The bill from the plumber arrived today for clearing out our blocked sewer pipe. I'd initially expected it to cost a couple of hundred dollars, as he'd done the job before and I think it cost around $400 that time, which had included installing a new access pipe to "make the job easier next time". I started to suspect it wouldn't be all that cheap when I initially talked to him via mobile after he first arrived at our house. When I mentioned the access pipe he'd installed last time, he said that this time the blockage was in a different spot connected to the other bathroom. He also asked for the drainage diagram, which is never a good sign for a supposedly simple job.

It turned out that the diagram we had from the house purchase was out of date, and didn't include changes made after the house was built. So after digging around the back of the house looking where he thought the pipe might be, he went away and promised to come back after looking up a copy of the new diagram. When I had a look the next evening after he'd finished, I noticed the neat new cement work where he'd added in a permanent access port to the pipe he installed last time, and also the repair job he'd done to the paver he'd dug up looking for where the pipes might be. When I commented to DW that the cementing was very neat, but I hated to think how much it would all cost, DW replied that "Oh, that shouldn't cost anything as he guessed wrong about where the pipe was" - I didn't say anything, but....

Anyhow, the bill came to $832.15 (!) - $50 service call, $65 plant hire (don't they have their own gear?), $573.50 labour, and $68 materials (some cement and a new garden tap).

The funny thing is that the job sheet shows that the blockage turned out the be immediately upstream of the Inspection Opening that he'd installed last time - which I mentioned to him when he first arrived. But what would I know, I'm not a plumber.

Enough Wealth

This month I selected Optimal Group (OPMR) from the MagicFormula listing to add to my "Little Book That Beats The Market" Portfolio of US Shares (100% geared). I bought 600 OPMR @ $8.48. My US Stock Portfolio currently stands as:
Symbol P/E Last Shrs Trade Date Paid Comm Value Gain
HRB 28.89 21.03 200 28-Jun-06 24.16 130 $5,103.75 -$889.62 -14.84%
MOT 12.07 17.65 265 24-Jul-06 18.98 130 $5,675.59 -$557.68 -8.95%
MSFT 24.42 28.57 200 21-Aug-06 24.64 130 $6,933.62 $823.79 +13.48%
ASEI 22.88 52.60 100 18-Sep-06 49.51 130 $6,382.72 $244.97 +3.99%
PWEI 6.55 32.86 150 13-Oct-06 33.29 130 $5,981.07 -$208.27 -3.36%
OVTI 14.61 12.49 300 13-Nov-06 16.47 130 $4,546.78 -$1,578.82 -25.77%
EPIQ 14.05 22.15 320 11-Dec-06 15.65 130 $8,600.90 $2,393.97 +38.57%
CRYP 14.02 25.34 200 10-Jan-07 23.92 130 $6,149.74 $214.62 +3.62%
VRGY 48.43 25.23 270 14-Feb-07 18.29 130 $8,266.11 $2,143.75 +35.02%
KG 16.77 19.96 260 7-Mar-07 18.49 130 $6,297.29 $333.78 +5.60%
OPMR 16.89 8.48 600 10-Apr-07 8.48 130 $6,174.01 -$130.00 -2.06%
11 symbols Total(AUD): $70,111.57 $2,790.49 +4.15%

The commision amounts include an allowance of another $65 for selling costs. There is no allowance for dividends received (around $300) or interest paid on the Portfolio Loan (currently around $400 a month).
At the moment the performance of this portfolio is largely governed by what individual stocks I have selected (semi-randomly) from the Lists generated on the www.magicformulainvesting.com website. For example, in the first trade I was tossing up whether the buy H&R Block or Hasbro toys - in the end I chose to purchase HRB (which has dropped nearly 15%). HAS in the same period has gained in price. Over a period of several years, once I am fully invested (with a portfolio of 18 stocks), the performance of my particular portfolio should be more in line with what can reasonably be expected from application of the "Little Book" methodology.

I'm quite happy with how the portfolio is performing, especially as the above figures are in AUD and the portfolio is held in USD. With the AUD hitting a 16-year high today, my foreign exchange losses have impacted the ROI to date quite significantly.

