Category Archives for "finances"

JobKeeper Package


The Government has announced a $130 billion JobKeeper payment to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus.

Around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer.

The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over.

If you have any questions about how this package affects you, please call us on 02 6056 1929 or email admin@vividadvisers.com.au.

Important note:  As of 23rd March 2020, we have closed the office in Wodonga, and the team are working from home. We have therefore disabled our online bookings at this stage, and you can call or email us to arrange an appointment.

Please remember, this is an extremely unique challenge for EVERYONE, and it's so important to continue to support each other and work together where possible.

Government Stimulus Package

The Federal Government has announced a range of initiatives to support individuals, households and businesses coping with unprecedented levels of upheaval and market volatility. Here, we look at the key measures and what they could mean for you.


Income support for individuals

Over the next six months, the government is temporarily extending eligibility to income support payments and establishing a new, time-limited coronavirus supplement of $550 per fortnight. This will be paid to existing and new recipients of JobSeeker (formerly known as Newstart), Youth allowance jobseeker, Parenting Payment, Farm Household and Special Benefit payments.


Payments to support households

The government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders who aren’t in receipt of the $550 supplement. The first payment will be made from 31 March 2020 and and the second payment will be made from 13 July 2020. Around half of those that benefit are pensioners.


Temporary early release of superannuation

The government is allowing individuals affected by the coronavirus to access up to $10,000 of their super this financial year and a further 10,000 in 2020-21 (i.e.before and after 1 July 2020). The amounts released won’t be taxed and won’t affect Centrelink or Veterans Affairs payments. To apply for the early release you will need to satisfy a number of requirements.


Temporarily reducing superannuation minimum drawdown rates and changes to deeming rates

The government is temporarily reducing superannuation drawdown requirements for account-based pensions and similar products by 50% for 2019-20 and 2020-21. Upper and lower social security deeming rates are also being reduced by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020. As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent.


Support for coronavirus-affected regions and communities

$1 billion is being set aside to support regions most significantly affected by the Coronavirus outbreak. These funds will be available to assist during the outbreak and the recovery.


Boosting cash flow for employers

The government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020 by providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people; with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

Under the enhanced scheme, employers will receive a tax-free payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

Payments will be made automatically through the ATO from 28 April and 28 July for the 2019-20 and 2020-21 financial years respectively.


Quick and efficient access to credit for small business

The Government is providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.


Relief for financially distressed businesses

The Government is providing this in the form of a safety net to lessen the threat of actions that could unnecessarily push the business into insolvency.


Supporting you

There’s no doubt that the current coronavirus situation is causing concern for what it means for you, your lifestyle and your financial position. Things are also changing at a very quick rate, so we will endeavour to provide the most recent changes on our Facebook Page.

If you have any questions about these announcements and how they affect you, please call us on 02 6056 1929 or email admin@vividadvisers.com.au.

Important note:  As of 23rd March 2020, we have closed the office in Wodonga, and the team are working from home. We have therefore disabled our online bookings at this stage, and you can call or email us to arrange an appointment.

Please remember, this is an extremely unique challenge for EVERYONE, and it's so important to continue to support each other and work together where possible.

The Medicare Levy – what you need to know

Ever wondered why your tax bill was higher than you expected? It could be because of the Medicare Levy. So what does the levy pay for – and how is it calculated?

What is the Medicare Levy?

Medicare is Australia’s publicly funded national healthcare system. The federal government partially funds the system by charging taxpayers a levy on top of their annual income tax. Thanks to this levy, all Australians can enjoy access to quality health care.

What does it cover?

Medicare provides access to a wide range of health care and hospital services, including:

  • free or subsidised treatment when you visit a medical professional such as a doctor, optometrist or specialist
  • free treatment and accommodation when you’re a public patient in a public hospital
  • 75% of your treatment and procedure costs when you’re a private patient in a public or private hospital (not including accommodation fees and other costs)
  • reduced costs for prescription medications in some cases.

How much is it?

For most eligible taxpayers, the Medicare Levy is currently charged at 2% of their taxable income.

Also if you don’t have private hospital insurance, you may have to pay the Medicare Levy surcharge (MLS) depending on your income amount for MLS purposes. The MLS can be as high as 1.5% depending on your family and personal income amounts.

When do you pay it?

If you’re required to pay the Medicare Levy, it’s automatically calculated against your taxable income when you lodge your yearly tax return.

You can use the Medical Levy Calculator on the Australian Taxation Office (ATO) website to work out how much you can expect to pay.

If you receive regular income throughout the financial year that is subject to pay as you go (PAYG) withholding (for example salary or wages), an estimate of the income tax and Medicare Levy liability relating to that income is withheld and paid to the ATO throughout the year. This prepaid tax and Medicare Levy is then taken into account when working out your tax bill when you do your tax return.

Is anyone exempt?

If your taxable income is below a certain level, you don’t need to pay the Medicare Levy. Different thresholds apply for individuals, couples, sole parents, pensioners and seniors.

These thresholds are increased each year in line with movements in the consumer price index.

 

2017–18

2018-19

Taxpayers entitled to seniors and pensioners tax offset

Individual

$34,758

$35,418

Married or sole parent

$48,385

$49,304

For each dependent child or student, add:

$3,406

$3,471

All other taxpayers

Individual

$21,980

$22,398

Couple/sole parent (family income)

$37,089

$37,794

 

You may also be exempt from paying Medicare Levy if:

  • you suffer certain medical conditions
  • you’re a foreign resident for tax purposes
  • you’re not entitled to Medicare benefits – for instance, you’re an Australian citizen or permanent resident but have been residing overseas for more than certain timeframes.

Keep in mind that there are specific requirements for each category, so you may need to check whether you’re eligible for an exemption.

Are some people charged a different rate?

There are instances when some people will only be charged a partial Medicare Levy. For instance, you’ll pay a reduce rate if you’re single without dependants and your taxable income for the 2018-19 financial year was above the exemption threshold but less than $27,997 (or $44,272 for single seniors and pensioners entitled to the seniors and pensioners tax offset).

Families (not eligible for the seniors and pensioners tax offset) may be charged a partial Medicare Levy if their household taxable income is below $47,242 (plus $4,339 for each dependent child).

To be eligible for a reduction, you also need to meet certain conditions.

What is the Medicare Levy Surcharge?

If you don’t have the appropriate level of private hospital insurance, you may be charged an extra amount on top of the 2% levy. This is the Medical Levy Surcharge (MLS) and only applies if your ‘income for surcharge purposes’ is over $90,000 for singles or $180,000 for families.

The MLS can range from an additional 1% to 1.5% depending on your income level. You can see a full breakdown of thresholds and rates on the ATO website.

What if you have private cover?

If you have an acceptable level of private hospital insurance, you won’t be charged the MLS. But first, you’ll need to provide information about your private health cover payments on your tax return.

For more information

If you would like more information or have any queries, please contact us. 

Are you looking after your mental health?

Running your own business can leave you with little spare time, but taking care of your mental health is an investment in you and your business.

As exciting as it is to be your own boss, it can come with long hours, unpredictable cashflow, industry and legislation changes, responsibility for your employees and more. This can leave you mentally exhausted, stressed, anxious or depressed.

We thought it important to share 5 tips on looking after your mental health:

1. Make regular exercise, sleep and eating health a priority.

2. Practice regular relaxation techniques like breathing exercises or meditation.

3. Decide which tasks you can outsource. Don’t try and do everything yourself.

4. Put systems and processes in place in the business that will allow you to take regular short breaks and holidays.

5. Set a time every day to turn your phone and emails off.

Having good mental health will allow you to think clearly, realise your own potential, cope with normal stresses in life better and grow and prosper in your business.

Can you make the most of the $30,000 Instant Asset Write-Off before the end of the financial year?

Are you in need of new office furniture, computers, printers, vehichle, tools etc? Now may be the time to purchase.. 

The instant asset tax write-off has been available to small-business (with a turnover of less than $10 million) for the last few years. It allows a business instantly claim a tax-deduction instead of claiming deductions over a number of years.

In January, the Prime Minister announced that the threshold would increase to $20,000, then as part of the Federal Budget in April, the amount was again increased to $30,000.

There are now 2 key changes to the instant asset write-off rules:

  • Write-off has been extended to medium businesses, where it was previously only small business. Medium businesses have annual turnover of between $10 million and $50 million.
  • Write off threshold increasing from $25,000 to $30,000. This is a per-asset basis, so eligible businesses can instantly write-off multiple assets. The $30,000 write-off is for assets first used, installed and ready for use from Budget Night (2nd April 2019) until 30 June 2020.

There are a few different dates to be aware of, so it’s important to chat to us about your eligibility and what you are able to claim as the purchase date is critical.

So, you do still have time to make a purchase before the end of this financial year to be able to write-off that asset up to the $30,000 limit (ensuring your eligibility of course). 

What to be careful of

It’s really important to remember that saving tax is great – we all love to do it – however it’s not worth spending money on an asset just to save tax. You really have to have a need to purchase the asset. The purchase of the asset should be leading to higher profitablity, better productivity or benefiting the business going forward.

As the financial year is coming to an end, if you are still considering purchasing any asset’s to potentially utilise the write-off, please get in touch with us as soon as possible so we can ensure you get the best outcome.

For more information, see the ATO website.

You can choose what you keep track of in your business!

If you have a small business, you know how important it is to keep good records of your income and expenses. You may however, know how important it is, but really still find it frustrating and time consuming. If so, you are not alone!

A high majority of business owners are now using software like xero or MYOB to help keep track of their income and expenses, as it really does make things so much easier (as long as you have been shown how to us it well!).

But, one thing we find a lot of people don’t realise, is that within their software program they can personalise the ‘Chart of Accounts’ to suit their own business.

The Chart of Accounts is that list of items that you can choose from as to where you want to ‘file’ away those pieces of information in your business. For example, you have an expense on your bank statement for petrol, and you choose to file that into ‘Motor Vehicle Expenses’. That list which includes Motor Vehicle Expenses is your Chart of Accounts.

A lot of the time, the options that you have to choose from will suit your business, and all is good. There are many times however where those options just don’t quite suit your business. You may want to keep track of certain income or expenses different to the options that are available.

For example, there may be an account for ‘marketing and advertising’. You are expected to put all of your costs for anything to do with marketing into this account. You may however want to break this up, and separately track the cost of Social Media marketing for example. The good news is that you can add, change or remove accounts from your Chart of Accounts to accommodate exactly what you do want to track. It’s amazing how many clients just didn’t realise that had the option to do it.

The ideal time to do this is when you set up the accounting software, so it is certainly worthwhile sitting down and determining what exactly it is that you want to be able to report on. It is possible however to do it at anytime; it may just require a little care if you have already been using the accounts you wish to change.

It is the reason why when we have a client start a new business, or a new business client come to us, we spend the time to go through their goals and objectives for the business, so we know how to be able to assist them in the best way. We can them ensure the Chart of Accounts is set up in the most useful way.

If you need any assistance with this, we are happy to help. If this all still sounds way too hard and frustrating – get in touch with us, we are absolutely able to help you!

Can you use superannuation to purchase rural land?

This is a pretty complex question, as there are a few variables, the very short answer is, yes – most likely.

You would have to have a Self Managed Super Fund (SMSF), as they are generally able to invest in rural property, as long as it meets the ‘investment strategy’ of the SMSF.

The purchase of the property also needs to meet the sole purpose test, which means it has to purely provide retirement benefits for it’s members.

Being rural land, it is likely to be running a farming business, which means that it could be classified as ‘business real property’. If that is the case, you can also set up a structure where you have the farming business (that you can be involved in) lease the land back from the SMSF, with the intention of making a profit.

To add another layer to this, the SMSF can also borrow money from a financial institution to purchase the property, meaning you don’t have to have the full amount of the land already available in the fund.

So, the general answer is certainly, yes, there are ways that you can do this, and it can be very beneficial, however getting the right tax and financial advice is imperative to ensure that it is something you would consider.

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At Vivid, we can certainly assist you with tax and/or accounting queries around Self Managed Super Funds, and you can make an appointment to see Brad ​right here on our website.  For financial advice we recommend chatting to Bronwyn, Lucy and the team at The Next Step Financial Group in Albury. 

Receipts for tax-deductions – how to store and for how long..

This week’s question: “What happens if you don’t keep all your documents for 7 years? And the best way to store them for that long?”

If you are an individual, the ATO requires you to keep tax records for 5 years.

If you are a Company, the ATO still only requires you to keep records for 5 years, but ASIC requires the company records to be held for 7 years.

The main reason you would need to keep records longer than this is if you have purhcaed an asset, and it may be subject to capital gains tax at some point down the track. You will need these records regardless of how long ago it was.

The good thing, is that you don’t need to hold onto the paper records for that time. Since 1999, the ATO have allowed electronic storage of receipts. They also acknowledge that receipts don’t necessarily even need to be retained. If you pay for things with your debit or credit card, the bank statement with these transactions is sufficient to claim as a tax-deduction.

A simple way to retain evidence of cash purchases is to take a photo of the receipt and then store electronically.

There are a couple of ways you can store these electronic receipts.

  • Create a Google Drive, Dropbox or similar account and create a folder for each financial year. You can then save any receipts off email, photos on your phone, or scans straight into this folder. Share the relevant folder with your Accountant when you lodge your return.
  • Use an App like xero. We use and recommend xero as it’s a great way for businesses and individuals to track their income and expenses. With xero you have the ability to attach a copy of a receipt to the actual bank transaction, giving you easy access to this information whenever needed. You can also make notes or comments on the transaction, and then simply give access to all of this to your Accountant to lodge your return. 

                      This is obviously great for tax-deduction purposes, but also really useful for warranty details as well!  

  • Use a free app like the myDeductions Tool in the ATO app. This also allows you to keep track of all your expenses and keep copies of receipts to easily send to your Accountant when you’re ready.

So what if you don’t keep the records for 5 years?

If you are audited by the ATO, they are going to want to see proof of any tax-deductions that have been claimed. If you have misplaced the receipt, hopefully you paid for the deduction by debit or credit card, so you have a bank statement as proof.

If there is no way that you can prove the purchase, the ATO will not allow the deduction. They will amend your tax return for that year, and any extra tax that resulted because of the deductions not allowed will have to be paid – potentially with interest.

We do have the benefit of technology in this day and age, making it very easy to keep track of purchases which is great. It is also much easier to keep track of these expenses as they occur, and save them into some sort of electronic storage or app, so that you aren’t waiting to the end of the year and then trying to track everything down!

Which is the right business structure?

There are a number of structures you can choose from when starting or changing your business. This may seem like a simple matter but the structure of your business impacts on your tax, personal liabilities, asset protection and reporting obligations.

