The birth of a child is one of the toughest occasions in anyone’s life, but also one of the most rewarding.  I will never forget the moment I realised that I was now responsible for the wellbeing of another human being who could not survive without my help, and that this responsibility remained through the rain, hail or shine regardless of my own state of health or mind on any given day.

The responsibility for having a child doesn’t end with the nurturing, but also extends to financing the child’s needs for many years after their birth.  This can be a very costly exercise, but like everything else, mothers take it in their stride and adjust their own financial and other needs to cater for the needs of the child.

The one thing that doesn’t cost anything in raising a child is the amount of love that you have available – it is limitless!  My children have brought me so much joy over the years and the rough patches are forgotten.  Also forgotten are the things we ‘did without’ in order to give our family a good education.  They simply don’t matter.

I am reflecting on motherhood as we near the annual celebration of Mother’s Day.  It now has an added significance for me because my daughter is also a mother, making me a grandmother.

Being a grandmother brings a whole new dimension to life.  Those little people make my heart sing!  The pride I feel as I see my daughter and her other young mother friends thoughtfully guiding their youngsters through childhood is immense.

I see these young mothers coping with exactly the same issues that I faced, and the financial struggle is just the same for them as it was for me.

The difference for me as a grandmother is that I don’t have to cope with sleepless nights, the school run, seemingly bottomless stomachs, the washing and so on. I can enjoy the laughter and the fun and games, and then I just go home and leave ‘em to it.

Having a budget in place will help you manage the expenses during your children’s early days and through their education years.  The costs are significant and having a plan for managing expenses will mean that you keep on top of the costs in an organised way.

There are many tools available, such as those on ASIC’s MoneySmart website that will assist you in establishing your budget. There are also apps that allow you to track expenses so you can see where your money is being spent.  Every one of these tools will assist in making ends meet and I suggest that you take advantage of these.  My budget lets me help my kids financially every once in a while because I know what they are experiencing.

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

Concessional superannuation contributions are contributions made by (or on behalf of) a person that is included in the assessable income of the fund.

As such, they attract tax of up to 15%. However, for those individuals’ earning more than $300,000 per year, the applicable tax rate is 30%.

The term ‘concessional’ reflects the fact that someone is claiming a tax deduction or tax ‘concession’. That is either the employer or the individual, depending on the type of contribution being made.

Paying tax at 15% (or 30%) may be a ‘concession’ if the individual’s marginal tax rate is higher than this. For example, if you’re earning over $37,000 per year, your marginal tax rate is 32.5%. For every $1 you salary sacrifice to superannuation (salary sacrifice is a type of concessional contribution), this will save you 17.5 cents in tax. Of course the money is inside superannuation now and you may not be able to access it until retirement (over the age of 60). Compulsory preservation is, if you like, the ‘price’ of the tax concession.

In view of these tax concessions, the Government places a cap, or limit, on the amount that can be contributed to superannuation on this basis.

For the current 2017 financial year (ending 30 June 2017), the concessional superannuation caps are as follows:

Coming into the end of the 2017 financial year, you may wish to consider optimising the amount you contribute to superannuation on a concessional basis. Particularly in view of the fact that from 1 July 2017 (that is, the start of the 2018 financial year), the concessional contribution cap will reduce to a flat $25,000 regardless of age.

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

When do you need some super tax tips? When we are hurtling towards the end of another financial year. The perfect time to get your house in order! After recent legislative changes, super remains a low-tax savings environment designed to fund your retirement.

We have put together a useful checklist that will help you maximise your entitlements.

1. Do a “Lost Super” search

With more than $17 billion in lost super, there’s a chance a few of these dollars might be yours. Google ‘superseeker’ and it will take you to the ATOs Super search tool. Simply enter your name, date of birth and tax file number in the search filters and you’re set.

2. Consolidate your super funds

Make sure you have undertaken step 1 and have a flick through your past statements. Use this opportunity to consolidate your funds into one account to make life simple. Ensure you’re not missing out on any insurance or other benefits before you close any accounts. Rolling over existing accounts into one account is a simple process with many superannuation funds providing this service.

