Andrew from Vista Financial

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  1. 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
  2. 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 it is not taxed. Regards Andy
  3. 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
  4. UK Pension

    Hello Pamela In relation to your private pensions........are these in payment already? Thanks Andy
  5. 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.
  6. 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: 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
  7. 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.
  8. 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: This may assist. Regards Andy
  9. 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
  10. 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
  11. 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.
  12. 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:
  13. 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
  14. 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.
  15. 2017 Federal Budget Analysis

    First home savers, downsizers and small business are the winners in Treasurer Scott Morrison’s second Budget – while taxpayers face an increase in the Medicare levy. Note: These changes are proposals only and may or may not be made law Superannuation Contributions from downsizing the home Date of effect: 1 July 2018 Individuals aged 65 or older will be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of the family home. This limit will: apply on a per person basis be in addition to the ordinary non-concessional contribution cap, and be available where the home has been owned for at least 10 years. Unlike other non-concessional contributions, it will not be necessary to meet a work test or have a ‘total super balance’ under $1.6 million. The amount contributed will not be exempt from the assets test used to assess eligibility for the Age Pension. First home super saver scheme Date of effect: From 1 July 2017 First home buyers will be able to save for a deposit by making voluntary concessional and non-concessional super contributions. Contributions will be limited to $15,000 per year (up to a total of $30,000) and will count towards the relevant contribution cap. Withdrawals can be made from 1 July 2018. Concessional contributions plus assumed earnings withdrawn will be taxed at the person’s marginal tax rate, less a 30% tax offset. The Government has provided an online estimator to help individuals calculate the potential benefit of the scheme. SMSF borrowings Date of effect: When law is passed Broadly, when new limited recourse borrowing arrangements are established, the loan balance will be included in an individual’s ‘total super balance’. The total super balance is used to determine a person’s ability to: make non-concessional contributions qualify for a Government co-contribution or a spouse contribution tax offset, and make catch-up concessional contributions above the annual caps from 1 July 2018, where certain conditions are met. Also, repayments made from the SMSFs accumulation balance will count towards the member’s transfer balance cap, if the borrowing supports a pension account. The transfer balance cap limits the total lifetime transfers a person can make to retirement phase pensions. Taxation Medicare levy increase Date of effect: 1 July 2019 The Medicare levy will increase from 2% to 2.5% pa to fully fund the National Disability Insurance Scheme. This increase will flow to a range of other taxes such as Fringe Benefits Tax. Small business accelerated depreciation Date of effect: 1 July 2017 The ability for small businesses with an annual turnover of $10 million or less to claim an immediate deduction for eligible assets costing less than $20,000 each will be extended for 12 months. HELP thresholds and rates Date of effect: 1 July 2018 The annual income threshold at which Higher Education Loan Program (HELP) repayments commence will be reduced to $42,000 (currently $54,869). Also, the repayment rate will start at 1% and increase progressively to 10%. Social Security Pensioner Concession Card Date of effect: From 1 July 2017 Individuals who lost entitlement to the Pensioner Concession Card as a result of the 1 January 2017 assets test changes will be reissued with the card. Energy Assistance Payment Date of effect: 20 June 2017 Eligible pensioners will be entitled to a one-off Energy Assistance Payment of $75 for singles and $125 per couple. Eligible recipients include Australian residents who qualify for the Age Pension, Disability Support Pension and Service Pension. Residency requirements for pensioners Date of effect: 1 July 2018 To be eligible for the Age Pension and Disability Support Pension (DSP), claimants will need to have 15 years of continuous Australian residence unless they have either: 10 years continuous Australian residence, with 5 years of this being during their working life, or 10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of 5 years. Existing exemptions will continue to apply for DSP applicants who acquire their disability in Australia. Family Tax Benefit – Part A Date of effect: 1 July 2018 A single taper rate of 30 cents in the dollar will apply to income that exceeds the Higher Income Free Area ($94,316 in 2016/17). Currently, two tests are applied and the higher payment determines the entitlement. Family Tax Benefit – Part A and B Date of effect: 1 July 2017 The payment rates will not be indexed for two years. Indexation will resume on 1 July 2019. Liquid Assets Waiting Period Date of effect: 20 September 2018 The maximum Liquid Assets Waiting Period (LAWP) will increase from 13 to 26 weeks. The LAWP is a period an individual will be ineligible to receive Government income support. The new maximum period will apply to: singles without dependents with liquid assets of more than $18,000, or couples, or singles with dependents, with liquid assets of more than $36,000. Liquid assets are readily available assets such as bank accounts, terms deposits, shares and managed funds. Important information The Federal Budget Analysis prepared by the MLC Technical team, part of GWM Adviser Services Limited, appears below. The information contained in this Federal Budget Analysis is current as at 9 May 2017 and is prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071749, registered office 150-153 Miller Street North Sydney NSW 2060, a member of the National Australia Bank Group of Companies. Any advice in this Federal Budget Analysis has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
  16. HMRC Overseas Pension List Re-released