Obviously it is beneficial to choose the correct structure during the initial start-up phase, however it is possible to change your business structure throughout the life of your business.

Why is choosing a business structure so important?

Your business structure will have an impact on:

•How much tax you pay

•Whether you’re legally considered an employee or the owner

•Your personal liability

•How much control you have over the business

•Ongoing operational costs and expenses

Choosing a business structure

There are four main business structures used by small businesses in Australia:

•sole trader

•company

•partnership

•trust.

Each has its own tax implications, advantages and disadvantages, and potential impact on how you run your business.

Sole trader

If you set up your business as a sole trader, you will be the sole person responsible for the business. You alone will own the business – with full control over all business decisions and assets.

As a sole trader, there are few reporting requirements and minimal costs associated with setting up the business as a sole trader.

Perhaps the biggest disadvantage of this business structure is its personal liability component. This means that you can be held personally liable for your business’s debts and liabilities. If something goes wrong, your personal assets could be seized.

Company

A company is a separate legal entity which is run by directors and owned by shareholders.

This business structure is more complex, and has higher setup and operating costs than the other structures.

This structure shields you from liability compared to the other structures, but you could still be held accountable for the company’s liabilities. For example, company directors are often asked for personal guarantees, which can effectively remove the liability protections built into this structure.

Partnership

A partnership is a business structure run by a group of people – the partners. These partners:

•run the business

•share control

•divide the profits.

A partnership is not a separate entity, and all partners are personally liable for the business’s debts. Like a sole trader, the partners each pay tax on the business income they receive, filing it on their personal tax returns.

Like a sole trader, this business structure is fairly easy and affordable to set up.

Trust

A trust is a structure operated by trustees for the benefit of the trust’s beneficiaries.

A trust is a popular business structure because it offers protection of assets and flexibility in income splitting which is tax effective.

There is obviously no clear-cut outcome of which structure is best, it is definitely dependant on your business and circumstances. Choosing the right business structure can save thousands of dollars in tax and getting the structure right is critical to business success.

It is really important to seek advice to get the right structure for you. Get in contact with us if you would like to chat further about your business structure.

Are gym clothes tax-deductible?

Today’s question we are answering is: “My business is in the health and wellness industry, can I claim gym clothes as a tax deduction?”

This is a great question, becauase we get asked similar version’s of this question ALL the time. Often people will say that ‘my mate told me he claims this, or my brother said I should be able to claim that’.

People actually claim all sorts of things as tax deductions, but if they get audited and caught out, they will regret it.

The main thing to be very careful of with this sort of ‘advice’, is that everyone’s situation is very different, and what is OK for one person, won’t necessarily be for the next.

So, in saying that, with expenses that you want to claim a tax deduction for, the expense HAS to be required for you to generate income.

In regards to clothes the ATO is pretty specific that it has to be ‘occupation specific’, ‘protective clothing’ or a ‘uniform’.

By occupation specific, they are referring to clothes specific for your occupation, and not general by nature. Something that makes the clothes recognisable to your industry – like the checkered pants that Chef’s wear.

Protective clothing includes anything that protects you from risk of injury or illness posed by the job you are actually doing, and in the environment which you have to do the job. Examples are safety vests, steel-capped boots, overalls etc. Ordinary clothes like jeans aren’t considered protective as they lack actual ‘protective qualilties’.

The other one is work uniforms. You can claim the cost of work uniform – whether it is compulsory or not – if it’s unique and distinctive to your organisation. A uniform is unique if it has been specifically designed for the Employer, and it’s distincitve if it has the company logo permanately attached.

Soooo, going back to the question, even if you are in the health and wellness industry, and it’s important to stay fit and healthy as part of your image and brand, the gym clothes don’t fit into these categories specified by the ATO. We certainly wouldn’t be suggesting to try and claim a tax deduction for them.

As we initially mentioned, everyone’s sitution and position is different, so please contact us to discuss further.

How is Bitcoin taxed?

This is a great question, as crypocurrency is becoming more and more popular in Australia. A lot of people are purchasing and trading cryptocurrency including bitcoin, blockchain, bubbles etc.

And of course, because it is becoming so popular, the ATO are keeping a close eye on cryptocurrencies, and have released a guidance paper on this kind of asset.

In this post, we want to give you a general understanding of cryptocurrency and the tax treatment, but the overall outcome will be absolutely dependant on YOUR situation.

So, let’s just take a quick step back, and explain what is a cryptocurrency is for those not sure?

Instead of a tangible piece of currency you take with you, a cryptocurrency is a digital asset that can be exchanged.

When you use cryptocurrency instead of ‘normal’ currency, the crypto owners don’t have to rely on banks to facilitate the transactions, and can therefore avoid the fees often associated with financial institutions.

There is a LOT of complexity to cryptocurrency, so we will move onto the tax treatment.

The ATO treat cryptocurrency as digital commodity, not money or foreign currency. In plain terms, it is treated as an asset. Therefore when it is purchased, sold or exchanged, it triggers an ‘event’. This could be a revenue event, or a capital gain event, but totally dependant on the circumstances of the transaction.

A couple of common examples:

 You are a trader

If you purchase the cryptocurrency as an asset with the intention to earn a profit, any gain you make will be fully taxable. If this is the case, you are essentially carrying on a business. And you could claim deductions against this taxable income.

You are an investor

If you acquire cryptocurrency because you just wanted to invest in the technology hoping one day it will go mainstream and increase in value, then you are classified as an investor. This means you would fall under the capital gains regime. The taxation treatment of this will depend on your own personal circumstances (i.e. if you have any capital losses and the amount of time you owned the cryptocurrency).

Generally speaking if you held the cryptocurrency for over 12 months in your wallet, then you will qualify for the 50% capital gains concession. If you sell within 12 months, you will be taxed on 100% of the capital gain.

 You are a customer

If you purchase less than $10,000 of cryptocurrency, it could be classified as a personal asset, and therefore any profit on disposal could be tax-free.

Word or warning here, the ATO has very strict guidelines on what is a ‘personal asset’, and it may be hard to fall into this category.

 You are a business

If you are mining coins to make a profit, you are running a business and the profit is taxable. As mentioned above though, you can claim deductions against this income as you are running a business.

So, what do we suggest 

Keep really good records!

We (or any Accountant) are going to need to know details to make sure the tax treatment is correct. 
Be prepared for the ATO to ask questions. With all the hype around cryptocurrencies, be sure the ATO is paying close attention. 
Ask for advice if needed. This is a new level of complexity that we haven’t seen before. We are here to help!

Single Touch Payroll – the effect on paying super entitlements…

Earlier this year, single touch payroll was introduced to Employers with 20 employees or more. 

What this means is businesses have to report information such as salary or wages, tax withheld and superannuation payments to the ATO every time they pay their employees. 

Businesses with less than 20 employees will have the same reporting requirements from 1st July 2019. 

The system is designed to make reporting easier for employers, but also to try and eradicate the massive unpaid super issue. 

Did you know, between 2011 and 2017, the ATO has estimated employers have not paid their workers $17 billion in super! Seventeen Billion…. That is huge! 

Previously, the most common way the ATO would find out about a lack of super payments, is if an Employee made a complaint, or an audit was performed. Unfortunately a lot of the time, Employees do not make complaints because they are unsure of their actual entitlements, or not comfortable actually making a complaint.

This will therefore take the onus of the employee, and the ATO will more easily be able to track super entitlements.

Having the entitlements tracked by the ATO, means Employers will need to be very careful to make sure that they are making the required payments to super. If not, they risk penalties as high as $10,600 or 75% of the liability. This is of course on top of what is owing to the Employee, plus assumed earnings. This can be massive to an Employer, and usually it isn’t just one employee, but multiple. 

One of the reasons Employers don’t make the required super payments is due to limited cashflow, and trying to find the required amounts on a quarterly basis. If businesses pay the amounts regularly – with each pay cycle, it is much easier to manage. 

So what to do if you think you haven’t paid the right amount of super… 

Talk to us if you are unsure at all! 

The ATO are proposing an ‘amnesty’ which is proposed to run until May 2019.

This is to give Employers the opportunity to do the right thing, and pay any outstanding super to Employees without any penalties. After this amnesty, expect the ATO to come down HARD on Employers who don’t pay the required super entitlements. This is your chance to to get organised, and not get penalised!

What tax deductions can I claim?

We did this quick video to cover some of the most common expenses relating to your work and income that you may be entitled to claim at tax time. 

First we cover what a deduction is, and when a expense is actually deductible.  We then cover the following most common deductions:

1. Vehicle and Travel Expenses

2. Clothing and Laundry Expenses

3. Gifts and Donations

4. Home Office Expenses

5. Investment Income Deductions 

6. Other – including Income Protection premiums, super contributions and costs for tax return lodgement in the previous year. 

We also discuss a link to the ATO website that goes through Industry Specific deductions. This is a really useful link, and you can search based on your occupation and industry of what may be claimable. The link is below the video. 

Link to industry related deductions on ATO website 

Teaching kids the value of money

In an increasingly digital world, the value of money can be a difficult concept for children to grasp. Here are some tips for helping your children and grandchildren become wealthy and wise.

When you were young, do you remember standing next to mum or dad at the corner shop and watching them count out notes and coins to pay for the bread and milk? This was a valuable lesson about the purpose and value of money.

Fast forward to today – few corner shops exist and the days of counting change are almost over. When our children see us pay for something at the shopping centre, it’s likely to be with a piece of plastic – or even by mobile phone.

That’s why it’s now more crucial than ever to consciously teach your children and grandchildren about money: how to spend it and how to save it. Here are five ways to do it.

Help them budget and save

Many children believe parents have an endless supply of money – which is why it’s so important to talk to kids about money from an early age. You can start by discussing your own household budget and explaining how you manage costs like weekly grocery shopping and phone bills. If there’s something your child wants, like a new soccer ball or item of clothing, work out a budget so they can save up and buy it. Then reward them by taking them shopping.

Give them pocket money

Pocket money is one of the simplest and most powerful ways to teach children the value of cash – which is why it should be earned rather than given freely. Whether it’s payment for completing chores or a reward for behaving well, children will understand very quickly that money has value. You can also separate their pocket money into portions for spending and saving, so they’ll learn how to put money aside for the future.

Set up a bank account

By setting up a bank account for your child, you can teach them the basics of everyday banking. It’s worth discussing the statements with them when they arrive – not only so you can explain what each part means, but also so you can check their progress towards their savings goals and praise them as they reach each milestone. You might even open a separate savings account to help making saving fun and easy.

Make money fun

 Learning about money doesn’t have to be another chore: there are plenty of games you can use to teach kids financial literacy. From a young age, you can play-act spending situations with your kids, like pretending to ‘shop’ with their toys or using food items in the kitchen. As your children get older, these games can become more advanced. In fact, one of the best ways may be through playing Monopoly – which you can use to teach more complex concepts like rent and taxes.

It’s so important to remember that what we teach our children about money when they are young, will impact on their financial future. It’s our responsibility to raise money smart kids. 

Federal Budget 2018 Snapshot

On Tuesday 8 May, the federal government handed down its Budget for the 2018–19 financial year. This is the third Budget delivered by Treasurer Scott Morrison and is likely to be the final Budget before the next federal election.

According to the Treasurer, this year’s Budget measures aim to provide tax relief to ordinary Australians, while supporting small-to-medium businesses and improving Australia’s essential services. The Treasurer claims that these measures will help to end Australia’s decade-long deficit and return a modest surplus of $2.2 billion by 2019–20.

Here are some of the announced Budget changes that could affect you. However, it’s important to remember that these are only proposals at this stage, and each proposal will only become law once it’s passed by Parliament.

Tax changes:

  • A seven-year personal income tax plan, to be delivered in three stages
  • Maintaining the Medicare Levy at 2%
  • Increasing the Medicare Levy’s low-income thresholds
  • Extending accelerated depreciation for small businesses

Superannuation adjustments:

  • A work test exemption for retirees
  • Increasing SMSF membership from 4 to 6 members
  • Introducing a three-year audit cycle for some SMSFs

Supporting mature Australians: 

  • New means testing rules for certain lifetime income streams
  • Expanding the Pension Work Bonus
  • Extending eligibility for the Pension Loan Scheme
  • Increasing the availability of home care packages
  • Additional funding for residential aged care and short-term restorative care

 

Tax changes

Seven-year personal income tax plan

The government’s three-point plan for personal income tax reform will be delivered over the next seven years as follows.

Stage 1 from 2018–19:

  • A new Low and Middle Income Tax Offset (LMITO) worth up to $530 p.a. will be introduced, in addition to the current Low Income Tax Offset (LITO).
  • The top threshold for the 32.5% personal income tax bracket will increase from $87,000 to $90,000.

Stage 2 from 2022–23:

  • The top threshold for the 19% personal income tax bracket will increase from $37,000 to $41,000.
  • The top threshold for the 32.5% personal income tax bracket will increase from $90,000 to $120,000.
  • The LITO will increase from $445 to $645.

Stage 3 from 2024­–25:

  • The 37% personal income tax bracket will be removed.
  • The top threshold for the 32.5% personal income tax bracket will increase from $120,000 to $200,000.

What this could mean for you

If you’re eligible for the LMITO, it will be available each year from the 2018–19 financial year until the 2021–22 financial year. You’ll receive the payment as a lump sum after lodging your tax return.

For more information about the proposed changes to tax thresholds and offsets, speak to your accountant.

 

Maintaining the Medicare Levy at 2%

In the 2017–18 Federal Budget, an increase in the Medicare Levy rate from 2% to 2.5% of taxable income was announced, which was legislated to take effect on 1 July 2019. However, the government has confirmed it will not proceed with this initiative and the Medicare Levy will remain at 2%.

What this could mean for you

It was expected that the increased Medicare Levy would also cause increases to other tax rates linked to the top personal tax rate, including fringe benefits tax. As the Medicare Levy is remaining unchanged, these consequential increases won’t take effect.

 

Increasing the Medicare Levy’s low-income thresholds

As of 1 July 2018, the government will increase the Medicare Levy’s low-income thresholds for singles, families, seniors and pensioners for the 2017–18 income year.

What this could mean for you

You won’t be charged the Medicare Levy if your taxable income is below the following thresholds:

  2016-17 2017-18
Taxpayers entitled to seniors and pensioner tax offset
Individual $34,244 $34,758  
Married or sole parent $47,670 $48,385  
For each dependent child or student, add: $3,356 $3,406  
All other taxpayers
Individual $21,655 $21,980  
Couple/sole parent (family income) $36,541 $37,089  

 

 

Extending accelerated depreciation for small businesses

From 1 July 2018, the government will extend the existing $20,000 instant asset write-off by a further 12 months to 30 June 2019 for businesses with aggregated annual turnover less than $10 million.

