Qoin and what it means for your Business

In recent times there has been a surge in inquiries regarding the use of Qoin as a payment for goods and services, and of course, for this to happen, businesses must be registered to be able to accept Qoin as payment for goods and services.

This article is aimed at ensuring the businesses that do sign up to accept Qoin as payment for the goods and services they understand the consequences of doing so.

The key issues to consider are:

  1. Qoin has a floating value. It is not as simple as saying that 1 x Qoin equals 1 x dollar.
  2. Capital Gains Tax and Income Tax
  3. Bookkeeping costs in terms of the business owners time or the cost of a professional bookkeeper.

Qoin has a floating value and there is often a focus on the “rising” value of a Qoin. Of course, whatever rises in value can also fall in value. If you are selling an item for $50 and you accept Qoin as payment, you should be aware that your stock and other business bills such as wages, will in normal circumstances need to be paid for in hard cold dollars. If Qoin falls in value, how do you pay the bills each month. If you are in a position where you can afford to speculate with the money you receive for your goods and services, then perhaps you can consider accepting some Qoin as payment, but it would normally be quite unwise for someone to accept Qoin as payment for goods and services if they do not have the cash in the bank to cover their expenses.

Capital Gains Tax and or income tax may be something you need to consider. If you accept Qoin as payment for a $100 service, the first thing that needs to happen is that you record the value of the Qoin offered as payment on that day, because the ATO requires that you have the value in dollars recorded in your books for accounting purposes.

Let us assume you accept Qoin for payment of a $100 service. In 4 weeks’, time, when you are paying your accounts, you need to sell some Qoin to generate the cash needed to pay your bills. The sale price of the Qoin could result in either a capital gain or a capital loss, or in a trading circumstance, could be simply treated as additional income. So, every time Qoin is accepted as payment for goods or services, or Qoin are cashed or used for the payment of suppliers or services of any sort, you will need to record the value of the Qoin on that day in dollars. Every transaction needs to be recorded in dollars.

Bookkeeping – most business owners are seeking simplicity in the bookkeeping or admin tasks in general. The use of Qoin will require additional tasks – the recording of the value of the Qoin at the time of each and every transaction.

Qoin as an investment: It is not the purpose of this article to deal with the value as an investment of Qoin. I am not qualified to talk about it and those selling Qoin tell me they are not qualified to talk about it. But it always comes up. The topic of the rising value of Qoin is always mentioned, but the possibility of a fall in value is not. It was recently suggested to me that some employers were considering paying their staff wages using Qoin at least to some degree. I would recommend seeking industrial relations advice prior to such activity to confirm this would satisfy the awards covering the employee’s employment terms and conditions.

There are many different cryptocurrencies. At the moment there seems to be a lot of interest in Qoin. Just make sure you fully understand the implications of using Qoin in business and it may be worthwhile reading the information provided on the ATO website, click on the LINKS below –

Cryptocurrency used in business

Tax treatment of cryptocurrencies

Transacting with cryptocurrency

If you are looking to simplify your business administration, or if you are concerned about the cost of bookkeeping or accounting fees now, then consider that adding the complexity of using Qoin in your business transactions may add further to the cost of your bookkeeping or accounting services.

I hope this article has been of some assistance.

Senior Financial Advisor

Peter Jordan

Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust t/as ClearWay Advice and Financial Management. ABN 93 745 037 799. Peter Jordan Sub-Authorised Representative 244948. Joredg Pty Ltd Corporate Authorised Representative 473095 Advice Links Pty Ltd AFSL No 517955.

Peter Jordan – Senior Financial Advisor

Peter Jordan – Senior Financial Advisor

I seem to be doing a lot of reading and writing of late, and hopefully, the messages we are providing to you are helping and informative.

On Saturday, Friday in the USA, Russell Investments issued their normal weekly Market Week in Review broadcast. It normally takes the form of a video release, involving a couple of their senior people filmed in their Seattle office discussing key economic issues of the past week.

On Saturday, the broadcast took the form of a voice broadcast, delivered from the homes of the 2 senior staff members, who are now confined to their homes as Seattle is in lockdown. Schools are closed as are many other services and businesses including all restaurants and other places where the public normally gather in greater numbers.