    HMRC has re-released the Recognised Overseas Pension Scheme (ROPS) list released following the temporary suspension it put in place on 14 April. This follows the March UK budget where vast changes to the QROPS system were made and so required Scheme Managers of QROPS to essentially reconfirm in writing to HMRC that they remain QROPS by the 13 April. The new list is here: The sole Australian Retail Scheme has again appeared on the new list which as a reminder is exclusive to members age 55 and over. Regards Andy
  17. New Tax introduced for UK Pension Transfers to QROPS

    This looks like it will impact on Australian resident UK expats who might wish to transfer their UK pension to a QROPS that is not Australian domiciled.
  18. State Aged Pension from the UK

    Hi John I am not sure what the assets test and UK state pension have got to do with each other........................claiming the UK state pension will not have any impact on the assets test (and vice versa), the income test perhaps (depending whether you are under or over the assets test threshold).
  19. Superannuation Changes (passed by law)

    Reduction in Concessional Contribution (SalarySacrifice/Pre-Tax Contributions) Cap Status: Passed Effective: 1 July 2017 The concessional contribution (CC) cap will reduce to $25,000 pa for all individuals regardless of age. The cap will be indexed in line with AWOTE in $2,500 increments. Individuals with sufficient surplus cash-flow could use the opportunity to maximise CCs for amounts made before 1July 2017 up to $35,000 for those who were 49 or over on 30 June 2016 and up to $30,000 for those under age 49. SMSF trustees should be mindful from1 July 2017 of unallocated reserves if any which may, when allocated, get counted towards the CC cap. Changes to Non Concessional Contribution (Post-tax Contributions) Cap Status: Passed Effective: 1 July 2017 The non-concessional contribution (NCC) cap will reduce from $180,000 to $100,000 pa. Individuals cannot make NCCs if they have a total super balance of $1.6 million or more at 30 June of the previous financial year. Eligible individuals will be able to access a three year bring forward of up to $300,000. Transitional measures will apply to the bring-forward rule. ​Personal Deductible Contribution Changes Status: Passed Effective: 1 July 2017 All individuals under the age of 75 will be eligible to make personal contributions for which they can claim a tax deduction up to the CC cap. Currently, individuals need to meet the 10% test (maximum earnings as an employee condition) to be eligible. This will enable people in a range of situations to make personal deduction contributions and potentially target the CC cap where that is currently not possible. Key examples include people who: are employed and receive SG contributions that are within the CC cap, but their employer doesn’t offer salary sacrifice arrangements switch from being a self-employed contractor to an employee during the course of a year and fail the 10% test due to employment income, and are residents for tax purposes who are working overseas for a foreign employer and their employer can’t or won’t contribute to an Australian super fund. Catch-up Concessional Contributions Status: Passed Effective: 1 July 2018 Individuals with super balances less than $500,000 will be able to access a higher annual cap and contribute their remaining unused CC cap on a rolling basis for a period of five years. Only unused amounts accrued from 1 July 2018 can be carried forward. This will enable individuals who take time out of work or work part-time to make catch-up contributions when they accumulate lumpy income or decide to go full-time. An opportunity exists for those who intend to sell a CGT asset in the future where they can accumulate the amount of unused CCs.They can then make a lump sum unused CC to offset the CGT liability on the sale of an asset by making a personal deductible contribution. Changes to TTR Income Streams Status: Passed Effective: 1 July 2017 Earnings and gains from investments held in a Transition to Retirement (TTR) pension will no longer be exempt and will be taxed at 15%. This change will apply to existing and new TTR income streams irrespective of the commencement date. Individuals will also no longer be allowed to treat certain superannuation income stream payments as lump sums for tax purposes. This change will have a significant impact on individuals running a TTR aged less than 60. This is because they will also pay tax on income payments, thereby negating the tax benefit for certain income earners. However, the strategy may still be beneficial when used for its intended purpose (ie for individuals wishing to reduce employment hours while maintaining their cash-flow at current levels). CGT relief is available for super funds for capital gains realised on the transfer of assets from pension phase before 1 July 2017. Introducing Transfer Balance Cap Status: Passed Effective: 1 July 2017 The total amount of super monies that can be transferred to pension phase will be capped at $1.6 million. The cap will be indexed in $100,000 increments in line with CPI. An apportionment approach will be used to determine how much cap space is available. Individuals in excess of the transfer balance cap on 1 July will need to either: transfer the excess amount to the accumulation phase, or withdraw the excess amount from their super fund. CGT relief will be provided to all complying super funds to adhere with the transfer balance cap rules. The CGT relief will enable funds to reset the cost base of assets reallocated from pension to accumulation phase before 1 July 2017 to comply with the transfer balance cap rules. Regards Andy Please note that the above information is general information only and should not be taken as financial advice.
  20. Merry Christmas and Happy New Year

