<html><body>
Self-managed super funds are continuing to grow in popularity with the latest figures from the Australian Prudential Regulation Authority (APRA) showing assets increased to $22 billion.
APRA’s quarterly superannuation statistics for March 31, 2013 show <a target="_blank" href="https://www.smartcompany.com.au/superannuation/052307-government-warned-to-back-off-on-proposed-changes-to-smsfs">SMSF assets </a>now make up 33.9% of the total $68.4 billion increase in superannuation assets in the last quarter.
SMSF Professionals’ Association of Australian director, Graeme Colley, said this increase means the total assets in SMSFs now stands at $496.2 billion or about 31.5% of the total $1.58 trillion superannuation pool.
“What these numbers say about SMSFs is positive on two fronts,” he said in a statement.
“First, that the fund trustees and their professional advisors have not missed the upswing in the equity markets in this quarter or over the past year.”
Colley said the investment performance of the SMSF sector has been on a par or better than the other sectors.
“Second, that despite the market volatility of the past years post the global financial crisis, people still want to take control of their superannuation and be responsible for it,” he said.
“This reflects both a growing awareness by trustees of superannuation and their capacity to be able to get professional advice on all issues pertaining to the management of their SMSF.”
A spokesperson from the Australian Institute of Superannuation Trustees said the APRA data showed industry funds were aware of the market competition from SMSFs and are increasingly offering products which compete.
“While the figures also show strong growth in the SMSF sector, superannuation funds are increasingly offering innovative, good value new products and services, which mirror some of the features of self-managed funds and aim to help retain members, particularly those with large balances,” the spokesperson said.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/">SmartCompany</a>.
</body></html>

cwaters-YrtBR88nBe

APRA figures show SMSF assets have hit $22 billion

<html><body>
The SMSF Professionals’ Association of Australia has developed best practice guidelines for self-managed super fund limited recourse borrowing arrangements (LRBA).
This week SPAA announced NAB has agreed to adhere to the two separate guidelines.
NAB is the first lender to sign up to the guidelines for <a href="https://www.smartcompany.com.au/finance/superannuation/22072-20110922-borrowing-smsf-cash-for-property-repairs-the-do-s-and-don-ts" target="_blank">LRBA</a> with the SPAA saying sign up from the other major banks is in progress.
Andrea Slattery, chief executive of the SPAA, said in a statement the association has been “very conscious” of concerns expressed about LRBAs and in particular about a “tiny rogue minority” spruiking this borrowing facility.
“We believe that by publishing these guidelines, and with NAB signing on and other major lenders in the pipeline (the major banks are estimated to have more than 85% of this market), the government and regulators can have a high degree of confidence that LRBAs are being used appropriately and that the industry has best practice guidelines for lending and advice in place,” she says. 
The two guidelines are LRBA lenders’ best practice guidelines and LRBA advice best practice guidelines.
Slattery says adherence to the guidelines by the banking and financial advice industry will ensure LRBAs are being used appropriately by SMSF trustees, and encourages self-regulation in the SMSF lending sector by lenders and advisers.
Jeff Bresnahan, chairman of SuperRatings, told SmartCompany there is a need for restrictions like this in the SMSF sector. 
“If SMSFs are going to come under scrutiny and there is going to be failures, there is a high chance it will be in the property area. There will always be the temptation for unscrupulous behavior in that sector,” he says.   
“The property spruikers are back and are targeting SMSF members so these guidelines can offer protection.”
Bresnahan says he is not concerned that some SMSFs may miss out on loans under the guidelines. 
“If the guidelines are well thought out then there should be an appropriate level of gearing, if people miss out because they were going to do something highly leveraged then that is not a bad thing,” he says.
“That is a positive move to protect people.”
Bresnahan warns the industry, valued at half a trillion dollars, has its risks.
“SMSFs are great for a lot of Australians, but there are a lot of SMSFs out there that have been sold probably inappropriately to people who should not have them and they have to be protected from their own greed and lack of financial literacy,” he says.    
Bresnahan says in mainstream super funds investors are protected by the Australian Prudential Regulation Authority in the event of default but SMSFs don’t have that protection.
“The more restrictions that are put in place the better I believe,” he says.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
</body></html>

Banks to impose restrictions on SMSF borrowing

<html><body>
Continued legislative tinkering to the superannuation system is forcing individuals <a href="https://www.smartcompany.com.au/superannuation/052307-government-warned-to-back-off-on-proposed-changes-to-smsfs">to abandon super and self-managed super funds</a>, leading to $16 billion not being placed into SMSFs, according to research published this week.
The research by the SMSF Professionals Association and Russell Investments found that as a result of lower contribution caps and continued changes to super, 54% of SMSF trustees would change the decisions they are making currently about their strategies towards their retirement.
Launching the research, SPAA chief executive Andrea Slattery said, of those who would change, 75% said they would invest in things other than super.
“That would be outside of super, not inside of super, and so that leads towards $16 billion not being placed in the superannuation system in this last 12 months,” she says.
“It shows there are big numbers in the SMSF sector which are mainly professionals, small business and the self-employed that are not putting money into super and if they are not putting it into super they are putting it elsewhere or spending it.”
Slattery says negative gearing has been the main benefactor of the movement out of superannuation, with confidence amongst SMSF trustees low.
In July last year the amount of pre-tax income people over the age of 50 may put into super each year was halved to $25,000.
Trustees now have to deal with legislative risk, according to Alan Schoenheimer, chief executive of Russell Investments in the Asia Pacific.
“I think trustees are learning a new risk called legislative risk, which they used to ignore in the past but now it is becoming clear this is a major dilemma,” he says.
“You put your money into the system and once it is in it is locked in, and you can’t reverse that decision, and now it is there for the government to raid.”
Schoenheimer says 10 or 15 years ago people were encouraged to contribute more than the required amount into superannuation and they were given incentives to do that and told it was a good thing.
“It is in a system where you can’t hide it by the way, it is there for all to see and Australian Prudential and Regulation Authority or the Tax Office or someone have your statistics and can look at it all the time and you can’t hide it out, you can’t get it out and all of a sudden the rules change.”
“I would have thought there were a lot of angry people right now.”
This article first appeared on Smart Company.
</body></html>

