Need to know more about the Downsizer Contribution?

Since the start of the new financial year, 1 July 2018, superannuation contribution opportunities for those aged 65 or over have expanded to include the new Downsizer Contributions.

These contributions enable eligible individuals to contribute up to $300,000 from the sale of one eligible property to super within 90 days of change of ownership, without needing to satisfy the work test.  Bonus!

This extra payment can be made in addition to the concessional contribution and non-concessional contribution caps and is not restricted by your total superannuation balance.

An “eligible property” must have been owned by an individual, their spouse or former spouse for 10 continuous years just before the sale of the property. Also, the individual must satisfy all the requirements to qualify for a full or part capital gains tax (CGT) exemption for that property.

TIP!!  Downsizer contributions can also present an opportunity to implement a re-contribution strategy.  What’s this, you ask??  This particular strategy enables you to increase the tax-free component of superannuation which can help reduce the tax liability on death benefits that will paid to non-dependent beneficiaries, such as adult children.

TRAP!!  Age Pensioners should know, that selling the family home then making a Downsizer Contribution may reduce their Age Pension entitlements.  This is because the principal home is an exempt asset for Centrelink purposes whereas superannuation is counted as an asset for clients who are of Age Pension age.

If this sounds like something you’d like to know more about, give your adviser a call, or we’d be happy to walk you through whether or not it’s right for you.

Posted in Finances, Superannuation, Taxation Tagged with: , , ,

Why should I care about lost super?

Did you know there is about 14.8 million Australians with a superannuation account, 40% of which hold more than one account? Some of that 40% make up the $18 billion in ‘lost super’. Is some of that yours?

Find it

Moved house? Changed jobs? Don’t know where your teenage self stashed your super? It’s easy to track it down.

Combine it

Save on fees, reduce your paperwork, keep track of your hard earned money, grow your retirement fund.

Get online

Many websites offer to help find and combine your super. It is quick, easy and free. You can check with your known superannuation provider or the Australian Tax Office.

Grow it

A qualified financial adviser can help you find an appropriate superannuation fund that will grow your hard-earned income ready for your retirement – and the sooner you get on top of this, the better!

Source: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Super-accounts-data-overview/

Posted in Money, Superannuation Tagged with: , , , ,

Simple lifestyle changes for a healthier you

“Cancer isn’t always a matter of genetics or bad luck.” – Prof. David Whiteman, Brisbane’s QIMR Berghofer Medical Research Institute.1

A recent study from the institute found risky habits and behaviour are to blame for more than 16,000 Australians being diagnosed with cancer each year.2 The good news is that changing these behaviours may help prevent certain cancers forming.

The most common types of cancers that are directly related to lifestyle choices include skin melanomas; lung, bowel, liver and stomach cancers.3

The key culprits causing these types of cancers are pretty obvious to most of us, and include:

  • smoking
  • high intake of red & processed meats
  • low fruits and vegetables
  • excessive exposure to UV light
  • excessive alcohol consumption
  • physical inactivity
  • overweight.4

You don’t need to be a genius to know it all boils down to what we put in our bodies and how often we move.

So, what changes can you make for a healthier lifestyle?

  • The biggest cause of preventable cancer is smoking, so your first mission is to “hang tough, don’t puff!”5
  • Eat more fruit and veg and reduce red and processed meat –going vegetarian just two days per week may help you create a more balanced diet.  You might even be surprised at some of the tasty and creative options available minus the meat!
  • Decrease the grog – limit drinks to special occasions, weekends or set yourself the challenging of nursing one to two drinks only at a party.
  • Exercise regularly – exercise helps reduce risks of various physical and mental health problems.6 If you have a sedentary ‘sit on youb bum’ lifestyle, even committing to 15 minutes of walking a day could be a great start.
  • Reduce exposure to UV light – get your rays early in the morning or late in the afternoon and use a combination of protective clothing, shade and sunscreen.  The tan bed has got to go!

 

1-5 ABC News, (2017), ‘Changes to risk factors could have prevented 40 per cent of cancer deaths, study finds’. Available at: http://www.abc.net.au/news/2017-12-12/cancer-study-finds-40pc-deaths-preventable-with-lifestyle-change/9247876

6 Australian Government, Department of Health, ‘Physical Activity’. Available at: http://www.health.gov.au/internet/main/publishing.nsf/content/phy-activity

Posted in Finances Tagged with: , , , ,

5 Tips for EOFY

The end of financial year doesn’t have to be too taxing a time.  These five tips will help organise your finances for the coming financial year.