I was going to "mirror" my US stock purchases with CFD purchases of equivalent value via CMC Markets, but none of the US stocks I was considering adding to the portfolio today are actually traded by CMC Markets. I may either use the CFD trading the hedge my currency exposure, or perhaps use it to by a core index holding of QQQQ or Russel2000.

Enough Wealth

Here's the latest round-up on how the various PF (Personal Finance) bloggers who post their Net Worth each month are progressing.
Monthly Net Worth of PF Bloggers for MAR 2007:

Blogger Age Net Worth $ Change % Change
Accumulating Money 2x no Feb data no Feb data N/A
Blogging Away Debt 2x -$33,791.00 $2,311.00 6.4%
Blunt Money 2x $235,688.70 $3,373.42 1.4%
Consumerism Commentary 30 $87,999.49 $10,680.04 13.8%
Crazy Money 27 $248,085.00 $7,529.00 3.1%
Enough Wealth 45 $1,070,998.00 $4,210.00 0.4%
Financial ladder xx $152,120.85 $8,601.65 6.0%
Finance Journey 25 $153,888.00 $2,261.00 1.5%
It's Just Money 32 $163,908.024 $4,667.58 2.9%
Lazy Man and Money 2x $169,009.00 $1,869.00 1.1%
Make love, not debt 2x -$60,964.42 $3,213.85 5.0%
Making Our Way 37 no Mar data no Mar data N/A
Mapgirl 3x $42,647.00 $3,664.00 9.4%
Moomin Valley 4x $417,195.00 $11,137.00 2.7%
Money Blog Site 25 no Mar data no Mar data N/A
My Money Blog 28 $133,672.00 $7,147.00 5.6%
My Open Wallet 37 $326,997.00 no Feb data N/A
Savvy Saver 27 $194,039.00 no Feb data N/A
Seeking Wealth xx $20,089.63 $3,136.80 N/A
Tired But Happy xx $145,292.00 $5,415.00 3.9%

nb. Some ages have been adjusted as follows:
exact age provided = listed as given
"20's" = listed as 2x
"early 20's" = listed as 22
"mid-late 20's" = listed as 27
and so on.

Please note - I'm still under the water (coughing up phlegm and feeling lousy), so I only updated the existing blogs in my list. If you sent me an email requesting to be added, I haven't forgotten you - I've just chosen to go to bed early, rather than add you to the list this month. Check back next month.

If anyone notices the N/A recorded for % change where dollar figures were listed last month and this month, it's because % change is not very meaningful where your net worth is very small - I generally don't bother including % change if your net worth is between -$50K and +$50K.

I've deleted a few blogs from the list that are either inactive or no longer post net worth updates.

Enough Wealth

I've started working through the last ten years of my tax returns to collate all the DRP and BSP stock issues, so I can get my stock transaction records up to date and estimate how much capital gains tax I'd have to pay if I liquidated my stock holdings to contribute the money into my SMSF next financial year. I took the opportunity to entry all the dividend information I've received so far this financial year. It was interesting to note how the total dividends received each year has slowly increased (this is partly due to buying some extra stocks as the bull market has reduced my margin loan gearing, and allowed me to purchase some additional stocks and retain a LVR of around 50%-60%). My records also show how more companies have paid fully franked shares in recent years - the % tax paid on dividends has slowly increased towards the 30% company tax rate:

Tax Year Dividends Franking Grossed Up Dividends Taxable Avg Income
Received Credit Dividends % Tax Paid Income Tax Rate

2003/2004 $10,039.90 $3,364.34 $13,404.24 25.1 % $60,396 25.3 %

2004/2005 $11,202.95 $4,000.30 $15,203.25 26.3 % $47,996 22.0 %

2005/2006 $12,954.82 $4,864.30 $17,819.12 27.3 % $56,078 27.3 %

2006/2007 $10,745.22 $4,017.47 $14,762.69 27.2 % $??,??? 2?.? %


This also shows how my taxable income has stayed the same or decreased slightly while my salary has actually been going up. This is mainly due to the size of my margin loans (and hence tax deductible interest) increasing in relation to my salary.

I don't know what my taxable income will be for this year - I usually pre-pay 12 months worth of my margin loan interest in June to bring forward the tax deduction. I may not prepay as large an amount this year, in case I wish to sell of most of my geared stock portfolio to reinvest the funds into my SMSF.