3. Salary sacrifice

You’ve probably heard the term before but what does it actually mean? Salary sacrificing is when you ask your employer to redirect a portion of your pay as a contribution to super. By ‘sacrificing’ some of your before-tax salary into your super, you are taxed at the concessional tax rate of 15%. These before-tax contributions reduce your taxable income so you pay less tax at a marginal tax rate.

4. Non-concessional contribution

If you’ve recently sold an asset, received an inheritance or received a bonus from work, then a non-concessional or after-tax contribution might be worth considering. It is referred to as a ‘non-concessional’ contribution because you don’t receive a tax deduction. Non-concessional contributions are the simplest way to add to your super as you simply deposit your personal money into your super fund.

5. Co-contribution

If you earned less than $36,021 during the 2016-17 financial year and make a non-concessional contribution of $1,000 towards your super, the government will also contribute $500. That’s a guaranteed 50% return on your money!

6. Spousal contribution

If your spouse earns less than $10,800 and you make a $3,000 non-concessional contribution to their super, you may be eligible for a tax rebate of up to $540.

7. Super splitting

If you or your partner take time off work or reduce working hours to look after the kids, keep the super contributions rolling by splitting. It allows the working spouse to have up to 85% of their super contributions placed into the account of the non-working spouse. It helps keep a couple’s accounts evenly balanced and is simple to implement.

8. Transition to retirement

If you’re aged between 57 and 64, a Transition to Retirement (TTR) strategy might be right for you. Despite recent budget announcements, TTR remains a solid strategy that lets you draw tax-effective funds from your super while you’re still working. You can then use your normal income to make concessional contributions to super. The simplest way to think about it is that you’re recycling your retirement benefits to reduce tax and boost super.

9. Set up a self-managed super fund

For those of you with more than $250,000 in accumulated super, a self-managed super fund might be the way to go. The Australian Tax Office has helpful videos click here and search for “SMSF videos”. It’s very important to get the right advice before proceeding.

10. Seek advice from a professional

Financial advice can help you identify and plan to achieve your financial goals so you can enjoy the lifestyle you want. A financial adviser will help you assess your current circumstances, identify your goals and priorities, and recommend financial strategies and products that will help you reach your goals.

So there you have it: the essential 10-point super checklist to tick-off before the end of the financial year. If executed consistently every year, it can make a big difference over the long-term. It is never too late to start!

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to get more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

Small businesses are the engine room of our economy. They are the home of Australian enterprise and opportunity and are where many big ideas begin. The Federal Government’s 2016 budget announced that it will reduce the tax burden and increase access to concessions for small businesses.

Small business entity turnover threshold

From 1 July 2016, the small business entity turnover threshold increased from $2 million to $10 million. The current $2 million turnover threshold will be retained for access to the small business capital gains tax (CGT) concessions.

Lower Taxes

The Government has further backed small businesses by reducing their tax rate to 27.5%, starting with businesses with a turnover of less than $10 million from 2016-17 income year. The Government will progressively decrease the tax rate for all companies to a flat 25% by 2026-27.

As many small businesses are not companies, the Government will also extend the unincorporated tax discount to unincorporated businesses with annual turnover of less than $5 million and increased the discount to 8% from 1 July last year, up to a maximum value of $1,000. After this initial increase, the discount will be increased in phases to a final rate of 16% in 2026-27.

Over 3 million businesses have accessed either the lower tax rate or higher discounts during 2016-17.

Expanding access to small business tax concessions

By increasing the small business entity turnover threshold to $10 million, the Government will provide over 90,000 businesses with access to a range of small business tax concessions. From July 2016, all small businesses with annual turnover of less than $10 million will have access to:

Instant asset write-off – simplified depreciation rules.

• Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 until 30 June 2017.

Deductions for professional expenses for start-ups

• Small businesses are entitled to certain deductions when starting up (i.e. professional legal and accounting advice and government fees and charges).

Small business restructure rollover

• From July 2016, small businesses can change the legal structure of their business without incurring any income tax liability when active assets are transferred by one entity to another. This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.

Lower taxes and expanded access to tax concessions will mean increased opportunity to grow a small business, employ more Australians and increase wages.