    Merry Christmas and a Happy New Year from the Vista Team. We hope you enjoy the festive season ahead. Please note that we will be closing from 5pm on Wednesday 21 December and will reopen on Wednesday 4 January 2017. ATB. Andy
  21. Australian Age Pension changes

    With the 1 January 2017 Assets Test changes less than 1 month away, it is important retirees who may be over the estimated Assets Test cut-off at that time understand the implications on their Age Pension entitlements. It is also important for all retirees to review their spending plans in light of how these changes impact their retirement over the longer term. A recap of what is changing The rebalanced pension Assets Test on 1 January 2017 will: have higher Assets Test thresholds (Table 1), and double the taper rate from $1.50 to $3 per fortnight per $1,000 of assets. 1. Higher Assets Test thresholds The first of the changes is an increase in the Assets Test thresholds. This allows retirees to hold more assets before their pension starts to reduce under the Assets Test. For some retirees with lower asset levels, this may lead to higher pension entitlements. For others, the Income Test will continue to determine their entitlements. Table 1: Assets Test thresholds [TABLE=class: cms_table] [TR] [TD]Retiree situation[/TD] [TD]Assets Test threshold as at 20 September 2016[/TD] [TD]Assets Test threshold from 1 January 2017[/TD] [/TR] [TR] [TD] Single, homeowner[/TD] [TD] $209,000[/TD] [TD] $250,000[/TD] [/TR] [TR] [TD] Single, non-homeowner[/TD] [TD] $360,500[/TD] [TD] $450,000[/TD] [/TR] [TR] [TD] Couple, homeowner[/TD] [TD] $296,500[/TD] [TD] $375,000[/TD] [/TR] [TR] [TD] Couple, non-homeowner[/TD] [TD] $448,000[/TD] [TD] $575,000[/TD] [/TR] [/TABLE] 2. Increasing the Assets Test taper rate The second change is an increase in the taper rate. This change will reduce Age Pension entitlements at a faster rate once assessable assets exceed the new Assets Test thresholds. The largest reduction in pension entitlements will occur at the new Assets Test cut-off thresholds (Table 2). Pensioners with assessable assets above the new cut-off will see their pensions reduce to nil. Table 2: Assets Test cut-off thresholds [TABLE=class: cms_table] [TR] [TD]Retiree situation [/TD] [TD]Current cut-off thresholds as at 20 September 2016[/TD] [TD]Cut-off thresholds at 1 January 2017[/TD] [/TR] [TR] [TD] Single, homeowner[/TD] [TD] $793,750[/TD] [TD] $542,500[/TD] [/TR] [TR] [TD] Single, non-homeowner[/TD] [TD] $945,250[/TD] [TD] $742,500[/TD] [/TR] [TR] [TD] Couple, homeowner[/TD] [TD] $1,178,500[/TD] [TD] $816,000[/TD] [/TR] [TR] [TD] Couple, non-homeowner[/TD] [TD] $1,330,000[/TD] [TD] $1,016,000[/TD] [/TR] [/TABLE] Case study: quantifying the impact on your retirement Bruce, aged 68, and his wife Anne, aged 66, run their own self-managed super fund (SMSF). In November 2016 they have $20,000 in personal assets, they own their home and have $750,000 in total household savings they are using to fund their retirement: $650,000 in account based pensions (ABPs) ($400,000 in an ABP for Bruce and $250,000 in an ABP for Anne both assumed to have commenced after 1 January 2015) in their SMSF in a broadly balanced asset mix $30,000 in cash outside super and $70,000 invested in a share portfolio They currently plan to spend $58,000 per annum in retirement increasing with inflation to maintain their standard of living, and they also estimate their spending needs will reduce by 30% when the first of them passes away. Under the current Age Pension rules Bruce and Anne are receiving an Age Pension entitlement of $612.15 per fortnight. Their entitlement is being determined under the Assets Test and post 1 January 2017 their Age Pension entitlement is expected to reduce by $474.75 to $137.4 per fortnight. The following charts illustrate an example projection of Bruce and Anne’s