Tag Archives: budget

30 Days to Financial Wellness

As we well know, without a plan, the financial goals we aspire to probably won’t materialise.

With no structure in place, 10 years down the track, you may feel no better off than you are now, and wonder where your money went. However, sometimes knowing where to start is a stumbling block.

So to start you on your journey, here is a 30 day plan . Full of hints, tips and links to great articles to get you started.

When you get to day 27 give me a call !


Budget Update 2016 – 7 Main Points

Morning, below is a summary of the changes to the budget relating to super. This being the area of most change. Remember these changes are not yet legislated and mostly will not come into force until 1 July 2017.

None of the changes suggest you should remove any money from super. It will continue to be more tax effective to have super as your savings structure rather than assets in your own name; just not as tax effective as it was.

1. Div 293 tax – the threshold for this tax, which is an extra 15% tax on contributions made, has been reduced from the current $300k to $250k. It reduces (but does not eliminate) the tax savings of making contributions for higher earners. The tax savings being the difference between the top tax rate and 30%.

2. Concessional contributions – the caps will be reduced to $25k pa (currently $30k and $35k depending on age) from 1/7/2017. From this date those with balances under $500k will have the opportunity to carry forward some unused caps for five years.

3. Work test – this is to be abolished from 1/7/2017, great news as it means we can utilise non-working spouses caps more easily.

4. Transition to Retirement Pensions – the lovely TRP strategy for those over 55 but not yet retired won’t work after 1 July 2017 as the earnings within the fund will be taxed at accumulation rates. So enjoy for the next year while it lasts and then we will look at rolling the balances back into accumulation phase. It will generally still be better tax wise than having investments in your own name, subject to your other income.

5. The Non concessional cap – (currently $180k p.a.) will be reduced to a lifetime limit of $500k. This limit starts today. Don’t panic if you have already contributed over $500k, you are not going to have to take it out or be taxed on it, it just means you can’t put in any further non-concessional amounts.

6. Pension Limits – the amount transferred into pension phase will be capped at $1.6m from 1 July 2017. So if you have a pension bigger than this already, we will need to roll some of it back into super by 1 July 2017 (the later the better).

7. Small Business Concessions – no changes to this, so it looks as though if you sell a business and retire we will still be able to contribute those funds to super in addition to the concessional and non-concessional caps above. (Subject to the CGT lifetime limits already in place)

That is pretty much all the important areas covered, so lets see what actually gets legislated and then we can adjust those long term plans.

Budget Summary

Budget Summary

If you want a factual summary of last nights budget have a look at the attached link which expresses it well.

Less political noise than most of the updates around in the press today.


Budget Update 2013

I am sure you are all hanging on the edges of your chairs for my budget update. So putting aside the removal of the baby bonus, which has been done to death in the media (and in my opinion was about $1m short of an incentive to have more children), here are some other, perhaps more important, changes along with what action you might need to take now. Remember however that none of this is as yet legislated.

Medical Offset.

This is the 20% tax rebate you can get for certain out of pocket medical expenses. It is going to be phased out. However, if you manage to claim the offset in 2013, you will be eligible to claim in 2014. Then if you are eligible to claim in 2014 you can claim in 2015. If you can’t claim in 2013 you can’t claim in 2014 or 2015. Simple!

So if you are planning to get sick, try and do it before the 30 June. Or at the very least make sure you get to Centrelink with all your medical receipts that you may have lying around before 30 June, to maximise the chance of getting at least $1 of offset this year.

The offset will still be available for disability aids, attendant carers and aged care expenses until 2019.

Contributions Caps

If you are not yet aged 60 on the 1st July 2013 your concessional contributions cap (ie SGC and salary sacrifice) remains at $25,000. If you are aged 60 or more on the 1st July 2013, then your cap is now $35,000. We are waiting to hear what happens if you turn 60 in the 13/14 year – watch this space.

Note that most people will have to amend their salary sacrifice amounts in July anyway. As the SGC goes up to 9.5% your salary sacrifice amount will have to come down. Once the employer maximum limits are published for 2013/14 we will advise what your new salary sacrifice needs to be to avoid breaching the caps.

Earnings in Pension Phase

Hopefully you are all aware that one of the benefits of investing in super is that as soon as you press the “pension button” the earnings of the investments within the fund are tax free. If you have a good public fund (not an industry fund) or an SMSF, the franking credits will also be refunded to your account.

The new rules (proposed to start 1/7/2014) will cap these tax free earnings whilst in pension phase at $100k. Earnings above that will be taxed at 15%. The limit is person, not per fund, so this strengthens the case for trying to ensure that super is split as evenly as possible between a couple. Better to have two $500k balances than one $1m balance. There are various strategies available to do this we can help you with.

The calculation of income will include some capital gains on assets sold. There are various transitional rules, but in broad terms the gains will be calculated as the difference between sales proceeds and the market value at 30 June 2014, or purchase cost if brought after this date. Lots of valuations will be required.

High Earners Superannuation Contributions

There was no mention of removing this proposal, so we have to assume it stays. That is the proposal to tax the concessional contributions of those earning in excess of $300k at 30% rather than 15% on entry to the superfund.

Concessional contributions are added to adjusted taxable income to calculate the excess over $300k. For example, if you earn $280k and put $25k in to super, by way of salary sacrifice and SGC, then we add the two together to see if the $300k cap is breached. In this example the first $20k will be taxed at 15% and the excess $20k will be taxed at 30% on entry to the fund.

Not a nice change, but either way it is still less than the 48% tax you would pay if you didn’t contribute to super.

Downsizing the family home

Under current Centrelink testing, the family home is not counted in the assets test when calculating the aged pension. Perhaps encouraging little old ladies to stay in massive houses. This proposal says that if the home is sold and 80% of the proceeds (but no more than $200k) is put into a “special” (details of special not yet announced) account, then those funds will not be counted for the asset test. The balance of the proceeds will count in the normal way.

This is perhaps not going to be utilised by many, as to qualify you need to be over age pension age, have owned the home being sold for at least 25 years, and be up to date on the changes to the Centrelink rules!

Pension Minimums

The pension minimum percentages have been reduced in the past few years due to the GFC. With earnings back on the up again, and no mention of the reductions being extended, we have to assume that the pension minimum drawdowns are back up to normal levels.

So there we have what I hope has been a useful summary. You will find further analysis on our newsletter which can be found here.

Any questions, don’t hesitate to get in touch.


Free Cashflow Spreadsheet

No idea where your money goes?

Arm yourself with three months of bank and credit card statements, a glass of wine and the spreadsheet on this link.

It is best if one of you completes it to start with. Then discuss the results, (nicely & in a productive manner) with your other half (if applicable), and work out where you can start to save & invest.

If this line represents the years you will work


This line represents how many years it has to stretch


Anyone know how to draw diagams in wordpress? !!