Property Investory
Shukri Barbara - From $4,000 a Year to Dominating the Property Tax World
August 22, 2021
Shukri Barbara is the founder and principal advisor at Property Tax Specialists, and with 100% of his reviews on Google being 5 stars, it’s safe to say he’s great at what he does! Barbara immigrated to Australia from Sudan with his family when he was 13 years old, and after studying commerce and marketing at university— and impressing his professors so much they became his clients!— he is now a CPA with over 30 years of experience in tax and accounting.
Join us on this episode as we discuss his childhood in Sudan and how he adjusted to life in Australia, at an age that is turbulent enough as it is. He tells us about the best thing that ever happened to him at a time in his career when he didn’t even know what an invoice was, the practice he started with no brains but a lot of balls, and how an ad he saw in 2000 changed everything for him.

Resources and Links:

Transcript:
**SHORT SNIPPET**
 
Shukri Barbara:
[00:19:44] Behind my back in about week three when I'm supposed to go and take the other job, he goes behind my back and talks to the partner. And he says, 'I don't want the other guy. I like this guy. He's good with the client. I want to keep him instead.' And that was one of the best things that ever happened to me. 
 
**INTRO MUSIC**
 
Tyrone Shum:
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.
 
I’m Tyrone Shum and in this episode, we’re speaking with founder and principal advisor at Property Tax Specialist, Shukri Barbara. He immigrated to Australia from Sudan when he was 13 years old, studied commerce and marketing and converted his lecturers to clients. He went from making $4,000 in a year to being one of Australia’s most sought-after tax specialists.
 
**END INTRO MUSIC**
 
**START BACKGROUND MUSIC**

Not Just Your Average Property Tax Specialist

Tyrone Shum:
Barbara has been in practice since 1985, and has always been against being labelled as just one thing.

Shukri Barbara:   
[00:00:46] From 2000, we've focused it on people with investments in property. So people will say, 'Look, you're a property tax specialist.' No, we try and think about people because people is really what the critical part is. So it's people who invest in property. That may be ownership, that may be direct to residential investment, commercial investments, building, construction, subdivisions, a whole lot of range that happens in there. 

[00:01:17] But the important part is people, they're the critical element. And that's who we're trying to help to get them to achieve their goals overall. And in the process, we try and make tax simple, in order for them to appreciate where it's coming from, how it's going to impact and what the issues are going to be there. And within that, we're trying to say, 'Well, okay, look, if we can just make sure you keep the money there by protecting your assets, by trying to get you to pay as little as possible in tax— legally, of course— and keeping the ATO offside. We don't want them unhappy. So we want to keep them on our side.' So offside, the bad things, we don't want to be there. There's plenty of opportunity, even within the legislation that the government and the ATO put up.

Tyrone Shum: 
These days he is mostly dealing with inquiries and consultations regarding the ever-changing market.

Shukri Barbara:   
[00:02:23] Since Amir has joined me as a partner in the practice, I do a lot of the phone calls. I'll take inquiries coming through. At the moment, what we've got is the market that has shifted, has created a lot of queries around capital gains tax, because everybody wants to readjust, sell. Buying is a bit harder at this point, because the market is so expensive, but people are trying to subdivide, in order to maximise. 

[00:02:53] So we return calls, we discuss with them, then we organise initial consults. And in the initial consult, what we're trying to do is really just understand the client. So we get them to tell us about themselves. And then we explain to them the basics, and then try and fit their situation into there and start to give them directions. Apart from that I do review the tax returns and sign off on some tax returns. I try and train and advise my team, wherever we're going. And there's a lot of research at the moment, as you've seen from the budget that's been announced a couple of days ago, the massive lot of changes that are coming through. 

[00:03:39] So not only do we have to maintain that, the government keeps changing it. On top of which they keep changing the technology associated. So we've got to keep all that going all the time. And sometimes it just becomes a little bit too much so we've got to take a step back just to put it in focus. But overall, the tax office from say, 10 [or] 15 years ago, doing pretty well in terms of working with the agents, and for us to be able to access the data they have on our clients. That's been fantastic. That's really been fun, so a credit to them as far as that goes. But the downside to that is that they know when you've gone to sleep and when you've got up and when you're going to have your milk and breakfast. And sometimes that becomes a little bit difficult because you just can't get away from it. 

Tyrone Shum:   
[00:04:34] I totally agree. Everything's so technology digitalised. Everything's online. Like I was surprised when I first saw my bank statements were all synced across into the tax port, I was like, ‘What?! Since when did that happen?!’

Shukri Barbara:   
[00:04:43] They've been going for years, mate, for about 20 [or] 25 years. They've been putting massive amount of dollars in every year until they've reached this point today.

I Love the Smell of Exercise and Emails in the Morning

Tyrone Shum:   
He has three daughters, aged 16, 15, and 12, so it’s safe to say mornings are pretty busy in the Barbara household!

Shukri Barbara:   
[00:05:14] You can imagine the first thing is trying to get everybody out. And 'Dad, you're going my way, can you drop me off to school?' or 'It's really early, I've got that early class.' I've got my eldest, she takes a little bit of extra maths. So she says, 'I've got to be at the school at 7:30.' So I've got to leave about seven. So I've got to wake up at about six, in order to make sure everything is done. And then of course, if there's anything left over from cleaning up the night before, then I just clean it up and make sure before I leave, so their mother is pretty happy with things and happy with me. 