Take the pain out of EOFY by being organised. With the right preparation, you can make lodging your tax return a painless process and maybe even increase your refund!

Firstly…

1.      Plan ahead

Decide when and how you will lodge your tax return. Will you do it online, via a lodgement service, the MyGov portal or ask your accountant?  Your choice may depend on the complexity of your affairs but whichever option you choose, allocate time in advance.  Often, it can be a great idea to meet with your adviser or accountant in June to ensure you are maximising the deductions and investments available before June 30.  Don’t leave it to the last minute and find out you’ve missed out!

2.      Find all you need

Often the most challenging part of lodging your tax return is finding all the relevant paperwork if you haven’t been of top of it all year. It can pay to keep your tax information together through the year, including receipts and bank and credit card statements. You’ll also need payment summaries, records of interest, details of any foreign pensions, your spouse’s income details and other records if you have investments or rental properties. You can see the complete list on the ATO website.  If you’re not great at being overly organised, invest in a tray or spike that you can put all the relevant paperwork on as it comes in so that it’s handy when you need it each year.

3.      Know your deductions

Many people don’t realise what you can claim tax deductions on. From dry-cleaning to charitable donations and superannuation contributions, knowing what expenses are tax-deductible may increase your tax refund significantly. Typical deductions include work-related training or courses, uniform costs, some insurances and office expenses.

The ATO website has a useful list of deductible expenses. If you want to get ahead, you could even purchase deductible items for next year before June 30 so they’re deductible against this year’s income.  Again, it’s worth checking in with your accountant early to ensure you get it right.

4.      Boost your super – and your spouse’s

By sacrificing some of your pre-tax salary throughout the financial year, you can increase your retirement savings but also reduce your taxable income. Salary sacrifice contributions are taxed at a maximum rate of 15%[1] which may be less than your marginal rate.  Popping in a lump sum prior to June 30 also works for many – just make sure you get the type of contribution right!

Also, contributing to your spouse’s super will boost their super savings and you may be entitled to a tax offset if your spouse earns less than $13,800.

5.      Get ready for the year ahead

The end of the financial year is a great opportunity to understand your finances.  Usually, you have until October 31 to finalise a personal return.  After lodging your return you should be well equipped to plan for the next financial year. Start thinking about how you can improve your budget or if you have the funds to invest.

Automating a small savings program can have small funds quickly add up.

By following these tips, speaking with a financial adviser or accountant and conducting your own research too, you should be ready to transition easily into the new financial year.

 

[1] Australian Taxation Office. Accessed at www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Salary-sacrificing-super/

Posted in Advisers, Budget, Finances, Money, Retirement, Savings, Superannuation, Taxation Tagged with: , , , , , ,

Starting a business?

Starting a new business can be exciting but there’s a lot to think about and organise too.

Before you even begin, consider how prepared you are to make the difficult decisions, work those long hours required, face possible and ongoing financial constraints, lose a fair amount of sleep, turn grey and maybe confront failure confront failure.

If that doesn’t put you off, here’s some more tips before you get started!

Research  

If you still have the drive to make a success of your business idea, start by talking with others who have gone down the same path and can help you figure out your next steps.  Most will tell you it’s hard, but totally worth it, tho some have enjoyed the journey, they’re also happy to go back to being employees.

Be under no illusions, this is a complex process with many moving parts, and having a checklist will make things easier.

The Department of Industry, Innovation and Science offers a lot of help through its business.gov.au website, including a start your own business preliminary checklist.

The checklist recommends following these steps:

  • choose your business structure and type
  • apply for an Australian Business Number (ABN)
  • register your business name and trademark
  • protect your intellectual property
  • understand the appropriate standards and codes of practice
  • set up record- and account-keeping processes
  • register a website name
  • work out what taxes you need to register for
  • find out the registration processes and licences you need
  • consider your insurance needs
  • buy or lease business premises.

Business plan

One essential ingredient of any new business venture is to draw up a business plan, which you will need to secure any financing. It will also provide direction and help keep you on track.  A business plan can run over one page, to being a small novel.

