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: , , ,

Create a great financial new year

New Year’s resolutions are easy to make but often hard to keep. But there are real benefits to making financial resolutions. Here are some helpful suggestions to get you started.

Get back to basics

If you find it near-impossible to reach your financial goals, you may need to revisit the basics: sticking to a budget. Does temptation usually unravel all your good saving intentions? Consider opening a locked savings account that you can’t deduct money from for a period of time, then automatically transfer funds into it each payday.

Plan for large purchases

Whether you need a new fridge or are considering placing a deposit on a home, the earlier you start planning for these purchases, the more manageable they become.

Set up an investment plan

If you’re considering investing this year, developing a sound investment plan is essential for your success. This may include working with your financial adviser to identify clear financial targets, calculate how much you can afford to invest and determine how much risk you’re willing to take on. 

Review insurance policies

Knowing you are properly insured may help provide peace of mind if your circumstances change unexpectedly. But identifying appropriate insurance policies and levels of coverage for your unique situation can be difficult – and getting it wrong is risky. This is why it’s important to regularly review your insurance policies with your financial adviser, especially if your situation changes.

Check your super

If you have multiple superannuation accounts – or have forgotten where your super is – you’re not alone. According to the Australian Taxation Office, there’s $18 billion of lost super waiting to be claimed nationally.1

Effectively managing your super is vital for building your retirement nest egg. Contact your financial adviser who may help you manage your super.

Set retirement goals

The earlier you set clear goals for your retirement, the more options you’ll have. Work out what assets you have – from your home to superannuation – and review your current spending patterns, then determine your goals for retirement and what lifestyle you’d like to enjoy. This will help you calculate how much you’ll need.

Create an estate plan

Estate planning involves more than writing a will. It outlines what you want done with your documents, contacts, debts, bills and assets, making the process easier for your beneficiaries after you’ve passed away.

Whatever your financial New Years’ resolution may be, seeking professional advice may help you make it reality this year.

Note:
1 The Sydney Morning Herald, 2017, ‘Almost $18b in lost super waiting to be claimed’. Accessible at:

http://www.smh.com.au/money/super-and-funds/tax-office-holds-records-of-almost-18-billion-in-lost-super-20170920-gylo3z.html

Posted in Budget, Debt Management, Finances, Insurance & Protection, Investments, Money, Retirement, Superannuation Tagged with: , , , , ,

Planning a holiday? Here are some tips!!

With the summer holidays right on top of us, it’s not too late to do your financial planning for the holidays – or start planning for later in the year. Here’s how to minimise your financial stress for a well-deserved break.

Plan ahead

The earlier you start planning, the more money you can save. And when it comes to peak travelling times such as December, typically the earlier you book your flights and accommodation the better your account balance will be.

Create a budget

Whether you choose Bali or the bush, create a budget. Account for expenses such as flights, petrol, food and activities, such as visiting museums or a spa. Research activities at your destination and see if you can book early – or if there’s some great free ones. The more you can book and pay for beforehand, the less you’ll need to worry about overspending.

Start saving

When you’ve worked out how much you will need, start saving. Even putting a small amount aside each week can add up, so you could enjoy some amazing experiences you may not have thought you could afford. A good tip is to open a high-interest savings account and set up an automatic transfer on your payday.

Hunt for bargains

There are lots of useful websites that compare deals on everything from flights to tours. Just make sure you turn on private browsing when researching online. Some travel sites track users and raise prices on the things you are researching if you return repeatedly.

And don’t worry if you have left things to the last minute – there’s a website for that too: lastminute.com.au.

While you’re on holiday…

It can be easy to splurge – you’re on holidays after all. But to avoid spending the new year paying it off, keep track of your finances while you’re away.

Set yourself a daily spending limit – or use a travel app to help you stay on track.

But if that’s too much of a buzzkill, you can transfer the exact amount you’ll need into a bank account just for your holiday. This may help you stay out of your other accounts unless it’s absolutely necessary.

Talk to your adviser

Your adviser may help you create a financial plan tailored to help you achieve the holiday you want.

Talk to your Wealth Planning Partners adviser to reach your financial goals for your holiday.  Call on 07 5593 0855.

Posted in Budget, Budgeting, Money Tagged with: , , , ,

Same-sex Marriage triggers Estate Planning challenges

With the recent legalisation of same-sex marriage in Australia, it’s likely we’ll see a slew of marriages in 2018!  But, be warned!  Same-sex couples are urged to review estate planning documents, as marriage can invalidate a binding nomination… in some cases.

While the parties and proposals continue Down Under, same-sex marriage reforms will bring significant benefits to same-sex couples when it comes to both death and medical decisions, as marriage ensures more rights for those legally wed.  However, there are still some important estate planning considerations for those looking to tie the knot.

Some super funds include terms that specify a binding death benefit nomination (BDBN) is not actually binding if certain life changes occur.

When members sign a BDBN for most super funds, it will usually be valid for three years; but in the conditions, it can state that it will be invalidated by an event such as marriage or the birth of a child.

Don’t fret!  It doesn’t mean that somebody could be automatically cut out. They’d still have a right to apply to the trustee say: ‘I was the nominee before, but now the spouse,’ but that process could open the door for others to come in and argue about why they have some entitlement also, making the process longer and more drawn out than necessary.

While this is mainly noticeable amongst APRA-regulated funds (most large super funds,) there can also be similar clauses in Self-Managed Super Fund (SMSF) Trusts Deeds where wording may suggest a binding death benefit nomination is invalid when a lifestyle change occurs.