[00:05:49] And then we'll try and get them across. And then when I come to the office, generally I like to take a walk, just to exercise. Especially in winter, it's a bit cold, you can't really do it early in the morning, which I used to in the summer. I would get up 6 o'clock, that'd be beautiful, just go for a walk, stretch out, say a little prayer here and there, it just clears your mind up a little bit. And when I get to the office these days, I'll just rug up and go for a walk around or go and pick up the mail, and in addition I just add a couple of steps up, couple of steps down just to get that exercise in. And then we come back and we open up the emails and check out what's happening and review what's being carried forward from yesterday.

Where’s the Kangaroos?!

Tyrone Shum:   
He was born in Sudan, in North Africa, and immigrated to Australia in 1970 when he was 13 years old.

Shukri Barbara:  
[00:06:55] Believe it or not, if you're religious or not, we came on the first of December. And the night before— we arrived here about 7 [or] 8 o'clock in the morning—Pope Paul the sixth had arrived. And the place was absolutely chockers. We could not get accommodation. And of course, we didn't understand that a motel is actually accommodation. So we were looking for 'Hotel.' Hotel just didn't didn't come up! So at the end of the day when somebody told us, 'Look, there's a motel.' So we all ended up there and arrived the first day here. So I guess the Pope blessed the country for us and said, 'Come on in.' 

[00:07:43] So from where we left, where we had a revolution, and there was a military coup and things were pretty tough. And we had to go out on the quiet down to this beautiful country. The disappointment, of course, is we couldn't see the kangaroos running across the road. I was walking out of the airport, I was looking for the kangaroos!

Tyrone Shum:   
[00:08:07] Where's the kangaroos, where's the koalas?!

Shukri Barbara:   
[00:08:09] That's it! And then this bloke, the porter comes up to my mother, and he says, 'You migrants, are ya?' And, like, my mother knows the Queen's English. It's not migrants, it's immigrants. She was just totally baffled because she's walking in with this leopard coat in the middle of summer, trying to get everything across through the customs. And this guy comes out, 'Yeah, yeah, righto. Listen, I'll just whack the bag over there. I'll take it.' It was a really lovely way to start. She just looked baffled. And then my father sees the situation and he asked the same thing of my father. And then he says, 'Look, my name is Habib. You're Australians, yeah, righto, okay, just put the bag up there. I'll take it.' So that was my introduction. On the first day of coming to Australia.

Happy Days

Tyrone Shum:  
He looks back fondly on growing up in Sudan, where he experienced a happy and carefree childhood.

Shukri Barbara:   
[00:09:18] Sudan was lovely. I was a real kid, didn't really know very much. Out there we were the minority, kind of being white and Christian. But still, we had other people of other religions in the school, the Catholic schools there. And we had the communities in where I was, what I can remember, in the areas. My grandparents were Syrian, my grandmothers. And so that's pretty much our background, overall, but my parents and myself, we were all born in Sudan. And within the groups, there was always Italians, Greeks, Egyptians, and everybody had their own little club and in the space we were living, we cooperated and sort of played around, particularly when we got to school together. 

[00:10:04] It was terrific at home, we had nice big sort of colonial type homes. And it was a lovely way it was supported. We had fun, we had absolute fun. I had no idea about life until we got out. And then we got out in this shock that I got out with Mum and my sister before Dad had to come out. So on the basis that we're going out on holidays, and then Dad managed to finalise things quietly and get out as well. And, of course, in the process, all the money that was came out as nothing, when you got it out, because you couldn't really take money out. Officially, the Sudanese Pound was equal to the sterling pound, but unofficially, because you can only get 10 cents in the dollar for it. 

[00:10:49] So we came out, as it was, and we left whatever it was behind. And it was quite an experience to come out here and learn about the new way of doing things, the more Anglo Saxon type style. So when we came out, I was the wog and the camel driver. You don't hear those terms much often these days in school. And so we tried really hard to assimilate to get on with life. We didn't want to be different. We wanted to be the same. But of course, with a name like Shukri, that was pretty hard. 

[00:11:26] I remember my first couple of weeks in school, this bloke comes up to me and puts his arm around my shoulder says, 'G'day Mike, how ya goin'?' I sort of looked at him and says, 'My name is not Mike. It's Shukri.' He says 'Oh, yeah, and you're Australian. Righto, how ya goin'?' And then I found out later on that he was actually Spanish.

[00:11:54] I had experiences through the first year trying to learn about what football really is. I knew football is a round ball you kick, not an eggy kind ball that you go kill people to get and pass on, and that was my introduction to rugby. And then the first time I played actually, they found out that I could run! They gave me the ball and they said, run. So I ran and I scored two tries. Well, the old boys didn't like it very much. So the next week we came along, they gave me the ball specifically so they can all pile up on top of me, both teams. And then when I got up, I would see all my jaw hurts. I couldn't exactly work out why my jaw hurts. And then later on in the playground, two kids, they're sitting around, talking 'I got him. I got him. Yeah, yeah!' Oh, yeah. Right. Okay. That's the way the game is played. Keep it. I went to athletics.