Financing your idea and keeping track of when the money comes in and where it goes, is crucial to your success, so a good bookkeeper and/or accountant is vital.

Employment

If you intend to hire people, you will also need to be familiar with the relevant labour laws, superannuation rules, work health and safety obligations and tax laws. Information about pay and conditions is available from the Fair Work Ombudsman website. You will also need workers’ compensation and public liability insurance.

A financial adviser can assist you with some of these, but there’s a lot to think about before jumping in.

But if you do still want to go for it, good luck to you and many successes ahead.  We’d love to be a part of your journey and assist many in small business to get ‘all their ducks in a row.’  We’d love to help you too!

Posted in Business, Finances, Insurance & Protection Tagged with: , , , , ,

Are you Retirement ready?

Planning is the key to be retirement ready… and so is getting advice.

You can avoid penny pinching in retirement because you haven’t saved enough money, but you do need to plan well ahead.

Here’s two top tips you’ll need to consider.

1. Figure out how much you’ll need

Find out how much income you will need by answering the following three questions:

  • What are your retirement goals?
  • What kind of lifestyle do you want?
  • What is your life expectancy?

While it’s fairly easy to set goals and lifestyle expectations for retirement, estimating how long you will live can be a bit more tricky, but is crucial to retirement planning decisions. It can help you decide on your risk profile, your personal asset allocation and even when to stop working to ensure you have enough funds for your retirement.

Although there are tools that you can use for calculating life expectancy, your financial adviser can help guide you through the process too.  It could also depend on the longevity history in your family.  Your adviser can help you come up with an estimate of your required retirement income based on your lifestyle expectations, tailored risk profile and how many years you’re likely to spend in retirement.

2. Ensure you’ll have enough income

With an estimate of how much you’ll need, your adviser can make recommendations to help you meet your required retirement income. These may include growing your retirement fund by investing some or all of it.  It may also mean depositing more into superannuation or building wealth outside of super.

Investment products usually carry risks. It’s important that you choose instruments that suit your personal risk appetite and need for returns.

If you prefer to have a regular and stable flow of income in retirement, there are definitely options available for you.

Seek professional advice on how this can be done and how you can get appropriate outcomes.  We’d love to help!

Posted in Finances, Superannuation Tagged with: , , ,

A new way to approach your super strategy

For many years, salary sacrifice has been the most tax-effective way to build superannuation.

Now, youre able to add personal deductible contributions to your super strategy.

New legislation introduced 1 July, 2017 removes the restriction on claiming a tax deduction for personal contributions to super – if 10% or more of your total income is attributable to employment. So, from a tax and super viewpoint, a personal deductible contribution will have the same net effect as salary sacrifice.

You can use either strategy to reduce your taxable income and boost super contributions. However, personal deductible contributions can’t go to untaxed and certain defined-benefit super funds. The existing qualifications on these deductions remain. For example, you must give a notice of intent form to your super fund before:

  • starting an income stream with all or part of the contribution
  • withdrawing or rolling over benefits (including the contribution)
  • giving the trustee a splitting contributions application.

In any other case, you must give a notice of intent form to your super fund when you lodge your tax return or at the end of the financial year following the year in which the contribution was made – whichever comes first.

You must be aged under 65 or satisfy the work test between 65 and 74, but a contribution can be accepted within 28 days of the end of the month you turn 75.

Salary sacrifice has its drawbacks

While salary sacrifice has been the cornerstone strategy, it’s good to remember that it can have restrictions. For example, some employees do not offer it, or will not allow you to pick your own fund, and there’s no guarantee about the frequency of contributions. If you have income replacement insurance, you might find this is affected by your reduced income through salary sacrifice. Your employer may even reduce your super guarantee entitlements to match this reduced income.

A comprehensive super strategy

Personal deductible contributions could be a great fit for your financial plan. You can choose your super fund and the timing of your contributions. And because you’re claiming a tax deduction on your super contribution – not reducing your salary – your income replacement insurance probably won’t be affected.

Personal deductible contributions can also work well alongside your transition to retirement strategy and other contributions you’re making, such as spouse contributions, co-contributions and contribution splitting.

