by Jodie | Jan 3, 2017 | In The Media
As you’re probably aware, when you donate to registered charitable organisation, your gifts are a tax deductible donation that can boost your tax refund or reduce the amount of tax you pay… completely aside from the feel good factor you get of supporting those less fortunate.
Most charities exist solely to support a good cause and rely exclusively on donations to continue their work. According to the Charity Donations Guide by Choice (September 2014) nine out of 10 Australians give to charity each year.
Here’s a short set of tips to making your gift go further and claiming your donation back at tax time.
What are some ways to give?
For those who aren’t always flush with funds, Choice advises that one way to give that is gaining in popularity is to volunteer. Some donate goods that can be used or sold. Others who are able, are happy to give directly to collection agents or donate directly via websites.
More than 30% of Australia’s population volunteer with not-for-profit organisations, providing an average of 56 hours labour each on an annual basis, a boon for cash strapped charitable organisations. If you are interested in volunteering some of your time, you can visit the Go Volunteer website to learn about opportunities available close to you, or even offshore, whatever is your preference.
Alternate ways to give are charity are by hosting high teas, dinners and balls. Just keep an eye on costs though as the price of the venue and catering can eat into your donation. In a small way, purchasing merchandise on an annual event day also adds to the bottom line of many organisations.
Tips for claiming charitable donations
Charitable donations are generally tax-deductible but before claiming any donations on your tax return, here are a few tips:
- The charity must be classified as a deductible gift recipient (DGR.) To check, visit the Australian Business Register. (Most charities are happy to let you know their status.)
- To qualify for a tax refund, your gift must be greater than $2. Keep receipts for any donations you make.
- The gift must truly be a gift – a voluntary transfer of money where you receive no benefit or advantage. You cannot claim items such as raffle tickets, pens, merchandise, chocolateor membership fees.
Many businesses try to find a charity that aligns with their business for maximum leverage. Businesses who offer goods and services for children find charities that benefit youth. Those supporting women might choose female cancer or domestic violence organisations. Those in finance may support poverty alleviation or micro-finance groups offering opportunities in third world countries. If you resonate strongly with the cause you support, you’ll feel much more aligned to the outcomes.
Another area worth considering, is how many cents in every dollar actually go to where they’re needed. Some charities are extremely admin heavy and over half of funds donated (or more) go to head office staff (or the CEO’s lear jet) rather than those we believe we’re supporting. It’s worth doing the research to find out exactly what goes where and most are very transparent now about this and the information can be found from a quick internet search.
A lot of larger organisations now are incorporating Corporate Social Responsibility programs within their businesses and finding both their staff and clients are loving the involvement.
Two favourite charities that Wealth Planning Partners are proud to support financially, and with our time, are The Hunger Project, who aim to eradicate chronic, persistent hunger by 2030 (with 81c in the dollar going where required) and Hands Across the Water, helping orphaned and disadvantaged children in Thailand (with 100% of funds utilised by the charity.) And, outside of giving ‘just money’ our Director has travelled to Uganda, Malawi and Thailand to see the funds in action and be personally connected with the benefits. This in turn raises profile and clients and colleagues alike are interested in the stories and leadership lessons learned along the way.
Have a think today about whether or not you’d like to include philanthropy in your business or personal plans… and how best to go about it.
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by Jodie | Dec 20, 2016 | Australian Economy, Debt Management, Finances, Wealth
Apparently, among richer nations, Aussies households are among the most in debt.
Research from LF Economics, using official data, shows that Australian household debt has risen to 123% of the nation’s economic output, pushing both Denmark and Switzerland into second and third place respectively. According to the Reserve Bank, household debt-to-income ratio reached a record 186% in 2015.
The housing boom is most often to blame forcing many buyers into large mortgages. But don’t stress just yet, it’s not all bad news.
Debt isn’t always a bad thing. Chances are by now you’ve heard of ‘good’ and ‘bad’ debt.
Good debt is usually used to produce an income and create wealth, whereas bad debt reduces our worth.
Utilising debt to purchase an investment property or share portfolio is usually seen as ‘good debt.’ Property value are expected to rise of the long term, and you receive an income in the form of rent. Shares are also expected to go up and dividends are often received along the way. Interest expenses are usually tax deductible and can often be claimed against income.
But don’t forget, investments and markets go up and down! Seek appropriate advice and consider your circumstances.