[00:12:59] By the time we got around to fifth form, I was the eldest more or less, I was the first one to get my driver's license. And I was showing off by bringing my father's old station wagon Falcon, 1970s style, into the school. By that stage, we were trying to get to the pub. And it was alright, by that stage. It was quite a good experience.

Tyrone Shum:   
[00:13:26] Wow, how many kids did you have in your family, how many siblings?

Shukri Barbara:   
[00:13:29] There's about three of us. But my eldest brother, he was overseas for a while. He was actually in Jordan. And he was in Jerusalem specifically. He was trying to be a priest at the time, before the takeover and when these rallies took over the place, they limited access in and out. But anyway, he finished there and then he went to work because he had language skills. He found himself with a  group, and he was actually translating for the Italian surgeons who were helping out in the civil war there. And then he was a reporter. And so he was reporting for the Italian news agency, as well, as a news reporter. And then when he got caught one time going between right and left, we arranged for him to come here.

[00:14:27] And then we've got my sister. He's a bit older than me and my sister's about nine years younger than me, and she's quite a dynamo. She's very good at what she does. I can't really share what she does, because it's a bit secure. But she got on pretty well. 

[00:14:56] There's some government affiliation, so I can't really talk about it. Not that I know, because she doesn't really tell me the details. But some of the stuff you've heard in the budget this week was a little bit of her work, in the background work, trying to bring people into Australia, the technology side. Rather than be out in the United States, bring the Australians who are in the United States back in to improve our lockdown here.

**ADVERTISEMENT**
 
Tyrone Shum:
Coming up after the break, we hear about Barbara’s travels...
 
Shukri Barbara:
[00:21:45] Then I sort of changed tack, I sold a little bit of the practice, kept some of the practice, and continued on, took a little bit of a break. Because by that stage, I was a bit burnt out and decided to take a little bit of a break. 

Tyrone Shum:
The company that helped him gain valuable confidence...
 
Shukri Barbara:
[00:25:11] In 1985, I joined the group called SWAP— Salespeople With A Purpose. And the experience I gained through being part of that club is fantastic. They taught me how to stand up and talk and they taught us how to be comfortable and do things, and then they made me into the treasurer. 
 
Tyrone Shum:
He shares a time when everything changed and he needed to adapt.

Shukri Barbara:
[00:27:28] But the key was in 1985, we just kicked off in the practice and they introduced capital gains tax and imputation credits and dividend franking, and all of that stuff just came in. We were sitting there and I said, 'I didn't take all that at uni.'

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.
 
**END ADVERTISEMENT**
 
<insert money partner advert here>

Tyrone Shum: 
Barbara is grateful for being an Australian university student at the time of the Whitlam government.

Shukri Barbara:   
[00:15:45] Thank you to Gough Whitlam. And the Labour Party at the time. I got educated for free.

[00:15:53] University was a free education for me. And my sister, she paid a little bit but still relatively free. So that was great. But that was absolutely a gift to the wogs and the things coming up with no money and nowhere to go.

The Student Becomes the Master

Tyrone Shum:   
[00:16:12] And what did you study at university?

Shukri Barbara:   
[00:16:18] I did want to study medicine, but I never quite made the mark. So we went into commerce and did the accounting major. And went from there. And then quite a few years later, I did do a postgraduate in marketing. I was running an accounting practice and trying to do marketing, as well. So that was quite interesting, trying to understand how to market the practice after that. So it was a quite good experience.

[00:16:54] It was on average, a couple of years. It just depends how many subjects you take per semester. I finished it in two years. By the time I finished, I actually converted three of my lecturers as clients.

Tyrone Shum:   
[00:17:13] That's great to hear. That's what you want, I guess!

Shukri Barbara:   
[00:17:17] Absolutely! I must have listened to their marketing and did it right.

Tyrone Shum:   
[00:17:21] Yeah, you've just basically put it back to them and say, ‘By the way, guys, this is what you should be doing.’ 

Shukri Barbara:  
[00:17:28] Yeah, because I was a bit older, and a lot of the kids were a lot younger. But what I was saying made sense to them. And so they came across. For me, that was quite satisfactory, to see that we've done things right. 

I Like This Guy

Tyrone Shum: 
After finishing university in 1985, he went straight out to work, taking on an intern position.

Shukri Barbara:  
 [00:18:25] I went to work, I remember, for Brambles at the time, as an intern type thing in the audit section. And then after I finished my exams, and I had to repeat one of the subjects. So after I finished that, I was working in the public accounting, chartered accounting sort of area, and I managed to get one of those jobs. And at that time, I was being brought in to cover a particular area where the firm had a client who was a managed fund of sorts, and they wanted to make sure because at that time, there were some big crashes. And they work to make sure that every check that the company the clients pays out, is audited. 

[00:19:09] So I was supposed to be brought in and replace a guy who was doing that. Because I started on the 30th of June and that was the end of the financial year, the guy had to finish off for the year. So they put me through with one of the audit managers. And for me, who didn't know what an invoice was, that was the best thing that ever happened to me. 

[00:19:34] He took me out on the audit trail and we discovered how all these companies work and where they come from, and looking at the invoices and how payments are made. And then behind my back in about week three when I'm supposed to go and take the other job, he goes behind my back and talks to the partner. And he says, 'I don't want the other guy. I like this guy. He's good with the client. I want to keep him instead.' And that was one of the best things that ever happened to me. Because by then I went out, I saw clients, I saw how things were done, I talked, I learnt about business, just from an audit perspective. 