Assets valued at $20,000 or more that cannot be immediately deducted can still be placed into the small business simplified depreciation pool. These assets can be depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).

What this could mean for you

Under this measure, small businesses will be able to immediately deduct purchases of eligible assets costing less than $20,000 that are installed and ready for use before 30 June 2019.

 

Superannuation adjustments

A work test exemption for retirees

From 1 July 2019, people aged 65–74 who have a total superannuation balance of under $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year when they last satisfied the work test.

What this could mean for you

This initiative will make it easier to keep contributing to super after you’ve left the workforce. For example, if you retire on 30 March 2020 and your super balance is below $300,000 on 30 June at the end of the year, you’ll still be able to make voluntary contributions during the 2020–21 financial year. The usual concessional and non-concessional contribution caps will still apply.

 

Increasing the maximum Self-Managed Super Fund (SMSF) membership from 4 to 6 members

From 1 July 2019, the Superannuation Industry (Supervision) Act will be amended to allow the number of members in new and existing SMSFs to increase from 4 to 6. This change will also apply to Small APRA funds (funds regulated by Australian Prudential Regulation Authority).

What this could mean for you

This initiative will provide more flexibility for larger families to be members of a single SMSF, but may also increase the risk of disputes among members. It’s also important to consider the need for:

  • multiple investment strategies to cater for members with different risk profiles
  • a corporate trustee, to avoid the risk of additional trustee penalties and to address the increased risk of fund membership changes.

 

 

Introducing a three-year audit cycle for some SMSFs

From 1 July 2019, SMSFs will have the option to move from an annual to a three-yearly audit cycle if they have:

  • three consecutive years of clear audit reports, and
  • lodged the fund’s annual returns in a timely manner.

What this could mean for you

If your SMSF has a good compliance and lodgement record, this initiative could make it cheaper to operate your SMSF, as it will remove the need for an annual audit. If a compliance breach does occur, however, it might not be detected for up to three years, potentially making it more difficult and expensive to rectify.

 

Supporting mature Australians

New means testing rules for certain lifetime income streams

From 1 July 2019, new age pension means testing rules will be introduced for pooled lifetime income streams. Those purchased before 1 July 2019 will be grandfathered.

At this stage, however, it’s unclear exactly which income streams will meet the definition of ‘pooled lifetime income streams’.

What this could mean for you

This initiative is designed to help you avoid the risk of outliving your income. Under the new rules:

  • 60% of all income payments will be assessed as income, and
  • 60% of the purchase price will be assessed as an asset until you turn 84 (or a minimum of 5 years) and then 30% of the purchase price will be assessed as an asset for the rest of your life.

 

Expanding the Pension Work Bonus

The Pension Work Bonus currently allows age and service pension recipients to earn up to $250 per fortnight without it impacting their pension entitlements. Under the proposed changes, this amount will increase to $300 per fortnight from 1 July 2019. The scheme will also be extended to pensioners who are self-employed.

Pensioners will still be able to accrue unused amounts of the bonus, so that their future earnings will also be exempt from the pension income test. The maximum accrual amount will increase from $6,500 to $7,800 a year.

What this could mean for you

The Pension Work Bonus is provided in addition to the income-free area of your pension. So if you’re a single person with no other income source apart from your pension and wages, you could earn up to $468 a fortnight from working and still be entitled to the maximum age pension.

 

Extending eligibility for the Pension Loan Scheme

Under the current rules, pensioners can top up their age pension to the maximum rate if they:

  • receive a part pension under the income or assets test, or
  • don’t receive an age pension under either the income or assets test (but not both).

This allows pensioners to take advantage of a voluntary reverse mortgage scheme, under which Centrelink treats the top-up payments as a loan that is secured by the pensioner’s property. This loan must be repaid when the pensioner either sells the property or passes away.

From 1 July 2019, the government proposes to expand the scheme by making all age pensioners eligible and increasing the maximum top-up payments from 100% to 150% of the maximum age pension rate.

What this could mean for you

If you’re receiving the maximum age pension, you could be eligible for annual top-up pension payments of up to $11,799 for singles or $17,877 for couples. However, some restrictions may apply, depending on factors such as:

  • your age
  • whether you are single or a member of a couple
  • the value of your home
  • the expected duration of these top-up payments.

 

Increasing the availability of home care packages

Since last year’s Federal Budget announcement, the government has provided an additional 6,000 high-level home care packages. From 1 July 2018, the government will supplement this with a further 14,000 new packages over the next four years.

What this could mean for you

As at 31 December 2017, there were over 100,000 people in the national queue waiting for either their first home care package or an interim package, with 54.4% waiting for a high-level (Level 4) package. If you’re in this situation, the initiative could help you access a home care package sooner.

 

Additional funding for residential aged care and short-term restorative care

During the 2018–19 financial year, the government will provide $60 million to fund additional places in residential aged care and short-term restorative care. A further $82.5 million will support mental health services for residents of aged care facilities.

What this could mean for you

As part of this initiative, the government will simplify the aged care assessment forms available via the My Aged Care website. This will make it easier to access the aged care services that you or your loved ones need.

 

If you would like any more information on how this may affect your individual circumstances, please contact us.

 

Important information: This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count Wealth Accountants® is the business name of Count. Count advisers are authorised representatives of Count.

Information in this document is based on current regulatory requirements and laws as at 8 May 2018, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

Count is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your authorised representative may not be a Registered Tax Agent. Consequently, tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent.

 

How much will your child’s education cost?

As a financial stylist, it’s probably obvious that we have a family budget. We therefore budget for not just school fees, but also additional school costs as well like uniforms, shoes and stationary. 

I feel like this year though, the costs have increased more than expected, and our budget sometimes struggles to keep up.

I wasn’t surprised then to read the 2018 costs of education report released by ASG. It compares Government, Faith and Private school fees. 

The costs obviously vary greatly between these options, and also between metropolitan areas and here in regional Victoria. For each child’s 12 years of schooling, you can pay between $52,000 in Government schools, and $381,000 in private schools. In metropolitan areas, this increases to between $72,000 and $550,000! Yes, that’s a significant investment in your child’s education.

So how to prepare?

You can include an amount in your budget each year to cover all of the school costs – remember, not just fees. For example, if you determine your school fees and add expected costs for like uniforms, shoes, books, supplies and after school activities for the year, divide this amount back to what it is on a weekly or fortnightly amount, and move that money into a separate bank account specifically for school expenses. You then have money set aside to cover the costs during the year. 

This assumes that you will be able to afford this amount into your budget each year. 

Otherwise you can research how much you are likely to pay over the course of the school years. That way you may be able to start budgeting earlier, or  build up a savings nest egg to go towards the costs. 

Here are three things you can do now to help cover your family’s education costs without sacrificing your lifestyle.

1. Create a savings plan

By putting aside a little bit of money on a regular basis, you can grow your savings so you’ll have money to put towards your child’s schooling. A simple way to do this is to set up an automatic transfer from your everyday account into a high-interest savings account. Once you get started, you’ll notice the interest compounding over time. As you get into the habit of saving, you’ll find it becomes easier to manage your short term expenses like school fees and uniforms.

2. Invest your savings

While a savings plan is great, it’s important to know that education costs may rise faster than inflation. This means your cash savings might not grow enough over time to meet your child’s future education costs, and you might want to consider non-cash investments as well. By investing part of your savings in an investment bond or managed fund, you may find it easier to cover education costs over the longer term, based on the anticipated growth and earnings from these investments. So it’s worth speaking to your financial adviser about the best investment vehicle for your situation.

3. Pay down your mortgage

It can be tough keeping up with school fees and other costs when you still have a major financial burden hanging over you.

That’s why it’s a good idea to start paying off as much of your home loan as possible before you child starts school, so you’re in a better financial position to manage their ongoing education costs when the time comes.

Even if your child is already in school, it’s never too late for your financial adviser to help you get your finances on track and plan for the remainder of their education.

 If you would like any assistance with navigating through your children’s school costs, shoot us an email and we will be in touch.

~ Bronwyn 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Are you just starting out on your first job after year’s of school and study? Your financial future starts now!

Are you just starting out on your first job after year’s of school and study?

They say every great journey begins with a single step — and yours is just beginning. Here’s how to get on the path to financial freedom at the same time.

Every year, thousands of young Australians start one of the biggest journeys of their lives: their careers. And if you’re one of them, you’re probably having a great time making the most of your new income without thinking too much about planning ahead.

But the good news is, you can get yourself set up financially for the future while still enjoying life now. Here are some things to keep in mind so you can get started on the right foot.

What are your life goals?

When you first join the workforce, it’s worth taking the time to really think about where you want to be in 5 or 10 years from now. That way, you’ll be able to make sure you’re headed in the right direction.

As the first step, consider your short- and long-term goals, both personal and professional. These may include:

  • Buying a car
  • Finding your dream job
  • Moving out of home
  • Saving for a house
  • Furthering your education
  • Starting a relationship

A financial adviser can help you see the big picture, while still making the most of the here and now. The sooner you get professional advice, the easier it will be to navigate a path towards your goals.

How much will it cost?

If you’re moving out of home for the first time, you’re probably celebrating your newfound freedom and independence — but beware how expensive your independence can be. Even with a regular paycheque coming in, it’s easy to overspend without thinking about it. The last thing you want is to rely on credit cards that you never seem able to pay off.

The Australian Government estimates the minimum cost of living to be over $20,000a year[1] — so it’s a good idea to work out a careful budget based on your salary. You should take into account your ongoing expenses like rent, bills and groceries while also putting aside savings for things that crop up occasionally, like car rego and medical costs. 

It’s also worth factoring in your goals and including a savings plan in your budget. So, for example, if your aim is to buy a car, set a deadline and calculate how much you need to save out of each paycheque to reach that goal.

we can help you with a budget 🙂 

If you haven’t yet done a budget to determine your living expenses, you will get so much benefit from doing so! 

We have a simple ‘Income Planner’ spreadsheet that you can download here:

Why do you need super?

At this stage of your life, retirement seems a long, long way off. But right now, time is on your side for growing your nest egg — and you’ll thank yourself later.

In most cases, your employer has to contribute 9.5% of your pre-tax salary into your super fund. But you can make your retirement savings grow faster by making extra contributions yourself. One way is to salary sacrifice an amount from each paycheque straight into super.

For example, a 20 year old who earns $50,000 a year could expect to have a super balance of around $256,000 if they retire at the age of 67. But if they put in an extra $50 a week (via salary sacrifice) throughout their working years, they’ll end up with more than $115,000 extra at retirement age — which will make a huge difference to their quality of life.[2]

Which types of insurance should you consider?

Sure, you’re young and healthy — but the reality is, no matter what shape you’re in, you never know what lies around the corner. And right now, there’s a good chance you’re taking some risks as well, especially if you enjoy active sports or adventure travel.

That’s why you should consider protecting yourself with insurance cover, so you know you’ll be looked after if you end up with a serious injury. It’s a good idea to take out Total and Permanent Disability (TPD) and life insurance so you can spare your loved ones any financial hardship if the worst should happen. A financial adviser can take a close look at your situation and help make the right insurance choices for your needs.

By getting guidance from a financial adviser now, you’ll be taking an important first step towards achieving financial freedom in the future.

[1] Australian Government, Living costs in Australia, July 2016.

[2] Based on calculations made using ASIC’s MoneySmart Superannuation Calculator. Assumptions: 4.8% investment returns (before tax and fees) on a Balanced investment option, with 7% tax on earnings, administration fees of $50 pa and investment fees of 0.5% pa.

Important information
This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. ‘Count’ and Count Wealth Accountants® are trading names of Count. Count advisers are authorised representatives of Count. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Information in this document is based on current regulatory requirements and laws, as at 30 January 2018, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws, rulings and their interpretation and may be subject to change. You should seek professional tax advice before making any decision based on this information. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or in writing.

Do you use your accounting software to get ‘useful’ reports on your cashflow?

We have got to the point where businesses will generally use some form of accounting software to track their income and expenses which is great. Makes life so much easier. But do you actually get useful reporting on your cashflow from the software, or do you just do it because you have to? Just getting it done.

Software programs will have a Chart of Accounts built into them, or one will be added by your Accountant. A chart of accounts is like a filing cabinet where you file your expenses. You can then look at each file and see how much money you spend on that particular thing. For example, you may have a file for things like petrol, car expenses, stationery or office equipment.

How well you categorise things into these files will make a difference on how well you know the numbers in your business.  Once you know the numbers in your business, you can make sound decisions on growing your business.

Whilst a lot of business owners will use software to categorise their expenses and that helps them keep track of where they spend their money, what they don’t realise, is that you can customise the Chart of Accounts to suit your business. This means the categories you file your expenses into, can be more relevant to you and your business, making your record keeping more useful.

If you are already using an online accounting system with a chart of accounts, it is relatively easy to amend the chart of accounts. You could make the changes, then start organising your expenses into those new filing cabinets and you will get the benefits of having more useful reports going forward. If you are keen, you could also go back and move things from your old filing system into the new one. This will give you useful reporting for a historical period – certainly could be worthwhile.

Regardless, make sure that your chart of accounts, and where you file your expenses, is suited to you and your business, and not just the company who created the software program.

If you would like any assistance with this, we are more than happy to help you out. Get in contact with us via email, or phone the office on 02 6056 1929.

How do you make your money decisions?

I recently read a post by Carl Richards who is a New York based financial adviser keeping advice simple with sketches. This was the sketch:

What this reminded me, is that people make decisions about money based on many external factors – family beliefs, early teachings, what family and friends are doing, marketing, the media, the list goes on.

However, the decisions you make around money should be based on the WHY you are doing it.

Your life… the reason’s you do everything in life is determined by what’s important to you – your values.

You need to make sure that you make decisions with your money that are based on what is most important to you in life.

If you aren’t doing this, and basing your money decisions on other external factors, your will likely find yourself with more stress and anxiety about money. Not ideal!

Good financial planning isn’t plugging some numbers into a spreadsheet or an online calculator, it’s about the intersection between your life and your money. Dreams, fears and goals don’t fit into a spreadsheet. It’s also not about finding the best investment – it’s about asking yourself why you want to invest in the first place. 

So how do you make good decisions about money? First and foremost make sure you are really really clear on your core values. Then look at your goals, and what you want to achieve, and make sure they align to these values. Your decisions you make around money will become much easier and you will feel so much more confident.