The announced changes present good opportunities for businesses and individuals to save on tax. If you think you may be eligible and want to take advantage of some of the new measures introduced, please contact our office to speak to one of our business consultants.

This article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to get more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

Many small business owners rent their premises and pay rent to a landlord.

However, since 1998 self-managed superannuation funds (SMSF) have been permitted to invest in business real property, and since 2008, they’ve been able to borrow money to do so.

Many small business owners don’t like paying rent, and if they could, would much prefer to buy their business premises and pay it off.

Assets they may have built up in their superannuation accounts can now be used to help fund the purchase of their business property. However, this would need to be structured through a self-managed superannuation fund.

And if you need to borrow funds to purchase the property in your SMSF, the 9.5% compulsory super you pay yourself as an employee together with the rent your business pays your SMSF can help pay it off.

At retirement you’ll have additional options. For example, you could sell your business but your SMSF could retain the business premises, continuing to collect rent from the new business owner. The rent could be tax free provided you’re over age 60.

Alternatively, if you retire after the age of 60 your SMSF could sell the business property free of capital gains tax.

While the strategy holds lots of appeal, there are many issues to consider, particularly in terms of ensuring that the arrangement makes sense and is properly structured. It’s definitely something worth seeking professional advice on.

If you are a small business owner or know someone who is currently renting their business space, contact us today toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office.  We would be delighted to speak with you about self-managed super funds.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Finding it hard to manage your business’s finances? Unsure of how to price your products or services? Don’t know how much you can afford to spend on wages and expenses? Want to gain an accurate value of your business? Sounds like you need a financial model.

All business operators are concerned with the profitability of their business, but it is difficult to gain an accurate grasp of its real financial position purely from monitoring bank balances and receipts. So often is the case that business owners in successful times lose incentive to monitor their financial position. This can come back to haunt management once times start to become gloomy as they ponder “How did this happen?” “What were we doing right before?”. As silly as it sounds, sometimes an Excel spreadsheet can answer all of these questions (and more!).

Financial models are a key element in most major business decisions. A financial model is prepared whenever any organisation is considering project finance, bidding for a project, evaluating acquisition targets, carrying out monthly financial planning and budgeting, conducting capital structure studies, or just to monitor the business’s profitability.  Accurate financial models are also a staple requirement if you are trying to source financing from investors or lending entities.

They are useful tools that allow business options and risks to be evaluated in a cost-effective manner against a range of assumptions, identify optimal solutions in evaluating financial returns and understand the impact of resource constraints to make the most effective business decisions. A truly effective financial model is one that dynamically updates as the economic and business climate changes.

Our Consulting team has extensive experience in developing financial models which draw from historical performance and management’s expectations for the future. Once a tailored financial model has been created, sensitivity tests are run to generate accurate forecasts and budgets to allow management to determine how they should operate in the future. From here, we can provide recommendations on other business functions.

Businesses from agriculture, engineering, finance, heavy machinery and retail industries have approached us to construct conservative financial models that enable business owners to “hope for the best, but plan for the worst”. In 2016 we had the pleasure of constructing a dynamic model for a grain and oilseed farm in NSW. The original need for the model was to gain a value of the enterprise for the purpose negotiations and restructuring. However, as new problems were encountered, such as restricted access to financing, falling crop prices and even flooding, management quickly realised the true power of a financial model: it’s a tool that provides insight into how to develop clear contingency plans. Similarly, a sports store facing a severe cash flow crisis was able to trade their way out and re-finance through using our no-nonsense approach and financial modelling.

If you or anyone you know owns a business that needs to review their financials to take their business to the next level or faces increasing uncertainty, then now is the time to deal with it. Contact us today, toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office to have a free initial consultation.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

When a couple presents for financial planning advice, one of the first things I’ll ask them to do for me is a risk profile questionnaire.

This is a multiple choice questionnaire designed to get a gauge of an individual’s attitude to risk. That is, how do they feel and react with movements, sometimes large movements, in the value of their investments. The answers to the questionnaire generate a score, and with this score we can, in broad terms, attribute to the individual a higher or lower tolerance for risk.

There’s no ‘right’ or ‘wrong’ in completing this questionnaire. A low or a high score isn’t good or bad, better or worse. However, it is a vital input when we come to prepare our investment recommendations.