[00:20:12] After that, I was doing that for a bit over a year, he went and joined another fellow as partners in a firm, and he head hunted me. So I went out with him, focusing on tax rather than audit. It went from there. I went to I think it was Reader's Digest, I went to work at Reader's Digest for a little bit. And I got involved a little bit in politics. So I got a bit busy there and then left Reader's Digest. 
 
[00:20:45] By 19, I had the opportunity— they were changing the laws regarding membership when giving out practicing certificates for accountants—I took the opportunity, just using my experience, rather than to have to sit for more exams and things, and got my practicing certificate with CPA. And from '85 onwards, I joined a friend of mine to start up a practice. With more balls than brains, really. 

[00:21:12] And so we kicked off and we did things all the wrong marketing way, I can tell you now from experience. We were putting things in letterboxes and 'Come and do your tax returns!' and these were the days where you had to do it manually or type it up all that sort of stuff. And that's how we kicked off. Later on we split with the partner and then I just kept going by myself right up until 1999. 

A Travelling Man

Tyrone Shum:
After working nonstop for so many years, he took some time off to travel.

Shukri Barbara: 
[00:21:45] Then I sort of changed tack, I sold a little bit of the practice, kept some of the practice, and continued on, took a little bit of a break. Because by that stage, I was a bit burnt out and decided to take a little bit of a break. And I also met this girl. She was an Irish girl running, still got a world tour of ticket. I said, 'Look, I'm on holidays, I'll go with you.' So we went around Europe. 

[00:22:17] Firstly, actually, we went to America where I attended my cousin's wedding in Canada, and then came around to the United States where my uncle lives. And saw that and then started our journey around South America, which is really what she wanted to do. Because she had seen most of the other world so in between Argentina, Chile. And then Cusco in... I can't remember the country where Cusco is. Anyway, where the Incas and so forth were at. That was really an experience I can tell you, is a really an experience there. And then back to Europe to see family and so forth. And that was an interesting exercise. And I tell you what, by the time I came back, I was glad I'm in Australia. You can't imagine. This is the best country ever. Best country ever. I was so glad.

[00:23:21] In 2000 we came back and there was a few of these ads, how to be rich out of property without a starting point, that's what they kept saying. I've always seen these ads and heard about them, but I've never really gone to see it. So having a bit of time on my hands, I decided to go to a free seminar and just sit down and listen. And then the guy comes up, and he says you can make rich, wealth, through property. And then he's saying, 'But you've got to have your team around you. I can't tell you.' He's still telling everybody. He says, 'I can't tell you, you've gotta have your accountant, your lawyer,' and whatever. 

Focusing on People

[00:23:56] So I looked at the guy next door, and looked at the other guy on the other side, I said, 'I can tell you because I know all that stuff from the tax side. So I can tell you.' So we followed that guy a little bit and rode on his wave of creating interest in property as a class of asset. And so we came up, they wanted me to advertise in their magazine and their manager, who is an excellent guy, Reuben Buchanan. He was a terrific seller, he’s a very smart guy. At the moment, he helps people get into an IPOs and all that sort of stuff. And we came up with the name Property Tax Specialist. And that's where we started to focus on people with investments in property.

[00:24:46] We always had it running, but we kicked it off again because we did a few other things, we supported Associations. So we were the back office for professional bodies. But the margins were just so small and they favored people they knew from their own group rather than us. So we did that for a while, we actually learnt a lot. 

[00:25:11] In 1985, I joined the group called SWAP— Salespeople With A Purpose. And the experience I gained through being part of that club is fantastic. They taught me how to stand up and talk and they taught us how to be comfortable and do things, and then they made me into the treasurer. The first meeting, I went there, they made me into the treasurer. And that was the best experience because the guy who ran the place, a guy called John Nevin, he really built me up hugely. So that was fantastic. And I was invited there by a lady who used to run... she's actually a diamond in Amway, Diamond region, Amway. So we learnt a lot through her and Amway as well, a lot of experience. So all I can add it to is life experience, which helps in understanding people, and the people's journey, and their aspirations of where they want to go and what they want to do.

[00:62:24] One of the other associations we also help run is something called National Speakers Association. And that was great because they talk about how to present properly and I'm there, ticking the names off. And once everybody is in I go and sit down and listen. So it was a great experience to hear how these guys operate.

Tyrone Shum:  
He bought his first property around 1983 in Hurstville, but didn’t fully commit to his property journey until 1985.

Shukri Barbara:   
[00:27:09] It went up for a while there, then when I started the practice, I needed the money. And so I sold it. I did make some gains on it at the time, capital gains started to come in. So I paid some capital gain, which didn't help overall. 

[00:27:28] But the key was in 1985, we just kicked off in the practice and they introduced capital gains tax and imputation credits and dividend franking, and all of that stuff just came in. We were sitting there and I said, 'I didn't take all that at uni.' So we had to learn all these new things coming through, and then going forward. So you can imagine my first year in being in practice, starting from June '85. I only made $4,000. I was sharing a flat. We used to have pizza on Monday, we'd have pasta on Tuesday and put the rest in the fridge for Wednesday and Thursday, and Friday, we'd go over to Mum's.
 