* The figures for the current tax year, ending 30 June, are not yet complete

Enough Wealth

Easter Eggs are often a very expensive way to buy mediocre chocolate, but one way to join in the fun without breaking the bank is to wait until next Tuesday to buy. Some stores were already advertising Easter chocolates at 20% off on Saturday - desperate to sell their stock before Sunday. If the pattern of previous year's persists, come Tuesday the stores will be full of Easter Eggs at 50% off.

Of course the traditional method of having cheap Easter eggs is to use food dye and non-toxic paints to colour and decorate hard-boiled hen eggs. This is actually a fun family activity, and a healthy alternative to overdosing on chocolate.

Enough Wealth

One of the catchiest phrases I ever heard at an "investment seminar"* was "tax is optional". Despite the common confusion between legal tax minimization, and illegal tax evasion, there are some relatively straight forward methods to protect one's hard earned income from the ravages of taxation. Now, the following is simply a couple of scenarios I've been thinking about, it is not professional tax advice as a) I'm not qualified to give any, and b) you'd be an idiot to base your investment planning purely on something you read on a blog - always check it out yourself against reliable reference material, or get professional advice. Having got past all the disclaimers, let's look at a few rough examples.

a) The obvious one - if you're over 60, come 1 July this year the new "simple super" legislation will make all income coming to you from your superannuation fund tax exempt - it doesn't even have to be included on any tax return you fill in. Hence retirees with adequate retirement savings will easily be able to pay no tax on a $100,000 annual income if it's coming to them from their taxed super fund.

b) If you're earning $100,000 salary in Australia the 2006/2007 tax rate for a resident single person would mean you normally would pay $27,850 in income tax (not counting the medicare levy), leaving $72,150 after tax income. This could be reduced to zero by arranging a salary sacrifice of %92,500 into superannuation. This would reduce your taxable income to $7,500. The tax rate on the first $6,000 of income is 0%, and the $235 low income tax offset would mean you could earn at least $7,500 taxable income without actually paying any income tax. Of course you'd probably need some other way to finance your living expenses if you reduced your taxable income to only $7,500! There is also the superannuation contribution tax of 15% on salary sacrificed contributions, so to some extent you'd simply be replacing $27,850 income tax with $13,875 contribution tax. This makes salary sacrifice of taxable income below $25,000 (the threshold for the 30% income tax rate) generally not worthwhile.

BTW This option would not longer be available after the new "simple super" rules come into force on 1 July - the max. salary sacrifice + SGL contribution total will be $50,000. And under the current rules, there is an age-based maximum that would make this option only work for older employees.

c) Have large tax deductions from investment interest expenses to reduce your taxable income to the extent that it entirely offset by franking credits from your stock dividends. This is theoretically possible, but would only be possible for some investors with large existing investment portfolios. For example,
Person X has a $1,000,000 stock portfolio yielding 3% ($30K) in fully franked dividends and earns $70,000 in salary. The stock portfolio averaging 6% capital growth.
If this person borrowed $2,000,000 via a margin loan at 8% interest and used it to expand the existing stock portfolio. The new situation would be:
Income:
$70K salary + $90K dividends.
Dividend franking credit $38,571.
Gross income = $198,571
Tax deductible interest = $160,000, paid for by salary and dividends.
Taxable income = 198,571 - 160,000 = 38,571
Tax on 38,571 = 6,921.30
Refund due = franking credit - tax liability = 38,571 - 6,921.30 = $31,649.70

The extra capital gain from the $2m extra invested is worth an average of $120,000. As it is eventually only taxed at half the applicable marginal income tax rate, the eventual after tax gain would be more than the decrease in current income.

Of course this would only work if you could live on $31K of after tax income, ie. you were going to invest $40,500 (56%!) of your after tax income anyhow. Otherwise you'd be short of income for living expenses.

Now, none of these options are practical or advisable for most people. And the ethics of paying nil tax is very personal - after all, someone has to pay for roads, schools, hospitals etc. And the use of gearing, especially using margin loans, increases risk - you may end up with investments that perform way below "average" during your holding period. But some combination of the above can be used to reduce the amount of income tax paid, provided you are currently spending less than you earn and are investing some "after tax" dollars.

