Category Archives: Australia

Boosting Super with the Work Test Exemption

If you’re a recent retiree and looking to increase your superannuation savings, here’s some good news!

The Australian Government is proposing to make it easier for recent retirees to save more super by allowing them to contribute for a year without having to show that they’ve been ‘gainfully employed’.

The former rules

Anyone below 65 can contribute to their super regardless of whether they work or not. But those aged between 65 and 74 need to meet the work test before they can make super contributions. To pass the test, they have to show that they’ve been gainfully employed for at least 40 hours over 30 consecutive days in the financial year they plan to contribute.

The government has already given members with a total super balance of less than $500,000 some flexibility to further grow their super. These individuals can carry forward any unused amount below the concessional contribution cap of $25,000 on a rolling basis for five years starting from 1 July 2018. They can use their unused cap amounts from 1 July 2019.  But people between 65 and 74 must still meet the work test before they can make these ‘catch‑up’ contributions.

The new measure

Now, to encourage this age group to save more for retirement, the government is proposing to give individuals who don’t meet the work test an extra year to beef up their super savings. From 1 July 2019, those aged between 65 and 74 with a super balance below $300,000 are able to make voluntary contributions in the first financial year that they don’t satisfy the work test requirement. Once eligible, they don’t have to remain under the $300,000 balance cap during the 12‑month period.

The annual concessional and non-concessional contributions caps will continue to apply, but members can access any unused concessional contributions cap amounts they have carried forward.

The government will assess total super balances at 30 June of the financial year in which members last met the work test.

Seek professional advice

If you’re considering contributing to your super under the proposed work test exemption, it may be wise to speak to your adviser to see how making additional super contributions may work to your advantage.

What a brilliant idea!

Did you know that it’s been almost 30 years since the superannuation guarantee was introduced in Australia, yet 40% of single women are retiring in poverty, and the fastest growing demographic of homelessness is the 55 year old woman?

In the financial services profession, there’s a couple of lovely ladies I know, who truly believe that it’s shameful a country as rich as ours has let its elderly women, after a lifetime of service and caring for others, go without enough money to care for themselves.  They’re also:

  • tired of hearing empty promises on policy change
  • overwhelmed by frightening statistics on super / gender equality
  • worried for our daughters’ futures.

So, they got to thinking!!  ‘What if we could monetise the $2.2 trillion p.a. of unpaid work performed by the 1.8 million women? What if we could create an income stream into super for the 76% of women who either don’t work or work part-time?’

Together, they’ve come up with the brilliant concept Super Rewards. 

Super Rewards is cash rewards, for women, for super.

Super Rewards is compatible with any super fund or SMSF. It’s free to join, and there are no upfront charges.  How beyond cool is that?

Each time you shop at the 120+ retailers on the Super Rewards platform, you earn money into your super. The more you shop, the more super you earn. So a percentage of what you earn, is going straight to your retirements savings, simply for doing what you may do best… SHOP!

There are some incredible brands on the platform, many of whom are Australia’s leading retailers, including Woolworths, The Iconic, Country Road, Apple, Booktopia, etc.  I had a bar fridge break down recently, so signed up and got shopping!

There are 6.7 million women in Australia aged 18-64 years old, and all of them would benefit from knowing about Super Rewards.  Together, they’re hoping to set generations of women free and improve their futures.  Together, they’re hoping to help women build their super the way it was originally intended: to live your best life, the way you choose, free of fear, doubt or financial worries.

And don’t you just love the tagline?

We are Super Rewards. Helping all women find their super power.

Check it out for yourself and see what you think!! I’d love to hear your thoughts.

Your Super is too Important to Ignore

Superannuation is the one thing you could do for your financial future this year, that could make a big difference to your retirement income. But how much do you really need?

That’s the million dollar, half a million dollar…? question.

Everyone’s needs are different.  Unexpected expenses just crop up, life gets busy and none of us have any clue how long we will actually be in retirement.

Of course, we’d like to think that the safety net of the age pension will still be around in years to come, but just how generous the country can afford to be with this payment, and who will be eligible, is also unknown as this may change year to year.  Sadly, none of us have a crystal ball, and we know it isn’t a lot!

So what exactly are some of the big expenses in retirement we need to budget for?

  • Healthcare
  • Aged Care
  • Food and Beverages
  • Utilities
  • Travel
  • Entertainment
  • Planned or unplanned expenses, i.e. a new car or home renovations

What major impacts could affect our superannuation?

  • How long you live
  • Your health
  • The rate of inflation
  • How much you earn on investments
  • Whether or not you have dependents – yes some retirees still have dependents!

It is wise to have a plan when it comes to your retirement income and a professional financial adviser can help you get a plan in place that is easy for you to manage now, and meets the needs of your ideal retirement.

If you want to start to get your super sorted this year, give me a call on 07 5593 0855.