I Didn’t Have the Cash to do Property

[00:28:28] And then we started the journey. So property was a bit limited for me in terms of the fact that what I didn't want to do, I didn't want my parents to help me. I wanted to do it on my own. So I didn't have the cash to do property. So what we did is by the time we came into focusing on property, we helped a lot of people, because we could understand the journey, we could understand people and that's the whole idea. It's about people. Wealth can be made. 

[00:28:58] And of course, Dad had a lot of properties. And we had it as a family. We had family properties out at Belmore and around those areas, we had a couple of unit blocks. Until at one stage Dad got sick of having to tell the agent to fix things up and one time it went really bad. So what we did is we actually sold them. So we sold them and then I restructured them. By that stage I was into the practice pretty well. And we restructured the whole property of things and we made it into the kids' properties. So rather than go to the bank, we borrowed from the family and restructured it in a way where the family can also access other benefits. 
 
[00:29:44] And then after that, of course I got married. And when you get married, mate, you can't save a cent! So since I got married I just spend it all! And it didn't help that I also lost money on the stock market, some of the gains I made from the first property, there was the dotcom crash, took a little bit of it. And then we were working together with someone before the September 11 planes. And that caught us out because we were doing in derivatives. He took us, about five [or] six of us, from 300,000 to about 650 in six months. 

[00:30:27] The mistake we made is we pulled the profit out, because the crash came in and the broker says it's a margin call. And of course, the guy running things was just outside of Brisbane, he didn't have the connections to say, look, we got the money. The broker didn't want to take the risk. He wanted the money, like, immediately. 12 o'clock midnight is when he called. So that wiped us out. 

[00:30:53] So from there on, we just sort of stuck with property, which is less volatile. And we just help people because now we understand when to do things, how to do things. But a lot of the time, what we do is we facilitate for them because property is a different kind of animal. And when you want to create wealth through property, you look at your strategy, you've got to have a strategy. You've got to start with a strategy. Are you going to hold long time, are you going to do short term, are you going to develop? There's a number of very basic strategies. And as long as you focus really clearly on those, you can get ahead.

Tyrone Shum:  
Barbara pinpoints the GFC as one of the worst moments in his journey.

Shukri Barbara:   
[00:00:12] We were just starting to get properties into Super funds, and into trusts. And we were dealing with someone who was going to help out. And we had a contact where a builder guy who sells properties, he was going to refer a lot of people, and he was testing it out with one property for himself. And right in the middle of the deal, the lender stopped. We couldn't get him to talk to us, we couldn't get anything. So it just killed it right there and then. 
 
[00:00:48] And that kept the things going like that for about five or 10 years afterwards, until things eased off. But through those experiences, life experiences with property and so forth, and people more to the point— because it was people running things—you could learn how to, when to, what does it look for, how to warn somebody else doing the same journey on what to look for. And of course, during that time, we kept developing our own knowledge.

Refocusing Wealth

Tyrone Shum:  
He realised he needed to do something in property after learning about family trusts.

Shukri Barbara:   
[00:01:42] When Dad sold the properties, the properties were held in family name, it wasn't just one person in the family. So there was five of us in the family. And all names were into the properties. And at that point, the aha moment was, look, we can't physically manage everything. And I was busy trying to build a practice up. So I had a business as well. And I couldn't rely on Dad getting older and the other kids weren't interested. So we had to shuffle things around and make it. So the aha moment is actually refocusing the wealth away from investment into owners, into homes and main residences.

Tyrone Shum:   
[00:02:37] So those properties that you mentioned, were they commercial properties?

Shukri Barbara:   
[00:02:41] The two blocks we sold were units, blocks of units that were sold. And then the cash was reworked so that each of the members, Mum and Dad as well as the kids had their own main residence.

[00:03:01] That worked very well, because we cut the bank out.

[00:03:06] Especially with high interest rates at the time. And that facilitated a whole lot of things. And it also gave me a bit of room to build the practice a bit more, so I wasn't having to make repayments in a tough market and so forth.

Tyrone Shum:   
[00:03:22] That's a smart strategy. And I guess it's just a matter of timing to be able to get that out there, then. And then when you actually moved on to sell those, and you reinvested those funds, too— what happened after that?

Shukri Barbara:   
[00:03:33] We haven't. I got married. I just did not have enough cash after that, putting kids through school and actually buying our own house and building it, we knocked down and rebuilt as well. And so I had to get a bit more help from the families to do the construction and so forth. And between paying private school fees, and trying to do things, we're okay at home. But I didn't go back into the property market, because I always needed some massive deposit to get in. And, of course, the wife was always a bit reluctant. So at the moment, we're comfortable. And we don't have to worry about the bank as such.
 
[00:04:26] I'm actually trying to get Helen to help me out with some commercial properties so that we're on to the cash flow positive type space, looking into the future, so that if I drop dead, then the family's still got some income.

Putting Clients First

Tyrone Shum:  
He sees his relationships with his clients as the main focus of his practice.

Shukri Barbara:   
[00:05:13] We've always said, 'What do the clients want at the end of day?' Because, the first thing is, of course, the clients. Nobody cares how much you know, until they know how much you care. So once we've established that relationship of trust, then we try and understand where they're at. And inevitably, the common theme is always to, firstly, we've made some money, we're using property as a class of asset, then how can we make sure it's protected? So that if something in the business goes wrong, the creditors don't come back and take it all up. Because you don't want to have the kids sleeping on the gutter. 