There also some further benefits possible by lowering your taxable income - for example, reducing the amount of medicare levy payable, qualifying for the government superannuation co-contribution, and so forth. You have to be a bit careful if you are married with kids and getting some "family tax benefit" payments (A or B) - the rules for calculating income differ between the ATO and centrelink.

It's probably best to end with another catchy quotation - "tax reduction should not be the key factor behind any investment decision." After all, it's no good getting a big tax break on an investment that ends up worthless.


* ie. high pressure sales talk for an investment scheme


Enough Wealth

Just a quick link to an interesting piece in today's SMH about consumer debt:
Abstract Nouns are All Very Well

Enough Wealth

While at home sick last Monday I heard mention that Oprah's selection of "The Road" was considered a bit unusual. I only took notice because of it's theme - I'm a SF fan and especially like post-apocalypse survivalist novels (I was actually a volunteer with the NSW State Emergency Service as "Intelligence Officer" for the Sydney Northern Division for about ten years, having been interested in civil defense at the time).

I read the short extract available online and it piqued my interest enough to enquire about it at the local bookshop at lunchtime. It was in stock (actually on sale at $28, reduced from $32 - still too expensive for my taste, especially as it is quite a thin novel), so I read a bit of it "browsing" in the bookshop. I got up to page 122 during lunchtime, so I went back after work to finish it off. I found it very moving, but depressing. While reading it I thought of my family and how it is possible in disasters for all the love in world to be insufficient to protect you're loved ones - even if you die trying. [Warning: spoiler coming...] Fortunately the novel has a relatively happy ending, but the way the story unfolded a tragic ending would have been much more likely in "reality". It made my feel a bit better, but in my view the ending was a bit too 'Hollywood' for it to be deemed a truly great novel.

ps. I DO actually buy quite a few books (mainly investment ones) from this bookseller, so I didn't feel too bad about not buying the novel today. As for the author -there was no significant loss of royalty payment; If I hadn't been able to read it for free today, I'd have just waited 'til it was available from the local library.

pps. I thought about including an amazon.com affiliate link to the novel in this post but that would have been TOO weird - posting about how to read the novel for $0, and at the same time trying the earn a commission out of one of my readers paying for the novel!

Enough Wealth

The paperwork from ESuperFund.com for setting up our new Self-Managed Superannuation Fund (SMSF) arrived in the post yesterday. A very thick envelope of "personalized" boiler-plate, with sixteen(!) little yellow tags showing where DW and I have to sign our names. I'll take a stab at wading through the details of the more relevant parts (the Trust Deed and the Investment Strategy) this weekend, between doing my university assignments and hiding Easter eggs* for DS1 to find, and hopefully we can get it all signed and sent back next week. Transferring DW and my super from BT super into the SMSF will save at least $1,670 in annual admin fees as far as I can tell**. I'll invest in the same asset mix within the SMSF as I had selected in the BT super scheme, just via Index funds instead of actively managed funds in some cases. If the capital gains tax liability caused by liquidating my stock portfolios isn't too high I'll also look at shifting my direct share investments into the SMSF as well, as there will be considerable tax savings over time within the super environment (especially NIL capital gains tax on super assets sold when the SMSF is in pension mode). You can't use gearing within a super fund (they're not allowed to borrow, except for very limited cases, such as when settling share trades) but, apparently it is OK to buy CFDs.

* They're actually lots of little packets of Trolli "bunny surprise" sweets (a bit like gummi bears), as DS1 is allergic to both milk and soy, so chocolate eggs are a no-no, even the "lactose free" ones. Just as well that he loves gummi bears

** The SMSF admin fee is AUD$599 pa. The BT fund charges a $53 pa member fee, plus an admin fee of around 1.5% pa. Our employer has arranged for a "member fee rebate" of about 0.9% pa but this still means that on the combined balances of DW and myself (around $370K) we're currently paying a net admin fee of around $2,270 pa to BT.