Government tinkering with superannuation proving costly

<html><body>
Australian investors have benefited from almost $70 billion in dividends throughout 2013-2014 with $10 billion going to self-managed superannuation funds, according to analysis by Credit Suisse.
Fairfax reports the dividend haul is a record $67.8 billion, up from $61.3 billion in 2012-2013.
“This is what investors want now, especially ‘selfies’ [SMSFs] who are collecting more than $10 billion of dividends themselves,” Credit Suisse equity strategist Hasan Tevfik <a href="https://www.afr.com/p/business/companies/epic_billion_dividend_haul_for_investors_CbbhL0wc7v8D1UY6TWk4VK" target="_blank">told Fairfax</a>.   
Jordan George, senior manager of technical and policy at the SMSF Professionals’ Association of Australia told SmartCompany his research shows that as of the end of 2013 SMSFs held 11.5% of market capitalisation of the ASX.
“If you look at that in context of a $70 billion flow of dividend, $10 billion to SMSFs seems right,” he says.
“We know SMSF investors have a preference for franked dividends as it helps them provide an income stream in retirement and that’s important to consider when we know 35% of SMSFs are in pension stage and are taking an income stream.”
George says SMSF trustees at the pension stage need to generate cash flow to fund paying a pension so dividends are important to maintain that.
“But it’s important to recognise for all super funds there are the same incentives to invest in franked dividends, it is not just an SMSF issue,” George says.
This article first appeared on <a href="https://www.SmartCompanycom.au" target="_blank">SmartCompany</a>.
</body></html>

$70 billion dividend payout with $10 billion to SMSFs

<html><body>
Former chairman of BHP Billiton and chief executive of the National Australia Bank, Don Argus, is embroiled in a legal battle with the Australian Tax Office over his superannuation.
The ATO wants to charge tax on almost $1.2 million in income earned by the $15 million self-managed superannuation fund of <a href="https://www.smartcompany.com.au/leadership/profiles/21793-20110906-the-selling-of-reform">the elder statesman</a> and his wife, Patricia.
Argus, who is now chairman of the Bank of America Merrill Lynch Australia Advisory Board, claims the income should be tax free.
On 16 April 2014 the Argus’s objected to the ATO’s assessment of income tax issued to their SMSF for the year ended 30 June 2010.
On 29 September 2014 the ATO disallowed the objection and so the Argus’s have now filed an application for the decision to be varied in the Federal Court.
The Argus’s are seeking an almost $1.2 million reduction on the tax paid by them for the 2010 tax year claiming the assessment of $2.25 million in tax is “excessive” because it wrongly concluded the SMSF did not pay out the minimum amount required.
Graham Colley, director of technical and professional standards at the SMSF Professionals’ Association, said with a $15 million fund value the minimum amount of pension to be paid should be around $900,000. 
“[SMSF trustees] need to make sure you pay the minimum amount of your pension for the year,” he says.
“You can do it simply by making sure you have direct debits into your bank account.”
Colley advises SMSF trustees also need to make sure the valuation of the investments are made so the calculation of the amount has been correctly done. 
“Even if you have underpaid a small amount the commissioner will exercise his powers of administration providing you make up the shortfall as soon as it is discovered,” he says.
“Make sure you know when your pension starts, make sure you know when it stops and one of the standards to qualify as a pension is to make sure you pay the minimum amount.”
<a href="https://www.afr.com/p/national/don_argus_takes_on_taxman_over_super_JwuiiKK4asPzKTku9UdW9K" target="_blank">Fairfax</a> reports the dispute is scheduled for a court hearing in Melbourne on 2 Februrary.
SmartCompany contacted Argus but did not receive a response prior to publication.  The ATO declined to comment.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
</body></html>

Former BHP chairman Don Argus takes on the Tax Office over his $15 million SMSF 

<html><body>
The number of self-managed superannuation funds in breach of borrowing requirements increased over the past year, according to research by the Partners Wealth Group.
<a href="https://www.partnerswealthgroup.com.au/wp-content/uploads/2015/01/2014-Partners-Wealth-Group-Audit-Survey.pdf" target="_blank">The research</a> is based on over 600 SMSFs across Australia audited in 2014 and found 23% of funds with a relevant breach were in breach as a result of borrowing requirements.
This is a significant increase from 12% of funds the year before.
However, overall the number of SMSFs requiring a contravention report to be lodged with the ATO has fallen over the past year in line with the past seven years.
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="77">
Year
</td>
<td valign="top" width="77">
2014
</td>
<td valign="top" width="77">
2013
</td>
<td valign="top" width="77">
2012
</td>
<td valign="top" width="77">
2011
</td>
<td valign="top" width="77">
2010
</td>
<td valign="top" width="77">
2009
</td>
<td valign="top" width="77">
2008
</td>
</tr>
<tr>
<td valign="top" width="77">
% funds in breach overall
</td>
<td valign="top" width="77">
5
</td>
<td valign="top" width="77">
5.3
</td>
<td valign="top" width="77">
5.3
</td>
<td valign="top" width="77">
5.5
</td>
<td valign="top" width="77">
3.4
</td>
<td valign="top" width="77">
7.2
</td>
<td valign="top" width="77">
11.3
</td>
</tr>
</tbody></table>
 