Bad debt is borrowed to buy goods that depreciate in value, don’t produce an income and usually aren’t tax deductible. The new car, jet ski, motorbike, caravan or loans for holidays are all included.
If things are getting out of hand for you and it’s time to start getting on top of your finances again, star first with your non-deductible debt and the one with the highest interest rate. It may feel good to lose the smallest credit card first, but you’re better off not paying the additional interest the other one is incurring.
Most people set goals for the new year that include getting on top of their finances in some way. I’d suggest you pick just one goal that you’re committed to and stick to it. Pay off that one annoying credit card in the coming 12 months, lose that personal loan or consolidate those super funds. Whatever is your biggest bug bear, I hope you get through it in 2017.
by Jodie | Nov 10, 2016 | Australian Economy, Debt Management, Self Managed Superannuation Funds
Recent years have seen a rush of investors buying property through super. But while the strategy has its advantages, there are also some potential risks to be aware of.
The pitfalls
While property has been a good performer in recent years, property investing still involves a number of risks.
Some hidden costs in owning direct property can catch buyers unaware, such as building maintenance costs and or levies. A property’s rental income may also not be sufficient to cover your mortgage payments or expenses, and what would happen if your property was vacant? Do you have enough disposable income to cover the costs yourself? And while interest rates are currently at record lows, an eventual switch in interest rate policy would lead to higher repayments.
In addition, past performance is not indicator of future performance so there are no guarantees your property will increase in value. You should also weigh up the impact of notoriously high entry and exit costs such as stamp duties, legal fees, agent’s fees and advertising costs on your investment.
One of the most important principles of investing is the benefits of diversification. So, if you invest the entirety or a large part of your SMSF in property you will have all or most of your wealth concentrated in the property market, leaving you highly exposed to a market downturn.
The pros versus the regulations
Investing in direct property, whether residential or commercial, can provide diversification benefits for a portfolio that may otherwise be dominated by listed shares, and offers the potential benefit of rental income and the opportunity for capital growth.
However, investing in property inside SMSFs is highly technical in terms of regulations and potential tax implications. In particular, there are strict rules around purchasing property through an SMSF specific to buying and or renting to “related” parties. As such, it’s prudent to seek professional advice on this area.
Commercial property
The strategy of using your SMSF to buy commercial property to lease back through their business is again subject to strict regulations and if you are thinking of replicating this you should discuss the regulatory requirements with your adviser.
According to the ATO, you can invest in commercial property, including your own business premises, through your SMSF, however the overall fund must still meet the sole-purpose test of providing retirement benefits to its members. When dealing with commercial property, an SMSF can generally buy the property and lease it back to a member or a related party of the fund – including the member’s business. Another regulatory hurdle to be particularly aware of includes having an arm’s length sale price and lease arrangement for the property in question when acquiring and or leasing the property to a member or related party of the fund.
Beware the Scammers
Unfortunately there have been instances of scammers operating in Australia using tactics such as:
• persuading people to access their super early to buy property;
• seminars where salespeople use pressure selling tactics to encourage you to make quick decisions; and
• cold calling from companies offering free financial advice or unreasonable returns on properties which are often located overseas.
What next?
Bricks and mortar can be a great long-term investment and may help to set you up well for retirement, but any such plan should be considered in the context of your overall financial plan and discussed at length with a trusted financial adviser. In addition, it is also prudent to do your own research by visiting the Australian Taxation Office’s webpage on self managed super funds.
Pros and cons of investing in property, Moneysmart.gov.au at: https://www.moneysmart.gov.au/investing/property#investment
Superannuation Industry (Supervision) 1993 Act and refer to a summary at the ATO website: https://www.ato.gov.au/super/self-managed-super-funds/investing/sole-purpose-test/
https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-resources/Valuation-guidelines-for-self-managed-super-funds/?page=10
by Jodie | Sep 30, 2016 | Australian Economy, Budget, Economy, Self Managed Superannuation Funds, Superannuation
On 27 September 2016 the Government released another round of draft legislation implementing a number of the changes to superannuation it announced in the 2016 Federal Budget.
Many of these changes will apply from 1 July 2017 so it might be sensible to for you to start thinking of how your superannuation will be impacted by the changes now and whether you might need to change any of your SMSF’s arrangements.