Enough Wealth

I started working on creating a nice looking "table of accounts" to provide a detailed, single-page snapshot of my fiscal situation. This was partly triggered by DW stating that "if you're hit by a bus I won't know what's going on with all your finances". I also want to have a more detailed "snapshot" of my accounts than my overall networth calculation provides. Although initially I'm just creating an excel spreadsheet to display the required information (see below), I'm toying with the idea of writing a .net application (either VB or Java) to display this info. The benefit would be that I could later on add in a webscraper object (eg. WebZinc) to automatically collect the latest figures off the internet (for nearly all the items), which would mean I'd only have to update some figure manually once a month (like my property valuation estimates, and some online data that has overly secure login methods). I don't think I have the time to start on such a hobby project at the moment though - I have some uni assignments due this weekend for the Master of IT and Grad Dip in Seconday Education courses I'm enrolled in.

One thing this chart already shows is that I have overly complicated my life by accumulated lots of surplus accounts in recent times. The three different margin lending accounts were opened as I evolved from starting with just a basic margin loan account to then adding one that also provider online trading access, and then to another from my home loan provider where the interest rate was at a slight discount. Most of the online savings accounts were opened just to get a small opening bonus, or accumulate some referral bonuses. And most of the credit card accounts were opened to make use of 0% balance transfer offers. There are also some cash management accounts that were automatically opened for me when I opened margin loan or brokerage accounts.



An interesting thing I've included which I don't normally consider, are contingent liabilities and contingent assets ie. Capital Gains Tax that would be due if I liquidated my stock investments (I'm still updating my stock transaction log, so I don't even know what this figure is at the moment), the value of my life insurance policy, a guestimate of possible inheritance (although this could easily end up being $0), and the current value of my accumulated annual and long-service leave which would be paid out if I quit my current job.

Enough Wealth

While I was home sick yesterday the plumber finished his second day of working to clear out our blocked sewer pipe. Apparently there is no accurate plumbing diagram for our house available (it was build about 40 years ago, and had some additions done before we bought it four years ago) so he had a few false starts digging around to find the sewer pipe. He said he'd send the bill, so I've no idea how much it will end up costing. I did opt for him just clearing out the blockage (tree roots) and coming back when/if needed again in a few years - the alternative was to reroute part of the existing sewer line outside of our house (for some reason it runs underneath our house), but this would cost around $1,500 and wouldn't guarantee we wouldn't get some more roots blocking a different section of the existing pipework anyhow.

I was back at work today and had an appointment with the dentist at lunchtime to repair a tooth that lost a large chunk out of it last week. The same tooth had root canal done a few years ago (around $1,000), and later on a repair job to fix a chunk of tooth that broke off the back of the tooth a short while later. This time a different part of the same tooth had broken off the front. The session cost $300 - $60 for two x-rays (my other teeth look fine, except for another molar on the other side that also had root canal done a few years back), cleaning, descaling, and fluoride treatment. Plus the actual repair job which "only" cost $90. Unfortunately the dentist recommended getting a crown done for the tooth asap, as it is badly cracked and won't last very much longer left as it is - this means the $90 repair job is only going to be used for a couple of weeks. I think she said the exact same thing two years ago when she made the last repair, so decided that it's time to "bite the bullet" and get the crown done. I've booked in for the two sessions required for the crown - it will cost around $1,400 for one crown! They have a nice, realistic tooth-like appearance, but at that price I almost expect solid gold like the "good old days".

We only have basic private hospital cover, with no dental cover, so this is all "out of pocket". I will get a 30% tax rebate for the amount of total "out of pocket" family medical expenses this tax year for any amounts above $1,200 or thereabouts. I may look into the cost of adding dental cover to our health plan, as the other molar that had root canal a few years ago apparently will also need a crown eventually. Plus DS1 has started getting loosing his baby teeth and has an overbite - so he may need braces or something later on. And DW doesn't have the best teeth in the world either...

I'll have to do a cost-benefit analysis based on the expected annual cost of the dental cover vs. likely dental work. I won't pay for dental insurance just on the off chance of needing some major work, as any emergency work (eg. from a car accident) would be covered by medicare in the public hospital system, and I've no interest in any "cosmetic" dental work that might be covered.

Enough Wealth

There's nothing wrong with giving each form a unique ID number, after all the names of some forms like the "Foreign Person's U.S. Source Income Subject to Withholding" form don't exactly roll of the tongue. What amazes me is that even common forms (equivalent to our Australian annual "tax summary" statement) seem to get referred to by their "code name" eg/ "W2" or whatever.