If you want to chat to someone to help determine and get really clear on your values, your goals, and how they relate to your money decisions – that is exactly what I am here for. I look forward to hearing from you 🙂 

~ Bronwyn Tyrell

Financial Stylist, Vivid Advisers

bronwyn@vividadvisers.com.au

In’s and out’s of the Medicare Levy

Ever wondered why your EOFY tax bill was higher than you expected? It could be because of the Medicare Levy. So what does the levy pay for – and how is it calculated?

What is the Medicare Levy?

Medicare is Australia’s publicly funded national healthcare system. The federal government funds the system by charging taxpayers a levy on top of their annual income tax. Thanks to this levy, all Australians can enjoy access to quality health care.

 

What does it cover?

Medicare provides access to a wide range of health care and hospital services, including:

  • free or subsidised treatment when you visit a medical professional such as a doctor, optometrist or specialist
  • free treatment and accommodation when you’re a public patient in a public hospital
  • 75% of your treatment and procedure costs when you’re a private patient in a public or private hospital (not including accommodation fees and other costs)
  • reduced costs for prescription medications in some cases.

 

How much is it?

For most eligible taxpayers, the levy is currently charged at 2% of their taxable income. However, the government has proposed to increase this rate to 2.5%. If this legislation is passed, it will take effect in July 2019.

 

When do you pay it?

If you’re required to pay the Medicare Levy, it’s automatically calculated against your taxable income when you lodge your yearly tax return.

TIP: You can use the Medical Levy Calculator on the Australian Taxation Office (ATO) website to work out how much you can expect to pay.

 

Is anyone exempt?

If you’re single and your taxable income was below $21,655 for the 2016–17 financial year (or $34,244 if you’re a single senior or pensioner entitled to the seniors and pensioners tax offset), then you don’t have to pay the Medicare Levy.

For families, you’ll be exempt from the Medicare Levy if your 2016–17 household income was below $36,541 (or $47,670 for eligible seniors and pensioners), plus $3,356 for each dependent child or student.

You may also be exempt if:

  • you suffer certain medical conditions
  • you’re a foreign or Norfolk Island resident
  • you’re not entitled to Medicare benefits – for instance, you’re not an Australian citizen.

Keep in mind, there are specific requirements for each category, so you may need to check whether you’re eligible for an exemption.

 

Are some people charged a different rate?

There are instances when some people will only be charged a partial Medicare Levy. For instance, you’ll pay a reduce rate if you’re single without dependants and your taxable income for the 2016-17 financial year was above the exemption threshold but less than $27,069 (or $42,806 for seniors and pensioners entitled to the seniors and pensioners tax offset).

Families may be charged a partial Medicare Levy if their household taxable income is below $45,676 (plus $4,195 for each dependent child).

To be eligible for a reduction, you also need to meet certain conditions.

 

What is the Medicare Levy Surcharge?

If you don’t have the appropriate level of private hospital insurance, you may be charged an extra amount on top of the 2% levy. This is called the Medical Levy Surcharge (MLS) and only applies if your taxable income is over $90,000 for singles or $180,000 for families.

The MLS can range from an additional 1% to 1.5% depending on your income level. You can see a full breakdown of thresholds and rates on the ATO website.

 

What if you have private cover?

If you have an acceptable level of private hospital insurance, you won’t be charged the MLS. But first, you’ll need to provide information about your private health cover payments on your tax return.

 

For more information

If you’d like to know more about how the Medicare Levy might impact your financial situation, get in contact with us.

 

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

 

Do you suffer from emotional spending?

I recently came across an article written by Dr Libby Weaver ‘Ways to deal with emotional eating‘. I couldn’t help but notice how easily it could relate to emotional SPENDING!

Emotional eating is when we eat for non-physiological reasons – we aren’t actually hungry… 

Emotional spending is when we spend for non-essential reasons – we don’t actually need anything.. 

Emotional spending is just as unhealthy as emotional eating, and could also have negative long-term impacts on your financial health. 

If you find yourself emotionally spending, you are covering up on your feelings – this could be sadness, anxiety, frustration or even happiness. 

The advice Dr Libby gives about food relates so well to emotion-driven spending : Be mindful of when you’re spending to alleviate stress, and when you’re spending because you actually need something. If your ‘go to’ habit to relieve the stress of a bad day, a bad relationship, is to go shopping, try to find other ways to manage this stress that are not so destructive to your financial well-being.

If you feel you suffer from emotional spending, we can certainly help you get through it. You can take control back over your money, and not let it control you.  

Instead of jumping on-line and making that impulse purchase to cover your real emotions, make an obligation free appointment to chat: BOOK ONLINE HERE

Cheers, Bronwyn

Your Financial Stylist

Link to Dr Libby’s article: https://www.drlibby.com/do-you-feed-your-feelings/ 

Life Lessons from The Block

The kids have been watching a little bit of The Block this season, and were both especially interested in the kids room reveal this week.

Now, forgive me, I do multi-task…. I know it’s not ‘ideal’, and means I’m not doing any of the said tasks to 100%.. I am well aware that’s not actually possible. HOWEVER, I do like to work at home of an evening, on the couch with my laptop. Sometimes even half watching (usually reality) TV.

Tonight was one of those nights, and The Block was still on, even though the kids had gone to bed. It quickly got my attention when I heard that what’s-his-name-host had brought in his assistant, who is his auditor, for an ‘intervention’ with one of the contestant’s.

So dear Sarah, apparently more commonly known as “Jason and Sarah” has apparently come this far in the season keeping track of her spending “in her head”. As it turns out, the amount of spending she has been tracking in her head, is a LOT less than the ACTUAL spending. So, in comes the auditor for the harsh reality check.

Jason and Sarah are only a few weeks in and already spent more than half of their budget for the whole season…. Whoops. They don’t have enough to finish the rooms at this rate, and may have to go to Auction with a ‘renovator’s dream’. Not ideal for them at all (perhaps opposite though for the investor who intends to snap that up!).

So at this point so many alarm bells are ringing in my head, I don’t even know where to start.

Have you never seen this show before? So, as far as I’m aware, this show has been around for a while. How do you not know that you should set up a proper budget, track your expenses and be concerned that if you don’t stay on track (ie. overspend!) then you will run out of money?!

I guess however, that this is a really simple concept to those who get it. But realistically, there are lot of us out there who have no idea what we actually spend money on. And by this, I am clearly not just referring to when renovating a set of apartments on a reality TV show, but in everyday life!

We may even have set up some form of budget. Jason and Sarah could have too (let’s give them the benefit of the doubt). But a budget is no help to anybody if you don’t track what you are spending against this budget!

To me, this tiny little part of one episode of The Block illustrated that even though something can be SOOO important, we still don’t do it. Why is that? Is it too hard? Too intimidating? What? Because, why would you choose NOT to track what you are spending when it gives you little to no control over your money?

Whether you have a little or a lot, if you aren’t taking control of your money, it’s taking control of you!

Maybe it’s time to stop living with your head in the sand, be responsible and take control.

And good luck Jason and Sarah for the remainder of the season. I hope the money gods come your way (or at least some room wins to top up the budget).

~ Bronwyn​ Tyrell

​If you need help taking control of your money – check out our Freedom 2 Achieve (F2A) program

Be Super Savvy! Check if you have any ATO held super now!

For a while now, you have been able to search for your lost super accounts on the ATO website via ‘super seeker’.

This service has now just been enhanced and it now allows for ATO-held super to be transferred direct to individuals (where eligibile). Previously, ATO-held super had to be transferred to an existing super fund.

What is ATO-held super?

ATO-held super is made up of amounts paid to the ATO by employers, super funds or the government on behalf of individuals, including:

  • unclaimed super money
  • super guarantee amounts paid to us by employers
  • superannuation holding account money (active and inactive)
  • super co-contribution amounts
  • low income super contribution amounts.

Claiming ATO-held super

The new functionality in myGov enables you to:

  • determine your eligibility to withdraw or transfer ATO-held super to your super fund
  • scan and upload any supporting documentation as part of the online claim
  • use mobiles and tables to make direct claims for ATO-held super.

How can you find out if you have any ATO-held super?

You can login to SuperSeeker which is a quick search using just your name, date of birth and tax file number. This will show you any ATO-held super in your name.

Alternatively, if you register online for a MyGov account (or already have one), that will then give you further access to:

  • check your super accounts that money has been paid into in the last two years
  • find lost super – there are billions in lost super dollars – see if some of it is yours
  • find your ATO-held super and transfer it into the super account you want
  • transfer your super into the super account you want.

I hope that you are one of the lucky ones, and some of the billions of dollars of ‘lost super’ is yours!

If you do find some ATO-held super and need some advice on what to do with it, or require any further assistance in the search process, please contact us.

You can now book appointments online!

 

We are excited to announce that you can now book Accounting and Financial Planning meetings with us ONLINE!

Whether you are a new or existing client, you can make the appointment via our website in the convenience of your own time and place.

We look forward to seeing you soon 🙂 ​

Federal Budget 2017 – What you need to know

On Tuesday 9 May, the Federal Government handed down its Budget for the 2017–18 financial year.

According to Federal Treasurer Scott Morrison, this year’s Budget is founded on the principles of fairness, security and opportunity. Mr Morrison claims that the government’s proposed measures will raise almost $21 billion in revenue over the next four years, returning Australia’s budget to surplus by 2021.

Here are some of the key Budget announcements. Note that each of these proposals will only become law if it is passed by Parliament.

Additional non-concessional cap for retiree downsizers

From 1 July 2018, people aged 65+ will be able to contribute up to $300,000 into super from the sale of their principal home, if they’ve owned their home for at least 10 years. The existing restrictions for contributions over age 65 won’t apply for these non-concessional contributions.

What this could mean for you

You may be able to contribute an additional $300,000 to super (or $600,000 for couples), over and above your existing concessional and non-concessional caps. However, if you or your partner receives the age pension, this could cause your entitlements to be reduced.

Super savings scheme for first home buyers

From 1 July 2017, individuals will be able to make extra voluntary super contributions of up to $15,000 a year beyond their employer’s Super Guarantee payments, up to a total of $30,000. These contributions will be taxed at 15% and can be withdrawn to go towards the deposit on a first home. Withdrawals will be allowed from 1 July 2018.

What this could mean for you

When you withdraw your extra contributions to pay for a deposit, they’ll be taxed at your marginal tax rate minus a 30% tax offset. While the tax concessions for these contributions may allow you to save a larger deposit, you won’t be able to access your money until retirement if you decide not to buy a home.

A 0.5% Medicare levy increase from 2019

From 1 July 2019, the Medicare levy will increase by half a percentage point from 2% to 2.5% of an individual’s taxable income. The Medicare levy low-income thresholds for singles, families, seniors and pensioners will increase from the 2016–17 financial year.

What this could mean for you

The increased levy may also result in increases to many tax rates linked to the top personal tax rate, including fringe benefits tax and excess non-concessional contributions tax. Certain lump sum super payments that attract the levy may also be impacted, such as disability benefits paid to people under preservation age.

Extension of the deductibility threshold for small businesses

The government will extend the existing accelerated depreciation allowance for small businesses by 12 months to 30 June 2018.

What this could mean for you

If your small business has aggregated annual turnover below $10 million, you’ll be able to immediately deduct the purchase of eligible assets costing less than $20,000 where they are first used or installed ready for use by 30 June 2018. After that date, the immediate deductibility threshold will revert back to $1,000.

New levy for major banks

A major bank levy will be introduced for authorised deposit-taking institutions (ADIs) with licensed entity liabilities of at least $100 billion (indexed to Gross Domestic Product (GDP)). The levy will equate to an annualised rate of 0.06% – for example, the levy on a bank deposit of $500,000 will be approximately $300 pa. Superannuation funds and insurance companies won’t be subject to the levy.

What this could mean for you

It’s unclear at this stage how the levy will be implemented, and what the impacts might be on clients/customers and shareholders.

Incentives for investment in affordable housing

From 1 January 2018, resident individuals who invest in qualifying affordable housing will be eligible for an increase in the capital gains tax (CGT) discount from 50% to 60%. This increased discount will also apply to eligible Managed Investment Trusts (MITs) as of 1 July 2017.

What this could mean for you

To qualify for the higher discount, your residential property must be rented to low-to-moderate income tenants at a discounted rate and be managed through a registered community housing provider. You also need to hold the investment for at least 3 years. If you invest in an MIT, you’ll be eligible for the 60% discount if the trust invests in affordable housing that is available to be rented for at least 10 years, and you hold the investment for at least 3 years.

Restrictions on deductions for residential property investments

From 1 July 2017, depreciation deductions for residential plant and equipment (e.g. dishwashers and ceiling fans) will be limited to investors who actually incur the outlay – not subsequent owners. Also from that date, investors will be unable to deduct travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

What this could mean for you

If you’re a subsequent investor in a property, the acquisition of existing plant and equipment will be reflected in the cost base for CGT purposes. Grandfathering applies to plant and equipment that forms part of a residential investment property as at 9 May 2017 and will continue to give rise to depreciation deductions under current rules. The new rule around travel expense deductions applies to all property investors, including SMSFs, family trusts and companies.

Tax changes for foreign tax residents and property owners

Foreign or temporary tax residents will no longer have access to the CGT main residence exemption on properties acquired after 7.30pm AEST on Budget night (9 May 2017). Also from Budget night, foreign owners of residential property that is not occupied or genuinely available on the rental market for at least six months per year will be subject to an annual levy of at least $5,000.

What this could mean for you

If you’re a foreign of temporary tax resident and you held an existing property before Budget night, the property will be grandfathered and you’ll be able to continue claiming the CGT main residence exemption until 30 June 2019. However, from 1 July 2017, the CGT withholding rate that applies to foreign tax residents will increase from 10% to 12.5%.

New thresholds for HELP debt repayments

From 1 July 2018, income thresholds for the repayment of HELP debts will be revised, along with repayment rates and the indexation of repayment thresholds.

What this could mean for you

A new minimum threshold of $42,000 will apply, with a 1% repayment rate. A maximum threshold of $119,882 will apply, with a 10% repayment rate. Currently, the maximum repayment threshold for the 2017–18 financial year is $103,766 with a repayment rate of 8%.

Reinstatement of Pensioner Concession Card entitlements

Pensioners who lost their Pensioner Concession Card entitlement due to the assets test changes on 1 January 2017 will have their card reinstated. Those who lost their entitlement were instead issued with both a Health Care Card and a Commonwealth Seniors Health Card. However these cards provided access to fewer concessions than the Pensioner Concession Card.

What this could mean for you

If your Pensioner Concession Card entitlement is reinstated, you’ll have access to a wider range of concessions than those available with the Health Care Card, such as subsidised hearing services. Your Pensioner Concession Card will be automatically reissued over time with an ongoing income and assets test exemption. You’ll also retain the Commonwealth Seniors Health Card, ensuring you continue to receive the Energy Supplement.