Included in the latest legislation were amendments relating to:
• Implementing the Government’s $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase from 1 July 2017.
• Lowering the concessional contributions cap to $25,000 per year for all taxpayers from 1 July 2017.
• Reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax, from $300,000 per year to $250,000.
• Providing greater flexibility for those with broken work patterns by allowing individuals with balances of less than $500,000 to ‘carry forward’ unused concessional cap space for up to five years.
• Removing the tax-free treatment of assets that support a transition to retirement income stream.
Some of these changes may require you to adjust your investment, contribution, pension and estate planning strategies going forward.
This will most likely be the case if you have a superannuation balance of over or close to $1.6 million, were planning on making significant contributions to superannuation in the next few years, are a high income earner or have a transition to retirement pension in place now.
How can we help?
If you are concerned that the Government’s changes to superannuation are going to affect you, please feel free to give me a call at the office on 07 5593 0855 to arrange a time to meet so that we can discuss your particular requirements in more detail.
by Jodie | Sep 28, 2016 | Insurance & Protection
What if you could reverse diabetes with chickpeas, fish and olive oil? A new study from Newcastle University links a very-low-calorie diet with the cessation of type 2 diabetes.
Type 2 diabetes is a progressive condition, at first managed by diet or surgery, and then by medication or insulin injections. But a new study indicates this doesn’t have to be the case.
A study conducted in March this year by Newcastle University in the United Kingdom placed 30 individuals with type 2 diabetes on a very-low-calorie diet for eight weeks and stopped all diabetes medication and insulin injections. A dozen participants experienced lower blood glucose levels and their diabetes went into remission for at least six months. The research team believes major weight loss can return insulin levels to normal.
While research needs to continue, the study provides hope that type 2 diabetes may not be a lifelong condition – and that’s great news for the 1.7 million Australians who suffer from it.
Inspired by the study, documentary-maker Dr Michael Mosley has suggested that the Mediterranean diet may help control diabetes. The diet is mainly vegetarian, with a few servings of oily fish a week. Olive oil is the primary added fat, and the diet also includes fresh fruit, yoghurt and legumes.
Researchers around the world have been studying the Mediterranean diet due to its remarkable effects on health. A recent study presented at the American Society of Clinical Oncology meeting in Chicago found the diet could help prevent the return of breast cancer. Other studies have suggested it can reduce the risk of heart disease and dementia.
According to Diabetes Australia, 280 people develop diabetes every day. That’s one person every five minutes, and makes it the fastest growing chronic condition in Australia. If you suffer from diabetes, would like to lose weight or would like to improve your overall health, the Mediterranean diet may be for you. But always check with your healthcare professional first.
Diabetes can affect your ability to be covered by insurance due to the long term effects of the condition so early diagnosis and management is vital.
by Jodie | Sep 22, 2016 | Finances, Investments, Money, Wealth
When you donate to charity, your gifts may be a tax deductible donation that can boost your tax refund.
There are many charities in Australia that rely on donations to continue their good work and nine out of 10 of us give to charity each year*. Here we provide a guide to making your gift go further and claiming your donation back at tax time.
What are some ways to give?
According to consumer group Choice, some great ways to give to charity are to give directly or to volunteer. More than 30% of Australia’s adult population volunteer with various not-for-profit organisations, giving an average of 56 hours per year. If you are interested in volunteering some of your time, visit the Go Volunteer website to find out about opportunities in your area.
Less effective ways to give are charity dinners and balls, as the cost of the venue and catering can eat into your donation. Charity telemarketers also take a cut of the money you give.
Tips for claiming charitable donations
Charitable donations are generally tax-deductible but before claiming any donations on your tax return, here are a few tips:
- The charity must be classified as a deductible gift recipient (DGR). To check, visit the Australian Business Register.
- To qualify for a tax refund, your gift must be greater than $2. Keep receipts for any donations you make.
- The gift must truly be a gift – a voluntary transfer of money where you receive no benefit or advantage. You cannot claim items such as raffle tickets; items such as pens or chocolate
or membership fees.
Two favourite charities that Wealth Planning Partners are proud to support financially, and with our time, are The Hunger Project, who aim to eradicate chronic, persistent hunger by 2030 and Hands Across the Water, helping orphaned and disadvantaged children in Thailand.
