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Andrew from Vista Financial

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  1. inShare ‘Christmas in May’ is the unofficial catchphrase of this year’s Federal Budget (given a Federal election is on the horizon), but officially it’s being referred to by the Government as a ‘Plan for a Stronger Economy’. The 2018-19 Federal Budget, delivered on 8 May 2018 by Treasurer Scott Morrison, saw many proposed measures announced. These proposed measures carry on with the main principles that underpinned last year’s Federal Budget, e.g. stronger growth, guaranteeing the essentials and living within our means. Below is an overview of some of the main proposed measures that may be relevant to you and your personal finances. Budget surplus The Government has restated its commitment to returning the budget to surplus. Based on forward estimates and the medium term, the budget is forecasted for a: $14.5 billion deficit in 2018-19; $2.2 billion surplus in 2019-20; $11 billion surplus in 2020-21; $16.6 billion surplus in 2021-22. Importantly, the budget surplus is set to occur a year earlier than previously promised. Taxation Personal Income Tax Plan Introduction of the Low and Middle Income Tax Offset*, a non-refundable tax offset of up to $530 per annum to low and middle-income taxpayers, which will be available for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. This is how it will apply to taxpayers with the following taxable incomes: ≤$37,000, a benefit of up to $200. Between $37,000 and $48,000, the value of the offset will increase at a rate of 3 cents per dollar to the maximum benefit of $530. From $48,000 to $90,000, the maximum benefit of $530. From $90,001 to $125,333, the offset will phase out at a rate of 1.5 cents per dollar. From 1 July 2018, the top threshold of the 32.5% tax bracket will be increased to $90,000 (currently $87,000). From 2022-23: The top threshold of the 19% tax bracket will be increased to $41,000 (currently $37,000). The Low Income Tax Offset will be increased from $445 to $645 (and withdrawn at a rate of 6.5 cents per dollar between incomes of $37,000 and $41,000, and at a rate of 1.5 cents per dollar between incomes of $41,000 and $66,667). The top threshold of the 32.5% tax bracket will be further increased to $120,000 (from the proposed $90,000 in 2018-19). From 1 July 2024: The 37% tax bracket will be removed. The top threshold of the 32.5% tax bracket will be further increased to $200,000, which will mean that the top marginal tax rate of 45% will be paid by those taxpayers that exceed this amount. *This will be received as a lump sum on assessment after an individual lodges their tax return. Furthermore, this is in addition to the existing Low Income Tax Offset. Retaining the Medicare levy rate at 2% and increasing the Medicare levy low-income thresholds The Medicare levy rate will not be increasing from 2% to 2.5% of taxable income from 1 July 2019; however, this will not impact the funding of the National Disability Insurance Scheme. From the 2017-18 income year, the Medicare levy low-income thresholds will increase for singles (from $21,655 to $21,980), families* (from $36,541 to $37,089), and seniors and pensioners [from $34,244 to $34,758 (single) and from $47,670 to $48,385 (family)]. *For each dependent child or student, the threshold increases by a further $3,406, (previously $3,356). Income tax exemption for certain Veteran Payments From 1 May 2018, supplementary amounts (e.g. pension supplement and rent assistance) of Veteran Payments paid to a veteran, and full payments (inclusive of the supplementary component) made to the spouse/partner of a veteran who dies, will be exempt from income tax. Deny deductions for vacant land From 1 July 2019, expenses associated with holding vacant land will cease to be deductible if the land is not being used to carry on a business. Improving the taxation of testamentary trusts From 1 July 2019, the concessional tax rates available for minors receiving income from testamentary trusts will be limited to income derived from assets that are transferred from the deceased estate or the proceeds of the disposal or investment of those assets. Further extending the immediate deductibility threshold The $20,000 instant asset write-off will be extended by a further 12 months to 30 June 2019 for businesses with aggregated annual turnover less than $10 million. Introduction of an economy-wide cash payment limit From 1 July 2019, there will be a limit imposed of $10,000 for cash payments made to businesses for goods and services; they can only be paid electronically or via cheque. However, transactions with financial institutions or consumer to consumer non-business transactions will not be subject to this cash limit. Enhancing the integrity of concessions in relation to partnerships From 7:30pm (AEST) on 8 May 2018, partners that alienate their income by creating, assigning or otherwise dealing in rights to the future income of a partnership will no longer be able to access the small business capital gains tax (CGT) concessions in relation to these rights. Extending anti-avoidance rules for circular trust distributions From 1 July 2019, anti-avoidance measures will be extended to family trusts engaging in ‘round robin’ arrangements whereby the trusts act as beneficiaries of each other and the distribution is ultimately returned to the original trustee tax free. Removing the capital gains discount at the trust level for MITs and Attribution MITs Applying to payments made from 1 July 2019, Managed Investment