[00:05:58] Of course I do qualify that by the idea is we're not trying to defeat the creditors get their rightful debts back. Because that's illegal. But we're trying to make our arrangements so that the risky assets sit in a different structure from the passive assets, such as the investment properties. So the businesses are managed separately from the properties and the investment portfolio that's there. 

A Family Man

Tyrone Shum:
Family is very important to him, and his main goal in life is to help his children in every way he can.

Shukri Barbara:
[00:06:27] And then, of course, people get older, as I'm getting older at the moment. And I'd like to leave a legacy to my kids. So how do we manage that through the structuring? So we're looking at whose name should be on the next property. Because you want to leave it to the kids. How do we transfer it without paying capital gains tax or stamp duty? How do we allow for the person who's going to get it and the effects of land tax? How do we work all that within what the person wants to do? How old they are? How many in the family? Is it a blended family, where you've got two lots of families, and if something goes wrong, somebody is always going to make a claim on whatever's there. There's all these things. 

[00:07:21] At the same time, everybody, as I'm getting calls right now, right now I am answering all my calls is I'm selling the property because the market's so good I don't want to pay capital gains tax. Well, okay. Let's have a look. It is probably possible. The last call I had, I found out that they were in the main residence exemption space, even though they rented the property out, their main residence exemption was extended through the six year absence rule, they really didn't have to pay anything. So literally, they're not going to pay anything. 

[00:07:57] Or the alternative. Like other people, they'll say, 'Well, we did buy another property because you're only allowed one main residence with exemption at any one time.' Well, okay, what's the value of each one? You work out which one is more expensive and growing faster, and the tax on that will be a lot more, you want that to be exempt. Not the old one. Because it doesn't cost as much.

Everybody’s Trying to Sell
 
[00:08:20] So these are the things. Other people come up and say, Listen, I talked to you a year ago. And this was around COVID time around March, April. She rings me up again. She says, 'Look, we had this duplex, we were living in one, renting the other one out.' I said, 'Okay, what's the problem?' 'Well, the market was good so we sold the one that was rented out. But it was so good I got an offer for the second one. So I sold that out! So we sold both!' So what's the problem? ‘Well, actually, for the last two years, I had to go back and look after Dad because he was very sick. He's just passed away. And I just bought my sister out of that house. So now what's my tax liability on the rented one and the old main residence?’ 

[00:09:10] So everybody's trying to sell. How do we minimise the tax? There are opportunities, plenty of opportunities, you've just got to know where the tax is, how you start to put it together, because basically capital gains is not hard, is your selling manners, your cost base, and if I can raise the cost base and minimise the selling cost, well, I've cut down the amount that you're going to calculate tax on.

[00:09:37] One bloke just sold his main residence. He was a non resident, he's actually gone over to the United States to work. And when you're a non resident these days, the tax is really terrible. But he sold his property while he's there because he wanted to use the money to buy something over there. So he doesn't get any concessions, he gets taxed. I said, Well, okay, let's have a look at your cost base. If you just look at it on price, the cost base, he made capital gain, but the cost base also included his maintenance fees, his interest. Because in all the years he lived in it, he didn't get any rent. So all that forms part of your cost base. So now it's on breakeven, he's got a little bit of a capital loss. So there's no tax.

Tyrone Shum:   
[00:10:35] Must be one happy client, then! 

Shukri Barbara:   
[00:10:37] He's very happy about that. So there's a couple of ways to help people out. And again, it's just to get to their goal, what do you want to achieve?

Tyrone Shum:  
He believes the best strategy is to plan ahead, based on your objectives in life and with property.

Shukri Barbara:   
[00:11:17] Once you're in a particular position, it's very hard to change. And it's not hard to change, it's expensive. Because if the property has grown in value... I get a lot of people like at the moment, what's happened is the revenue New South Wales have worked out their technology to the point they're data matching a lot of the ownership with Titles office, and some information. 
 
[00:11:43] We had one client where Home Security, they could find out who was in and out of the country. And they say, well, you're not a resident, so there's the land tax surcharge, if you're a foreign person. And of course, if you're a surcharge, you're paying a surcharge on land tax. So you got the basic land tax, on top of which there's a surcharge, which is very expensive. 

[00:12:13] So I get the call saying, 'What the hell is this?' And I say, 'Well, okay, can I shift the property out from my name into a trust or something, or out from the trust back into my name, to reduce the land tax?' Sure, you can, sure, but you're gonna have to come up with money for your stamp duty and your capital gains tax. Because the reason the land tax is higher, also, because land has gone up, and the property values have gone up.

Tyrone Shum:   
[00:12:46] And it's quite expensive exercise to shift things out. That's why you have to plan it way, way in advance. Because you learn the hard way until you've actually been there.

Shukri Barbara:   
[00:12:53] This is it. But we look at also, if you're going to save some money by doing that, we compare the savings with the cost. If it's going to take you two years, and you're going to make it up, okay, that's not too bad. If it's going to take you 10 years to make it up, well, why pay the cash now? Then we can try and use timing, because timing is another issue that can help out. You pick the time to create the taxable amount in a year when you're retired, or you're taking a year off where you don't have other income.

**ADVERTISEMENT**

Tyrone Shum:
Coming up after the break, Barbara shares his early mentors...