<table style="width: 460px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="205">
Key breaches 
</td>
<td valign="top" width="205">
% of funds with relevant breaches in 2014
</td>
<td valign="top" width="205">
% of funds with relevant breaches in 2013
</td>
</tr>
<tr>
<td valign="top" width="205">
SMSF borrowings
</td>
<td valign="top" width="205">
23%     
</td>
<td valign="top" width="205">
12%
</td>
</tr>
<tr>
<td valign="top" width="205">
Loan to members
</td>
<td valign="top" width="205">
23%
</td>
<td valign="top" width="205">
38%
</td>
</tr>
<tr>
<td valign="top" width="205">
In-house assets
</td>
<td valign="top" width="205">
20%
</td>
<td valign="top" width="205">
31%
</td>
</tr>
</tbody></table>
Partners Wealth Group director of SMSF consulting and auditing, Martin Murden, attributes the increase in breaches to a misunderstanding of the rules.
SMSFs are entitled to borrow under limited circumstances in order to pay benefits, settle on investments and acquire investments via a limited recourse borrowing arrangement (LRBA).
“Because borrowing via a LRBA is relatively new and has been subjected to several rule changes since inception, my suspicion is that there has been confusion, resulting in some SMSF trustees thinking it was permissible to use their fund to borrow to overcome a short-term liquidity problem – much like a small business seeking a temporary extension to a bank overdraft in difficult circumstances,” Murden said in a statement.
Two other key areas of transgression highlighted by the Partners’ research came from funds taking personal loans for members and funds breaching the in-house assets rule.
Murden said, periodically, loans occur by mistake. For example, using the wrong cheque book (that of the SMSF) to pay a personal expense. On other occasions members are simply in need of money and there is no one to stop them from borrowing from the fund.
“However, it is important to remember that while the loan may appear small in dollar terms and when compared to overall fund assets, personal loans are simply not allowed under super legislation. They’re an absolute no-no and size is no excuse,” Murden said. 
Graeme Colley, director of technical and professional standards at the SMSF Professionals' Association of Australia (SPAA), said the spike probably means auditors are being more fastidious in analyzing the operation of SMSFs.
“Hopefully with requirements for the registration of auditors, the auditors that are left in the registration group are taking their jobs more seriously as they have greater obligations in reporting to ASIC,” he says.
“We may see an increase again simply because of the thoroughness of the audits that are conducted.”
Colley says the types of breaches identified by the Partners Wealth Group are not surprising.   
“The main issue is people taking money out of their funds, in-house assets which is next and then separation of assets,” he says.
“Mixing assets is really serious as it means SMSF trustees may be putting their hand into the operation of the fund.”
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
</body></html>

Spike in number of SMSFs in breach of borrowing requirement

<html><body>
The self-managed superannuation fund sector is soaring, with the Australian Taxation Office revealing it expects more than 1,000 applications a week to be lodged for SMSFs in May and June this year.
Speaking at the annual <a target="_blank" href="https://www.smartcompany.com.au/superannuation/054815-asic-sounds-warning-bell-on-smsfs">Australian Securities and Investments Commission</a> forum in Sydney yesterday the ATO's commissioner for SMSF, Stuart Forsyth, said the rush was already on with the office receiving a record 500 applications to set up new funds in one day last week.
"It is the highest we have ever seen on one day," he said.
"It is an illustration of the growth that is out there."
This last minute surge before the end of the tax year will take the total number of <a target="_blank" href="/news">SMSFs</a> to half a million, although Forsyth said the ATO rejected about 68 of the 500 applications as being unsuitable.
Graeme Colley, director of education and professional standards at the SMSF Professionals Association of Australia, told SmartCompany a surge in applications for SMSFs was "not surprising" towards the end of the financial year.
"You can get a tax deduction of up to $25,000 on your contributions, so traditionally there is a spike towards the end of the year," Colley says.
"People are disillusioned with larger funds and there is more interest in SMSFs generally, which influences people to set up their own funds."
Colley believes speculation about the budget and the impact of what will happen means people are trying to protect themselves from any superannuation changes by setting up an SMSF.
He says the ATO receiving 500 applications in one day last year is interesting and he assumes people are setting up the SMSFs for the right purposes.
"The concern is that people are panicking or rushing in to set up an SMSF and hopefully the advice they are getting is for the right purpose to provide retirement benefits; they need to look before they leap," Colley says.
The ATO also revealed at yesterday's forum that it will seek to close down as many as 10,000 self-managed superannuation funds this year, targeting funds that are inactive and have not been lodging annual tax returns.
Forsyth told the forum the closures come at the end of a year-long review of the SMSF sector.
According to Colley this shutdown of SMSF funds is not something SMSF trustees should be concerned about.
He says "every now and again" the ATO goes through its database and looks at those funds which are inactive or have been closed down and it undertook a similar exercise a few years ago.
"When you look at shutting down 10,000 funds out of half a million it is only 2% of the total number, it is a very small proportion," he says.
"The ATO will notify trustees a number of times before closing down a fund, it's not like opening and shutting a shop."
This article first appeared on <a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CDMQFjAA&amp;url=http%3A%2F%2Fwww.smartcompany.com.au%2F&amp;ei=qVJSUYTyLcnYigeQxIDQBQ&amp;usg=AFQjCNHpZnYFW6OgdohnBFaGGjvpykD8CA&amp;bvm=bv.44342787,d.aGc" target="_blank">SmartCompany</a>.
</body></html>