Anyhow, back to the topic of this post - my 1042S arrived in the post today. It's really just of academic interest to me. As a non-resident I don't have to do a US tax return (as far as I know). The information provided is also of no practical use in filling in my Australian tax return (due after June 30). Even though there's a tax agreement between the US and Australia so I can claim a tax credit on my Australian return for any US tax already paid on my US dividends, the Australian system requires me to report all transactions in the Australian tax year (1 July - 30 June), so a Calendar year statement from the US isn't really much help. Also, the Australian return must list each individual transaction converted to the equivalent AUD value applicable at the time of the transaction. Theoretically this would mean looking up the exchange rate for the date each dividend was paid into my US broker account. But I'll probably just use the exchange rate that was applied to the funds I transferred each month to make my stock purchase - the variation in exchange rate will not have a material impact on the calculated amounts, as the totals for Jun-Dec 06 are only USD$60.25 in dividends and USD$9.04 US Federal tax withheld. As the Australian tax return often only requires whole dollar amounts for many items, the rounding error is likely to be much larger than any difference in exchange rate that occurred during a month.

I haven't quite worked out what my US broker is doing with my US dividend amounts - the first dividend sat in the cash account, and then was deducted from the amount due for the next stock purchase I made. However, subsequent dividends have simply accumulated in the cash balance of my US stock account for several months, and weren't credited against the amount due for subsequent monthly stock purchases. The amount is trivial, but it's still annoying to have a cash balance sitting in my US account unused and not earning any interest, when I then have to borrow that amount in Australia to pay for my next stock purchase in full! Hopefully when I start selling my first US "Little Book Portfolio" stock purchases at the end of the year (once they've been held 18 months) the amounts will be added to the current cash balance and be used to fund subsequent monthly stock purchases.

Enough Wealth

My Networth as at 31 Mar totalled $1,070,988 (AUD), an overall increase of only $4,210 (0.39%) for the month. My stock leveraged stock portfolios increased by a net 3.52% during March, and the estimated valuations for my share of our home and investment property increased 1.42% compared to last month, which is encouraging. The property gains were slightly offset by our mortgage loan balances increasing by a net $1,084 (0.30%) due to our monthly redraw of $3,500. We're redrawing some of our advance mortgage payments to help with our repayments while DW is on maternity leave.

The biggest negative for the month was a sharp drop in the valuation of my retirement account, which wasn't recovered fully by the stock market recovery - possibly some fee or tax liability was paid out during the month. The retirement account balance ended down $6,628 (2.00%) for the month. I'll have to check all the transactions for the month online to confirm exactly what was going on, but the online transactions are a pain to analyse - having half a dozen investment options (mutual funds) in my retirement account, each and every transaction is split into a separate transaction for each investment option. The easiest method is to download the relevant date range and import it into excel, then sort by transaction type and description and total up all the related items for each date to work out the total amounts being deducted for fees, insurance premium, fee rebate, tax etc.

Enough Wealth

The Australian Treasurer today released an updated "Intergenerational Report", five years after the first report made official the looming demographic disaster facing government finances as the aging Baby Boomer generation reached retirement age, stopped paying taxes and starting drawing on the aged pension. The most interesting aspect from my point of view was the radical change in the projected situation in 40 years time (which is based on expected trends in life expectancy, fertility rates, retirement ages and workforce participation) compared to the previous report. Instead of a projected 50 Billion dollars a year (5% of GDP) budget deficit in 40 years time, the latest projection is for a more modest $35 Billion dollar a year shortfall - a reduction of 40%. This decrease was largely due to a slight increase in the fertility rate (whereas the original report expected the downward trend in fertility to persevere) and a slight increase in the participation rate, especially of older male full-time employees. It makes me wonder what situation will arise if, as is likely, the participation rate increases further. As there is apparently a large proportion of the Baby Boomer generation that has insufficient funds socked away for their retirement, it seems inevitable that more of them will have to continue working beyond their planned retirement age. Perhaps this will end up being a non-event. I'll see what comes out in the next update 5 years from now.

