to be working. You can’t claim work from home costs if you were on leave or were stood down during the Coronavirus pandemic.

So, no funny business.

If you’ve been stood down for example, just checking the occasional email from the boss or staying in touch with your employer over the phone, doesn’t count as working from home.

If you’re not sure if you’re eligible to claim work from home costs, or to decide which method works for you – leave it to the experts. Talk to your tax agent or accountant or jump onto the tax office website for more details.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not tax or financial product advice.

Home renovations underway

Money Matters: 3 Tips in Financing Your Home’s Renovation – Our Guide

Working on a home renovation project can be a tricky matter, especially if you don’t know where to get the money to match the house improvements you’ll need. As a homeowner, it is vital to ensure that your financial choices work towards your benefit and not result in greater debt.

Making the right financial choices

Dealing with house renovations is a matter of understanding your finances and knowing your options in borrowing money from accredited lenders. If you’re planning a new house extension or saving up for some much-needed updates to your amenities, here are three tips to help finance your home improvement project:

1. Work out your current and future budget

A recurring mistake that homeowners make during their renovation project is that they don’t know how much it will cost them. Working out your budget should be the first item on your list so that you can track how near or far you are from your goal.

You should make a quote of all the materials, furniture, and appliances that you’ll need for your renovation project. Then, try to get different quotes on each product to make a lower and upper limit of your material expenses.

If you’re doing a small project that can fit in a room, the figures you’ll end up with will show a close estimate of how much you’ll spend. On the other hand, if you’re doing a large scale installation, you’ll also need to consider the corresponding labour fees in hiring contractors to perform the job. The longer the project is, the more costly your bill will be.

2. Renegotiate your mortgage payments

Once you have an estimated figure of your renovation cost, you can then plot how you’ll reach that target. There are many ways to save up for your house project. Sometimes, banks will allow you to negotiate with a more favourable rate if you have more than 20% equity since this will enable you to switch to another lender easily.

To successfully haggle with your current lender, you should do research on other competitors and note their respective rates. By presenting this information to your lender, you can have more room in demanding lower rates or extended payment dates.

3. Seek out a personal loan

Different lenders in the market offer varying limits and rates for personal loans. Unsecured loans can be more suited to finance your home renovation project if you’ll be borrowing something in between $5,000 and $30,000. Some lenders can also offer this amount for a loan term spanning over seven years.

If you’ll be dealing with a larger project, such as kitchen or bathroom upgrades, an increase in your existing home loan may be your best bet. These  borrowing methods have lower rates compared to unsecured loans but the loan term is longer. 


In planning a renovation project, you should always consider whether the updates will add value to your property. By doing the proper research and securing the right contractors in doing the job, you won’t just end up with a more enjoyable living space, but you’ll also be investing in your home’s resale value in the future.

At Brickhill, we provide the best credit and funding advice to homeowners who are in need of refinancing their home improvement projects. If you’re looking for debt consolidation on the  North Shore, get in touch with us today, and we’ll be happy to answer your questions!

Stamp duty reform, will it happen?

The conversation around stamp duty reform has gained momentum in recent weeks at both the state and federal level, with everyone from RBA Governor Phillip Lowe to Treasurer Josh Frydenberg to state politicians suggesting that land tax reform may have a role to play in Australia’s post-COVID economic recovery.

Reform could significantly aid homebuyers through reducing the amount of money they need to have saved up front, as they’re not able to borrow against stamp duty but instead must pay it in cash.

As reports continue to swirl that an overhaul to land tax may be imminent, Australian Broker unpacks what that change might look like. 

The current situation

While discussion around stamp duty reform swells and ebbs on a fairly regular basis, when it comes down to it, it’s widely viewed as “untouchable”– especially in Victoria where it makes up 40% of the state’s revenue, according to Damien Roylance, managing director of Melbourne-based Entourage.

“We’ve always talked about stamp duty reform, but the thing is the percentage of stamp duty hasn’t changed since the ‘70s when the median house prices were 30-odd thousand. It was never adjusted down as we moved into the 2000s and house prices obviously increased,” Roylance said.

Pre-COVID, it was projected that stamp duty would generate $9.5 billion in revenue for Victoria this year alone. 

However now, with the hope of reform feeling more like an actual possibility in recent weeks, buyer behaviour is being affected.

Roylance explained, “A lot of agents are screaming ‘Just make a decision on it!’ because if people think reform is coming, they’re worried they’re going to hold off buying. With a million dollar purchase, which is not uncommon these days, the stamp duty is $55,000. If people think change is coming, why would they buy now when they could save that much down the line?”