Over the coming weeks, it is likely there will be increased news time allocated to the likelihood or otherwise of a Global Recession. It seems that such an occurrence is now almost unavoidable.

However, on the positive front, a recession normally brings a fall in equity markets of about 20 to 30%. The US market is already down 30% plus, as is our Australian share market. Given this is the case, Russell Investments argues that a recession is already fully priced into the market.

Russell Investments is watching 3 key things over the coming weeks – the spread of the virus and intensity of the spread, the Government responses to the virus and the perceived effectiveness of the responses, and the actual effect on the economy, of both the virus and the responses to the virus.

Their expectation is that the next unemployment numbers in the US will provide some guidance on the impact of the shutdown that is happening across the country, and the unemployment benefit applications are expected to exceed those experienced during the downturn of 2008.

However, whilst they are less confident of a V-shaped recovery, they remain reasonably confident of a U shaped recovery which essentially means the recovery continues to be expected to be strong, but a little slower in eventuating.

I have been asked how long this will all go on for. Impossible to tell. But, Government assistance packages being offered in Australia seem to indicate a time frame for the need for assistance of about 6 months. There’s always a chance that this could be extended, but we need to remember this is a virus that thrives best in winter, so 6 months would seem to be a reasonable timeframe.

All portfolios are built with a view to the medium to long term. Most decisions made by fund managers to invest in certain assets are made with a medium to longer-term view in mind. We do not take on clients who are looking for quick profits because it is a highly risky game, and it is contrary to the way most funds operate.

I appreciate this is not a normal time for any of us, and extraordinary steps are being taken by Governments around the world to help us all deal with it, and help businesses to cope.

Finally, over the last few days, there have been a number of announcements about Government support for businesses and individuals, and some of the announcements related to the relaxation of Superannuation and superannuation pension rules. None of these items have yet been legislated, but it is likely they will be considered by the Federal Parliament on Friday if not before. Once the final legislation is enacted, we will pass on the details to those to whom it applies.

I’ll be in touch soon with any further updates.

Stay safe.

Yours Faithfully.

Peter Jordan 

Senior Financial Advisor

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Its Time, Retirement Beckons

I wrote in my recent article that I have just completed a 10 day road trip visiting clients.

One of the couples I called on, Alistair and Barbara, who have been clients for 10 years +, are facing retirement at the end of the year. This is something we have been planning for, frequently modelling their situation using information and ideas they have in regards to retirement. The things that would have material effect on our modelling include the impact of buying a new vehicle, securing their privacy by buying a neighbouring block of land, travel including regular cruises and some domestic and overseas travel, renovations to their home. All these things are important to them.

And there are many more items that need to be factored in as well, such as their risk tolerance – how much downside risk can they handle. We have been working with these clients for many years so we know that Barbara has a lower risk tolerance than Alistair, and because of this we are often faced with Alistair wanting to be more aggressive, although only marginally so, than Barbara, and the end result is often come to via discussion and review of the downside risks.

It’s an in depth discussion, but in the end, it is a discussion that has to take place and the clients must be comfortable with the risks being taken with their money. Of course, risk profiling Is important, but achieving the long term goals our clients have can result in a trade-off between their desired risk profile and achieving those goals. No-one wants to take on risk that is not required and sometimes additional risk, although not desired, offers the only solution long term to the achievement of client goals. Either we take on a little more risk, or we scale down the aspirations, reduce what we are trying to achieve.

These guys have a small amount of debt which is covered by a portfolio of shares they purchased some years ago. They are reluctant to keep the debt, the only debt they have, post retirement and the decision will probably be made to sell the shares to clear the debt.  What cash is left, after retaining a buffer in bank accounts, will probably end up in superannuation.

The essence of retirement planning in my view is the sleep test. We want our clients to live a stress free life. We want them to be well rested and comfortable with the recommendations we make around their strategy and products. We and the clients prefer not to have too many surprises, so modelling downside risk is important for us. It gives us an idea how bullet proof our clients models are. Not all are bullet proof – there’s simply not enough cash to be bullet proof, but at least when the modelling is done, our clients are aware of the risks and can live accordingly.