Enough Wealth

A couple of dividend statements arrived today - $403.23 from Foster's Group and $324.08 from Australian Pipeline Trust. The Foster's dividend is fully franked (ie. carries a tax credit for the 30% company tax that has been paid), so on my tax return I'll declare both the dividend and the franking credit as income, but get a tax credit for the amount of the franking credit ($172.81). This basically means that I'll only have to pay additional personal income tax on this dividend if my marginal tax rate ends up higher than 30% (ie. in the 40% or 45% range). As I usually reduce my taxable income considerably via the tax deductible interest paid on my margin loans, I'll probably not have to pay any additional tax on this dividend. If my marginal tax rate was lower than 30% I'd get a tax refund for the excess franking credit.

The Pipeline Trust dividend was actually a combination of unfranked dividend of $185.76, a capital return of $69.66 which is not taxable (but which reduces the cost basis of the shares when they are eventually sold and capital gain is calculated), and a trust distribution of $69.66 which gets reported under a different tax item from dividends and has different tax treatment - I don't know exactly what, the details will be in the end of financial year taxation statement from the trust. Overall I prefer the simplicity of a straight dividend to trust distributions, even if they have favourable tax treatment!

I filled in an online application for a self-managed superannuation fund (SMSF) account with esuperfund.com. As its nearing the end of the 2007 tax year (30 June 2007), and a SMSF has to report each year to the tax office, eSuperFund has an offer of $0 annual fee (as well as the usual $0 establishment fee) for the 2007 fund paperwork. This is good, as it lets me get the fund established this financial year and have everything in place to transfer most of my existing superannuation account balance into the SMSF asap. I'll probably leave a small balance in my existing super fund with BT Employer Superannuation, just to keep my existing life and TPD insurance in place. I may even leave my employer 9% SGL contributions and salary sacrifice amounts going into the BT account as the 1% admin fee on these small amounts will not be material. I can always transfer additional amounts into the SMSF later on. My wife will probably transfer her entire balance and arrange for future contributions to go into the SMSF as she has a smaller balance and won't be doing any salary sacrifice while working part-time for the next few years (until DS2 starts school).

Finally, I didn't do much spending today - $39.64 for some grocery shopping, and $26.60 for petrol. I normally fill up the car on a Tuesday as that is generally the bottom of the weekly price cycle, but as there is often an early increase in petrol prices immediately before the Easter long weekend, I decided to fill up today instead.

Enough Wealth

The cold I caught on Friday went to my chest, so I spent most of the weekend in bed or on the sofa, coughing up phlegm. I called in sick this morning, as I'm still coughing and might as well use one of my days of sick leave to rest and recuperate fully. We get 10 sick days each year, which accumulate if unused, but aren't paid out if you leave work voluntarily or even if you are retrenched. I've probably accumulated more than 50 days of sick leave in my current job as I don't take many sick days. The majority in the past few years have been days off to stay home when DS1 has been sick and had to stay home from school (I alternated taking days off with DW while she was working full time).

One good innovation my company introduced last year was "odd job days" - up to 5 out of the 10 days of annual sick leave can be taken as personal days to complete any "odd jobs" that can only be done during business hours. This was in recognition that a lot of "sickies" are actually taken when people really ill - they need time off for school open days, closing on buying a house, moving house, waiting for the plumber etc. etc. The new scheme is good in that it doesn't disadvantage the "honest" employees who were loath to take a day of sick leave if they weren't actually bed-ridden, compared to those who took a day off after a big night out, or because it was good beach weather. At the same time, the company has got more strict about people who continue to take off too many one day "sickies" - if you repeatedly take off one day "sick" to make a long weekend every month they can ask for a doctor's certificate.

Anyhow, today I'll take it easy around the house, hopefully I can spend some time sorting out my share transaction records while I recuperate.

BTW - there was a magnitude 8.0 earthquake at the solomon islands this morning, so there's been a tsunami warning issued for the entire east coast of Australia. I don't expect a noticeable wave as the shock wave will has spread out considerably by the time it reaches Australia, plus the local seabed topology along most of the east coast isn't conducive to generating large tsunamis. The northern coastline is also protected somewhat by the great barrier reef.

Enough Wealth