Increased pension residence requirements

An individual currently needs to have at least 10 years’ residence in Australia (at least 5 of which are continuous) to qualify for the age pension or disability support pension. From 1 July 2018, they’ll need to have at least 15 years’ residence in Australia or either a) 10 years’ continuous residence including 5 years during their working life, or b) 10 years’ continuous residence and not in receipt of an activity-tested income support payment for a cumulative period greater than 5 years.

What this could mean for you

This measure may impact you if you have less than 15 years’ residence in Australia or less than 5 years’ residence between age 16 and age pension age. However, existing exemptions will be maintained for humanitarian reasons or if you became unable to work while you were an Australian resident.

Other proposals

· A new Jobseeker Payment will replace 7 existing working age payments from 20 March 2020

· Job seekers and parents who receive working age income support will have increased activity test requirements from 20 September 2018

· The maximum length of the Liquid Assets Waiting Period will increase from 13 weeks to 26 weeks from 20 September 2018

· A one-off Energy Assistance Payment of $75 for single recipients and $125 for couples will be paid for those who qualify on 20 June 2017

· Family Tax Benefit rates will not be indexed for 2 years from 1 July 2017

· A new upper income threshold of $350,000 pa will apply to the child care subsidy from 1 July 2018.

​If you wish to discuss anything further, please contact us to make an appointment on 02 6056 1929 or admin@vividadvisers.com.au

Important information: This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count Wealth Accountants® is the business name of Count.Count advisers are authorised representatives of Count.

Information in this document is based on current regulatory requirements and laws 10 May 2017, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.

Count is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your authorised representative may not be a Registered Tax Agent. Consequently, tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent.

Protecting your assets & income through personal insurance

​DID YOU KNOW – 95% of Australian families do NOT have adequate insurance cover? **

Insuring your car, home or other possessions makes sense. So why do so few of us insure ourselves? If illness or injury stopped you from working for an extended period, could you keep paying your bills?

Personal risk insurance gives you peace of mind that if the unexpected occurs, you and your family will be provided for.

What is personal risk insurance?

Personal risk insurance is an important way of ensuring you and your dependants will be financially supported in the event of serious illness, disability or death. If your ability to earn an income is affected, a personal risk insurance policy may enable you to maintain your current lifestyle and continue supporting those who depend on you.

Why do I need it?

While we recognise the emotional impact of events such as serious illness or death, the financial consequences can be equally devastating. If the unexpected did occur, having personal risk insurance can go a long way to helping you and your family meet your basic living expenses such as your mortgage, groceries, petrol or school fees. Depending on the event, you may also need to cover significant medical expenses, rehabilitation, modifications to your home or services to help maintain your lifestyle.

Types of personal risk insurance

There are four main types:

Life insurance:  A lump sum payable on death or terminal illness. This can help support your dependants to maintain living standards or pay off debts.

Total and permanent disability (TPD) insurance:  A lump sum to help support you if you are totally and permanently disabled due to illness or injury.

Income protection insurance:  A monthly income stream to help support you if you are temporarily unable to work because of illness or injury.

Trauma insurance:  A lump sum to help support you if you are diagnosed with a specified major medical condition (eg. heart attack, stroke or cancer).



Life insurance

Life insurance can help provide financial assistance for a family if they lose the homemaker or breadwinner.

In a business situation, life insurance can help protect against the loss of a key employee or business partner.

Total and permanent disability (TPD) insurance

TPD is designed to help meet one-off and ongoing living expenses, as well as cover special expenses such as medical and rehabilitation costs.

To receive a TPD insurance benefit, you must satisfy specific criteria to establish the genuine nature and extent of the disability (this can vary between insurers). These criteria usually include a range of permanently disabling conditions specified in the policy, such as paraplegia, as well as more general criteria relating to your total and permanent inability to work.



Income protection insurance.

Income protection insurance, also known as salary continuance insurance, pays a monthly benefit of up to 75% of your pre-tax salary if you are disabled due to an illness or injury for longer than the nominated waiting period.

Income protection benefits begin after a predetermined waiting period (eg 30 days, 90 days, or two years) that you nominate when you take out the cover. Generally, a longer waiting period means a lower premium however it also means you’ll have to wait longer to receive your first benefit payment. The policy will continue to pay the benefit for as long as you remain unable to work up to a maximum predetermined period. This can be a set time frame such as two years or age based (eg. up to age 65).

Trauma insurance

Trauma insurance provides a lump sum payment if you suffer a serious, debilitating medical condition (as specified in the policy you choose) such as heart attack, cancer or stroke. Trauma insurance is designed to help people cope with the financial impact of a traumatic event as they recuperate.

Generally, you will receive the trauma benefit provided you survive for a set period after incurring the condition. It is important to note that different policies may have different features and you can access certain types of insurance through your super. Talk to your financial adviser for the most appropriate insurance to suit your individual and family needs.

What kind of insurance do you need and when?

As your lifestyle and financial position change over time, so do your risk insurance needs.

For example, during the years when you are supporting a young family or paying off a large mortgage, you will likely want more protection than later years when you may have downsized homes and your children are in the workforce. The diagram shows what type of insurance may be required most during each phase of life.

How insurance needs can change over time:



Can you afford personal risk insurance?

When you consider your existing financial commitments and level of savings, how long could you be without an income before you would need to sell the house or change schools? The cost of premiums for any personal risk insurance policy reflects both the risk (probability) of an insured event occurring and specific features of the policy. Some typical risk factors are your age, the state of your health, your occupation and the type of recreational activities you participate in.

Some of the policy features may include:

  • the amount of benefit payable upon claiming
  • the waiting period before benefits are paid
  • how long benefits will be paid out for.

Before taking out personal insurance, consider the policy features carefully and seek professional advice.

Insuring through superannuation

Acquiring life insurance through your superannuation fund can provide some tax concessions which are not generally available for life insurance policies held ‘outside super’. For example, by claiming a tax deduction for personal contributions to superannuation or making salary sacrifice contributions from your pre-tax income, you can effectively pay your insurance premiums from your pre-tax income. This could make it significantly cheaper (on an after-tax basis) for you to insure through superannuation.

Also the trustee of the superannuation fund may be able to claim a tax deduction on the premiums for life, TPD and income protection insurance. This could also reduce the cost of cover.

Not all types of personal risk insurance is available through your superannuation fund. New rules came into effect on 1 July 2014 that restrict the types of new TPD and income protection policies that can be purchased through superannuation, while new trauma policies are generally prohibited.

Tax considerations

Note that these contributions are subject to the concessional contribution caps. From 1 July 2013, if these caps are exceeded, the excess concessional contributions are effectively taxed at your marginal tax rate, plus an interest charge*.

 When insuring through superannuation, if life insurance benefits become payable they attract a tax liability of 32% if paid as a lump sum from a super fund to a non-dependant. However where life insurance benefits are paid to a dependant, they are tax-free.

Benefits for income protection acquired through superannuation are taxed at normal marginal tax rates.

TPD insurance may attract tax as a superannuation life benefit.

The importance of policy ownership

Whether you are taking out risk insurance yourself, with your spouse or with a business partner, ownership of the insurance policy is an important consideration. There are different policy ownership options available. Each one can give a different outcome in certain circumstances.

We recommend you seek professional advice on the structure that suits your goals and objectives.

** Lifewise/NATSEM Underinsurance Report – February 2010.

* You are also able to withdraw up to 85% of any excess concessional contributions made from 1 July 2013. Amounts withdrawn do not count to your non-concessional contribution cap.

​If you would like any further information on personal insurances, and what is most important for you and your family, contact us. 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

Happy International Women’s Day

Wednesday 8 March 2017 marks the 100th anniversary of the first International Women’s Day. Since then, there have been enormous gains in terms of gender equality – but when it comes to our financial equality, women still have a long way to go.

The situation is improving, as female financial literacy rates increase around the world and more women become empowered to take control of their money. But women still face a variety of unique challenges throughout their lives that can become barriers to growing their wealth.

Here are some of the key financial gender gaps – and how we as women can overcome them.

Wages

Despite making significant headway over the last century, the gap between women’s and men’s salaries remains one of the most visible signs of gender inequality.

On a global scale, women earn about half of what men earn – with women bringing home an average of $10,778 compared to $19,873 for men.[1] Even though things are slightly better in Australia, women working here full time earn 23.1% less than men – creating an average wage gap between the sexes of $26,853.[2]

On the other hand, if we were able to close the Australian wage gap once and for all, women would see a significant difference to their overall financial position and would be better able to plan a secure future.

Workforce participation

Women are less engaged in the workforce than men, largely because we tend to take career breaks while we raise children. And as our population ages, women are more likely to take on the role of caregiver for their elderly parents as well. Squeezed between these responsibilities, we have less time over our working lives to earn money and build up our savings.

What’s more, many women who return to the workforce after a career break end up working part time. In Australia for example, only 28% of women with dependent children work full-time, compared to 82% of men with dependent children.[3]

Super

The combined effects of lower wages and workforce participation contribute directly to a substantial superannuation gap between women and men. Because women can earn less over the course of our working lives, we also receive less in compulsory Super Guarantee payments from our employers. And while we take time out of the workforce, we’re often receiving minimal super payments or none at all.

The end result is that women are likely to have much lower super balances when we retire than our male counterparts. In fact, the current average super balance for men aged 60–64 is $292,500 while women in the same age bracket only have an average of $138,150 (less than half).[4] This means many women will retire without enough super to fund a comfortable lifestyle, and they may even run the risk of outliving their savings.



Three ways to close the gap

The good news is that society is already moving towards closing these gaps. And in the meantime, there are steps us women can take while we’re still working to improve our personal financial situation. Even if you’re in the final stages of your working life, there are ways to make your income work harder for you so you can shape your financial future.

1. Start boosting your super

Your super is probably the most valuable tool you have for growing your nest egg, so it pays to make the most of it.

First, consolidating your super into a single account may help you avoid paying extra money in unnecessary fees. However it is not appropriate for everyone so before you make any changes to your super, talk to your financial adviser. You may also need to consider things like exit fees, the loss of insurance cover and the cost of withdrawing from your current super fund. Then, consider asking us about whether setting up a salary sacrifice strategy is right for you. You can talk to you employer about setting up a salary sacrifice arrangement – this means they take a fixed amount out of your pre-tax earnings each payday and put it into your super account for you.

As with your employer’s compulsory contributions, your salary sacrifice contributions are generally taxed at just 15% when received by your super fund. If you’re over 50 (anytime during this financial year) you can make up to $35,000 in pre-tax super contributions before extra tax applies (or up to $30,000 if you’re under 50). But from 1 July, this cap will be reduced to $25,000 per financial year – so it may be worthwhile talking about whether you should be taking advantage of the current cap while you can.

2. Put away a bit extra

As well as salary sacrificing, you can give your super a boost each year by making an after-tax contribution. This is an excellent way to grow your nest egg if you come into some extra money – for example, if you earn a bonus, receive an inheritance or end up with some surplus cash after downsizing your home.

You can currently make up to $180,000 in after-tax or ‘non-concessional’ contributions to super each year before extra tax applies. If you’re under age 65 during a financial year, you can even put in three years’ worth of contributions at any time during those three years, which means you can contribute up to $540,000 in one go. But from 1 July, the cap will be reduced to $100,000 a year (or $300,000 over three years), so if you have the means to make the most of the current cap, now may be the time.

3. Speak to me – Bronwyn Tyrell – Financial Stylist at Vivid Advisers

I can help you work out the right strategies for making the most of your income and savings. For women especially, it’s important to get professional guidance at each stage of life. So no matter where you’re at, I can help you understand your options and empower you with the knowledge and skills you need to make confident financial decisions.


[1] World Economic Forum, The global gender gap report, 2016.

[2] Workplace Gender Equality Agency, Gender Equality Scorecard, November 2016.

[3] Australian Bureau of Statistics, Education and work, Australia, 6227.0, May 2016.

[4] ASFA, Superannuation account balances by age and gender, Dec 2015. Based on 2013/14.

Count disclaimer


*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is anAuthorised Representative of Count Financial Limited.Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117. ‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian FinancialServices Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers areauthorised representatives of Count. www.count.com.auGeneral advice warning: The advice provided is general advice only as, in preparing it we did not take into account yourinvestment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice,you should consider how appropriate the advice is to your particular investment needs, and objectives. You should alsoconsider the relevant Product Disclosure Statement before making any decision relating to a financial product.Our Financial Services Guide (FSG) is available here:Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.Privacy disclaimer


We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative ofCount Financial Limited, we are bound by Count’s Privacy Policy.

Business Owner’s Checkilst

Being your own boss can be rewarding, but it’s also incredibly challenging. That’s why it’s important to future-proof your hard work by taking steps today that will prepare your business for tomorrow.

When you’re running your own business, it’s demanding enough to keep up with the day-to-day, which means it’s easy to lose sight on the big picture. But without careful planning, your business might not be prepared for whatever the future holds.

Here are 5 essentials that every small business owner should factor into their business plan.

  1. Give it structure. Make sure you structure your finances so your personal assets and business assets are kept separate. As a minimum, you should have a separate business bank account and credit card, and pay yourself a salary. By untangling your personal finances from your business bookkeeping, you may even save time on administration.
  2. Be prepared for the unexpected. If anything were to happen to your staff, your equipment or your intellectual property, it could have disastrous results for your business. The concept of business insurance is a veritable smorgasbord of safeguards against unexpected events, with options ranging from vehicle and key person insurance to public liability and professional indemnity cover. No matter what type of business you have, your Financial Adviser can help make sure it’s protected.
  3. Have an exit strategy. One day you (hopefully) intend to retire – and a time may even come when you decide to leave the business earlier than expected. Regardless of when you eventually exit, it’s important to plan ahead so it can be done smoothly, with as little financial impact to the business as possible. Start thinking about succession management sooner rather than later – it’s a good opportunity to evaluate your business and identify its future leader.
  4. Plan beyond yourself. Even with a retirement succession plan in place, there’s always a chance your business could be faced with involuntary succession – for example, if you die unexpectedly. So as well as insuring your business, make sure you’re personally covered against death, disability and serious illness. You can also set up a legally binding buy-sell agreement that sets out how ownership of the business will be transferred in the case of involuntary succession. And to be certain your assets will be distributed to your chosen beneficiaries according to your wishes if you pass away, make sure you have a comprehensive, up-to-date estate plan.
  5. Work to live, not the other way round. Your business is a big part of your life, but it’s important to remember that there’s also life beyond work. Many small business owners find it hard to separate work life and home life, which can cause tension with their loved ones. So if you’re looking to secure your business’s finances, your Financial Adviser can give you the guidance you need to remove some of the stress of business ownership

~ Team Vivid



Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

Avoid a Christmas hangover!