ATO prepares for influx of SMSF applications

<html><body>
Troubled Vietnamese restaurant chain MissChu has been sold to a company controlled by <a href="https://www.smartcompany.com.au/leadership/profiles/30077-nahji-chu" target="_blank">MissChu founder Nahji Chu</a> for an undisclosed price.  
KordaMentha confirmed the sale of the MissChu business this morning to MissChu Holdings, a company controlled by the Mawson Group and Nahji Chu.
Rahul Goyal and Janna Robertson of Korda Mentha were appointed as administrators of MissChu in December last year.
The MissChu business operates six retail tuckshops and a catering business in New South Wales and at its height it was turning over $20 million a year.   
The Melbourne MissChu businesses were not affected by the voluntary administration and <a href="https://www.smartcompany.com.au/finance/45365-misschu-to-close-london-store-economic-data-points-to-slowing-chinese-economy-midday-roundup" target="_blank">the London store closed in January</a>.
Chu fought hard to save her business, <a href="https://www.smartcompany.com.au/finance/cashflow/45494-weneedchu-misschu-takes-to-social-media-in-attempt-to-keep-chain-afloat" target="_blank">launching a #weneedchu campaign</a> on social media in an attempt to keep her business afloat.
She has <a href="https://www.smartcompany.com.au/finance/45514-misschu-founder-nahji-chu-how-the-ato-cost-me-my-business" target="_blank">previously blamed the Australian Tax Office</a> for the collapse of MissChu, an allegation the <a href="https://www.smartcompany.com.au/finance/tax/45602-ato-hits-back-at-misschu-after-being-blamed-for-its-demise" target="_blank">ATO strongly disputed</a>.
The sale to Chu followed what KordaMentha described as an “extensive marketing campaign” where approximately 60 expressions of interest were received.
KordaMentha sought final offers from the preferred bidders and proceeded to accept the best offer that was able to be completed.
The settlement is due to take place in about 15 business days.
Goyal said in a statement that the administrators conducted an “extensive marketing campaign”.
“KordaMentha conducted a broad sale process, and we are pleased that the business can continue as a going concern and that jobs could be preserved,” he said.
Goyal said a scheduled report to creditors and second meeting of creditors will provide further information on the likely outcome for unsecured creditors and employees from the administration.
Sixty employees <a href="https://www.smartcompany.com.au/finance/45153-i-m-hurting-and-i-m-working-through-it-misschu-founder-says-the-restaurant-chain-will-trade-through-voluntary-administration" target="_blank">were terminated in January</a>. 
KordaMentha said all the New South Wales outlets would remain open.
SmartCompany contacted Chu for comment but did not receive a response prior to publication.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
</body></html>

Nahji Chu buys MissChu business back out of administration

<html><body>
The consumer watchdog has instituted proceedings in the Federal Court against best-selling property investment author Rick Otton and his business We Buy Houses for alleged breaches of the Australian Consumer Law.
Otton is the author of How to Buy a House for a Dollar, which was rated as one of the Top 10 Most Popular Business Titles for 2013 by Money Magazine and Dymocks.
The Australian Competition and Consumer Commission claims Otton made representations to consumers that by attending seminars and boot camps they would be able to buy a house for $1; buy a house using little or none of their own money; and build property portfolios without their own money invested and without new bank loans.
The seminars and boot camps range in cost from $2,997 to approximately $17,000 for a mentoring program. 
The ACCC claims the strategies do not enable consumers to buy a house for $1 but rather involve consumers acting as middlemen to facilitate property transactions between third party sellers and third party buyers.
The alleged representations were made in a number of mediums since at least  1 January, 2011 including in published materials, on websites and during various events such as seminars and “boot camps”.
Otton is travelling so was unable to answer questions but provided a statement defending his business and book.
“It seems that the ACCC thinks that the public are fools, that they will take the title literally and think that they only need a dollar to buy a house,” he said.
“It’s a sad day when the ACCC thinks the Australian public is that foolish that they don’t understand that the dollar is just the start of the process.”
Otton claims the expression is often used in business that you can buy a business for $1, that is, for the value of the debt owed by the business.
Otton says the We Buy Houses “technique” involves buying a property where the loan repayments on a house are creating hardship for the owner, and the loan amount is so high that the owner cannot sell the house for enough money to pay out the loan.
“Why wouldn’t the owner welcome someone new who can step in, agree to buy the house and pay out the loan down the track?” he says.
“The ACCC is taking a literal interpretation of the title, it’s like saying the book Fifty Shades of Grey is misleading because it’s not about paint colours, or that David Niven’s memoirs, The Moon’s a Balloon, isn’t about the moon.”
ACCC chairman Rod Sims said in a statement that the watchdog is concerned the strategies promoted by We Buy Houses and Otton “target vulnerable consumers who don’t qualify for bank loans or who are having difficulties meeting their mortgage repayments”.
Otton came under scrutiny in 2013 <a href="/news/wa/best-selling-property-investment-authors-wa-seminars-banned-department-of-commerce">when his seminars in Western Australia were banned by the Department of Commerce</a> on the basis of misleading advertising. 
The matter is listed for a directions hearing in Sydney on 1 April, 2015.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
</body></html>

