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by Jodie | May 14, 2014 | Australian Economy, Budget, Budgeting, Business, Debt Management, Economy, Interest Rates, Money, Superannuation, Taxation
Well, we know that when times get tough, it makes get sense to stick to a budget, and ‘tighten one’s belt’ and that’s what the latest Australian Budget is all about. So what are some of the main changes and how will they affect you?
Pensions: Looks like we’ll be expected to work longer, but that’s cool with me. Not sure I could spend thirty years eating baked beans on a Superannuation Plan funded only by a percentage of forty-five years income. It’s also unlikely younger Aussies will get a Government Pension unless our workforce makeup alters. Changes include:
Pension payments will have the asset and income test thresholds frozen for 3 years from 1 July 2017
The Government will index pensions to inflation rather than wages from September 2017, this is expected to reduce increases.
The pension age will be increased to 70 by 1 July 2035, building on former Government’s move to increase the pension age to 67 by 1 July 2023.
Working Longer: The Government has acknowledged for older Australians to find jobs there needs to be a culture change. They’re offering up to $10,000 to businesses that employ Australians aged over 50 years who have been on unemployment or disability benefits for more than 6 months. I love that idea!
Healthcare: From 1 July 2015, previously bulk-billed patients can expect a charge of $7 per visit towards the cost of standard GP consultations and out-of-hospital pathology and imaging services. For concessional patients and children under 16, the contribution will be limited to the first 10 visits each calendar year. The Medicare levy will increase from 1 July 2014, to fund DisabilityCare, which was announced in last year’s budget.
Business gains and losses: The Government remains committed to cutting the company tax rate by 1.5% from 1 July 2015. For large companies this will offset the cost of the Paid Parental Leave Levy. For SMEs it will provide a boost to profits. The Government has also reinforced its promise to repeal the Minerals Resource Rent Tax (MRRT) and Carbon Tax. In addition, the Government introduced an Exploration Development Incentive to encourage investment in small exploration companies undertaking greenfields mineral exploration in Australia.
High income earners levy: A 2% levy will apply to those earning an income above $180,000. This for three years only from 1 July 2014 to 30 June 2017 and means those earning above $180,000 will pay the extra 2% levy on all income in excess of $180,000. e.g. if you’re earning $200,000 you will be faced with an additional 2% on $20,000 – a total levy of $400. Not too harsh!
Higher education – good and bad: The Government has announced it will deregulate the higher education sector and from 1 January 2016 will allow providers in Australia to set their own tuition fees. This is likely to increase the cost of education in Australia. The Government will continue to provide students a way to defer costs of study through HELP and graduates will begin to repay the debt only once their income reaches $50,638 from 1 July 2016.
And, from 1 July 2014, a tertiary loan system will be extended to TAFE students who will have access to 4-year concessional trade support loans to help them complete their trade course. That’s pretty cool!
More super: The Super Guarantee will increase from 1 July 2014 to 9.5%. It will then remain frozen for 4 years, after which it will increase 0.5% a year until it reaches 12% in July 2022.
So as expected, some winners, some losers in a tight budget. However, the morning headlines were overwhelmingly negative and could indicate that consumer confidence is likely to take a hit, at least initially.
This in turn likely means the RBA keeps rates on hold – possibly for the rest of the year, and maybe beyond. Each state will also be affected with hospital funding cuts and cuts to payments for education also. This will likely increase debt burdens of individual states, who in turn could look at increasing revenue through raising taxes.
So, some of the changes may affect you, and if you’re worried about how, get in touch with your Adviser for an assessment of your situation.
by Jodie | May 14, 2014 | Australian Economy, Budget, Debt Management, Economy, Finances, General, Taxation
Are you a Mature Australian? Or would at least like to think so? Wondering how the budget changes will affect you – or those other Mature Australians around you?
Here’s a quick wrap of the main alterations that may impact you from Budget 2014:
- The Super Guarantee levy has been pushed back by one year. It will increase to 9.5% on 1 July 2014 and then be frozen until 1 July 2018. Previously, the levy was to reach 12% by 1 July 2019 under Labor proposals, 1 July 2021 under the Coalition promise, now 1 July 2022.
- Excess non-concessional contributions – excess contributions tax eliminated (positive) – now refunded, any earnings taxed at marginal rate.
- Increase in caps (positive) – concessional $30,000, non-concessional $180,000.
- Australian Defence Force Super – new recruits from 1 July 2016 end of defined benefit.
A couple of other Tax Changes:
- The Mature Age Tax Offset abolished from 1 July 2014 (previously restricted).
- Dependent Spouse Tax Offset abolished from 1 July 2014 (previously restricted).
Changes to the Pension include:
- The pension age will rise to 70 by 2035.
- Indexation by CPI (rather than average male OTE) from September 2017.
- Indexation of asset test/income test thresholds frozen for three years from 2017.
- Deeming rates (for income test) reset to $30,000/$50,000 from 2017 (currently $46,600/$77,400).
Updates to the Commonwealth Seniors Health Card will be:
- Superannuation balances are to be counted in the income test (presumably at the deeming rate) – which makes it harder for non-pensioners to qualify (income limits currently $50.000/$80,000).
- No Seniors supplement – abolished from 1/7/14 ($876.20 for single, $1,320.80 couple).
It’s been a tough budget, but perhaps not as tough as some were expecting. All Australians have been told to bear the burden. According to Federal Treasurer Joe Hockey, “the economy is growing at less than normal speed and the time to fix the budget is now.”