Shukri Barbara:
[00:14:23] He was very kind to me, whenever we ordered trust from his firm, he would explain it. And I labored the questions until I really got it.

Tyrone Shum:
The importance of good relationships and knowing who to turn to...

Shukri Barbara:
[00:16:22] Michael Carruthers and all the team there, there is Kareena there, there's Ray, the team at Knowledge Shop are just absolutely sensational. I've been with them for over 20 years now and they really helped me out. And they were instrumental in the growth of my practice.

Tyrone Shum:
He praises his teammate Amir Ishak and the great work they achieve together.

Shukri Barbara:
[00:23:38] Together, we present the client with something they don't get anywhere else. I talk a little bit about their journey, understand how they fit in, Amir will pick up on the numbers extremely quickly. He's usually very, very good with that. 

Tyrone Shum:
And that’s up next. I’m Tyrone Shum and you’re listening to Property Investory.

**END ADVERTISEMENT**

Teamwork Makes the Dream Work

Tyrone Shum:  
Barbara has learnt from everybody over the years, but one particular mentor in his early days made quite the impression.

Shukri Barbara:   
[00:14:04] Over the years we started out, there was a guy called Chris Balalovski who helped me out a lot with understanding trusts. Because trust is a very difficult area, and to understand the legal concepts and how they work. He was very kind to me, whenever we ordered trust from his firm, he would explain it. And I laboured the questions until I really got it. And then I took additional reading and along with the Tax Institute and so forth, there was a lot of material, we spent a lot of time trying to read over a long period. You can't get it all in one go. 

[00:14:46] Then there is Margaret Antunes, who is a lawyer, she's terrific also, helps out, she’s a broad thinker, tells you how it's coming. Because it's not only about the numbers. It's about life. The numbers have to reflect life. So in terms of life, the family group that you're helping out, whose what can be affected? How can we do it? Sometimes you might be trying to get the principal right. But if your savings is only $2, and it's going to cost you $200,000 to get it, what's the point?

Tyrone Shum:  
[00:15:24] You wouldn't do it.

Shukri Barbara:   
[00:15:25] So you've got to have cost benefit analysis coming through as well. But I learnt from everybody. There's a cross section of people in the professional side, these do sort of stand out. But then we joined a group called Knowledge Shop, which is a group for accountants. And a couple of those people were very instrumental, Greg Hayes and Peter Knight, because they had the firm, Hayes Knight. And they're the ones who developed the Knowledge Shop concept. 

Time Is of the Essence 

Tyrone Shum:  
His relationships with people in his field are instrumental, especially how busy he is with his family. He always has people to turn to for answers to tax questions.

Shukri Barbara:
[00:16:01] Michael Carruthers, who runs the tax side of things, he is absolutely terrific. He's terrific, because they support us little accountants. If we don't know something, or we want a quick answer rather than sit there for an hour reading their stuff, we ring them up and say, 'Listen...' and then they point you to where the material is. Fantastic. Michael Carruthers and all the team, there is Kareena there, there's Ray, the team at Knowledge Shop are just absolutely sensational. I've been with them for over 20 years now and they really help me out. And they were instrumental in the growth of my practice.
 
[00:17:04] The thing is whether you have time, whether you have enough time. From the time I wake up into here, and then go home, I gotta listen to the kids and still allow for the family on top of everything else. There's not enough time to read. And some of the concepts are quite difficult, like a lot of the changes they've just put through. And the only reason I can get it a little faster than somebody new is because I have the history. Because I know what has happened and I'm quite involved in public issues. So I can understand why they want to do these changes. And because we get involved with the Tax Institute and CPA, and the Knowledge Shop, we've been gradually building our background in the situation. So that is what makes it a lot easier for us than for somebody absolutely green starting out.

Tyrone Shum: 
Finding time to read may not be as easy now as it used to be, but earlier in his career he took in a lot of knowledge through authors such as Robert Kiyosaki, and some other notable names.

Shukri Barbara:   
[00:18:30] I started out reading Jan Somers. That really kicked off this whole focus on property. Michael Yardney was another fellow who was very kind to me, he took one of my articles and published it. As a result, I got a lot of inquiries. He's still out there, he's doing a lot of things. This is in terms of property rather than the tax side. 

[00:18:58] Dymphna Boholt's program. I'm always fascinated. I don't always agree with Dymphna on her Tax Administration, or the way she goes, but the numbers she comes up in terms of property in the market is just sensational. I acknowledge these guys, because the way I became interested and focused on property is because I used to go to all the seminars that my clients used to go to, because my clients did not know how to tell me what they wanted. They couldn't articulate it. So I said, 'I'm going to sit in the meetings, and I'm going to listen to the seminar. And then we can talk, we can find out how to help you out.' So that's how I developed the practice. Because I'm there. They don't have to try really hard to tell me the concept they've just heard.

Tyrone Shum:  
For anybody not well-versed in the world of tax, it can be an overwhelming process to say the least. Barbara understands this and tries to simplify it as much as he can.

Shukri Barbara:   
[00:20:29] I try to just make it simple if I can, because they go and they listen to these things. And they say, okay, also, there's a great idea. Okay, but how do you actually make it work? And which bits do you have to do in order to make it happen? And that's what I try and do. I try to support the client.

Tyrone Shum:   
[00:20:52] If you had met yourself, say, 10 years ago, what do you think you would have said to him?