ACCC drags Rick Otton to court for his “Buy a house for $1” claims

<html><body>
Billionaire investor Warren Buffett published his eagerly anticipated annual letter to shareholders of his company Berkshire Hathaway this weekend.
The letter is a <a href="https://www.smartcompany.com.au/finance/investment/41783-five-gems-from-warren-buffett-s-annual-shareholders-meeting">flagship event in the business calendar</a> as the investment guru updates shareholders on the company’s progress while dropping plenty of investment wisdom on the way.
The letter is published ahead of Berkshire Hathaway’s annual meeting, which Buffett refers to as “Woodstock for capitalists”.
Here are six pearls of wisdom from this year’s edition:
1. Beware of investment bankers
Buffett takes aim at investment bankers on Wall Street in his annual letter.
“The Street’s denizens are always ready to suspend disbelief when dubious manoeuvres are used to manufacture rising per-share earnings, particularly if these acrobatics produce mergers that generate huge fees for investment bankers.”
2. Don’t dawdle
Buffett acknowledged he stuffed up by being slow to sell shares of the British supermarket chain Tesco, which wound up costing Berkshire Hathaway $US 444 million.
“An attentive investor, I’m embarrassed to report, would have sold Tesco shares earlier,” he says. “I made a big mistake with this investment by dawdling. Charlie calls this sort of behavior ‘thumb-sucking.’ (Considering what my delay cost us, he is being kind.)”
Buffett noted the loss amounted to only 0.2% of Berkshire’s net worth.
3. The need for post mortems
The investment guru concedes that he has made mistakes along the way, particularly the use of Berkshire shares to purchase businesses with “limp” earnings.
“Mistakes of that kind are deadly. Trading shares of a wonderful business – which Berkshire most certainly is – for ownership of a so-so business irreparably destroys value,” he says. 
Buffett advocates post mortems of all acquisitions in order to determine “an elementary reality” whether the intrinsic value of the shares you give in an acquisition is less than the intrinsic value of the business you receive.
“I’ve yet to see an investment banker quantify this all-important math when he is presenting a stock-for-stock deal to the board of a potential acquirer,” he says.
“Post mortems of acquisitions, in which reality is honestly compared to the original projections, are rare in American boardrooms,” he says.
“They should instead be standard practice.”
4. Forget about the too-good-to-be-true bargain
Buffett recommends focusing on paying a fair price for top businesses rather than a bargain price for a mediocre business.
“Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” he says.  
5. Always have cash flow
Buffett revealed Berkshire Hathaway maintains $US20 billion in cash reserves at all time.
While that’s a little unrealistic for most small businesses, Buffett says cash reserves are key.
“At a healthy business, cash is sometimes thought of as something to be minimized – as an unproductive asset that acts as a drag on such markers as return on equity,” he says.
“Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”
Buffett says that in 2008 when other businesses went under Berkshire was uninterrupted.
“When bills come due, only cash is legal tender. Don’t leave home without it.”
6. Work out your succession
While not naming names Buffett has assured shareholders he has the succession question well in hand at Berkshire Hathaway.
The investment guru says he and the board of directors “believe we now have the right person to succeed me as CEO,” and who in some respects “will do a better job than I am doing.”
Buffett also left open the prospect of a female chief executive saying, “Gender should never decide who becomes CEO.”
You can read Buffett’s <a href="https://www.berkshirehathaway.com/letters/2014ltr.pdf">letter to shareholders in full here</a>.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
</body></html>

Six pearls of wisdom from Warren Buffett’s 2015 letter to shareholders

Property developer Alta is planning to redevelop an office tower just off St Kilda Road, converting it into residential apartments.

Alta, which is being led by former Fridcorp co-owner Nigel Givoni, has paid around $27 million for the B-grade office asset on a 2,323 sqm site at 10 Queens Road, opposite Albert Park. They are planning a conversion to build to sell apartments.

During the campaign, there became a divergence between bids based on those looking to purchase for office use and those proposing residential redevelopment through adaptive reuse. That gap was over 30 per cent, Cushman &amp; Wakfield advised.&nbsp;

&nbsp;

Jozef Dickinson of Colliers Residential said “10 Queens Road is a prime example of a well-located but underutilised asset that can be repositioned to meet the evolving needs of the city.

"The St Kilda Road precinct, with its proximity to the CBD, Albert Park, and the new Anzac Metro Station underpins its higher and better use. Couple this with premium park and bay views, the site is well placed to support high-quality residential development.”

The site was bought from receivers for Taiwan-backed Everland Global. They had spent $59 million on the 19-level building in 2019 when they bought it from billionaire NBL owner and property developer Larry Kestelman.&nbsp;

Queens Road is where Mirvac is currently building <a href="https://www.apartments.com.au/new-apartments/the-albertine-by-mirvac-melbourne-31-queens-lane-melbourne-vic-3004">The Albertine,</a> just under 100 apartments that will complete in mid-2026.

The site was bought from receivers for Taiwan-backed Everland Global

Joel Robinson

Alta plots office to apartment conversion in St Kilda Road precinct

Rooftop pools are hard to come by in Melbourne.

While generally more of a trend in the Sunshine State due to the climate, Melbourne's gets plenty warm enough in Spring and Summer for the amenity that has been a little left behind in both the Victorian and New South Wales capital.

Projects by Crema decided to break the mould at its recently completed South Melbourne apartment development, The Eighth.

<a href="https://www.apartments.com.au/buildings/the-eighth-south-melbourne-22-kings-place-south-melbourne-vic-3205">The Eighth</a> is one of the least dense projects to be delivered in South Melbourne in years, with just 36 large-scale apartments across the 12-level building.

[smartcode_project:default project_id=5345 project_image_fid=269728]

It was about creating an inspiring space for residents to gather. Those who already call The Eighth home frequently head up to the roof, whether it's for a swim or for the bar and dining area, which offer sweeping views to both the Melbourne CBD skyline and Albert Park.