*Charity donations guide, Choice, September 2014
by Jodie | Sep 22, 2016 | Advisers, Finances, Insurance & Protection, Money
If your life insurance policy is in a drawer gathering dust, your family could be in for a nasty shock in the event of a claim. Here we outline some pitfalls to avoid when taking out cover.
1. Buying on price rather than cover
No-one wants to pay too much for cover but the purpose of buying life insurance is to ensure your family won’t be left to fend for themselves in the event of your death.
Cheap policies can be riddled with potential issues, so read the fine print and look into the capacity
of the insurer to pay, policy exclusions and dispute handling processes.
2. Not considering insurance outside super
Many people make the mistake of thinking that life insurance cover through super will be enough. Most super funds provide a default level of cover but this is often well below the level required.
In some cases, people could be caught unaware that their insurance cover had lapsed if and when they changed jobs and switched out of the fund. However, on the plus side, since the introduction
of Choice of Fund, it is easier to carry over and elect to use your own superannuation fund when going into a new job. An individual’s insurance cover within their super fund remains intact as long
as they remain a member of that fund.
When it comes to insurance within superannuation it’s also important to remember that premiums
are paid from what is effectively your retirement savings, which can impact your overall super balance on retirement and when you begin drawing down on your savings.
3. Failing to get proper advice
Life insurance policies are easy to obtain these days and it can be tempting to buy policies online
or from a teleprovider. However, policies that are quick and simple to obtain may be declined at claim time for reasons such as non-disclosure, exclusions or hidden clauses.
Sitting down with a qualified adviser means you can benefit from unbiased advice on a broad range of policies that can be tailored to your individual requirements. The adviser will also discuss issues you might not have thought of- for example will your insurance policy be owned by you, your spouse, both of you, your super fund or a trust or corporate entity?
4. Failing to review cover when circumstances change
There are certain key events in life when it is imperative to take a fresh look at your insurance coverage.
Have you married or divorced or has your spouse passed away since you last reviewed your policy? Have you become a parent or have your kids left home? Have there been any changes in your financial circumstances such as an increase in income, more debt or paying off a mortgage?
All these are factors to consider when determining the level of your cover.
Summary
No-one wants their families to be left high and dry in the event of their death. Taking the time
to consider your life insurance today may be your greatest gift to your loved ones tomorrow.
by Jodie | Sep 22, 2016 | Advisers, Women
Wealth Planning Partners are pleased to announce that their Director Amanda Cassar has been named a finalist in the Female Excellence in Advice Awards for 2016.
CEO of the Association of Financial Advisers (AFA) Brad Fox, said the ability of this Award to attract so many women of such high calibre is a great indication of the industry’s progress in generating positive change for the future.
“Female advisers play a vital role in our industry in providing Australians with better access and more choice over who they partner with on their financial journeys. As a result, the Australian advice industry continues to get better, enabling it to provide great advice to more Australians.”
The Award criteria include assessment of the candidates’ contributions to financial literacy in the community and/or campaigns targeted specifically at helping female clients take control of their financial lives.
TAL, who are long term sponsors of the Award, General Manager of Retail Distribution, Niall McConville said the Award continued to attract and showcase some of the extraordinary female talent in the industry.
The winner for the AFA Female Excellence in Advice Award will be announced at the AFA National Conference in Canberra from 5-7 October 2016.
We would like to wish Amanda and all the finalists the very best for the announcement of the award winner and note that it’s the clients who are the real winners when such passionate ladies are their to assist with their financial needs..
by Jodie | Aug 31, 2016 | Advisers, Finances, Money, Retirement, Wealth
Planning your finances early means you are better placed to enjoy what really matters in your retirement. Read this guide to find out how.
Entering retirement is a significant change – but that doesn’t mean it has to be stressful. By starting to plan early and following a few simple steps, you can help reduce your worries as you transition.
Consider what lifestyle you want. Do you want to travel, move, study? Go on a cruise then settle down in a retirement village? Or downsize your home and live comfortably?
On a psychological level there are other considerations. For example, how will you fill your time in retirement and will it keep you sufficiently engaged and or give your life a sense of purpose? Have you thought about giving back to the community in some way, or working and or consulting part time?
How much money you’ll need will depend on a clear picture of all of your goals – both financial and your overall wellbeing.