And, it’s very important that each member of a couple completes their own questionnaire. Why? Because if there is a difference in how each member of a couple think and feel about risk, we’d want to identify this, discuss it and agree on the risk we’re prepared to accept in respect of what are, after all, investments that they have a common interest in (even though the assets themselves may be held in different names).

What might happen if we don’t consider each member of couple’s individual risk profile?

Say one member of a couple may have a high tolerance for risk. We might call them a ‘growth’ investor, comfortable with a higher level of exposure to growth assets like shares and property. The other member may have a lower tolerance for risk. We might call them a ‘conservative’ investor, more comfortable with a higher level of exposure to defensive assets like fixed interest.

Ignoring their differences on risk, and simply investing on the basis of ‘growth’ is likely to create all sorts of problems in the future. For example, say after 6 months the growth portfolio, which was constructed taking into account only the ‘growth’ investor’s preferences, drops 20%. The ‘growth’ investor won’t like it. However, he or she may be reasonably comfortable with the situation knowing perhaps that it’s a longer term investment in quality investments and is likely to recover in due course.

Their spouse, on the other hand, may well be fraught with concern and anxiety.

Having each of them complete their own risk profile questionnaire would have provided an opportunity at the beginning of the process to identify their differences on this point; discuss them and agree on an investment approach that met and managed both their expectations. It’s important to agree on risk.

Are you interested in a free initial consultation with one of our friendly advisers to know if your investments are invested for the right amount of risk? Contact us today, one of our friendly advisers would be delighted to speak with you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

Can I give my kids some money?

I hear this question quite often from my clients.  There are several answers to the question.  Underlying it all is the normal parental need to be able to assist our family while they are juggling the usual expenses of home and children, from an income that doesn’t always stretch quite as far as they would like.

The first part of the question is – can I afford it, and your answer to that may be that you think you can.

The next part of the question is – are there consequences for me?

There may be – for instance if you receive a Centrelink age pension there is a limit as to how much you can gift to your children.  The current limit is $10,000 per year up to a maximum of $30,000 over a three year period.

If you are a fully self-funded retiree the consequence could be that your ability to maintain your own lifestyle in retirement is compromised, so it is a question that needs careful thought.  It is recommended that you seek advice from your advisor.

Is giving cash the best way to help?

It is debatable as to whether straight out cash gifts are really the best way to help – you can’t direct where the cash is spent, and it may not be put to its best use.  What if we paid an essential expense instead?  Examples might be to contribute to the grandchildren’s school fees or to pay the life insurance premium for your son or daughter?

Paying a life/TPD (total and permanent disablement) insurance premium for an adult child may mean the difference between them being properly insured, or having little or no life or TPD insurance.  This not only protects your child and his/her family, but it protects you too, as you may be called upon for support should your child become ill or disabled.

I would like to start an investment for my child/grandchild.

This is also an excellent way to give your family a helping hand as it is a long-term solution that will provide some passive income and capital growth in the future.

A small investment in the Capricorn Diversified Investment Fund, with distributions set to be reinvested, is one way you can achieve this, and it is even better if you add extra contributions from time to time.  By the time the newest grandchild is old enough to attend university or wants to buy a car for example, there will be a tidy little nest egg they can draw from.  You can view details of the Fund here or contact us for information and assistance.

Want to learn more about helping out your children/ grandchildren? For your free initial consultation with one of our friendly advisers, contact us today! One of our advisers would be delighted to assist you.

The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.

What is HECS-HELP?

Australian citizens studying in Commonwealth supported places are eligible to apply for assistance to fund the student contribution amount for each unit in which they are enrolled.  This assistance is in the form of a HECS-HELP loan.  There is no real interest charged on the loan but the debt will be indexed each year in line with the Consumer Price Index.  The adjustment is made on 1 June each year and applies to any part of the debt that has been unpaid for 11 months or more. Eligible students can use a HECS-HELP loan for the whole amount of their student contribution.

I’ve finished studying – how much do I owe?

The Australian Taxation Office manages all HELP debts and this information can be viewed online through the myGov website once a myGov account has been created.  You can also call the ATO to find out the details and you will need to quote your TFN to access the information.