There's further amenity within the building, with an Italian eatery, serving from the early hours through to the mid afternoon, located conveniently on the ground level.

[smartcode_project:default project_id=5345 project_image_fid=269730]

Peter Kennon, the architect behind the building, described The Eighth as “a container for life”.

Kennon and Projects by Crema Founder Nicolas Crema bonded over their mutual frustration with buildings and residential developments that claimed to offer a superior lifestyle, but did not at their heart have an understanding of and appreciation for the way people really want to live, and that did not give residents the power to curate their own lifestyles.

They decided to create a place to live where people’s lives organically spilled over the edges of their private residences and into other areas of the building. And where spaces inspire feelings of belonging.

This shared vision has resulted in a building that is intuitive, easy living in its DNA. The thinking behind The Eighth and its design epitomises Kennon’s and Crema’s philosophy of lifestyle without compromise.

The building elevates everyday experiences and activities – like reading the paper or working in the downstairs café, meditating or exercising at lunch time, arriving home via a private lift at the end of the day, and catching up with family and friends at night by the rooftop pool – by centring the way people actually want to live now.

“To me, it’s about feeling comfortable in your own skin,” says Kennon.

“It’s the ability to craft a lifestyle and routine that enables you to spend time doing what you love and what makes you feel good. The Eighth works to the patterns of the people living in the building."

To cater for a variety of lifestyle far and above what spaces there are for residents, The Eighth also has a dedicated concierge service and on-site management to elevate the day-to-day experience.

[smartcode_project:default project_id=5345 project_image_fid=269726]

The apartments themselves have been crafted by interior design doyenne Miriam Fanning, whose focus tends to be more on luxury houses than apartment developments.&nbsp;

Her design studio, MIM Design, created the spaces with timeless materials, such as stone benchtops, cove lighting in bedrooms, stone baths in most apartments, and expansive glazing that draws in natural light while maintaining privacy.

[smartcode_project:default project_id=5345 project_image_fid=269730]

Located in South Melbourne, just one train stop from the CBD via the upcoming Anzac Station, The Eighth integrates private residences, co-working spaces, wellness facilities and hospitality offerings within a single, architecturally driven address.&nbsp;

&nbsp;

&nbsp;

There are only four apartments left to sell in the building. The generously-sized 128 sqm three-bed apartments start from just under $1.6 million.

[smartcode_project_cta:default project_id=5345]

Projects by Crema takes lifestyle elements sky high at The Eighth in South Melbourne

Recruitment industry boss Sarina Russo, who heads up&nbsp;one of Australia's largest education, training, and employment providers, is turning to residential apartment development.

An entity tied to Russo has filed plans for a skinny 36-level tower, on a <a href="https://www.urban.com.au/new-apartments/457-adelaide-street-brisbane-city-qld-4000">narrow 367 sqm site on Adelaide Street</a>.

There are just 20 apartments proposed, some full-floor, some multi-floors.

Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettletontribe</a>, the project would replace Jamison House, an existing five-storey office building.

<img alt="457 Adelaide Street, BRISBANE CITY" data-entity-type="file" data-entity-uuid="bd429ae2-a7c3-449b-89f3-7fb67e8c54c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Adelaide%20st%20front.png?VersionId=2iXa_91lFlbJsVJb15hjXzoAbs8jN5JQ" />

The architectural vision promotes “biophilic design, passive design, and open flowing spaces,” with interiors promising high-end finishes and abundant natural light, the documents submitted to the Brisbane City Council noted.

Each apartment has direct lift access, and most occupy entire or half floors, reinforcing the project’s high-end positioning. Generous private balconies face either Adelaide and Howard Streets.&nbsp;

According to the assessment report by Urbicus, “the building is well designed and articulated with varying setbacks, deep balconies, and variations in façade treatments and materials,” allowing it to integrate with its taller surroundings while minimising amenity impacts.

The uppermost levels will host communal amenities, including a rooftop pool, covered BBQ area, and multiple outdoor lounging zones, with additional resident facilities provided on Level 1 and a mezzanine.

Access to the site is split across its two frontages, with pedestrians entering from Adelaide Street while vehicle access is provided from Howard Street via a single 6.5-metre crossover.&nbsp;

Car parking is facilitated through a car stacker system across three basement levels, accommodating 24 spaces, 20 for residents and 4 for visitors, as well as bicycle storage.&nbsp;

<img alt="457 Adelaide Street, BRISBANE CITY" data-entity-type="file" data-entity-uuid="3fe617d7-7f72-4ee6-ab3c-90a11d123248" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Adelaide%20st.png?VersionId=s4cGqip_A3okoUh_7xfzRJ2Biwdc7gOd" />

The project is a rare one for the Brisbane CBD, which hasn't had a new tower launch in years.

Meriton has <a href="https://www.apartments.com.au/news/qld/meriton-approved-for-brisbane-skyscrapers">approval for its two-tower development on Alice Street</a>, but they are yet to start marketing the 753 apartments.

First Look: Sarina Russo plots skinny Brisbane CBD apartment tower

Legacy Property is taking its new&nbsp;<a href="https://www.apartments.com.au/developments/north-sydney-nsw-2060">North Sydney</a> development to the NSW Government.

They've submitted a State Significant Development proposal for a mixed-use building with 35 apartments, 10 of which will be affordable, above a two-storey commercial podium at <a href="https://www.apartments.com.au/new-apartments/1-church-street-north-sydney-nsw-2060">1 Church Lane</a>.