Trusts (MITs) and Attribution MITs will no longer be able to apply the 50% capital gains discount at the trust level; ensuring that income is taxed in the hands of investors, as if they had invested directly. Superannuation Protecting Your Super Package From 1 July 2019: Insurance within superannuation will be offered on an opt-in basis for members that have low balances (<$6,000), are under the age of 25 years and/or have accounts that have not received a contribution in 13 months and are inactive. A 3% annual cap on passive fees charged by superannuation funds on accounts that have low balances (<$6,000). A ban on exit fees on all superannuation accounts. Inactive superannuation accounts that have low balances (<$6,000) will be required to be transferred to the ATO, and the ATO will be given greater capacity to proactively reunite Australians (and their active account) with their lost and inactive superannuation. Work test exemption for recent retirees From 1 July 2019, there will be an exemption from the work test for voluntary contributions to superannuation, for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements. However, existing annual concessional (and, the carry forward rules) and non-concessional contribution cap limits will continue to apply to the contributions permitted by the exemption. Increasing the maximum number of allowable members in SMSFs and small APRA funds From 1 July 2019, the maximum number of allowable members in new and existing self-managed superannuation funds and small APRA funds will increase from four to six. Three-yearly audit cycle for some SMSFs From 1 July 2019, the annual audit requirement for self-managed superannuation funds will be changed to a three-yearly for those with a history of good record-keeping and compliance. Preventing inadvertent concessional cap breaches by certain employees From 1 July 2018, individuals who earn over $263,157 and have multiple employers will be allowed to nominate that their wages from certain employers are not subject to the superannuation guarantee (SG). Due to this, employees who use this measure could negotiate to receive additional income, which is taxed at marginal tax rates. Ongoing care and maintenance of Treasury portfolio legislation Technical amendments will be made to legislation with regards to: The transition to retirement income stream rules relating to the death of a member. Addressing double taxation in respect of deferred annuities purchased by a superannuation fund or retirement savings account. Social Security Skills Checkpoint for Older Workers Program To support employees aged 45-70 to remain in the workforce, the Government will provide funding to establish the Skills Checkpoint for Older Workers Program. This will mean, starting from 1 September 2018, 5,000 employees each year would be entitled to receive customised career advice on transitioning into new roles, or their pathways to a new career, including referrals to relevant training options. Jobs and skills for mature age Australians The Government will provide funding to support mature age Australians, aged 45 years and over, to adapt to the transitioning economy and develop the skills needed to remain in work. This includes targeted funding, for example, to those considering early retirement or who are retrenched to look at alternatives to remain in employment. Finances for a longer life From 1 July 2019: The Pension Work Bonus will increase from $250 to $300 per fortnight to allow pensioners (and self-employed retirees) to earn up to $7,800 each year without affecting their pension. The Government will introduce a ‘retirement income covenant’ requiring superannuation trustees to formulate a retirement income strategy for their members and offer ‘Comprehensive Income Products for Retirement’ (CPIRs), which provide an income for life, regardless how long the member lives. Pension means test concessions will be introduced to encourage the development and take-up of pooled lifetime retirement income products that help retirees manage longevity risk. Only 60% of the assets and income from a qualifying income stream would be assessable, reducing to 30% from age 84 or a minimum of 5 years. The Pension Loans Scheme will be expanded to everyone over Age Pension age, allowing homeowners to borrow a fortnightly amount that tops up their Age Pension to 150% of the Age Pension rate (increased from 100%). The loan is paid fortnightly, is tax-free and currently attracts compound interest of 5.25% on the outstanding balance. Healthy ageing and high quality care The Government will deliver an additional 14,000 new high level home care packages over four years from 2018-19. Furthermore, 13,500 residential aged care places and 775 short-term restorative care places in the 2018-19 Aged Care Approvals Round will be released. From 1 July 2018, the Residential Care and Home Care programs will be combined. Moving forward Whilst there were many other proposed measures in the 2018-19 Federal Budget, we have focused predominantly on the ones that may relate to you and your personal finances. Other measures not mentioned include, for example, the infrastructure spend on road and rail projects (i.e. Melbourne Airport Rail Link, Bruce Highway, Perth Metronet, and Western Sydney Airport), funding for schools, public hospitals, and regulators, to name a few. For more information on this year’s Federal Budget and what it may mean for you, please watch Jeremy Thorpe from PwC Australia discuss his thoughts, and the summary of the winners and losers by ABC News.
  2. Andrew from Vista Financial