Once you’ve decided on your retirement goals, you need to consider whether you’ll have enough money to support them. It’s important to think long term. A man who is 65 years old today could live 19 more years; a woman 22 years more. But you may live even longer. You’ll need to know how much super you will have by the time you’d like to retire, when you’ll be able to access your super and whether you’ll be eligible for the Age Pension.
You can use many online tools to calculate how much you’re likely to save during your working life. A financial adviser may also provide you with a thorough evaluation tailored to your current assets and super fund.
After coming to grips with your finances and how much you’ll need to save to fund your desired lifestyle, you can work out the appropriate retirement plan.
You may want to start a transition to retirement pension, which allows you to keep working while accessing your super. By continuing to work after you reach your preservation age (between 56
and 60, depending on when you were born), you can boost your retirement savings as your employer will continue to make contributions to your super and it’ll be taxed at a lower rate.
With a transition to retirement pension you can either continue to work full time or reduce your working hours and supplement your income with withdrawals from your super – but there are restrictions on how much you can withdraw. Which option you choose will depend on your desired retirement lifestyle. In the recent Federal Budget, the Government proposed to change the tax treatment of transition to retirement pensions. It is important to understand how these proposed changes may impact you.
If you are able to work past pension age, there are government incentives you can take advantage of, such as the Work Bonus. Under the Bonus, the first $250 of your employment income isn’t assessed in the pension income test, increasing the amount you can earn.
If you would like to retire and access your super once you reach preservation age, there are several ways you can manage your finances. You may set up a retirement income stream. This means you can withdraw certain amounts from your super fund at intervals so you don’t spend your savings too quickly.
Another option is to withdraw your super in cash or transfer it to a non-super account. This may be an appealing way to immediately clear debts, invest in assets outside super and make any significant immediate purchases. However, it may also lower your future income and attract higher tax rates.
Retirees can take advantage of numerous entitlements such as travel concessions, discounted medicine and other benefits that holding a Pensioner Concession Card or Commonwealth Seniors Health Card provide. If you are eligible, the Age Pension will provide you with payments as a supplement to your savings.
Retirement can be an exciting time of transition. By organising your finances now you are better equipped to enter your retirement with far less stress, more purpose, and free to enjoy what’s ahead.
[1] Australian Bureau of Statistics, Life Tables, States, Territories and Australia (November 2014). Accessed from https://www.moneysmart.gov.au/media/332959/financial-decisions-at-retirement.pdf
by Jodie | Aug 22, 2016 | Debt Management, Finances, Insurance & Protection, Money, Wealth
With the majority of Australians still dangerously underinsured, is it time you reviewed your cover?
Jeff is a clean-living 53-year-old who exercises regularly, doesn’t smoke, enjoys a healthy diet and only indulges his love of good wine at the weekend.
Yet things changed suddenly for Jeff last year when he awoke one night to find he couldn’t breathe. His wife called for an ambulance and he was rushed to hospital, where he was taken into life-saving surgery following a heart attack.
After waking from his operation, Jeff was in deep shock. While he knew there was a family history of heart disease, he had gone to great lengths to prevent the onset of the illness and had not properly thought through how his family would cope without him.
During his recovery, Jeff reviewed the life insurance component of his super and discovered that in the event of his death his family would receive just $300,000, which would barely pay off their mortgage. He had not taken into account daily living expenses, car loans, his daughters’ school fees, his wife’s low income or their inadequate savings.
Fortunately for Jeff his story is a positive one. Now in better health and back at work, he has spoken to a financial adviser and taken out additional life insurance, albeit at a significant premium following his heart attack. He and his adviser are also looking into critical illness cover, which would pay out a lump sum should he suffer another sudden illness.
In Australia, Jeff’s story is not uncommon. In fact, surveys have shown Australia has much lower levels of insurance than other developed nations including the US and UK1[1].
The required level of life insurance is now about $680,000, while the typical default cover is about $258,000 – a significant gap2[2].
Could your loved ones make ends meet if you were unable to work or died?
Here are some of the things you should consider:
- Mortgage or rent costs
- Daily living expenses – food, bills, transport
- Childcare
- School and university fees
- Other expenses – house repair costs, medical expenses
Please give us a call to make an appointment to discuss your insurance needs and ensure you are adequately covered.
[1] Lloyd’s Global Underinsurance Report 2016
[2] Rice Warner Underinsurance Research Report 2014