Yes, there are now less than 4 weeks to Christmas – scary isn’t it!

To avoid a budget blow-out and Christmas (financial) hangover, it is definitely best to start planning for Christmas early, however it’s never too late to get started being organised!



Food, Drinks plus more!

Make a list of everything you will need for your Christmas festivities. Don’t just include food and drinks, but remember things like extra toilet paper.

When doing this remember that Christmas is only one day (or sometimes drags out a bit longer!) you don’t need to blow out your whole budget on this.

Start looking for these items now!

If you add a small bit each week to your weekly shopping, your budget won’t blow out in just week leading up to Christmas. This also gives you the opportunity to find things on sale and stock up.

Who do you need to buy for?

Make a list of everyone you need to buy for.

Don’t forget about the extra little ones that also add up. What about Kris Kringle at work and the small gifts for the neighbours…

Things that are typically given for presents will generally not be on sale in the week leading up to Christmas. Therefore you can certainly save money by being more organised and buying earlier in the year to grab them for a bargain!

If you buy gifts during the year as you see them on sale – this is a great way to stock up the Christmas cupboard. Just remember to check what you have in there regularly, as I often forget then still buy something else and that clearly defeats the purpose!

Consider hand making some gifts if you have time. The thought is very much appreciated…

How about consider a Secret Santa or Kris Kringle with your family members. You can set a limit on the amount spent and overall you will spend a lot less money.

Or what about only buying for the kids in the family(s). How often do you struggle buying a gift for someone because they already have everything they need. Are you buying something just for the sake of buying something? Then perhaps you no longer need to buy gifts for each other and just get something for the kids….?!

Don’t forget the small things

Also try and buy wrapping paper, gift tags, cards and sticky tape early. You don’t want to be rushing to the supermarket at the last minute to find they have none left!

Wrapping paper tips:

Unless you’re a super saver and save all the used wrapping paper, just buy the cheap stuff – it can still look quite fancy if done creatively.

What about using newspaper and finish off with a lovely red ribbon?

Recycle the kids artwork (not into the recycle bin) but for use as gift paper

If you do prefer to wrap in something nice, use a gift box or gift bag that can at least be re-used.

Electricity

If you are home over the holidays you may find that you are using more electricity than normal so accommodate for that in your budget.

If you are not going to be home over the holiday break – make sure all power points are turned off so that there is no chance of unnecessary costs. It all adds up!

FINALLY, make 2017 Christmas the best yet! So now is definitely also the time to make sure you are prepared financially for next year.

Now you have more of an idea of what the festive season actually costs you – divide that total cost by 11 months and start saving in January next year so the money is there for next year. That will certainly save a Christmas hangover (unless you overdo it on the champagne!)

​~ Team Vivid



Changes to the Age Pension assets test – Jan 2017

Changes to the Age Pension Assets Test from 1 January 2017

If you are over 65 or close to 65 years of age, it is important that you know about changes the Government has introduced to the pension assets test which will come into effect 1 January 2017 and which may affect your eligibility for the Age Pension. If this doesn’t affect you as yet, you may wish to share with family or friends who it may. 

What is the Age Pension assets test?

The Age Pension assets test is a means test, which helps Centrelink determine your eligibility for the age pension and other social security payments, and generally applies to assets that you hold outside the family home.

What are the changes to the Age Pension assets test that will apply from 1 January 2017?

• The lower threshold is increasing. Those with greater assets could see a significant reduction in, or loss of, their age pension entitlement and those with lesser assets could see an increase to their entitlement.

• The rate at which your Age Pension reduces if your assets exceed the lower threshold is increasing from $1.50 to $3 per fortnight for every $1,000 over the threshold – this has the effect of reducing the cut-off limit where an Age Pension is no longer payable.

The table below provides a summary of the current and new Age Pension asset test thresholds. Please note that the lower thresholds have increased and the cut-off thresholds where you are not entitled to an Age Pension have been lowered.

assets-test-jan-17

 

 

 

 

 

 

What happens if I lose entitlement to the Age Pension?

If your Age Pension is no longer payable as a result of the changes to the assets test on 1 January 2017, you will automatically be eligible for the Commonwealth Seniors Health Card (CSHCC). You will not be subject to the income test which usually applies to the CSHCC. The card gives you access to cheaper prescriptions via the Pharmaceutical Benefits Scheme, bulk-billing rates for doctor’s appointments, and an increase in benefits for medical expenses above a certain threshold via the Medicare Safety Net.

Every state and territory have their own list of concessions available and often private businesses offer discounts or concessions to Commonwealth Seniors Health Card holders.

We’re here to help

Contact us on 02 6056 1929 or admin@vividadvisers.com.au if you have any questions about how these changes affect your age pension entitlements.

~ Bronwyn

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

How long does it take to create a new habit?

If you are trying to achieve a certain goal that you have set, often you also need to create a new habit to reach that goal.

Some people can fear the word ‘habit’ as it implies change, yet research shows that discipline and habit are essential to achieving the life you want.

Research that was conducted in 2009 determined that it takes an average of 66 days to create a habit. The full range was 18 to 254. So obviously, depending on how much of a change the habit is, it can be within that time frame. 66 days was the sweet spot.

So, if it takes 66 days to create a new habit that will help you achieve your goals – what are you waiting for?

What is a habit you need to create to help you get to where you want to be?

I have attached our 66 day habit worksheet where you can start tomorrow (or even TODAY!) and mark off each day that you do the action required.

The worksheet gives you something to be accountable for. Put it on your fridge or on your bathroom mirror – somewhere where you will see it regularly during the day.

Don’t be too hard on yourself though. If you miss a day or two – don’t give up. Just get back into crossing more days off!

So whatever your goal is, download the 66 day habit worksheet and work towards the life you dream of!

Download here

What will you do with your tax refund this year?

What will you do with your Tax Refund this year?

82% of taxpayers are likely to get a refund this year *

Average tax refund is $2,112 *

* Sources: Australian Taxation Office Annual Report 2013/14 & 2014/15)

What do people do with their tax refund?

  • 29% – Paid bills
  • 21% – Saved it
  • 16% – Didn’t get a refund
  • 13% – Loans or credit card payments
  • 9% – Home loan payments
  • 5% – Holiday
  • 5% – Other things (including engagement ring, education, car rego/tyres, party)
  • 2% – Household appliances

(Source: MoneySmart poll, August 2015 (n-2124))

Tips on how you can make the most of your tax refund:

1. Reduce Debt Stress

credit card

You may have a mortgage, credit cards, personal loans or outstanding bills. Reducing any of these debts will remove unwanted stress, and of course overall interest that you pay!

You should concentrate on loans with higher interest rates like credit cards first. The savings can be substantial!

 

 

2. Invest in yourself 

invest in yourselfThere are creative ways to use your tax return, without wasting it away.

You could consider investing in a gym membership for instance, or a new pair of running shoes, or even a personal trainer… chances are you will save on healthcare costs later in life!

Fixing or renovating parts of your house can also assist to improve your lifestyle, whilst adding value to your property in the mean time. It could also save you on repairs and maintenance in the future.

Invest in your future income earning capacity.

Invest in a course or some form of further education. This can increase your chance of getting into a higher paying job (and maybe even something you enjoy more!)

You may also like to make yourself feel fabulous by investing into someone else. Perhaps a charity that is close to your heart, or even investing in your own children. Investing money into an education fund for your kids can be one of the most satisfying investments you can make.

3. Building future wealth

CompoundingWe of course, can’t avoid the probably most expected option, of investing for your future.

If you were to invest $2000 from your tax return in the first year, then every year after that invest another $2000, over 39 years the investment would increase to $240,000! That’s only $80,000 of your money contributed, but $160,000 in compounding interest over the period. (this is assuming an annual rate of 5%).

Of course, these are just average figures and don’t take into account a large number of variables throughout a persons’ life, or fees and costs. But it does illustrate the power of regular investing!

 

If you would like to discuss what to do with your return this year, we would love to hear from you! 

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

Ethical investing can make cents

As a Certified B Corporation, we often get asked about ethical investment options.

ethical investing

Ethical investing has gone from backwater to mainstream over the past decade, as Australians discover they can make the world a better place whilst have the potential to make money at the same time. Whether you choose to support a sustainable future, animal welfare or strong corporate governance, it has never been easier to align your values with your investments.

Consumer demand for ethical investments doubled in the two years to December 2014, with total assets under management of $31.6 billion. Growth was supported by strong investment returns and growing interest from superannuation funds, managed funds and Financial Advisers.1 In the early days it was often assumed that investing ethically would limit your options and reduce returns. However, over the past decade, ethical

Australian share funds have provided better returns than both the ASX300 Index and the average large cap Australian equities fund.2

What is an ‘ethical investment’?

Ethical investment, or ‘socially responsible’ or ‘sustainable investment’, is the term of a process that takes into account environmental, social, corporate governance or other ethical concerns. It’s a process that begins with your personal values. For example, you may wish to include investments in your portfolio that support the development of renewable energy or to avoid companies with a poor health and safety record. Australians who want to invest ethically can do so in a number of ways which your Financial Adviser will be able to help guide you through. You can buy direct shares in companies that align with your values or invest in an ethical managed fund. If you are a member of a public offer superannuation fund, it may offer an ethical investment option on its investment menu.

A great way to incorporate your personal values into your broader investment portfolio is to invest via a managed fund. But before you do, it’s important to understand the different methods ethical fund managers use to achieve their investment objectives.

Some funds screen out companies in controversial industries such as tobacco, gaming or testing their products on animals. Some select only sustainable companies in sectors such as clean energy or green property; while still others aim to raise corporate standards by investing in companies that, are ‘best in class’, within their industry in terms of corporate governance.

It is also becoming increasingly common for ethical investors and fund managers to use their ownership to engage with companies on issues such as executive pay or environmental standards.

We can help you identify ethical investments tailored to your personal requirements that have the potential to generate strong financial results.

Contact us on 02 6056 1929 or admin@vividadvisers.com.au if you wish to discuss further.

  1. Responsible Investment Benchmark Report 2015, Responsible Investment Association Australasia,responsibleinvestment.org/wp-content/uploads/2015/08/2015_Benchmark_Report_Aust_FINAL.pdf
  1. Responsible Investment Benchmark Report 2015, ResponsibleInvestment Association Australasia,responsibleinvestment.org/wp-content/uploads/2015/08/2015_Benchmark_Report_Aust_FINAL.pdf
Important information
This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. ‘Count’ and Count Wealth Accountants® are trading names of Count. Count advisers are authorised representatives of Count. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Information in this document is based on current regulatory requirements and laws, as at 4 May 2016, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws, rulings and their interpretation and may be subject to change. You should seek professional tax advice before making any decision based on this information. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or in writing.

Get fit this new financial year!

 

How do you go with making and keeping new years resolutions?

It is very common for the resolutions made in January to already be forgotten by the end of February.

Does this sound familiar?

This makes a lot of people disheartened about even setting new years resolutions in the first place.

What you may find works better, is setting ‘New financial year’ resolutions.

By mid-way through the year, you are a little more clearheaded and not so distracted by the craziness of the festive season. You also realise that you are now half way through the year already and if you don’t get serious about doing something now you will be back at the end of the year again and in the same position you were, or even worse.

If you’re after some guidance about what kind of financial resolutions to make, here are some ideas:

  1. Get honest with your money

If you you’re like many others we speak to, you may be in denial about your finances. You may have credit card debts that you chose to ignore. You may have a shoe addiction that you choose to not pay attention to the affect this has on your bank balance. Or you may not be honest with your partner on where you spend your money.

You need to stop living in denial, and get honest with your money.

So, start by writing down everything you have and everything you owe. If you have a partner, do it with them. Include all financial assets and all debts, credit cards, store cards and loans. This will allow you to have an honest look at where you are now.

  1. Track where your money is going

You can’t track what you don’t measure. You need to be keeping track of where you spend your money each week.

An awesome way to do this is by using a cloud based software program like xero which will link to your bank account transactions. You then categorise those transactions into difference expense options so you can see where your money is going. It also allows you to set a budget, set some goals to achieve and learn to be more conscious about your money.

  1. Set some savings goals

If you haven’t set some financial goals – start today! Without knowing what you want to achieve, it’s harder to stick to a budget or savings plan. Put some short and long term goals in place, then work out how much you need to save to reach those goals. Work it out on a weekly or fortnightly basis and start an automatic savings plan.

  1. Are you planning on retiring soon?

You need to have a plan in place. You need to work out when you want to retire, how much income you would like to receive in retirement, how much you need to provide that income and what your current situation is. Then work out the gap between where you are and where you want to be. They put a plan in place to reduce that gap. You could consider reducing your spending, increase contributions to super or adjusting your time frame to retirement. It’s so important that you start to plan early. A road can take you anywhere, but a plan on how to get to where you want to be will make the trip much more efficient.

  1. Are you and your family protected?

Have you recently considered what would happen financially if you (or your partner if you have one), was unable to work due to sickness, injury or death? How would you pay the bills, loan payments and normal living costs? You may even find you have more expenses arising due to medical costs. Having the right amount of personal insurances can allow you to concentrate on recovering and returning to work, rather than financial stresses.

 

A new financial year is a great time to get more financially organised. Now is the time to make the most of this next financial year and get financially fit!

 

If you need any assistance setting goals, creating a budget that works for you, and removing financial stress, our ‘Freedom 2 Achieve’ program may be the multi-vitamin you require. See more information on our website here.

Freedom 2 Achieve Logo (72dpi)

 

 

 

 

 

 

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

How do you intend to pay your bills if you’re unable to work?

Have you thought about what would happen if you were unable to work due to sickness, illness or injury?

Would you rely on the public health system? Or hopefully you have private health insurance that would help cover some costs?

Or maybe the reason you can’t work happened at work and you would be able to claim on workcover. These would all give you some level of financial relief.

At the end of the day however, you could end up being unable to work, and no income coming in whatsoever.

I hate to be all doom and gloom, but how would you pay your mortgage or rent?… What about groceries?… Electricity?…Gas?… Phone etc.

Your expenses won’t go away just because you aren’t able to earn an income.

A lot of people I talk to initially have the impression they would be ok financially because of the things I mentioned above. This is unfortunately not the case. Private health would cover ‘some’ of your health costs, the public health system may even cover you if serious enough to not be considered ‘elective’. Workcover MAY kick in with some payments IF the incident happened at work.

But what if the dominos don’t line up and your ‘ideal injury’ doesn’t happen. You’re left with no income to cover living expenses and this is where life gets seriously difficult financially.