    Sources of Income in Retirement

    Switching from earning an income through employment to generating an income in retirement can require some careful planning. Often income will come from many different sources and the combination that works for you will depend on your individual circumstances. It pays to seek financial advice to help determine which sources of income will best meet your needs and living costs and support you through your retirement.
  3. Andrew from Vista Financial

    What is a Managed Fund?

    When it comes to investing, there are various investment methods available to build and maintain wealth over the long-term. For example, depending on your circumstances, you may invest directly (e.g. share portfolio), indirectly (e.g. managed fund), or a combination of these. Managed funds are professionally managed investment vehicles that allow investors to pool their money together to invest. They may differ in the way they invest (e.g. asset allocation, investment philosophy, risk tolerance and investment time horizon) and the fees and charges attached to them can differ. Watch our animation for further insight into what a managed fund is, how it works, and the pros and cons of investing in one: Managed Fund Video
  4. Andrew from Vista Financial

    What is a Managed Fund?

  5. Andrew from Vista Financial

    What is an investment (insurance) bond?

    When investment strategies are implemented to build and maintain wealth, they are centred on an understanding of your financial situation, goals and objectives. The utilisation of superannuation is often a major component of this due to reasons such as the variety of investment options available and the favourable tax treatment of income and capital gains in both the accumulation and pension phase. Depending on your personal circumstances, there may be situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation. Reasons that can prompt this may include: Savings for future expenses that will be incurred in the medium to long-term, but prior to your ability to gain access to superannuation. These expenses may comprise such things as saving for a long-stay overseas holiday or your child’s education or wedding. Alternatively, you may find that you wish to continue building wealth, however you are unable to make further contributions to superannuation due to reasons such as your age and employment situation, or having exceeded your contributions cap limits. Due to the above considerations, you may find that an investment bond (also commonly referred to as an insurance bond) forms a component of your overall investment portfolio. What is an investment bond? An investment bond is a non-superannuation investment vehicle commonly offered by insurance companies and friendly societies. It has similar features to a managed fund (e.g. your money is pooled with other investors and is managed by fund managers) combined with an insurance policy (e.g. with a life insured and a nominated beneficiary). This type of investment has been around for some time now, and it’s one way to build wealth outside of superannuation in a tax effective manner if the relevant investment bond rules governing contributions and withdrawals are followed and the strategy is appropriate to your financial situation, goals and objectives. Below we have provided you with some of the key points surrounding investment bonds. Investment options As with any investment, your risk profile is an important consideration. Although investment options may vary between bond issuers, generally an investment bond gives you the ability to invest in a variety of different investments and construct a portfolio that has asset weightings appropriate to your risk profile. For example, you may have the choice to invest in conservative assets (such as cash and fixed interest), growth assets (such as shares and property), or a diversified mixture of both. Tax treatment Investment bonds are tax paid investments. This means that tax is paid by the bond issuer and not you as the investor. The maximum tax paid on earnings is 30% before being reinvested back into the investment bond; however, depending on the underlying investments in the investment bond, you may find that franking credits and other offsets may further reduce this effective tax rate. In addition, generally you do not need to declare earnings in your tax return. As such, investing in an investment bond may be of benefit to you if your marginal tax rate is higher than 30%. In terms of withdrawals, if you decide to redeem your investment after 10 years, subject to the 125% rule (discussed below), then there is no additional tax payable on earnings; however, if this is done within the first 10 years, then the following rules apply. Investment bond - Tax treatment of earnings upon withdrawal Withdrawal made Tax treatment Within the first 8 years 100% of earnings assessed at your marginal tax rate (MTR)* In year 9 Two-thirds of earnings assessed at your MTR* In year 10 One-third of earnings assessed at your MTR* After 10 years No additional tax payable on earnings *Less a 30 tax offset. Given the tax treatment on earnings when making a withdrawal, you will typically find that this type of investment is generally held for the long-term, namely, more than 10 years. Initial contribution and future contributions (the 125% rule) When it comes to investing in an investment bond, there is no cap on your initial contribution, however some bond issuers may require a minimum initial investment amount. Furthermore, you can usually make additional contributions in future years. Provided these additional contributions are no more than 125% of the previous year’s contributions, they are treated for tax purposes as if they were made in the first year. For example, if you make total investments of $2,000 in the first year, your future contributions could increase each year as shown below, without breaching the 125% rule: Investment bond - 125% rule Years Contributions 1 $2,000 2 $2,500 3 $3,125 4 $3,906 5 $4,883 5 $6,104 7 $7,629 8 $9,537 9 $11,921 10 $14,901 However, there are two important things to consider regarding contributions and the 125% rule: If you make contributions that exceed 125% of the previous year's investment, the start date of the 10 year period will reset to the start of the investment year in which the excess contributions were made. If you don’t make a contribution to the investment bond in one year, any contributions in following years will reset the start date of the 10 year period. Fees payable The fees applicable to the investment bond will depend on the relevant bond issuer and the investment options that you have chosen; however, common fees that you may pay can include establishment fees, contribution fees, withdrawal fees, management fees, switching fees and adviser service fees. Estate planning An investment bond may provide estate planning opportunities. For example: Death benefits from an investment bond can be directed to a nominated beneficiary tax-free regardless of who receives the benefit or how long it has been held. You can invest for the benefit of a child, with the option to have the ownership transferred automatically to them once they reach a nominated age. Furthermore, the 10 year period generally doesn’t reset upon the transfer of ownership. Moving forward As you can see, an investment bond may be an important consideration in situations where it’s also beneficial for you to grow and hold a portion of your wealth outside of superannuation in a tax effective manner; however, the use of an investment bond will be based on your financial situation, goals and objectives. Consequently, depending on your personal circumstances and the reason for growing and holding wealth outside of superannuation, alternatives to investment bonds that may also be considered are direct shares, managed funds, online savings accounts or mortgage reduction (and then withdrawing the required amount when needed via a redraw facility). If you have any questions about investment bonds then please contact us.
  6. Andrew from Vista Financial

    The Pension Protection Fund

    The Pension Protection Fund (PPF) protects millions of people throughout the UK who belong to defined benefit, eg final salary, pension schemes. If their employers go bust, and their pension scheme can't afford to pay what they promised, the PPF will pay compensation for their lost pensions.
  7. Andrew from Vista Financial