The new development comprise 35 apartments, 10 of which are affordable, above a two-storey commercial podium. The plan includes the retention and adaptive reuse of the heritage-listed shopfront at 265 Pacific Highway, integrating it into the ground-level frontage.

According to the Scoping Report prepared by Planning Lab, the design “responds to the broader priority and urgent demand for affordable housing” while incorporating a “tower above consisting of 35 residential apartments and communal roof garden”.&nbsp;

Positioned within 300 metres of Victoria Cross Metro Station, the site qualifies for Housing SEPP incentives, including a 30 per cent bonus to height and floor space ratio, which the proposal seeks to utilise.

Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettletontribe</a>, the building would rise 10 to 13 storeys, with a stepped massing strategy to transition from the Pacific Highway frontage down to the finer-grain character of Church Lane. The two-level podium includes new commercial tenancies, communal open space, and landscaping.&nbsp;

Winter gardens have been integrated into apartments along the highway elevation to mitigate noise impacts, and Church Lane is set to be widened to six metres to improve access and separation from lower-scale dwellings to the east.

Nettletontribe said in the documents submitted as part of the application that the proposal delivers a well-resolved mixed-use development that responds to its urban and heritage context along Pacific Highway, North Sydney.

"Positioned along a key section of the Pacific Highway corridor, the site forms part of a transitional zone between the North Sydney CBD and the emerging Crows Nest and St Leonards centres. The design responds to this dual context—addressing the scale and intensity of the highway frontage while engaging sensitively with the finer grain and heritage character of Church Lane and West Street."

<img alt="Legacy" data-entity-type="file" data-entity-uuid="629ff458-3b46-4f72-a01b-aade8baf8b2d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-08-07%20at%2012.03.14%E2%80%AFPM.png?VersionId=kNYKtqbXY1Gjov794jKtaOJmhFm15gUS" />

As the Scoping Report notes, “the design of the proposal is still consistent with the objective of [ADG] controls to maintain the privacy of neighbouring properties,” with separations and setbacks applied particularly along Church Lane.

The proposed envelope is largely consistent with the uplift previously approved through Planning Proposal PP-2021-2926, which designated the site as part of a Southern Transition Area in the North Sydney Civic Precinct Planning Study. That designation supports mid-rise, mixed-use development to bridge the scale between the North Sydney CBD and nearby heritage areas.

The site spans 1,099 sqm and includes four properties. While 253-263 Pacific Highway will be demolished, the heritage item at 265 will be retained and adapted for commercial or community use.&nbsp;

The development includes four levels of basement car parking accessed from Church Lane, with a total of 55 car spaces planned, exceeding minimum Housing SEPP requirements.

Legacy Property, led by CEO Matthew Hyder, has two projects in Macquarie Park, totalling nearly 400 apartments.

Designed by Nettletontribe, the building would rise 10 to 13 storeys, with a stepped massing strategy to transition from the Pacific Highway frontage down to the finer-grain character of Church Lane

First look: Legacy Property proposes shoptop housing on North Sydney fringe

Sydney’s residential market continued its gentle climb in July, with dwelling values up 0.6 per cent over the month and 1.8 per cent across the rolling quarter.

The affordability gap between units and houses is continuing to wide. Units values grew by 0.2 per cent over July, whereas houses jumped by 0.8 per cent, Cotality's Home Value Index found.

Units in the harbour capital are now up 1.3 per cent over the quarter, compared to 1.9 per cent for houses.

Sydney median unit value is $868,000, some $662,000 less than the $1.53 million house median.

Sydney’s relative strength echoes broader capital city resilience, with combined capital values also up 0.6 per cent for the month and 1.8 per cent over the quarter. The gains are underpinned by interest rate cuts earlier in the year, tight listings, and steadily improving buyer confidence.

<h2>What happened in Sydney’s off the plan apartment market in July?</h2>

There were some major moves in the Sydney off the plan apartment market, from Sydney's biggest developers.

<a href="https://www.apartments.com.au/developers/lendlease-development">Lendlease</a>&nbsp;formalised a new joint venture with Mitsubishi Estate Asia and Nippon Steel Kowa Real Estate to develop a $2.5 billion luxury project at 175 Liverpool Street.

<img alt="Lendlease announces partners for its $2.5 billion luxury development on Hyde Park" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Bates%20Smart_175%20Liverpool%20Street%2002-min.jpg?VersionId=2l2XiHSdIP5a_Ei_Y3yft5eLPJ6kLX3G" />

Located on the southern edge of Hyde Park, the dual-tower development will deliver up to 300 high-end residences with north-facing views toward the Opera House and Harbour, alongside 2,000 sqm of retail and commercial space.

Construction is targeted to begin in 2027, pending approvals.

Read more: <a href="https://www.apartments.com.au/news/nsw/lendlease-announces-partners-for-its-2-5-billion-luxury-development-on-hyde-park">Lendlease announces partners for its $2.5 billion luxury development on Hyde Park</a>

On the Lower North Shore, <a href="https://www.apartments.com.au/developers/traders-in-purple">Traders In Purple</a> and joint venture partner Sydney Anglican Property were granted planning approval for the renewal of St Andrew’s Anglican Church in <a href="https://www.apartments.com.au/developments/lane-cove-nsw-2066" target="">Lane Cove</a>.

The development will offer 48 two and three-bedroom apartments, many of which will enjoy dual aspect, enhancing outlooks and cross-flow ventilation.

The existing parish church, built in 1924, will be retained and sensitively adapted into a meeting place and portal to the new contemporary auditorium and ministry spaces, linking old and new.

Traders In Purple CEO Brett Robinson said redevelopment of the site had been enthusiastically supported by many members of the local community.