Possible approaches to the reform

Even with his pragmatic acknowledgement that a reduction in tax in one place almost surely equates to an increase in tax elsewhere, Roylance has considered several alternative structures for stamp duty which would take pressure off owner occupiers without depriving the state its revenue.  

“Paying stamp duty over a deferred period, say 10 or 20 years, would be a lot better for a lot of people from a cash flow point of view. Rather than paying $50,000 in one go, a homebuyer might instead pay $2,500 a year for 20 years,” he explained.

Roylance also outlined a credit system which would help address the way in which stamp duty sometimes discourages people from transacting more.

“Say you buy a home for $1m dollars, and you pay your $55,000 stamp duty. Then you upgrade to a home for $2m in the next few years, but you’re given a credit for the first move you already paid for,” he explained.

“The buying and selling of property is so expensive. If you’re able to have a credit system like this, young people moving up the property ladder can pay their stamp duty along the way. So when they buy their big home for $2m or $3m, they’ll have already paid a big chunk of that tax. 

“There’s a lot to flesh out there, obviously, but a credit system could help prevent people from having to pay it all again.”

While Roylance doesn’t necessarily feel stamp duty should be lowered or altered for investors, he does see significant room for improvement especially as it pertains to helping first home buyers into the market.

“The first home buyer stamp duty concession is pretty low, tiering between $600,000 and $750,000 in Victoria, but we have first home buyers buying for over a million. Times have changed; they’re now in their thirties, just got married and they’re not looking to buy a $600,000 apartment anymore,” he said.

What we’re most likely to see

While it’s interesting to model creative solutions which benefit both homebuyers and the government, tax reform is rarely radical.      

“Everyone expects the change to come in the form of a land tax increase,” said Roylance.

However, the managing director has also seriously considered the possibility that, despite the duty dominating the discussion of late, no change will be made at all. 

“Brokers aren’t seeing too many people drop off at the moment. Stock levels have been really down, so houses price haven’t really lowered. We’re seeing properties snatched up in days rather than weeks,” he said.

“If property prices are holding strong and people are still buying, do they need to do this? Obviously, reform is being considered as something to spark the economy and get things going again, but if it shows signs of life, why would they take away such a huge earner for the government?”

-By Madison Utely (AustralianBroker)

blue credit card in hand

Debt Consolidation: What Is It and What Can It Do for You

Living with debt is one of the more difficult things in the modern age. While most people try to actively avoid accumulating it, debt can be inevitable if you want to make a big purchase—a home loan, a car loan, or even a business loan.

No matter how savvy you are with your money management, it’s easy to accrue a lot of debt from numerous sources without meaning to. While you might be able to track the differing payment timetables and handle the numerous payment processes, it’s not ideal to do so for long. With time, you may get confused and miss out on a payment, eventually leading to even more accrued debt.

In the event that this happens, it’s easy to lose hope and simply take it as it goes—but it doesn’t have to be the case. You have numerous options to make your debt easier to manage, and one such way is through debt consolidation.

What Is Debt Consolidation?

Debt consolidation, as the name implies, involves the combining of numerous different consumer debts. These are, more often than not, composed of personal loans, credit cards, and store cards. Sometimes also car loans. Once combined, a different loan is taken out to pay for all of these debts and liabilities, which is usually done in an effort to obtain more favourable terms, both rates and time to repay the debt.

Why Should I Go For Debt Consolidation?

As great as debt consolidation is, it’s definitely not the be-all-end-all solution for your debt problems, but it can certainly help in some measure. To cement that point, here are a few advantages it offers:

Different Repayment Terms

As stated earlier, one of the chief reasons to undergo debt consolidation is to have better repayment terms for your loans. Consolidating your credit card debt and loans into a new loan can have you renegotiate for lower interest rates and may incur fewer fees. While your debt won’t be erased, you can lower the total amount you pay to clear your account off.

Simplify the Payment Process

Multiple sources of loans and debts require you to pay off multiple times in a month through different channels on different dates. Tracking all of your necessary monthly payments can get exhausting very quickly, which is where debt consolidation comes into play. Through consolidation, you will only have to focus on paying off once a month, thus reducing the chances of you forgetting what to pay and when.

The Bottom Line

While debt can be a struggle to deal with, you will always have options on how best to deal with it. The important thing is to make yourself more knowledgeable and taking the opportunities presented by finance brokers to handle your debt.

Are you looking for a debt consolidation service in North Sydney? At Brickhill Financial Solution, we provide a variety of services to help you manage your debts better. Get in touch with us now!