    Running the retirement planning race

    For those who have taken part in a marathon or other endurance sport, you’ll already know that to reach the finish line you need: 1. Preparation, 2. Flexibility, 3. And, perseverance. In many ways, retirement planning is quite similar. Below we take a look at some of the key considerations. Getting clear on why you’re doing it and making the commitment When it comes to taking that first step, one of the biggest obstacles to retirement planning is shifting one’s mindset. Understandably, it can be hard to engage with the topic of retirement, especially if it’s far off and you have competing priorities right now. One place to start is by considering what kind of lifestyle you’d like to lead in retirement and how you might fund it. The Age Pension is a safety net for those who don’t have enough superannuation or other financial resources behind them to generate a reasonable minimum retirement income. The maximum Age Pension alone allows for a very basic lifestyle – the current full payment rate (including the pension supplement and energy supplement) is $23,096 pa for singles and $17,410 pa each for couples. From 1 July 2017, those at least 65.5 years may qualify, however the age is set to increase by 6 months every 2 years and will be 67 years by 1 July 2023. If you are striving towards a better lifestyle in retirement and/or want to retire before the Age Pension kicks in you will need to build your own personal financial fitness, to either supplement the Age Pension or self-fund your retirement. This may involve ramping up your debt repayments and/or savings. For example, paying off your home and growing your superannuation (over and above your employer’s Superannuation Guarantee contributions) and/or other investments outside of superannuation to reach your goal. Taking a proactive approach to retirement planning earlier, means you can benefit from the power of compounding and give yourself flexibility if things change along the way. This may enable you to move towards your goal at a more comfortable pace. If you leave retirement planning for later, you may find yourself under more pressure to reach the same goal or your expectations for retirement may need to be revised. See our article “It’s Never Too Early or Too Late To Save For Retirement" for a good example of this. Here, we show how much money you need to set aside each month (assuming a 6% return pa) to reach $1 million by age 65 if you start at different ages during your lifetime. For example: Age 20 = $361.04 pm Age 30 = $698.41 pm Age 40 = $1,435.83 pm Age 50 = $3,421.46 pm Building your support team, assessing your existing situation and cross-training An important part of retirement planning is building a team of relevant people around you. For example, your financial adviser is here to help you map out an appropriate path and support you on your journey. This will initially be based on an assessment of your baseline financial fitness and the establishment of a plan that focuses on the steps that need to be taken to achieve your goal. Depending on your circumstances, the plan can encompass many areas of your personal finances. For example: Creating a budget and monitoring your cash inflows and outflows Managing your debt levels and making extra debt repayments Saving and investing for the long-term Reviewing the use of superannuation as a vehicle for wealth accumulation Establishing a contingency plan with personal insurances. Together these things can help you reach your goal. For example, budgeting can help you tap into surplus income, which can then be used to pay down debt faster. The extinguishment of debt, frees up further income, which you may choose to contribute into superannuation and/or build other investments outside of superannuation. Having appropriate personal insurances in place can help you stay on track to reach your goal when an unexpected event such as a sickness or injury occurs. Milestones, reassessing your progress and blasting through the wall Retirement planning is not a sprint. It’s a long-distance run. So, working towards smaller milestones, reassessing your progress and making adjustments where needed along the way can help you stay motivated and keep on track to achieving your goal. A milestone can be extinguishing debt by a certain date, reassessing your progress can include an annual review of your financial situation, whilst making adjustments can involve tweaking your plan to cater for changes in legislation over time. Nevertheless, at a certain stage in your race whether it be at the beginning, halfway through or nearing the finish line, you may find yourself hitting a “wall”. This may be due to one or a combination of factors, for example, competing priorities and/or unexpected events. To manage your way through this, it’s important to assess the situation with your support team, make adjustments where required, and then refocus your attention to the goal at hand. Digging deep, crossing the finish line and post-planning Nearing the finish line, may be the point in your life where you have paid off your debts, accumulated a reasonable superannuation account balance, have additional investments outside of super and are in the highest income earning years of your career. This is where you can start to think about building on what you have already achieved to date. For example, by doubling down to further boost your superannuation in the time remaining, which may involve maximising your concessional and non-concessional contributions whilst still considering the limits. Crossing the finish line is often accompanied by a feeling of relief and accomplishment. Your preparation, flexibility and perseverance has culminated into your goal becoming a reality. At this stage, it’s time to reassess your current situation and manage your recovery and relaxation. The next chapter of your life is upon you, although it may not be as physically and mentally demanding, it’s still important to stay on top of your new baseline financial fitness. We hope you have enjoyed our look at some of the parallels between retirement planning and running a marathon. If you need help with your retirement planning, remember we are here to help you map out an appropriate path and support you along the way. Access this and many more articles and videos like this here: Vista Financial Knowledge Centre
  8. Andrew from Vista Financial

    The pitfalls of DIY Will kits

    According to recent research, approximately 45% of Australians* pass away without a will, or ‘intestate'. The word intestate is derived from the Latin word intestatus meaning a person who passes away without a will. Intestacy may result in inconvenience, delay, and expense during a difficult time in your life having just lost a loved one. Intestacy may occur not only where a person fails to make a will, but also for other reasons, such as: The will didn't properly dispose of all their assets; The will was invalid due to it not being signed and witnessed according to the law; The person didn't have the mental capacity to make the will in the first place; and, The will was drafted poorly, and the legal rules governing will construction weren't followed. When considering your estate planning, it may be easy to fall into the mindset that drafting a will is a simple Do-It-Yourself task, especially considering there are many cheap DIY options available online and through your local newsagency or post office. However, a recent analysis*^ completed by Choice, in consultation with several estate planning professionals, looked at numerous DIY will kits available and they settled on this summary comment: “Will kits can be an excellent research tool. Depending on your situation and skills, they can help you to write your will, but they can't adequately handle complex situations such as blended families or self-managed super funds. So we recommend you get some expert advice as well. Making sure your loved ones are provided for is far too important to leave to chance, and the consequences could be disastrous if you get it wrong.” The main points that lead to this summary by Choice regarding DIY wills are as follows: Will Kit 1 The will kit contained basic instructions, which may have resulted in confusion. 'Issues relating to children, taxation, superannuation and executors' weren’t appropriately covered off on. Will Kit 2 There was no mention of taxation issues. Will Kit 3 There was no space for witnesses (to the will) to sign each page, so the will may be considered invalid. 'Discussion about who could challenge the will was not entirely correct'. Superannuation issues weren't appropriately covered off on. Will Kit 4 The summary regarding the distribution of superannuation was unclear. There was 'no provision or explanation as to when it would be appropriate to seek tax advice'. Will Kit 5 The will didn't appropriately deal with superannuation and taxation issues. There were no clear instructions to seek professional advice if/when doubt arose from anything contained within the will kit. As you can see by the above points, there appear to be common trends when it comes to DIY will kits i.e. formatting issues and the lack of informative information in certain areas, such as taxation and superannuation. In addition, many DIY will kits do not offer the capacity for establishing testamentary trusts (to protect assets after your passing or for tax-related purposes), nor are they able to be amended with a codicil (an additional document that allows you to change details in your will such as an Executor or a beneficiary changing their name). By seeking professional advice from your estate planning professional, in conjunction with your financial adviser and accountant, you can limit the chance of leaving behind a partial or fully intestate estate, as well as make sure the will that is drafted reflects your full intentions and the individual complexities of your personal finances, such as personal insurances, investments, superannuation, and taxation considerations. It is a good habit to review your estate planning situation and needs at least every five years, or if a major event happens. Article from Vista Financial Knowledge Centre
  9. Andrew from Vista Financial