These particular clients will be pretty secure – with 10 years to get it right, they are looking at a pretty secure retirement. They have taken strong action to prepare for this day.

There are many things that can derail financial plans. Investment markets can have an impact, but many of you would be surprised to know that investor behaviour is the one thing that does most damage. Trying to time markets, pulling out at the wrong time, spending more than was originally budgeted without considering the consequences, gifting money to kids that really is not affordable and the list goes on. Most of the risk is behavioural.

So, advice and planning is critical. Take the time to call ClearWay Advice on 1800721186. Always use the services of a Certified Financial Planner who is associated with a FPA Professional Practice.

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Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

Income Protection – through Superannuation

income-protection-superannuation

I’ve recently had reason to examine at close hand, the value of Income Protection, labelled Total and Temporary Protection within a workplace superannuation product.

I have a new client, who has recently suffered a series of strokes that will leave the client, most likely unable to return to work, especially to the high pressure role previously held. All sick leave and other entitlements have been exhausted and approval for an income payment has been obtained, paid via the insurance held within the workplace superannuation account.

The insurance is labelled Total and Temporary Income benefit but it has a payment period specified and most members would assume they would be paid for the term shown on their statements.

In the case of the person we are working with, there is some doubt, although not yet confirmed, that our client will now not be able to return to work. In this case the client has been advised by letter, that the client’s income benefits will cease in December, after less than 6 months of benefit’s being paid.

On advice, our client has other insurance benefits, but not income protection. The level of insurance for Life and Total and Permanent Disablement within the workplace superannuation account is low because of the age of the client and the investment balance is not great because of the years of service.

I often get told by public servants in particular, that my insurance is covered in my super. Over the years we have seen a number of cases similar to this recent case, where members of a workplace superannuation fund expect that their income protection benefits will be paid for the term specified on their statements, only to find out once on claim, that they may not have the security they initially thought they had.

Our new client, if the medical diagnosis is confirmed, may not be able to work at all again. The plan was to work for another 5 years, and at that point retirement would have been secure. Forced retirement, 5 years early and without the security of the income protection insurance thought to be held, will mean a significantly different retirement.

What does this mean, and what can you do to ensure your financial future is secure? Get advice. Make sure your insurance definitions are confirmed and that your cover is what you think it is. But put simply, insurance through superannuation is not what it used to be. Be aware that a good income protection insurance plan is about providing the right amount of funds when they are needed, to the person who needs them. In the case of my new client, this will not happen.

All insurance and superannuation plans should be reviewed by advisers not associated with the product provider.

Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

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The Value of Advice

The Value of Advice:

It is often difficult to ascertain the advice value, provided by financial advisers. It’s difficult because much of the value we provide to clients, or more particularly, the value client’s state they get from their relationship with us, is not easily quantifiable.

However, Russell Investments has recently released their “2019 Value of an Adviser Report” where they have tried to quantify the value of our advice. In addition, they have identified areas where value is provided but the value in these areas was difficult to quantify.

Most of the value that they can quantify are for things advisers do every day, often without clients being aware. These include:

  • Ensuring your portfolio asset allocation remains in line with the risk profile originally agreed to,
  • Advice and cautioning clients against poor investment decisions,
  • Providing guidance around the tax implications of decisions you are making.

These day to day tasks are estimated to contribute around 4.4% on average per year to the performance of client portfolios.

But Financial Advisers do much more than this. Getting a plan in place, helping you to focus on the outcomes that you have indicated are important to you. Helping develop strategies that will assist you in:

All of these things have value, but that value is difficult to quantify in dollar terms, but knowing these strategies are taken care of, can help you sleep at night. What value do we place on peace of mind?

If you are considering getting advice, speak with a Certified Financial Planner, who is part of an FPA Professional Practice. Take advantage of the Value of Advice.

Peter Jordan is a Sub Authorised Representative 244948 of Joredg Pty Ltd as trustee for the Jordan Hybrid Fixed Trust, Corporate Authorised Representative 473095 of Keystone Partnership Pty Ltd AFSL No 466137

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