Punch and Judy do Super Splitting

This one is for our Aussie readers and a great strategy for some couples to help manage their retirement savings.  If you’re an international reader, does your government offer something similar?  I’d love to hear how it’s done in your country.

A spouse contribution split can help reduce a member’s total superannuation (retirement savings) balance below a trigger point or, when used as an ongoing annual strategy, can help achieve a measure of account equalisation between spouses.  It can also be helpful to reduce a super balance where one spouse is somewhat older than another.

Firstly, to be eligible, the receiving spouse must be under 65 and, if over preservation age, not retired. (Where the receiving spouse turns 65 during the year of the split, action will need to take place before their birthday and is paid as a rollover super benefit.)

Too much jargon right?   So what does it look like?

Punch and Judy are married.  Punch is now the sole breadwinner as Judy wants to stay home for a couple of years while The Baby is still cute.  She’s not earning and her Super retirement savings will be impacted.

Punch is on a good wicket and gets a hefty amount paid into his Super fund by his employer.  Because Judy is amazing, and doing a brilliant job with their kid, Punch wants to make sure she’s not disadvantaged and chooses to split his super with her.

Punch has a sufficient account balance and as his boss has put in a $25,000 contribution, he can pass over up to 85% or $21,250 to Judy’s fund.  Happy wife, happy life!

Punch is a good partner, be like Punch… (ok, he’s usually a tosser, but this time he’s nice!)

Contributions splitting does not reduce the contributions originally made for the member for reporting and contribution caps purposes.

If you think Super Splitting could be beneficial for your family, it’s worth chatting with an adviser to find out more to find out the tips and traps and whether it’s right for you.

The Federal Budget for Accumulators

Are you an Accumulator?

That is someone who is still stashing their wealth prior to retirement?  Chances are, you may have kids, debt and be pretty time poor!

So what did the Federal Budget 2019 include for you?

We’ve summarised the key takeouts so you can understand the tax cuts, social security and superannuation issues that may impact you.

It’s only two pages tops, so if you’d like to know more, check it out here:

Federal_Budget_2019_Accumulators.

Look for help to get into the housing market

Governments across the country are offering incentives for first-home buyers. You just have to know where to look.

Buying your own home is the largest purchase most people will make in their lives.

However, a long run of low interest rates has fuelled spectacular dwelling price growth, record housing debt and phenomenal asset values, particularly in Sydney and Melbourne. According to the Reserve Bank of Australia, housing prices nationally have increased 7.25 per cent a year, on average, over the past 30 years.

In its Perceptions of Housing Affordability Report 2017, financial analysis and advisory firm CoreLogic says it now takes 1.5 years of household income to save for a 20 per cent deposit on a dwelling compared with 0.8 years 15 years ago.

Nevertheless, there are government incentives to help prospective first-home buyers. Last year’s Federal Budget proposed allowing individuals to make voluntary contributions to their superannuation to save for a deposit.

Super contributions and earnings are taxed at 15%, rather than higher marginal rates. Contributions are limited to $30,000 per person in total and $15,000 per year and both members of a couple could take advantage of the scheme.

Currently, the NSW and Victorian governments are offer first-home buyers:

  • no stamp duty on all homes worth up to $650,000 in NSW and $600,000 in Victoria
  • stamp duty relief for homes worth up to $800,000 in NSW and $750,000 in Victoria
  • a $10,000 grant for builders of new homes worth up to $750,000 and purchasers of new homes worth up to $600,000 in NSW
  • no duty on lenders mortgage insurance in NSW

Most states have first-home buyer grants, and some are making it harder for foreign investors by increasing duties and land taxes and introducing other measures to reduce competition for first-home buyers.

SEEK ADVICE

There are many investment options that can help you build a deposit, but you don’t have to make financial decisions by yourself.

Chat with your Adviser today… or I’m more than happy to help!

The end of another Financial Year

It’s hard to believe we’ve just clocked the end of another financial year.  It really doesn’t seem that long ago we just completed our last round of tax returns!  I hope you managed to make the most of your deductions and income.

And it’s been a big year too for what was formerly known as the financial planning industry.  2016 is the year the Government began to view us as a profession… although, you may agree that that still needs a bit of work.

Now is the time where many advisers will have to choose whether or not they will earn the right to continue as planners.  The proper qualifications will be needed and recognised, ongoing training and accountability measures will be put into place, and all are aimed at protecting the consumer.  That’s a win, right?

Building consumer trust has always been the end game and following in it’s wake, better recognition and respect for professional planners.

We’ve also managed to have enshrined the terms Financial Planner and Financial Adviser which will make it easier for the public to find professionals to provide them with advice.  From 1 January, 2019, anyone claiming to be a financial planner without the qualifications to do so, will be breaking the law, so you’re less likely to end up in the wrong hands.  Another win!

So, we’re pretty sure you’ve had a big financial year, and we hope you’re set for an even more cracking year ahead.

It’s time to take a load off and enjoy the weekend.

Happy EOFY everyone!