    Multiple super accounts and you

    Regardless of your age, one of the ways to help you grow your wealth and prepare for retirement is to take an active interest in your superannuation sooner rather than later, especially when considering the impact that having multiple superannuation accounts may have on your end ‘retirement nest egg’. You’ll notice from your superannuation statement, that your super grows from contributions and returns less tax and costs (such as contributions tax, administration/member fees, investment fees, adviser fees and insurance premiums). With this in mind, consider what impact several sets of deducted costs may have on your overall superannuation balance if you have multiple superannuation accounts running simultaneously. Not to mention all the extra paperwork come super statement time. As at 30 June 2016, over 14.8 million Australians have a superannuation account* – great news for people looking to have a lifestyle above what is provided by Age Pension entitlements! But did you know that almost half currently hold their superannuation in more than one fund? What’s more alarming is that many of these people are nearing retirement in the 61 to 65 age bracket. That could mean they may have been paying duplicate sets of costs throughout their working life, potentially reducing their ‘retirement nest egg’! Fees aside, it is also important to be aware of how this impacts asset allocation. In many instances your additional superannuation accounts may have been established under what is called a ‘default investment option’, which in some instances coincides with a balanced investor, on average this equates to roughly 70% growth assets (such as shares and property) and 30% income assets (such as cash and fixed interest). You might find that this is exactly how you would like to be invested based on your financial goals and objectives and risk tolerance. But if the default investment option does not align with your needs it may mean that you’re not getting an optimal result from your superannuation. Before you go rolling one superannuation balance into another it is important to understand that in some instances it may make sense to retain multiple superannuation accounts. For example, you may be in a position where: one superannuation account needs to be retained with the minimal account balance because you have personal insurance cover within it that was established prior to a medical condition developing; whereas, the other superannuation account is receiving your personal and employer contributions due to its potentially better quality investments. If you are unsure about which path to take, then remember it is ok to seek professional advice from us before you consolidate your accounts because we can help you make an informed decision regarding fees, insurance offerings (and insurance cover established prior to medical conditions), defined benefit schemes, as well as diversification, risk tolerance and much, much more. Lastly, as at 30 June 2016, there were roughly six million lost and ATO-held superannuation accounts with a total value of roughly $16 billion*. Is some of it yours? Read our article on how to find your lost super because it could mean more money for you in retirement!
  10. Andrew from Vista Financial

    Vista Financial Knowledge Centre

    We have recently launched a financial knowledge centre which can be found here: http://www.vista.financialknowledgecentre.com.au/kcarticles.php and it's FULL of informative and educational articles and videos on all things finance, here’s a video to explain it. I should also mention that it is free to sign up even if you are not a client of Vista and you will receive a 2 month trial period.
  11. Andrew from Vista Financial

    When can I get a Mortgage

    Hello Phil An employee will secure a mortgage much sooner typically than someone that is self-employed as usually a self-employed person requires at least 2 years books. The other hurdle is that I believe the 489 is a temporary visa and this can mean that some lenders will not entertain the idea of a loan. However some will but typically the maximum loan will be an 80% LVR. Really you will need to be here and in employment/working before you can entertain the idea of looking at securing a mortgage I think but as I say unless you have a huge deposit and are willing to pay a premium for a mortgage it's likely that the employee route will provide a better chance. Regards Andy
  12. Andrew from Vista Financial

    Tax on money transfer

    Hey KPG It seems that Snifter has answered your questions already however just to clarify the tax situation on monies that you bring with you to Australia when you emigrate....no it is not taxed. Regards Andy
  13. Andrew from Vista Financial

    UK Pension

    Hello Pamela In that case it makes no difference from a tax perspective whether you have the payments paid directly to your Australian or UK Bank. Is that is what you are trying to ascertain?? Andy
  14. Andrew from Vista Financial

    UK Pension

    Hello Pamela In relation to your private pensions........are these in payment already? Thanks Andy
  15. Andrew from Vista Financial

    Work Bonus (Age Pension)