“There is a demand for high-quality, well-designed, premium apartments for locals wanting to downsize in their neighbourhood and those wanting to raise their family in a highly desirable suburb without the burden of a high-maintenance house and yard.

“It was very clear to us that the local community is also in need of a larger performance space, and we look forward to providing the community with a fantastic new venue that will support the cultural richness of Lane Cove.”

Read more: <a href="https://www.apartments.com.au/news/nsw/traders-in-purple-and-sydney-anglican-property-greenlit-for-lane-cove-project">Traders in Purple and Sydney Anglican Property greenlit for Lane Cove project</a>

Over in the eastern suburbs, <a href="https://www.apartments.com.au/developers/toga-group">TOGA</a> reached a significant milestone at The Kensington, with the development officially topping out.

The Anzac Parade building is being delivered by Gold Star iCIRT-rated builder <a href="https://www.apartments.com.au/developers/dasco-australia" target="">DASCO</a>, who can start to turn their attention toward the exterior of the building, and the fitout of the 142 one, two, and three-bedroom apartments strategically located opposite the Kensington Light Rail stop.

[smartcode_project:default project_id=110959 project_image_fid=307645]

<a href="https://www.apartments.com.au/new-apartments/the-kensington-147-151-anzac-parade-kensington-nsw-2033">The Kensington</a> forms part of a broader revitalisation effort along the light rail corridor in Sydney’s inner south.

Residents will move in midway through 2026.

Read more: <a href="https://www.apartments.com.au/news/nsw/toga-tops-out-the-kensington-reshaping-anzac-parade-light-rail-corridor">TOGA tops out The Kensington, reshaping Anzac Parade light rail corridor</a>

Sekisui House Australia released the latest stage of their Melrose Park urban renewal precinct.

<a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a>, in partnership with Hankyu Hanshin Properties, has opened expressions of interest for <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-86-wharf-road-melrose-park-nsw-2114">Aeris</a>, the sixth and most elevated stage in the $5 billion Melrose Park master planned community in Sydney’s north-west.

<img alt="Sekisui House Australia reveals Aeris, Melrose Park’s latest stage" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Aeris_Stage%206_1_0.jpg?VersionId=xsMRsasGYnnQoaLLmwqtSFAsOQv8ZZJN" />

Aeris will comprise 468 apartments across two tall 20 and 24-storey slender towers. Prices start from $649,000 up to $1.55 million, with internal sizes ranging from 50 to 130 sqm.

As sustainability credentials become more central to buyer expectations, <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> continues to model future-facing urban design.

Construction of Aeris is anticipated to commence in late 2025, with the first lower tower due for completion in Q4 2027 and the second and third towers expected in 2028.

Read more: <a href="https://www.apartments.com.au/news/nsw/sekisui-house-australia-reveals-aeris-melrose-park-s-latest-stage">Sekisui House Australia reveals Aeris, Melrose Park’s latest stage</a>

In <a href="https://www.apartments.com.au/developments/crows-nest-nsw-2065">Crows Nest</a>, <a href="https://www.apartments.com.au/developers/deicorp">Deicorp</a> broke ground on <a href="https://www.apartments.com.au/new-apartments/falcon-alexander-8-alexander-street-crows-nest">Falcon &amp; Alexander</a>, offering around 100 apartments near the new Metro station.

Conceived by award-winning architects <a href="https://www.apartments.com.au/architects/turner-studio">TURNER</a>, Falcon &amp; Alexander will create a vibrant vertical village in the heart of one of Sydney’s most connected neighbourhoods. Thoughtfully arranged around a central atrium and lush communal gardens, residences will enjoy panoramic views over Sydney Harbour and the Lower North Shore, with interiors designed for modern, light-filled living.

<img alt="Deicorp breaks ground at Falcon &amp; Alexander, Crows Nest apartments" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-07-28%20at%203.55.17%E2%80%AFPM.png?VersionId=3IIFc1X8W6tPGj.P6xmw_2limcEUkinJ" />

Residents will benefit from premium amenities, including a resident-only skygarden, and boutique retail and dining spaces on the ground floor, all integrated with the local urban fabric.

With proximity to transport and established retail precincts, the development is well-positioned to capture demand from downsizers and city professionals alike.

Read more: <a href="https://www.apartments.com.au/news/nsw/deicorp-breaks-ground-at-falcon-alexander-crows-nest-apartments">Deicorp breaks ground at Falcon &amp; Alexander, Crows Nest apartments</a>

In the upper north, <a href="https://www.apartments.com.au/developers/capital-corporation">Capital Corporation</a> advanced <a href="https://www.urban.com.au/new-apartments/the-residences-at-wahroonga-estate-169-fox-valley-road-wahroonga-nsw-2076">The Residences at Wahroonga Estate</a>&nbsp;masterplan by appointing DASCO to build the first stage. This is the first partnership between Capital Corporation and DASCO, bringing together two award-winning property powerhouses in what promises to be a defining project for the region.

[smartcode_project:default project_id=135247 project_image_fid=3629]

The move followed over $90 million in early sales, highlighting appetite for prestige residential offerings in leafy, well-connected locales.

Construction on the first 128 residences will commence in the coming months, with completion targeted for late 2027.

Read more: <a href="https://www.apartments.com.au/news/nsw/capital-corporation-appoints-dasco-to-build-the-first-stage-at-the-residences-at-wahroonga-estate-after-90m-in-sales">Capital Corporation appoints DASCO to build the first stage at The Residences at Wahroonga Estate after $90m in sales</a>

Cara Waters

Editor's Picks

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.

Cara Waters

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.