Shukri Barbara:   
[00:20:58] Go out more. 

[00:21:07] My wife reminds me we've been married 17 years now. And we got married quite late, and so our kids are quite young. But 10 years ago, I would have probably done a few more things in the practice. Not that I haven't tried, I've tried to take on people to work for me and partners. Sometimes they'll come in and they work and they learn everything. And then they go their own way, or they want to do something different, travel or something like that. But I wouldn't have minded to try and build the practice a lot faster.

[00:22:08] Just take a bit more holidays. My focus, one of the reasons why I probably haven't, and so forth, is because for good or for bad, I have always put the clients first, even before me. And sometimes, that doesn't help in a family situation. But I've always tried to say, ‘Look, the clients pay me. And I'm going to try and give them the best.’ So if I have a lot of calls late, if I have to get out of my way to get them done, then that's what I'm going to do.

Tyrone Shum:   
[00:22:49] And hence the reason why your clients stick with you for long term.

Shukri Barbara:   
[00:22:53] I hope that's the reason!

When I’m 64

Tyrone Shum:   
[00:22:56] Excellent. Let's talk about five years from now. So what are you most excited about your journey in the next five years?

Shukri Barbara:   
[00:23:03] Well being I'm 64 and I'm relatively on top of my game at the moment. But there'll be a little bit of a change perhaps in the way I do things here, in that I'll help Amir. Amir is pretty much running most things now, in the practice. So I do a little bit of the talking to people and understanding where they're at and seeing what they need, together with him, because he's very good on the numbers as well. And he's very smart. So together, we present the client with something they don't get anywhere else. I talk a little bit about their journey, understand how they fit in. Amir will pick up on the numbers extremely quickly. He's usually very, very good with that. 

[00:23:53] So when we bring it together to the client, we bring out pretty much what he wants to do, whether it's good or not, and whether the numbers work. And hopefully, that takes the client forward, a lot more comfortable in what they're doing, how they're doing it. So as we go for the next five years, with my youngest being only 12 years, and I hate sitting around at home doing nothing, I expect that I'll probably do work but it will be a retired. Because I'm supposedly retired. 

[00:24:30] Amir is running things and I'm trying to cut down. I have cut down a fair bit, but as I say, when you see me in the media and so forth, it's just to promote the whole practice rather than anything else. But we still do a lot of difficult questions come to me and we try and solve it together, Amir and I, and the client gets the best of us.

Get Your Dancing Shoes On

Tyrone Shum:   
[00:24:56] Fantastic. Just any hobbies that you would like to pursue as well, too, during this stage?

Shukri Barbara:   
[00:25:02] Yes. You know, tonight I'm actually taking my wife and going dancing. 

Tyrone Shum:
[00:25:12] Oh, nice!

Shukri Barbara:
[00:25:14] Yep, tonight is salsa night.

Tyrone Shum:
[00:25:18] It’s a great dance.

Shukri Barbara:  
[00:25:19] The last time I danced with my wife at a school— because I used to do rock and roll— when we got married, the first year, a few months after we got married, we decided to do something and we went down the RSL and we took a rock and roll class. It's an eight week program. By week four, she says, 'Listen, you're turning me too many times, I'm getting dizzy.' By week five, she says, 'I'm gonna sit down.' And then she comes back on the Monday of that week, and just says to me, 'Well, guess what? Yes, I'm pregnant.' And that was the last time we actually did formal dancing together. 

[00:26:03] So now that the youngest one has started in high school, we can leave them at home and we can go out dancing. So yes, I would like to talk myself in dancing, get back to rock and roll, do a little bit more of the Latin. I also like to draw. I used to take a life class, before I got married, years before, and I'd like to get back into just pencil and charcoal and that sort of stuff. 

[00:26:34] My wife, she's taken up water painting as well. So yeah, that's a couple of the things I'd like to do, particularly portraits. I'd like to do portraits with the charcoals. To capture the people's essence. I don't know whether you see the program with Anh on the ABC where he paints the people he interviews?

Tyrone Shum:
[00:26:56] Yes. I love that so much.

Shukri Barbara:
[00:27:00] He’s such a talent.

Tyrone Shum:  
[00:27:03] Yeah, exactly. It’s amazing how he can have a conversation while still being able to creatively paint the picture. How do you do that, Anh?! It’s such a great skill to have. 

Shukri Barbara:   
[00:27:22] I remember when I went to my wife, I caught her fancy at one point, an important point, with a poem. So I don’t mind going back to poetry as well.

The Force Has Been With Him

Tyrone Shum:
[00:27:35] Amongst your journey and what you’ve accomplished and so forth, how much of your success do you think has been due to your hard work skill and intelligence? And how much do you think is because of luck?

Shukri Barbara:   
[00:28:01] There's been a lot of hard work, mate. There's been a lot of late nights. In the past, I have been in here from 8 o'clock in the morning till 8 o’clock [or] 10 o'clock at night. And I've slowed that down a fair bit. As I say, I'm retired. But building up to whenever Amir came along, there's been a lot of late hours. But as Obi Wan Kenobi says to Luke Skywalker in Star Wars, the force is with you. And I think the force has been with me!

**OUTRO**

Tyrone Shum: 
Thank you to Shukri Barbara, our guest on this episode of Property Investory.