Paying back my loan

Even if you are still studying, you will need to begin repaying a HELP debt as soon as your income, as reported on your income tax return, is above the compulsory repayment threshold.  This amount is adjusted annually and for the 2016/17 financial year, the amount is $54,869 and above.  Repayments are made through the taxation system at a percentage of your annual income.  The percentage increases as your income increases.  For example, someone earning between $54,869 and $61,119 will repay the loan at the rate of 4% per annum, while someone earning in excess of $101,900 will repay 8% of their annual income.

Voluntary repayments can be made at any time and for any amount, and before 31^st December 2016, there is a bonus of 5% for doing so.  This means that if you repay $500 by a voluntary payment, an additional credit of $25 is applied to your loan.

What if I can’t afford repayments?

You can apply to the ATO to have your payments deferred if you believe that your compulsory repayments would cause serious financial hardship.  In making this application, you will need to substantiate your claim by providing a detailed statement of income and expenditure.  It is possible to appeal should your application be unsuccessful.

Do I have to repay the loan and what happens to the debt if I die?

There are certain special circumstances that may result in cancellation of a debt for a particular unit if the unit has not been completed. You need to apply to have the special circumstances taken into account.  In the case of death, any compulsory repayment relating to the period up to the person’s death must be paid from the estate, but the remainder of the accumulated debt is cancelled.

Are you interested in gaining a better understanding of your HECS-HELP debt? Do you want to put a plan in place to make sure the loan is paid off as soon as possible? Contact us today for your free initial consultation, one of our advisers would be delighted to assist you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.

Previously, individuals could not access their superannuation until they had reached their preservation age and a condition of release had been satisfied (which was usually retirement from the work force).

Regulations were introduced in 2005 to give effect to the “Transition to Retirement” (TTR) measure which allows individuals to gain access to their superannuation benefits after reaching preservation age while still working and before a condition of release has been met.

Your preservation age is not the same as your pension age. Your preservation age is the age at which you can access your super and depends on when you were born. You can use this table to work out your preservation age.

The TTR measure allows individuals to commence a retirement income stream (i.e. account based pension) while still working. The retirement income stream commenced is non-commutable, which means that the balance cannot be accessed until a condition of release is satisfied. There is a minimum 4% or maximum 10% yearly pension income limit of the account balance, as at 1 July each year.

Commencing a TTR pension can be very tax effective as income and capital gains are tax free and the pension payments are concessionally taxed for those under age 60. Pension payments become tax free for those over age 60.

A popular strategy used by those who have reached their preservation age and intend to keep working has been to use a TTR pension to in fact increase their overall super nest egg whilst still maintaining their cash flow requirements.

This strategy involves:

• Arranging with your employer to sacrifice part of your pre-tax salary directly into your super fund,
• Convert most of your super into a TTR pension account, and
• Using the regular payments from the TTR to replace the income you sacrificed into super.

By taking these steps, it’s possible to accumulate more money for your retirement, due to a range of potential benefits. For example:

• Salary sacrifice super contributions are generally taxed at up to 15%, rather than at marginal rates of up to 49%,
• Investment earnings in a TTR are tax-free, whereas earnings in a super fund are generally taxed at a maximum rate of 15%, and
• The taxable income payments from the TTR pension will attract a 15% pension offset between preservation age and 60.

See how it works below:

Assumptions:

SPOILER ALERT! In the 2016 Federal Budget, the government proposed that from 1 July 2017, earnings from a TTR pension will no longer be tax-free. The earnings will be taxed at up to 15%, the same as if they were in accumulation phase. Whilst this proposed measure does take some of the gloss off the TTR strategy it is still a worthwhile strategy, but in more limited circumstances.

If you’re considering taking advantage of the TTR pension/salary sacrifice strategy, or considering reviewing an existing strategy, then we recommend you seek advice on the merits of such a strategy for your personal circumstances, especially the implications post-30 June 2017.

Are you interested in getting your TTR pension/salary sacrifice strategy reviewed or started? Contact us for your free initial consultation today, one of our friendly advisers would be delighted to speak with you.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs.  Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.