retirement using fixed assumptions for investment returns and how long they will live. The first chart shows how their retirement spending is funded each year and the second chart breaks down their total lifetime spending over retirement into initial capital, earnings and Age Pension entitlements until Anne is age 91 when in this scenario we assume both persons have passed away. The first chart above illustrates that the amount of Age Pension Bruce and Anne might have received under the current rules would have gradually increased over their retirement as they spend down on their savings. Whilst Bruce and Anne’s Age Pension entitlement under the new rules is significantly lower at 1 Jan 2017, the higher taper rate means that their Age Pension entitlements increase more quickly as they spend their savings. Despite the expected $474.75 fortnightly reduction in Age Pension at 1 January 2017, Bruce and Anne’s estimated total lifetime Age Pension entitlements reduces by less than 2% as a result of the new rules. Whilst the timing of when they receive their Age Pension entitlements changes, the overall amount they receive over their retirement is actually very similar. The higher drawdown on their savings at the start of their retirement does mean that Bruce and Anne’s would have around 20% less capital remaining at the end of their life expectancy under this scenario. The above analysis considers just one market scenario. If we test Bruce and Anne’s retirement through 2,000 market and lifespan scenarios we can determine the confidence they can have that their retirement spending will be sustainable for life. Retirement is considered to be sustainable if there are sufficient assets to maintain their desired lifestyle for the rest of their lives. We compare the level of confidence they would have in their retirement spending plans pre and post the 1 January Assets Test changes below. The Age Pension changes have reduced the probability that Bruce and Anne’s savings will last as long as they do by 5%. Is it worth spending some savings to maintain your Age Pension? If Bruce and Anne wished to continue receiving the same amount of Age Pension under the new rules as they do today they would have to reduce their assessable assets by approximately $158,000 prior to 1 January 2017. These assets would need to be spent or invested in non-assessable assets such as the family home in order to not count towards the Age Pension means tests. However, spending a sizable portion of their savings now in order to boost their Age Pension entitlements would have a significant impact on the sustainability of their retirement plans. It would increase the chance of them outliving their savings by around 17%, with their confidence level falling from 81% to 64%. Conclusion Despite many retirees likely to face a significant reduction or loss of Age Pension from 1 January 2017, when looked at from a broader perspective the biggest change is likely to be the timings of when payments are received rather than the overall level of entitlements. It may not be necessary to make significant reductions in living standards or large changes to savings in order to maintain a sustainable retirement plan. Important information: This article constitutes information only and has been prepared without taking account of the objectives, financial situation or needs of any particular individual. The case study is illustrative only. The article does not constitute financial advice. Social Security entitlements are only one consideration when making a financial decision. Anyone should, before acting, consider the appropriateness of the information in regard to their objectives, financial situation and needs and, if necessary, seek professional advice. First published on Switzer Super Report 24 November 2016
  22. UK Pensions/QROPS/OZ Superannuation - Table