    Work Bonus The Work Bonus provides an incentive for pensioners over Age Pension age to participate in the workforce by allowing them to keep more of their pension when they have earnings from working. How does the Work Bonus affect pension rates? The Work Bonus increases the amount an eligible pensioner can earn from employment before it affects their pension rate. The first $250 of fortnightly employment income is not assessed and is not counted under the pension income test. The Work Bonus operates in addition to the pension income test free area. From 1 July 2015, for single pensioners, the pension income test free area is $164 a fortnight and for couples combined, it is $292 a fortnight. For example, this means a single pensioner over Age Pension age with no other private income could earn up to $414 a fortnight from employment and still receive the maximum rate of pension. Work Bonus Income Bank Pensioners over Age Pension age accrue any unused part of the $250 fortnightly Work Bonus exemption amount in a Work Bonus income bank, up to a maximum of $6,500. The income bank amount offsets future employment income from the pension income test. The income bank amount is not time limited; if unused, it carries forward, even across years. The Work Bonus income bank is useful for pensioners who wish to work, particularly those who undertake intermittent or occasional work. How does the new Work Bonus work for single pensioners? Example 1: Bob is an age pensioner working as a school crossing supervisor, earning $300 a fortnight. He has no income other than the Age Pension. Under the Work Bonus, the first $250 of Bob’s employment income is not assessed, and only $50 is counted under the pension income test. This is less than the pension income test free area of $164 a fortnight for a single pensioner, and Bob will still receive the maximum rate of Age Pension. Example 2: Maria is an age pensioner who works for three fortnights as an accountant. She has no other income. As Maria has not worked in the previous 12 months, she has accumulated the maximum income bank amount of $6,500 (26 fortnights x $250). During the three fortnights that she works, Maria earns $2,000 a fortnight, a total of $6,000. As Maria’s income bank amount is more than her employment income, none of the $6,000 is assessed under the income test and she will still receive the maximum rate of Age Pension. In addition, Maria will retain $1,250 in her income bank to offset any future employment earnings ($6,500 - $6,000 earnings + $250 Work Bonus concession for each of the three fortnights that Maria works). How does the Work Bonus affect the employment income of your partner? The Work Bonus applies to individual pensioners. It cannot be shared by a pensioner couple. Example: Mary and Jim are a couple who both receive the Age Pension. Mary has employment income of $550 a fortnight and Jim has employment income of $200 a fortnight. They have no other income. Under the Work Bonus, the first $250 of an individual’s employment income is not assessed. Only $300 a fortnight is assessed as income for Mary and nothing is assessed as income for Jim. Under the pension income test, pension is reduced by 50c for every $1 of income over the income test free area. Mary and Jim’s combined assessed income of $300 a fortnight is $8 higher than the income test free area ($292 a fortnight for a couple) and their combined pensions are reduced by $4 a fortnight ($2 a fortnight each). If Jim was under pension age, he would not be eligible for the Work Bonus and all of his earnings of $200 a fortnight would be assessed as income. Who is eligible for the Work Bonus? All pensioners over Age Pension age are eligible for the Work Bonus if they have employment income. This includes: Age Pension, Carer Payment, Bereavement Allowance, Disability Support Pension, Widow B Pension and Wife Pension recipients. Employment income Employment income is income from paid work undertaken by the person as an employee in an employer/employee relationship. This includes but is not limited to salary, wages, leave payments, commissions, employment-related fringe benefits, bonus payments, supported wages and casual loading. Employment income does not include income from self-employment or business income. Pensioners who are self-employed or running a business are not entitled to the Work Bonus, but are able to make business deductions from their income. Application for the Work Bonus Pensioners do not need to apply for the Work Bonus. If you are a pensioner with variable fortnightly employment income, you must keep Centrelink informed of your income. The Work Bonus can only be applied to employment income that has been reported. Pensioners can report over the phone (including Voice Recognition), in person at a Centrelink office or by using the internet. For more information For more information about the Work Bonus, contact the Department of Human Services (DHS) on 13 2300 or visit the DHS website.
  16. Andrew from Vista Financial

    Driving Licence

    Hello I can't remember if you have to do something different the first time you get one (been here for almost 10 years now). I'm sure you have seen the website: https://www.sa.gov.au/topics/driving-and-transport/motoring-fees/driver-s-licence-and-permit-fees It looks like that's for the year and then there is the admin charge so probably better getting longer then 1 year. There is an enquiry button on the site, maybe send an email to them, I'm sure they will be happy to confirm. Regards Andy
  17. Have you have transferred your UK Pension to an Australian Superannuation Fund (under QROPS rules) prior to April 2017? If so and particularly if you did this through your Bank (especially the Major 4 Banks) or one of the big UK Pension Transfer companies then a review of your Superannuation Fund really should be considered. There are many reasons that a review could benefit you and add value to you for your retirement (which of course is the whole reason for having a pension/superannuation fund). Some of the reasons for reviewing could be: You are paying high fees for your fund when they are not warranted; Your money is not invested in the correct Risk Profile in accordance with your needs/comfort zone; You money is sitting in Cash and is not invested at all and therefore is not providing any/minimal returns for your retirement; You are paying fees to a Financial Adviser who you feel you are receiving no benefit or value from OR even worse you are paying fees to a Financial Adviser who is not even contacting you for Financial Planning Reviews;; Your investments are performing below expectations; You do not think you can move your super monies to another Super Funs due to UK (HMRC) penalties (which actually may not be the case). If you have any of the concerns listed above then a Review of your (former UK Pension monies) Superannuation Fund is most certainly warranted. If you would like to review your situation then we are able to assist. We are licensed Australian Financial Planners (former UK Advisers) who work with and maintain strong connections with UK Advisers and who deal with UK Expats daily (our business is predominately UK Expat based). We will be in a position to help alleviate any of your above concerns by reviewing your Super Fund and if is it not appropriate AND a move is allowable (under UK rules which we will confirm) we can advise on a more appropriate Super Fund and/or Investment Portfolio for your monies which is more suitable for you.
  18. Andrew from Vista Financial

    Tax on overseas money without interest gain

    Hello Eugene Welcome to the forum. Have a look at this thread on our Sister site Perth Poms: https://www.perthpoms.com/topic/18395-can-you-help-any-advice/ This may assist. Regards Andy
  19. Andrew from Vista Financial

    Spouse Super Contribution (Tax Offset)

    If you make contributions to a complying superannuation fund or a retirement savings account (RSA) on behalf of your spouse (married or de facto) who is earning a low income or not working, you may be able to claim a tax offset up to $540. For 2017-18 and later income years the sum of your spouse's assessable income, total reportable fringe benefits amounts and reportable employer super contributions was less than $40,000 and the contributions were not deductible to you. See here for further information or talk to us: Click here
  20. Andrew from Vista Financial