It’s always a good idea to review your financial situation and savings plan before new legislation comes into place. Speak with a financial adviser to learn about how you could benefit from building personal deductible contributions into your retirement savings strategy.

The advisers at Wealth Planning Partners would be happy to help!

Posted in Advisers, Finances, Superannuation, Wealth Tagged with: , , ,

How the Budget may affect families

What you need to know!

  • The Budget is forecast to return to surplus in 2019/2020
  • There’s a 7 year plan to eliminate the 37% tax bracket
  • A major crack down on tax cheats to begin
  • The Medicare Levy remains at 2%
  • Superannuation – exit fees banned
  • Child care combined income threshold to increase to $187k
  • Aged Care – 14,000 home care places over the coming four years
  • Education – schools to receive an extra $24.5bn over 10 years
  • Infrastructure spending to increase including $1bn to improve traffic flow
  • Energy costs to reduce by $400 per year for each family from 2020
  • National security to be increased with $293.6m spend

Need to know more?… click here!

Posted in Australian Economy, Budget, Economy, Finances Tagged with: , , , , , ,

Diversification of assets is a good defence against a fall

Increased Diversification can assist in lowering risk in times of market volatility.

A properly constructed portfolio can protect investors in downturns in the market and help provide appropriate returns at other times.

Portfolios which include diversifying assets may protect the overall portfolio against equity market volatility.

It’s been over ten years now since the last ‘global recession’ or ‘global financial crisis’ and many are wondering if another large correction or event is nigh.

If you have concerns about your portfolio and how it’s invested, have a chat with your adviser today.

Posted in Economy, Money, Wealth Tagged with: , , ,

A money-wise wedding: Creating a budget for the big day

Whether you’re planning a large, luxurious wedding or a small, intimate affair, smart budgeting could help free you from financial worries, so you can enjoy your special day.

Following these steps may help ensure no one’s worried about debt on the honeymoon.

1. Plan early

Given that the average Australian wedding costs $36,200[1], the sooner you start saving, the sooner your dream wedding can become a reality. The day after the engagement is fine!

2. Create a budget

Take stock of your income and calculate the maximum you can afford to spend on the wedding – and your ideal cost scenario.

3. Talk to your family

If you’re part of the bride’s or groom’s family and want to contribute, let them know. You could contribute a set figure or fund a specific part of the ceremony, such as the flowers or venue.

4. Prioritise

What must you have at the wedding and what can you compromise on? For example, do you want a live band but aren’t fussed about fancy table decorations? Agreeing on your priorities up front can help you clarify which aspects to save for and which to downplay or skip altogether.

5. Start a spreadsheet

Once you have an idea of your budget and priorities, it’s time to dive into the details. Use a spreadsheet to list a maximum cost for every wedding-related item from bouquet to band and compare it with vendors’ quotes. Don’t forget to take into account hidden costs like insurance, corkage and the marriage licence as well as costs related to the rehearsal dinner and honeymoon.

6. Stay accountable

Avoid blowing out your budget by keeping your spreadsheet up to date, setting up a wedding-expenses-only bank account, and sticking to your guns as far as your limits and priorities are concerned.

If you’ve created your budget and despair of affording your dream wedding any time soon, don’t worry. Here are some tips to help you reign in your costs.

  • Limit your guest list to your favourite people: At $100 per head, every 10 guests cost you $1,000.
  • Think outside the box when picking a wedding venue: A park, garden, art gallery or friend’s house may be more affordable than a hotel, and the natural ambience can save you money on decorations.
  • Book an out-of-season wedding: It can be cheaper to schedule a wedding in winter, on a week night or a Sunday morning.
  • Keep your menu simple: Stick with the specialties of the season and region, consider canapes or buffets over three-course meals, and ask for house spirits (not top-shelf varieties) or beer and wine.

Call in an expert

While you may call upon a wedding planner to help you organise your special day, a financial planner may be just as important.

A professional financial adviser may help you create and stick to your budget as well as stay accountable – so you can focus on the important things, like celebrating with the people you love!

 

 

[1] Australian Securities and Investments Commission, ‘How much can a wedding cost?’. MoneySmart. Available at: https://www.moneysmart.gov.au/managing-your-money/budgeting/simple-ways-to-save-money/how-much-can-a-wedding-cost

Posted in Budget, Finances, Savings, Wealth Tagged with: , , ,