    I have compiled a table below that outlines some prominent points for example taxation, retirement age and accessibility for Australian residents (excluding temporary) for the different types of UK Pensions versus QROPS (popular destinations for Australians) versus Australian Superannuation Schemes. For me from a tax, retirement planning and control perspective Australia will be the optimal destination to have your retirement monies if living in Australia for retirement. However clearly other factors need to be considered in terms of whether their are guaranteed benefits involved in a current scheme ie (final salary/defined benefit), contributions cap issues for transferring into Australia, wishing to access funds earlier than Australian retirement age permits and so on. In these cases then other destinations or leaving the original scheme as is could be the better outcome. [TABLE=class: cms_table_cms_table, width: 708] [TR] [TD][/TD] [TD]UK Defined Benefit/Final Salary[/TD] [TD]UK Personal Pension/SIPP[/TD] [TD]Malta QROPS[/TD] [TD]Gibraltar QROPS[/TD] [TD]New Zealand (PIE) QROPS[/TD] [TD]Australian Superannuation (QROPS)[/TD] [/TR] [TR] [TD]Age of access [/TD] [TD]55yrs[/TD] [TD]55yrs[/TD] [TD]55yrs[/TD] [TD]55yrs[/TD] [TD]55yrs[/TD] [TD]56yrs moving to 60yrs gradually[/TD] [/TR] [TR] [TD]How much can be accessed[/TD] [TD]25%/30% lump sum remainder provides income for life[/TD] [TD]100%[/TD] [TD]100%[/TD] [TD]25%/30% lump sum remainder provides income for life ( May allow 100% from April 2017 )*[/TD] [TD]30% lump sum remainder provides income for life ( May allow 100% from April 2017 )*[/TD] [TD]100% from age 65 or retirement if earlier and preservation age met[/TD] [/TR] [TR] [TD]Accepts transfers in from UK pensions[/TD] [TD]Normally no. But may be possible to buy extra years’ service.[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Only over age 55[/TD] [/TR] [TR] [TD]Member bears investment risk[/TD] [TD]No[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [/TR] [TR] [TD]Tax on earnings within fund[/TD] [TD]NA[/TD] [TD]0%[/TD] [TD]0%[/TD] [TD]0%[/TD] [TD]0%[/TD] [TD]10%-15% in Super phase 0% in Pension phase[/TD] [/TR] [TR] [TD]Tax on Lump Sum in Australia[/TD] [TD]Proportional growth since arrival in Oz assessed at individuals marginal tax rate[/TD] [TD]Growth since arrival in Oz assessed at individuals marginal tax rate[/TD] [TD]Growth since arrival in Oz assessed at individuals marginal tax rate[/TD] [TD]Growth since arrival in Oz assessed at individuals marginal tax rate[/TD] [TD]Growth since arrival in Oz assessed at individuals marginal tax rate (may be a tax free element TBC)[/TD] [TD]0%[/TD] [/TR] [TR] [TD]Tax on Income In Australia[/TD] [TD]Assessed at individuals marginal tax rate[/TD] [TD]Assessed at individuals marginal tax rate[/TD] [TD]Assessed at individuals marginal tax rate[/TD] [TD]Assessed at individuals marginal tax rate[/TD] [TD]Assessed at individuals marginal tax rate[/TD] [TD]0%[/TD] [/TR] [TR] [TD]Benefits on Death[/TD] [TD]Spouse (and financial dependents) pension typically 50%/66.6% of benefits[/TD] [TD]100% of pot to nominated beneficiaries. Fund can provide income for beneficiaries[/TD] [TD]100% of pot to nominated beneficiaries[/TD] [TD]100% of pot to nominated beneficiaries[/TD] [TD]100% of pot to nominated beneficiaries[/TD] [TD]100% of pot to nominated beneficiaries[/TD] [/TR] [TR] [TD]Tax on Death[/TD] [TD]Income taxed at spouse’s marginal tax rate[/TD] [TD]Generally zero (although UK may withhold if member over age 75). Tax planning can avoid this[/TD] [TD]Zero[/TD] [TD]Zero[/TD] [TD]Zero[/TD] [TD]Zero typically (although portion may be up to 15% if to a non-tax dependent)[/TD] [/TR] [TR] [TD]Can transfer to Australian QROPS[/TD] [TD]Government funded and private Schemes – Yes[/TD] [TD]Yes[/TD] [TD]Yes[/TD] [TD]Officially no as needs to go to a scheme that has the 70/30 rule (May change in April 2017)*[/TD] [TD]Yes[/TD] [TD]NA[/TD] [/TR] [/TABLE] *Autumn Statement in November proposed full flexible access for all QROPS, to match the flexibility of UK Pensions.
  23. UK Pensions/QROPS 5 year+ rule to become 10 year+ rule