SMSF trustees, and all couples looking to wed, will want to make sure all estate planning documents are reviewed and updated where necessary, including Wills, powers of attorney and superannuation nominations.

Posted in Finances, Money, Self Managed Superannuation Funds, Superannuation Tagged with: , ,

Budget for a very merry Christmas

A bit of planning and forethought may help take the financial stress out of Christmas.

Christmas for many families, is a happy time of year that brings people together, but it can also be expensive!
With a bit of early planning you may control your festive season spending.

Here are some tips to help avoid a New Year financial blowout.  You don’t want a heart attack when you get that statement in January!

Draw up a budget

You know it makes sense, but it can seem a bit Scrooge-like. Start with the total amount you want to spend. Divide this into gifts, catering, entertainment and travel and list the items you need to purchase in each. Then put a spending cap on each category.

Sort your gift-giving

Draw up a gift list and allocate how much you want to spend on each person. If money is tight, consider options such as vouchers for home-cooked meals or gardening as alternatives.

It may help for big groups of relatives or friends to agree in advance upon a spending cap per gift. Another option is to do a Secret Santa by choosing each other’s names randomly from a hat. Each person then buys the person they picked a gift, instead of buying for everyone.

Open a Christmas account

Set up a special bank account early in the year and use a regular auto payment option. The sooner you start saving, the more you will have.

You’ll also be able to make the most of all those annual specials from Boxing Day forward!

Make a shopping list

Wandering through the shops without knowing what to buy may cause you to overspend. Do your research first, then set out with your shopping list in hand and stick to it.

Be prepared to bargain as smartphones make it easy to compare prices. Avoid last-minute shopping as this may result in rushed and expensive decisions. Even better, pick up bargains in the sales earlier in the year and put them aside.

Above all, keep your head and stick to what you can afford.

Travel smarter

The holiday season is one of the most expensive times to travel, so it may be worth considering house swapping, camping or having a staycation. If you are travelling, a budget will help you stay
on track.

I’d love to hear some of the ways you stay on track each Xmas without blowing your budget!  Let us know in the comments and share your top tips!

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

Key-person insurance: Protection for your business

How would your organisation cope if something happened to a key person?

Unexpected events can play havoc not only with people’s lives but also with businesses.

However, business owners are often so busy they don’t stop to consider the true cost of the loss of a key employee, business partner or even themselves.

The knock-on effects may include disruption to other staff, missed opportunities, delays or penalties for late delivery of projects, lost revenue, increased expenses, significant costs to find and train a suitable replacement, loan repayment and even loss of the business.

What is key-person insurance?

Key-person insurance protects a business’s financial position against the significant impact of a traumatic event such as the death or disablement of a key person.

A key person may be an employee, owner or an individual whose contribution to the business is significant.

This cover is not a specific kind of insurance but the application of life insurance to protect against key-person risk. It can be used with buy/sell life insurance (also known as business succession insurance) which covers the change of ownership if an owner dies or becomes incapacitated.

The benefits

Often a cash injection to an affected business may keep a bad situation from becoming worse or even catastrophic. The insurance proceeds may be used to:

  • minimise or eliminate the potential loss of revenue, sales or profits
  • help cover the often significant costs of finding or training a replacement
  • service or repay any debts that are called in
  • cover the impact of a writedown in the goodwill of the business
  • provide needed liquidity
  • help keep staff and maintain essential supplier relationships.

Are there alternatives?

A business may have other strategies to help manage their risks, including asset sales, promoting staff or reallocating workloads even temporarily, using profits, borrowing more, or drawing down existing loan facilities.

However, insurance is the only practical alternative where a business doesn’t have the capacity to cover its risks.

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

5 Tips on Giving to Charity

Feeling generous and want to make a difference? Here are five tips on giving to consider.

An estimated 14.9 million Australian adults (80.8 per cent of the population) gave $12.5 billion to charities and not-for-profit organisations in 2015–16.[1]

For many people, donating comes as a response to a specific request, but if you feel strongly about helping out, why not budget for it?

As well, many people plan to leave money to charities in their wills and with some extra thought in estate planning, a bequest can be made in a tax-effective way.

Regardless of how you give, it’s always important to keep accurate records of your donations to give to your accountant at tax time.

Here are five things to consider before donating.

1.         Why giving is important

Giving to the less fortunate is a good thing to encourage from a young age. Certain schools make volunteering part of their programs but even parents can encourage philanthropy through their own actions. Giving is good for both the donor and the recipient, and it makes the world a better place.

2.         Do you know what the charity does?

It’s an obvious question, but at the very least the charity’s mission and goals should align with yours. Is it doing good works in the areas that concern you? Do you feel strongly about what it is doing with your money?

 

3.         What has the charity achieved?

Most organisations are happy to advertise their successes through videos, photos, testimonials, and their annual reports to help you get a more complete picture.

4.         Can you volunteer?

Being charitable can also mean pitching in and helping, which is a great way of finding information and making connections. This will help you decide whether the organisation fits your values and goals, and make you feel more fulfilled knowing you are making a difference.

5.         How much are you comfortable giving?

Giving circles are a solution for people who don’t have a lot to give. This just means getting a group of 100 or so people together who each contribute perhaps $1,000 to create a pool of $100,000. They donate the lot to one charity to make a big impact.

If you would like to make giving part of your financial plan, your adviser can help you get the most out of your philanthropic efforts.

[1] www.philanthropy.org.au/tools-resources/fast-facts-and-stats/

Posted in Finances, Money Tagged with: , , ,