    QROPS / ROPS - query with pension transferred in 2011 from UK to Aus

    Thanks for this Nic, appreciated. Hello Ali Yes the rules have changed recently however there should still be a difference as to when the member payment charges apply based on pre and post April 6 2017 transfers. Do you wish to perhaps email me and we can pick this up offline? Email is in my signature. Regards Andy
  21. Financial planning is about protecting your wealth as well as building your wealth. It is easy to think that we won’t get sick or hurt and ignore the need to protect the very thing that generates our wealth, our own health and our ability to work. But if accident or serious illness does occur the impacts can be devastating. It’s worth remembering that no matter how much expert advice you receive or how well you manage your finances there is always a risk that you could suffer an early death or serious illness or injury. Where that leaves you and your loved ones in the future depends on the wealth protection strategy you have in place. Risks you could face in the future may include: Emotional, physical or mental trauma Death or serious illness Loss of income due to temporary or permanent incapacity Damage to your house or other personal assets Theft and/or damage to business assets Public liability and/or professional indemnity risks Your financial plan should include a strategy to minimise risks that could jeopardise both your present and future plans. In simple terms, if you cannot afford to lose something then you should try to protect your exposure. Insurance can provide a cost-effective protection mechanism. This may take a combination of personal, general and health insurance policies. There are many different aspects to insurance and it is best to tailor a package that suits your needs as well as your budget. How the Strategy Works Personal risk insurance protects your wealth accumulation strategy by providing money if you are no longer able to earn an income due to disability, trauma or death. The money received can help with medical bills, loan repayments and living expenses. Many people often underestimate the importance of personal insurance which has led to a problem with underinsurance in Australia. It is important that you consider having enough cover to replace your income and cover expenses so that the personal tragedy does not create financial tragedy. You can apply for insurance to cover you in the event of death, temporary or permanent disability, or trauma (critical illness). Outlined below is a brief outline of types of personal risk insurance. Life Insurance The most common type of cover is life insurance (term life insurance). Life insurance will pay a lump sum to your estate or specific beneficiaries in the event of death or in some cases, terminal illness. The advantage of life insurance is peace of mind that your death will minimise any financial hardship for your loved ones. Life insurance can be used to pay off debts, provide an income for dependents, cover funeral expenses and generally assist in maintaining your family’s lifestyle in the event of your death. With this type of cover, your family would not be burdened by debt and may be protected from selling assets to pay debts or cover living expenses. Total and Permanent Disability Insurance Total and Permanent Disablement (TPD) can prevent you from working and require expensive medical treatment and ongoing care. TPD insurance aims to provide a lump sum if you suffer an illness or injury and you: Are permanently unable to work again or Are unable to care for yourself independently, or Suffer significant and permanent cognitive impairment. TPD insurance pays a lump sum which can be used to pay for medical expenses, ongoing care costs and to meet living expenses for you and your family. The definition of TPD can vary and may include options for a range of occupations, including homemakers. Options that you can choose from include: Any Occupation TPD: The benefit will be paid if you are unlikely to be engaged in any gainful business, profession or occupation to which you are reasonable suited by your education, training or experience. This definition is generally less expensive than an Own Occupation definition but for some people may be harder to meet. Own Occupation TPD: The benefit will be paid if you are unlikely to ever be engaged in your own occupation again. Own Occupation TPD provides a generous definition as it is specific to your occupation and is particularly suitable for specialist occupations. The premiums for this type of definition are more expensive than Any Occupation TPD. You should discuss your circumstances with your financial planner. Trauma Insurance A serious illness or injury can prevent you from working for a period of time and may require expensive medical treatment. Trauma insurance (also known as critical illness, crisis or recovery insurance) aims to provide a lump sum upon the diagnosis of a specified illness or injury such as life threatening cancer, stroke or heart attack. Trauma insurance pays a lump sum which can be used to pay medical expenses and reduce any financial pressure while you focus on recovery. This payment is made regardless of whether you are able to return to work, and is designed to relieve financial pressure at a time when you are under great stress. Child Trauma insurance can be added to your policy to cover a seriously ill or injured child. This provides a lump sum to help you cover medical treatment and eases financial worry for parents who may need to take time off work to provide care. Income Protection Insurance Income Protection insurance aims to minimise the financial impact of sickness or injury by replacing income lost during a prolonged absence from work. A monthly benefit will assist you to meet living expenses and debt repayments. Income Protection policies will usually pay a benefit up to 75% of your gross income (some policies may pay higher) after a waiting period. Payments continue for a set term or until you return to work. Generally premiums for income protection are fully tax deductible. Waiting period: This is the time period that you must be off work before an income benefit is payable. Waiting periods range from 14 days to two years. Generally, the longer the waiting period, the lower the cost of the income protection insurance. Benefit period: Starting at the end of the waiting period, the benefit period is the maximum time the benefit is paid. Options range from two years, five years or until a specified age such as age 65. Types of contracts include: Agreed value: The monthly benefit is agreed at the time of application and will not reduce even if your income decreases after your policy commenced. This option provides certainty and peace of mind on how much income you will receive. If details of your income are provided at the time of application the benefit can be guaranteed so that no further financial assessment is required at the time of claim. Indemnity value: The monthly benefit paid depends on your earnings at the time of a claim rather than at the time of application. If your income at the time of claim is lower than it was when the policy started, the monthly benefit may be reduced accordingly. Details and proof of income will be required at the time of claim. You can generally claim a tax deduction for the premiums paid on an income protection policy to reduce the effective cost but any income payments received are considered taxable income. Business Expense Insurance Business expense insurance