    HMRC are consulting on changes to the time period that a member payment charge applies for unauthorised payments from Relevant Non UK Schemes (RNUKS - this would include an Australian QROPS (former QROPS)) which if approved will come into effect from April 2017. Without doubt great care should be taken when considering transferring or withdrawing benefits from a QROPS (former QROPS). Here are the proposals: Currently UK tax can arise on payments, including deemed payments, made from a foreign pension scheme that has had UK tax relief (a relevant non-UK scheme) under the following provisions: · the member payment charges under Schedule 34 Finance Act 2004 · the taxable property charges under Schedule 34 Finance Act 2004 The member payment charges Certain payments from a relevant non-UK scheme (RNUKS) are taxable if the member is UK resident when the payment is made or has been UK resident in any one of the previous five tax years. Guidance on the definition of an RNUKS and when UK tax charges apply can be found in the Pensions Tax Manual at PTM113210. The time limit during which the member payment provisions apply will be extended so that the member payment charges will apply if, at the time of the payment, the member is UK resident or has been resident in any one of the previous 10 tax years. The extended time limit will apply to: · transfers made from a registered pension scheme on or after 6 April 2017 · pension inputs into an overseas scheme on or after 6 April 2017 that have benefitted from UK tax relief.
  24. Transfer UK Pension (age 55+) to Oz - No SMSF required

    We can now offer advice on transferring UK Pensions into Australia (for people age 55+) without the need for a SMSF and instead into an everyday superannuation fund. This superannuation fund also has the option of investing the funds in sterling so no need to convert to Aussie dollars whilst the exchange rate is as low as it is (obviously no guarantees it will improve!). If you are over age 55 and do have a UK pension you may wish to explore your transfer options sooner rather than later for two reasons: A) If you have a defined benefit pension scheme transfer values are particularly high at the moment with transfer values seeming to be around 25xtimes the annual pension benefits on average. b) It is likely Australia will be changing the rules around how much can be contributed to superannuation as a non-concessional contribution (typically this is what UK pension transfers are classed as), currently the maximum in one go (subject to certain eligibility) is $540,000 however from July 1 2017 this is likely to reduce to $300,000 (we should know the outcome of the proposed changes around December time). If you would like to explore your options then feel able to make contact via PM or email address (in signature below). We are fully qualified and licensed Australian Financial Advisers and where required we work with UK FCA regulated Advisers. Regards Andy