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by Jodie | Apr 17, 2014 | Advisers, Budget, Debt Management, Finances, General, Insurance & Protection, Money
It’s possibly unfortunate, but most things we do in our lives we rely on money. And money is definitely required to maintain our family’s standard of living.
The issue is not about how much we earn or what we take home at the end of the day. It’s about living within our means and even the consistency of what and how much we earn.
Travelling broadens our view on the issue of material wealth, especially when we see the lives of people who have substantially less then we do. This was brought home to me on a recent trip to Bali, although the happiness and smiles of the locals often put us to shame. That’s where we realize that it’s not about money to find family happiness. Rather, it’s about the security of our income, and the ability to live within our means.
It’s no secret that the greatest cause of stress in most families stems from money or a lack thereof. That’s why at Wealth Planning Partners, one of our values is to assist our clients maintain family happiness by keeping their heath, income and their wealth financially secure.
One effective way to achieve this, is through income protection, something that when put in its place can save our family from unnecessary stress and pain in the unfortunate but common case of the family income being put on hold. Often, due to unforeseen occurrences, such as illnesses or injury that strikes out of left field!
Although we can’t take the stress out of major illness or injury, being able to assist with continuity of income, gives the team at Wealth Planning Partners great satisfaction, knowing it’s one less thing for our clients to worry about. We’re there at claim time for you, assisting with the forms, liaising with doctors and ensuring processing whenever you need us. Don’t hesitate to get in touch for a price, or complete the insurance quotation tool on the www.wealthplanningpartners.com.au website.
by Jodie | Mar 30, 2014 | Advisers, Australian Economy, Debt Management, Economy, Finances, Insurance & Protection, Money
The fact that 95% of Australian families do not have adequate insurance is likely a direct result of the “She’ll be right, mate” attitude and is also directly coupled to an over-generous social system.
The post baby-boomer generations have grown up under this system, resulting in the expectation that the Government will always be there in time of need or financial difficulty. This in turn, has led to an under-insurance epidemic!
A few statistics from the financial industry are quite sobering and have highlighted under-insurance as one of the biggest security threats facing Australians.
According to OnePath’s Insurance Fundamentals:
• One in five families will be impacted by the death of a parent, or a serious accident or illness that renders a parent unable to work;
• The typical Australian family will lose half or more of their income following a serious illness, injury or the loss of one parent as a result of under-insurance;
• Under-insurance is expected to cost the federal government $1.3 billion over the next 10 years.
As Australia’s debt levels continue to rise and the government has committed to paying down debt, the social system we have all become accustomed to will, and is very rapidly shrinking. Australians are going to have to face the fact that they are responsible for their own financial health, their financial futures and eventually their own funded retirement.
This is where the importance of a Financial Planner for every person or family will become vital. The current situation presents itself as a major opportunity for Financial Planners going forward and many are already offering better engagement with clients through marketing and social media. Ongoing contact will enhance the experience for the client and additionally build trust ensuring more families embrace risk protection strategies to help in time of need.
These are exciting times with many positive changes in store for both the consumer and adviser. Carpe diem…..
by Jodie | Feb 2, 2014 | Budget, Budgeting, Debt Management, Finances, General, Money
Being honest about what we have, or don’t have can be a start to cleaning up our financial life. For whatever reasons (upbringing, culture, entrenched ideas) many suffer from money shame. Sweeping our financial issues and emotional baggage around the issue under the carpet might hide our situation from others, but doesn’t help us, short or long term.
Often, we’d rather not speak up and tell someone if we can’t afford a certain outing or meal with friends. We want to fit in, hang out and be accepted so we can lie to ourselves and others rather than be honest about where we’re at.
There should be no shame or embarrassment in speaking the truth. So, if it’s time for you to ‘man up’ (or ‘lady up’ as the case may be) with your finances, here’s a new way of looking at things that may help out.
Do speak up! Be brave enough to tell your family, kids or friends ‘I’m watching my money these days. I’ve got some dreams I’m pursuing and that’s my current priority.’ It may be that you’ve decided to get on top of your credit card debt, save for that trip you’ve always wanted, be serious about that housing deposit or just be more mindful about where your money goes. Putting it out on the line often means we then will be accountable for our actions and have a better chance of achieving our dreams.
Perhaps you could offer offer an alternative when social invitations arise. You might not be able to afford go out to dinner and a movie, but maybe you can have a night in with a video, popcorn and drinks. Could your friends come back for a cuppa and bickies later? Have a supper or dinner party at home where friends are responsible for different plates to share, and importantly, let others know when your kicking your financial goals. Have a celebratory bubbles or whatever lights your fire, when you do clear the credit card. We often forget to pat ourselves on the back, even for little achievements, so have milestones that you work to along the way and enjoy the sense of achievement as you go.
Often saying ‘I can’t afford it’ feels shameful or embarrassing and we may feel we’re a burden on our friends, even a killjoy, but there’s no shame in standing up and being honest about what you choose to spend your hard earned dollars on.
Possibly, some of your friends may even be inspired to watch their own dollars and cents more closely, or take better charge of their financial journey.
It’s your choice to shrug off the shame and make positive and constructive choices around money.
And if you want a hand with budgeting, don’t be afraid to ask. An investment in ‘getting it together’ may just be the best decision you’ll ever make!