can help to keep your business running if you are unable to work due to temporary illness or injury. This may be particularly appropriate for a sole trader. This type of insurance will usually cover up to 100% of your eligible business expenses, for example rent/lease payments, interest costs, accountant’s fees, telephone, electricity, etc. However, not all expenses are covered so you should check the policy wording before taking out a policy. Alternatively, if you run a larger business you may need to consider life, trauma, TPD or income protection insurance to cover ‘key’ employees or your business partners in case they die or become disabled and are unable to work. This type of insurance protects your business in the event of the loss of a person who makes a significant contribution towards the profitability or stability of the business. As an example, ‘key person’ insurance may provide the business with a lump sum that could be used to either hire a temporary replacement, cover costs of training a new staff member or just compensate the business for any reduction to profit. The premiums may be deductible as a business expense depending on the insurance purpose and the proceeds may also be considered taxable income. Premiums Premiums for all types of personal insurance will vary with age, gender and smoking status. Occupation and medical history may also affect the cost of premiums. Premium options include: Level premiums: The premium rate is fixed when you start the policy and does not change as you get older except in line with CPI indexation. Level premiums are initially higher (than stepped premiums) but will be more stable over time. This can help with affordability and reduce the risk that premiums will become unaffordable as you get older. Stepped premiums: The premium rate increases each year according to your age. Stepped premiums are initially more affordable than level premiums but over time may become more expensive. However, this option can provide you with flexibility as your needs change over time. Your financial adviser can assist in determining which premium option is most appropriate for you. Ownership Life, TPD and income protection policies can be owned personally or through a superannuation fund. Trauma insurance can be owned personally. When held within a superannuation fund, the policy is owned by the trustees usually for the benefit of the member. When making a choice of how to own the policy you need to consider the advantages and disadvantages of each option. Inside Superannuation In Personal Name Advantages · Premiums are paid using contributions into the fund (e.g. employer contributions) or your superannuation savings – this can help to ease your cash flow. · Tax concessions on contributions may reduce the effective cost of the premiums (e.g. salary sacrifice to cover the cost of premiums) · In some funds you may be eligible for automatic acceptance (for some cover) which means you will not have to provide evidence of health or income · The claim proceeds are usually tax-free · Claim proceeds will be paid directly to you, your estate or nominated beneficiary as appropriate. This ensures the money is available when you and your family need it · A wider range of benefits and features may be available · Income protection premiums are generally tax deductible Disadvantages · The policies may have less benefits and features than those offered outside superannuation due to legislation restrictions · Tax may be payable on claim proceeds, depending on circumstances and rules at the time · Your disposable income will be reduced as you need to pay premiums from your after-tax income · Premiums need to be paid from after-tax money and so may be a higher cost to you than premiums inside superannuation Taxation How insurance premiums and claim proceeds are taxed will depend on the type of insurance policy and beneficiary, but will also depend on whether you choose to hold the policy inside or outside of superannuation. You should seek specialist taxation advice to check the taxation applicable to your circumstances. Inside Superannuation In Personal Name Premiums · Premiums are deductible to the fund · Not deductible except for income protection policies Claim Proceeds · Life policy – the proceeds are taxable only if paid to a non-tax dependant · TPD – if you are under age 60 when you take this money out of superannuation tax may be payable · Income protection – the benefits are assessable income to you and are taxed at your marginal tax rate · The proceeds from a life, TPD or trauma policy are generally tax-free. However, the benefits from an income protection policy are assessable income and taxed at your marginal tax rate Application and Underwriting When applying for insurance you will need to complete an application form providing both personal and medical information so that the underwriter can assess the application. Some applicants may also need to undergo a medical examination and/or blood tests or a report may be requested from their usual doctor to determine whether to accept or decline the cover. Depending on your circumstances and health you may be asked to pay an additional premium, known as a loading, if you have an unfavourable medical history or display higher risk factors for developing chronic illness such as being overweight or high blood pressure. In some cases, the life insurance company may apply an exclusion to your policy. For example, a decision may be made to not cover your for high risk activities and sports or a pre-existing injury/illness. This means that if an event occurs that is excluded, the benefit under the policy will not be paid. Many policies are guaranteed renewable. This means that as long as you pay the premium you will continue to receive cover regardless of any changes in your circumstances or health. If you do not pay your premiums, your insurance will lapse. Some life companies may provide a short window of opportunity to pay your overdue premiums to maintain the cover if you have missed the due date. If your policy lapses and your health or circumstances have changed it may impact on your ability to get the same cover at the same premium. It is important to understand the benefits included in your policy, and optional extras. Benefits included are at no extra cost however optional extras may increase your premium. Your financial adviser can discuss the features of the recommended policy with you.
  22. Andrew from Vista Financial

    Changes to Superannuation - Video overview

    There are some BIG changes coming to Superannuation from 1 July 2017. Watch this short video for an overview of them:
  23. Andrew from Vista Financial

    Info about my private pension

    Hi Tracy What was the reason that you moved your UK pensions to Gibraltar in the first place? Regards moving them to Australia, can I ask how old you are? It is now only possible to move them to Australia if you are over age 55. We do have UK associates that would be able to assist with advising on investments within a Gib QROPS, if you would like further details please feel free to email (address in signature). Regards Andy
  24. Andrew from Vista Financial

    SA miss out on Infrastructure spending

    From Jay Weatherill's Facebook page: Of the $70 billion allocated for infrastructure in the Federal Budget, SA will receive no new funding. No new projects. No new roads. Disappointingly, our state has been completely ignored in favour of the eastern states and WA.
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