The sad part is that whilst you are suffering financially, this causes you to suffer more emotionally and mentally and your health may further suffer due to these extra stresses.

How nice would it be to be able to concentrate on getting better from your injury or illness without financial stresses hanging over you.

So, you may read all of this and perhaps even get to a point where you understand and appreciate the importance of income protection, but that’s where the confusion often starts.

Where on earth do you start?!…. Options vary more than paint sample cards at Bunnings!

paint colours

 

 

 

 

 

You may even hold some form of income protection (or perhaps referred to as salary continuance) in your super fund(s). You may have also seen the array of ads on TV telling us that cover is available to anyone, anytime, from only $1 per day (excuse me for a moment whilst I cough suspiciously).

An income protection policy has one purpose, and that is to provide you with an income if you are unable to work due to sickness or injury.

You may have the option of paying all, or some of the premiums for this cover from your superannuation fund.

This can help with your cashflow, but may not provide as many features or benefits if you compare to a policy held outside super.

If you do have some cover through your super fund, that is awesome. As having some form of cover is always better than none. HOWEVER, you need to be VERY careful if you are relying on forms of cover if you don’t know exactly what they do, or don’t, cover. There is some policies within certain super funds that are close to impossible to ever claim upon, so you would essentially be paying for something of little to no benefit at all.

We are passionate about educating clients (and anyone really), about the importance of personal insurances and how to protect the life you are building. If you would like to chat to us about your situation and what types of cover may be appropriate for you we would love to hear from you.

If you would like more information on income protection, here is a link to a brochure with some further details.

Posted by Bronwyn Tyrell – 3rd April 2016

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

Count Quality Advice Award Winners 2016

 

We were honoured to be named a finalist in two awards at the annual Count Conference last week (March 2016).

These were the ‘Female Excellence in Advice’ and the ‘Outstanding Quality Advice’ awards.

At the Awards Dinner on Wednesday night, we were blown away to be announced the winner of the ‘Outstanding Quality Advice‘ Award.QAA 2016

 

 

 

 

 

It is awesome to receive recognition of the work we do in the business, however we don’t feel that we did anything overly fancy to win this award… We just do what we thought anyone in an advice business would do. That is putting the client’s values, goals and priorities first, then making sure that we are doing the best we can to help them to achieve those.

We also know the advice industry can be quite confusing and overwhelming due to both legislation complexities, and also often tarnishing media reports. Therefore we are very conscious of providing and explaining our advice in simple terms for clients to understand, whilst of course remaining complaint with legislation.

Thanks to our team for being awesome, our clients for allowing us to love what we do, and the Count network for recognising the work we do.

Cheers, Bronwyn.
QAA Count Conf 2016

Bron & David_Quality Advice Award_Mar2016_3

 

Will you be an April Fool?

 

If you are like us you may have seen the TV ads lately asking us if we are going to be an April Fool in regards to our private health insurance premiums.

What they are constantly reminding us is that, as of 1st April, our health insurance premiums go up again.

Last year, premiums went up on average by 6.2% (and as high as 18%!) As a result of this, half a million Australians dropped or downgraded their policies according to Department of Health.

That is a massive drop.

Clearly, it is obvious people feel the importance of taking out this insurance at some point. But it is then a scary reality that so many move on to cancel this insurance due to the premiums just pushing their budget beyond reasonable.

This is where private health insurance and personal insurances, like Life, Disability, Trauma and Income Protection, differ.

Currently, private health insurance premiums are based on your age and the level of cover you are after. The premiums you pay are not relevant to your health status whatever. You could be a smoker, overweight with a family history of illnesses and you still pay the same premium as the person next door the same age.

Your premiums just continue to get higher and higher each year as there is an assumption your risk of claiming gets higher as you get older.

With personal insurances, this can (and I’ll say ‘can’, not ‘is’ because it can also vary enormously!) be very different.

When you apply for a personal insurance policy you (should) be assessed based on your health, your medical history and your family’s medical history.

What this means is that the insurance company decides at the time of your application, what your premium should be based on your health, history and family history.

This means that someone who has a higher risk of making a claim against their insurance (due to their health or their family history) pays higher premiums than someone who has a clean bill of health.

As we are just about to see again, private health cover premiums also increase every year on 1st April. As mentioned about, this very often makes the premiums not affordable and when the cover could be most helpful, could be cancelled due to affordability.

The awesome thing with personal insurance policies is that once you are assessed when you apply for your cover you have the option of locking these premiums in for the life of the policy.

From a budgeting/personal cash flow perspective this has the benefits of locking your personal insurance costs into your budget and knowing it won’t increase to ridiculous amounts each year.

But there is BIG warning that comes with this; not all insurance policies will be set up this way. The feature above is referred to as ‘level’ premiums. They stay level for the life of your policy.

You can also have what is called ‘stepped’ premiums.

Stepped premiums work similar to your health insurance premium’s where they will get higher and higher each year. They may start off cheaper than the ‘level’ option, but over the long term the difference is massive.

Below is an illustration which shows the difference between the stepped and level premiums for a personal insurance policy.

Stepped vs Level Insurance Premium Graph

 

 

 

 

 

 

 

 

 

 

Being on ‘stepped’ premiums can also have a similar effect where the cost of the policy can become ridiculously expensive as you get older. Similar to private health cover, people often cancel their cover as it gets too expensive. The uncanny part is that this is where you could be most likely to NEED the policy!

So this may all sound quite daunting and I understand why so many throw insurance into the ‘too hard basket’.

This is where we can help. As part of our advice process we can determine what insurance policies you currently have, and what features they have. Importantly, we then determine what you need based on your current circumstances and what is important to you in life.

Comparing apples with apples can be extremely difficult in this market. And we are reasonably confident it’s not something you are jumping out of your skin with excitement to do yourself.

If you don’t want to be an April Fool, contact us to make an initial appointment and we can help you get back to spending time on the things you love to do in life.

` Bronwyn

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.  Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

 

Are you concerned about your investments dropping?

 

With markets being particularly volatile throughout January, we understand that you may have some concerns. To help you better understand the current market fluctuations, we’ve attached a Special Edition of the Count Market Watch report that focuses on the recent market volatility.

It is important to remember that volatility is a natural part of the economic cycle. While markets go up and down and returns fluctuate, this shows us that over the long term share markets have risen but volatility has been a part of this story. In times like these, it is also important to remind yourself of some of the fundamental principles of investing.

  • Shares are a long-term investment. Shares are generally a long-term investment designed to provide capital growth over a period of five years or more. For superannuation investments, the time frame may be anywhere up to 20 years.
  • Markets go up and down. During volatile times it is important that we continue working together to ensure your investment portfolio is sufficiently diversified to cope with market volatility.
  • Your financial plan is designed for you. We designed your financial plan and investment strategy to suit your goals and risk profile. It is important that you don’t make changes to your portfolio without seeking advice and confirming whether the changes are aligned to your goals and objectives.
If you have any questions about the effect of financial market movements on your investments, or would like to review your financial situation, please contact us.

Savings and the silly season

Don’t let the Christmas holidays undo your great work throughout the year. Be aware of spending patterns to turn silly season into savings season.

Last Christmas, a CommBank research study* said, Australians would spend $17.8 billion in five weeks from December 1 2014 to January 6 2015. Unsurprisingly, the spending would be mostly on gifting and holidays, but other major expenses included Boxing Day sales and entertaining friends and family.

During those five weeks, the study revealed, Australians were forecast to spend an extra $1079 each, with 3.2 million consumers hitting the shops on December 13 alone. Of the extra spending, $7.6 billion would go on gifting and another $4.6 billion on partying. But it didn’t all end at Christmas –another $2.6 billion would be spent during Boxing Day Sales!

So if you ever should be planning your finances, it is now, to ensure Christmas does not take away from the great financial work that has been done throughout the year. But how do we prepare for silly season without taking the fun out of it?

The first step is to make yourself familiar with your upcoming expenses.

This means budgeting. Where are your expenses going to be and what can you afford to allocate to each? How can you reduce the upcoming costs and which of them are ‘needs’ as opposed to ‘wants’? What types of bolt-on expenses come with the main ones – buying meals or catching taxis during a big shopping day or while away on holidays etc.

Set realistic and attainable budgets then formulate a plan to achieve them.

Be creative in your gifting – use price comparison sites and points from rewards programs, for instance. In order to balance out your spending, figure out which of your usual expenses you can go without. If you usually go out to dinner once a week, consider giving this a miss as you’ll likely be attending several festive dinners, for example. And do you really need to attend the Boxing Day sales this year? Are those purchases absolutely necessary?

Then put a plan in place to record your spending

There are several apps that do just that. It’s no use setting a budget if you can’t measure your performance against it. (We use and recommend Xero, but there are many options out there!)

Planning will help you avoid the Christmas guilt of over-spending. You need to remember the meaning of Christmas; which is not about spending a lot of money!

Rather than stressing about the cost of everything, plan plan plan, and then enjoy the time you spend with family and friends.

You don’t want to spend January wondering where the money went!

* www.commbank.com.au/about-us/news/media-releases/2014/festive-spending.html

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.  Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

October is breast cancer awareness month

October is breast cancer awareness month in Australia, and Friday 23rd October is Pink Ribbon Day.

Breast cancer is the third most commonly diagnosed cancer in Australia, and can be a very expensive experience if unfortunate to be diagnosed.

This is the perfect opportunity to remind everyone (not just women) on the importance of insurance to ensure appropriate protection is in place.

There are a range of insurances available that could provide a lump sum payment and/or ongoing income replacement if you were diagnosed.

If you would like more information, or to ensure you are protected, contact us to discuss further.

 

Ten facts about breast cancer in Australia[1]:

 

  1. Breast cancer is the third most-commonly diagnosed cancer in Australia.

 

  1. The number of new cases has continued to increase in recent times, from 5,368 in 1982 to 14,568 in 2011.

 

  1. 14,568 new cases were diagnosed in 2011, most of them in women, although 103 men were also affected.

 

  1. The number of new cases is expected to increase in 2015 with 15,740 cases projected, including 145 in men.

 

  1. Breast cancer is expected to make up 12.4 per cent of all new cancers diagnosed in 2015.

 

  1. Death rates have consistently improved since 1968, reaching their lowest level in 2012.

 

  1. People diagnosed with breast cancer from 2007-11 had a 90 per cent chance of surviving for at least five years, relative to survival in the general population.

 

  1. Health system spending[2] on breast cancer was approximately $237 million during 2008-09.

 

  1. According to a recent study[3] commissioned by the Cancer Council, the lifetime economic cost of breast cancer was estimated at $653,600 per affected person in 2005.

 

  1. Breast cancer recently accounted for just over 50 per cent[4] of claims paid to customers of CommInsure’s Trauma Cover and Income Care-Crisis Benefit products.

 

For more information on Breast Cancer and Pink Ribbon Day, go to www.pinkribbon.com.au.

[1] Australian Institute of Health and Welfare, 2015. Breast cancer in Australia. Retrieved online from http://www.aihw.gov.au/cancer/breast/

[2] Australian Institute of Health and Welfare, 2013. Health system expenditure on cancer and other neoplasms in Australia 2008-09Retrieved online from http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?id=60129545609

[3] Access Economics, 2007. Cost of cancer in NSW. Retrieved online from http://www.cancercouncil.com.au/wp-content/uploads/2010/11/costofcancer_costs.pdf

[4] Based on CommInsure’s internal claims data, 2009-10

 

 

Avoid common financial traps

feeling trapped

Avoiding common financial traps by following some very simple steps could provide a healthy boost to your savings and retirement wealth. Here we outline several everyday errors that could affect anybody – from first-time savers to serious investors.

 

TRAP: Save by spending only small amounts

SYMPTOMS: You don’t waste funds on big expenses. Instead you reward your thriftiness with smaller treats like take-away coffees and dinners out.

SOLUTION: A great deal of money is lost through erosion, rather than through major single expenses. A $4 coffee each working day adds up to around $1,000 annually. Add this to the small costs of music and TV streaming, bottled water, drinks with your friends, weekly restaurant meals, a rarely-used gym membership and so on, and there is a problem. To find out where your money goes, record your expenditure for a month. It is simple to identify areas for saving once a budget clearly illustrates your spending habits.

 

TRAP: Going with the crowd

SYMPTOMS: You do what those in your social or work circle do, in terms of saving and investing, rather than figuring out a route to wealth that is distinctively yours.

SOLUTION: Human beings are innately tribal. Not only do we surround ourselves with people similar to us, we also look to them for indicators of what we should do to improve our lives. But how similar are our retirement dreams? And is a certain investment worth more just because everybody else is buying? Every wealth plan should be completely individualised for the greatest chance of achieving one’s own goal.

 

TRAP: Selective investment blindness

SYMPTOMS: You hear about an investment – shares in a particular business, or a house in an area you’d like to live in, for example – and it takes your fancy. You do some research but intentionally seek positives and ignore negatives.

SOLUTION: Rather than seeing negatives as threats to your ownership of the investment, instead read them as negotiation points. So if the house in your dream location has problems with its roof, you should now be able to purchase it for less. Also, use the negatives to compare the investment to its competition. If there are concerns with the business in which you’d like to invest, look around and find out whether these issues are common in competitor businesses. Your search will either put your mind at ease or help you find a different option for investment.

 

TRAP: Raiding the re-draw

SYMPTOMS: You constantly make use of your mortgage’s re-draw facility.

SOLUTION: The re-draw facility of a mortgage is an excellent place to store money as it should help to reduce interest. But once money is in your mortgage it is good practice to consider it untouchable. So pay off as much as you can above the minimum, then keep other savings in a linked account that also reduces mortgage interest. Once money is in the mortgage, leave it there.

 

TRAP: Developing an attachment

SYMPTOMS: You feel an emotional attachment to an investment.

SOLUTION: Often once we have purchased an item we develop an emotional attachment, for example when someone gives their car a name. This attachment, in an investment sense, can be dangerous. Professional investors avoid emotional ties and see investments for what they are – a means to an end. Recognising emotional attachments is an important first step towards developing a more objective and analytical investment outlook.

 

TRAP: Running out of money each month

SYMPTOMS: You live from pay week to pay week, often running out of money.

SOLUTION: ASIC’s MoneySmart website1 says 16% of Australians save money easily, 41% save a little and 43% don’t save at all. Successful savers, they say, prioritise their saving because they have a clear plan, know how much money they need to save and regularly review their progress. Whatever your motivator, having savings is vital as a buffer for the hard times, or for the handling of unexpected expenses. So it’s best to make a plan, and make that plan a priority.

1 www.moneysmart.gov.au/managing-your-money/saving/how-australians-save-money

 

If you would like any further information, please contact us: admin@vividadvisers.com.au

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

 

Get your Super into shape this Spring!

We all know that our super is important. But do you realise how important it is for women in particular?

Here’s what we know:

  • Women live longer on average.
  • Women are more likely to take career breaks for family, study or other pursuits.
  • Women (still!) earn less than men on average.
  • Women have less super on average.

These are five great reasons to get serious about growing your super. The good news is there are some easy and quick ways to do it.

Strategy 1 – Bring it all together

If you’ve got super floating around in different accounts, combining your super into one account can help you keep track of your money. It can also help you avoid multiple sets of fees.

This process is easier than you might think. Most of the information you need will be on your latest super statement. When you’re consolidating, make sure you look through each of your existing accounts and compare them to ensure you’re choosing the best account for you. Consider things such as the fees you pay and included insurance(s). You can also look for any lost super via the Australian Taxation Office’s SuperSeeker website.

The super fund you’re hanging onto (or opening up) will then do most of the actual consolidation work for you.

You could be missing out on a small fortune in potential growth between now and your retirement.

Strategy 2 – Change investment options

If you haven’t made a choice about how your super is invested, you’re probably letting your employer decide. That’s not necessarily a bad thing, but the ‘default’ they choose may not specifically suit you.

If you’re still a long way from retirement, and your super is being invested in low-risk assets (e.g. in a cash or conservative investment option), you could be missing out on a small fortune in potential growth between now and your retirement.

Check your current investment option, as shown on your super statement, in relation to your retirement time frame. Make sure you’re comfortable with the growth potential and risk attached to your option, remembering that higher growth potential comes with higher risk.

If you’re not happy with your current investment option, contact your super fund to find out what other options are available to you and what you can do to make any changes.

Strategy 3 – Salary sacrifice into super

The idea is that you ask your employer to direct some of your salary to your super fund before you pay income tax on it.

  • Inside super you only pay 15 per cent tax on these contributions (if you earn less than $300,000 pa).
  • Outside super you pay anywhere up to 49 per cent tax.

The end result is that you take home less pay now, but you pay less tax, and you have more super going into your account.

The government’s MoneySmart super contributions optimiser enables you to play around with different contributions to see how it impacts your tax and super contributions.

Remember, there are limits on the amount that you can contribute to your super each year.1

Strategy 4 – Take advantage of government perks

Salary sacrifice strategies are particularly attractive for people on higher incomes who can save more tax. But there are also some ways to boost your super if you earn a lower income over a period of time, such as during a career break.

If you’re eligible and earn less than $50,454, the government co-contribution offers a boost to your super of up to $500 if you make an after-tax super contribution. The government co-contribution amount depends on your income and how much you contribute.

Strategy 5 – Check your life insurance

If you’re an employee, your super probably includes some cover for death and total and permanent disability. This is a great perk that most employers have to offer, but the minimum level of cover they provide isn’t enough for most people.

The opportunity here is that you could get some of the cover you need to protect your family in a more cost effective way than if you bought insurance outside super.

 

If you would like to discuss any of these strategies further, and get your super into shape for spring, then contact us today!

Winning the money mind games

Success in generating long-term wealth has a lot to do with awareness of the tricks money can play on your mind. How many of these do you recognise?

Money and emotion are strongly connected. Purchases often mean something to us personally. They broadcast our identity. They make us feel special. They reward us for hard work. But in the background, behind our most basic reasons for spending or saving, our mind plays further tricks. If you become aware of these tricks then the added clarity will benefit your wealth generation.

  1. Bigger is better

Consider the purchase of a new car. You have just spent $35,000, so when the salesperson offers you a special deal – a $700 upgrade pack including a towbar, carpet mats and alloy wheels – it seems like a bargain. But would you happily go out today and spend $700 elsewhere? How many grocery trips does that represent? And many of us will grab the opportunity to buy a $100 item that has had its price slashed to $50. But if a $5000 item is discounted to $4950, then the $50 saving is not nearly as attractive. Remember that a dollar is always worth a dollar, no matter how much or how little the related purchase happens to be.

  1. Discounted = good value

It is increasingly rare to see a price ticket that is not marked down. But is the $130 jacket, marked down from $210, actually better value or better quality than the $100 jacket in the shop next door? Ignore the higher price (known as an ‘anchor’, intended to make the discounted price seem cheap) and consider the actual value. This works in several other situations. For instance, many restaurant menus offer a high-priced entrée and main to make the other options seem cheap. And in your local electronics store, the fancy $500 toaster is only really there to make the $140 toaster seem like a bargain.

  1. Gifted money is not worth investing

You receive money as a gift so instead of adding it to savings, investment or retirement funds, you put it straight into the spending budget. Your mind is de-valuing the money, because it was a gift. In other words, you didn’t have to work for it, so it is somehow of less value or not worthy of investment. But if you regularly invest a specific percentage of your income, then consider investing the same percentage (or more) of gifted money.

  1. Small change is of little value

How much small change do we leave lying around, or in a container, or in the glove box, then happily spend it on little things without a second thought? But consider that a small money box for children can easily hold $400 in gold coins, and suddenly that small change becomes a very real driver of financial change. The same goes for small pay rises, which may not seem to make any difference right now but can make a very real difference over the long term.

  1. Money buys happiness now

Buying something today produces a very measurable result.

Saving for the future and putting money into superannuation or investments is difficult to quantify in terms of lifestyle. So make it quantifiable. Figure out your average monthly expenditure and buy future months of happiness with your savings and investments.

  1. Reduced mortgage repayments represent a saving

In an environment of falling interest rates, many home owners have been offered a drop in mortgage repayments. That is great for our household budgets, right? But consider that if you drop your repayments, you will spend more on the mortgage in the long run and will lose more money in interest, as you take longer paying off the mortgage compared to keeping your repayments at the same level.

If you would like to discuss any of this further, please contact us.

 

Count disclaimer

*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.

‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Our Financial Services Guide (FSG) is available here:

Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

Privacy disclaimer 

We are committed to ensuring the privacy and security of your personal information. As an Authorised Representative of Count Financial Limited, we are bound by Count’s Privacy Policy.

What will you do with your tax refund this year?

Some interesting statistics:

  • 77% of taxpayers are likely to get a refund this year
  • Average tax refund is $3,630

Sources: Australian Taxation Office Annual Report 2013/14 & 2012/13)

What do people do with their tax refund?

  • 31% – Saved it
  • 24% – Paid bills
  • 18% – Loans or credit card payments
  • 11% – Home loan payments
  • 7% – Holidays
  • 7% – Other things (including engagement ring, education, car rego/tyres, party)
  • 2% – household appliances

(Source: MoneySmart poll, September 2014 (n-2240))

​Some Recommendations on effective ways to use your refund:

Reduce Debt Stress



You may have a mortgage, credit cards, personal loans or outstanding bills. Reducing any of these debts will remove unwanted stress, and of course overall interest that you pay!

You should concentrate on loans with higher interest rates like credit cards first. The savings can be substantial!

Invest in yourself



There are creative ways to use your tax return, without wasting it away!

You could consider investing in a gym membership for instance, or a new pair of running shoes, or even a personal trainer… chances are you will save on healthcare costs later in life!

Fixing or renovating parts of your house can also assist to improve your lifestyle, whilst adding value to your property in the mean time. It could also save you on repairs and maintenance in the future.

Invest in your future income earning capacity.

Invest in a course or some form of further education. This can increase your chance of getting into a higher paying job (and maybe even something you enjoy more!)

Building future wealth



We of course can’t avoid the probably most expected option, of investing for your future.

If you were to invest $2000 from your tax return in the first year, then every year after that invest another $2000, over 39 years the investment would increase to $240,000!

That’s only $80,000 of your money contributed, but $160,000 in compounding interest over the period. (this is assuming an annual rate of 5%).

Of course these are just average figures and don’t take into account a large number of variables throughout a persons life, or fees and costs. But it does illustrate the power of regular investing!

Something different?

You may also like to make yourself feel fabulous by investing into someone else.

Perhaps a charity that is close to your heart, or even investing in your own children. Investing money into an education fund for your kids can be one of the most satisfying investments you can make.



We would love to know how you have, or intend to, spend your tax refund. Leave a reply below!

Interest rates are rumoured to drop again; what impact will that have on your portfolio?

Last week, the RBA Governor Glenn Stevens made comment about the risk to retirees if there was another interest rate drop.

It was then further discussed in the media that if retirees where to invest $1 million, then based on expected interest rate returns, this would be a return of only $1297 per fortnight. This is similar to those receiving the Centrelink Age Pension! (from a million dollars!)

This greatly concerns me. Not so much because of the retirees who may be potentially earning less on their cash (bank) account investments, but rather that reminder that so many retirees, or pre-retirees rely on cash investments solely to fund their retirement!

Interest rates have been on a decline since November 2011 and hit their first record low in April 2013 at 2.75%. Rates have now hit a further record low in February 2015 at just 2.25%.  This means these ‘cash only investors’ have been getting historically low returns on their investments for that same period!

Understandably the reason people chose this investment option is because it is low risk, stable and (practically) guaranteed. I get that. Also, retirees may not be comfortable with taking on more risk to try and get better returns on their money.

This is why when providing advice to my financial planning clients, I want to educate them, and always discuss the importance of DIVERSIFICATION.

Diversification is simply blending a mix of different investments into a portfolio. This blend is foremost a mix of different investments types, like shares, property, fixed interest, cash and alternatives. These are referred to as ‘asset classes’. Diversification can then be layered further by investing into different investment options (providers/fund managers).

diversification

The benefit of diversification is that it can lower the overall risk in your portfolio. Different kinds of investments, on average, will provide higher returns over the longer term, rather than relying on any single investment type.

So the other benefit is that you are looking at better long term average returns than just that of a low cash interest rate!

A diversified portfolio means that some investments will be doing well, others not so much, and some in the middle.

Unfortunately, no-one has that crystal ball that will tell us which asset class will provide the best returns at any given time. And trying to guess is a gamble that I wouldn’t be willing to take.

Diversifying in a portfolio doesn’t have to mean taking on huge amounts of risk that you are not comfortable with.

Of course, diversification doesn’t eliminate all risk, but it certainly can cushion the blow!

If you would like any further information regarding this, please contact us.

The number one retirement question

How much will you need in retirement? This is perhaps the single most important question in terms of financial planning. Despite what many believe, it’s possible to figure out an answer. Here is some tips how to do it:

When you’re attempting to work out how much money you will require in your post-career years, a good starting point is the Australian average cost of living in retirement.

Each quarter the Association of Superannuation Funds of Australia (ASFA) analyses the annual budget required to fund a ‘comfortable’ or ‘modest’ lifestyle during your retirement years.

A modest retirement lifestyle is defined as being ‘better than the Age Pension but still only able to afford basic activities’. A comfortable retirement lifestyle enables healthy retirees to be involved in a broad range of leisure and recreational activities and to have a good standard of living.

The latest figures released, in June 2014, reveal that for a modest lifestyle a single person requires $23,363 annually and a couple requires $33,664 annually. The figures for a comfortable lifestyle rise to $42,433 for a single person and $58,128 for a couple

retirement income table

This is a useful measure, but of course the cost of living will always vary depending on one’s desired lifestyle, health, interests and tastes. These numbers, for instance, assume the outright ownership of a home and the relative health of the individuals.

Of greatest concern though, is the fact that ASFA has alsoidentified that typical retirement benefits for a full-time workerearning up to $100,000 annually (receiving only compulsory super payments, after 30 years in a taxed fund, allowing for inflation and assuming an investment earning rate of 7%), will not likely cover the costs of a comfortable lifestyle for a couple.*

For a couple, such a lifestyle will require a lump sum of at least $510,000 at retirement, the ASFA Retirement Standard says. But if your tastes go beyond the average, or if your health deteriorates and you have increased medical costs, you will likely require even more, or risk lowering your level of lifestyle.

So how do you work out exactly what you will need in retirement? Begin by figuring out what your superannuation balance will add up to if you continue on your current course. This is where we can provide assistance.

Then put together a budget of your household’s weekly, monthly and annual expenditure. How much of this will you expect to continue into retirement? School fees and mortgage repayments will perhaps no longer come into the equation. But travel, home renovations, hobbies, courses, entertainment, eating out, or other forms of expenditure, may increase.

This is where your unique desired retirement lifestyle comes into play. What is a realistic monthly or annual amount that will make this lifestyle a reality? Compare this to the ASFA Standard to find out whether you will need more or less than the average Australian.

What good is this information? It offers you a tool with which you can check you’re on track to achieve your desired retirement lifestyle. An accurate figure allows you to decide on acceptable risk levels in your investment strategies, to raise or lower regular contributions, and to enjoy your earnings whilst knowing your future is taken care of.

The greatest power an investor has is time. But without knowing the end goal it is impossible to take advantage of time by charting a goal-specific course. Figuring out the cost of your desired retirement lifestyle is the very first step in making it a reality.

If you would like to find out any more information regarding this, please contact us.

 

* From ASFA Retirement Standard – All figures in today’s dollars (using 3.75% AWE as a deflator), investment earning rate of 7% assumed. Annual expenditures needed for a comfortable lifestyle are as at June 2014: $42,433 for a single, $58,128 for a couple.

Be honest with your debt!

I was reading an article in a health magazine about people who struggle with weight gain because they aren’t actually aware of how much food they are putting in their mouth. They were also not acknowledging they were doing it, as nobody saw them doing it. This is serious denial.

I couldn’t help but see the resembalance to the denial people face around their spending habits and their growing debts.

One of the main culprits of this is the use of credit cards. Spending on a credit card doesn’t seem that harmful as you don’t actually ‘see’ your hard earned dollars being handed over a counter.

An even bigger cuplrit is using this said credit card online. A lot of online stores now offer you the ability to store your card details securely on their site meaning you can simply make a purchase without even having to put your details in every time.

This is a great strategy from the online business, but not so great for the consmer who has a love affair with online shopping!

So, just like the person not paying attention to what they were eating every day/week/month, if you don’t pay attention to what you are spending you are going to end up financially overweight! Yes, in debt!

Tracking what you are eating for a month wil help someone determine where the problems in their diet lie. This allows them to make the appropriate changes to not continue to gain the weight.

This is the same theory with spending and accumulating debt.

If you are unsure where your debt is coming from, and why you aren’t getting ahead, you NEED to track what you are spending your money on!

At a minimum, this should be done over a three month period. However in some cicumstanes I recommend a longer time frame depending on how often your spending habits cycle around.

There are simple apps available which can easily track your spending and determine where the extra financial calories are coming from!

It can be quite daunting to confront your habits, and a lot of people chose to ignore it.

Once you can admit to yourself that there is a problem, then it is much easier to determine a way to fix it!