Last week the Victorian Government introduced Stage 4 restrictions in an attempt to mitigate the spread of the COVID-19 virus throughout the community. Never before has the state experienced such a level of disruption to business, communities, and individuals. In this situation, and given the circumstances which contributed to it, a level of disquiet, frustration, and anger are absolutely understandable. Whether this lockdown strategy will be successful or indeed worth the price, remains to be seen.

That said, with all the negativity abounds, it’s important to be mindful of focusing on what we can individually and collectively control. What we can actually control comes down to what we think and what we do (including how we choose to react to events). That’s it! How we think will inform the priorities we choose and in turn, will impact on the choices we make.

The outcome of this will also depend on our perspective. Denying, or arguing against the reality of our situation may help us to ‘let off steam,’ however, it may also serve to hinder acceptance of a reality that individually we can’t control.

Life’s difficult, and at the moment it seems more difficult. However, accepting that life is difficult allows you to move towards opportunities for growth, learning and gratitude. The other aspect of perspective is a heightened sense of gratitude. Sure, freedoms that we may have previously taken for granted have been suspended, however, I had a good night’s sleep, warm and safe in my bed and in the morning had a warm shower and a full breakfast!

The final aspect of perspective is to know that all things end, and this certainly will also. It can be difficult to see this ending whilst we’re still very much in the middle of it, but it will end.

In the meantime, look for opportunities for growth and learn to remain optimistic knowing that we will get to the ‘the other side of this bridge’.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

The June quarter inflation numbers were printed this week and as expected, it was not good!

The chart below depicts the current situation we find ourselves in thanks to COVID-19.

As you can see, the cost of living dropped an unprecedented (have we had enough of hearing that word lately?) 1.9% over the past three months to June resulting in the annual rate of inflation coming in at -0.3%.

Since 1949, this is only the third time inflation in Australia has been negative!

In a nutshell, this means people are not spending money.  Since people aren’t, or more correctly, haven’t been able to spend money due to the restrictions brought on by COVID-19, company profits will be lower and if profits are lower so will dividends.  As to what extent, we’ll find out in August.

A low inflation rate impacts interest rates and this is not good for term deposit holders. If inflation is low, so are interest rates to encourage spending. However, it’s just not happening. In these times return expectations from our investments need to be adjusted to align with the environment we are in, which is low-growth. This looks like remaining for some time and it is a global phenomenon.

To counter this in the United States, this is how they’re addressing the issue there:

For now, adjust your return expectations from your investments and strap yourselves in, there’s a long way to go!

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

A measure that has been introduced in some states since the COVID-19 pandemic, is the temporary ability for deeds to be executed electronically.

The legislation enables documents including deeds, to be signed and witnessed electronically, via an audio-visual link. There are varying requirements, from state to state, to ensure the validity of the electronic signings and these all need to be carefully considered, including that these are completed before the legislation expires. In some states, no such legislation has been enacted, and those that have done so will see the legislation expire before the end of the calendar year.

It leaves me wondering how these electronically-signed documents will be treated in the future, years after our current pandemic is ‘forgotten’? Will they be acceptable in a court of law, when our memories of this current event and the relaxation measures allowed, have dimmed?

Another recent interesting case is that of a discretionary trust, where the original trust deed could not be located and only photocopies of the deed could be found. This case was taken to court after a bank proceeded to freeze a trust bank account until the original could be produced. The court ruled that the photocopy was ‘overwhelmingly likely’ to be a copy of the original which could not now be found.

It’s perhaps a timely reminder that we need to retain original signed trust deeds, such as that for a discretionary trust as in this case, or the trust deed for a self-managed superannuation fund as another example. Keeping them until the trust is finally wound up is prudent, and may just save you a trip to court if you can’t locate the original.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

Investing can be frustrating and depressing at times, particularly if you don’t understand how markets work and don’t have the right mindset. This is especially true given the rollercoaster ride we are currently experiencing due to the COVID-19 pandemic. The following investment quotes are extremely relevant and provide a great foundation which stays true regardless of market volatilities and uncertainties.

“If you fail to plan, you plan to fail.” – Benjamin Franklin

Having a clear understanding of your investment goals and a plan on how to get there when saving for a home, retirement or generating income to live on is critical. If you don’t have a clear plan you will be subject to all sort of distractions which can impact where you want to get with your investments. Having a financial adviser assist in setting up a plan and ensuring that you stay on track is a great way to help you achieve your financial aspirations!

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” -John Bogle

Successful investing is all about knowing yourself. Smart investors have an awareness of their weaknesses and seek to manage them. One way to do this is to take a long-term approach. If you want to trade day to day then you need to recognise that this requires a lot of effort, a rigorous process and a willingness to go against the crowd. Having an understanding of your own tolerance to risk and aligning your investments to that risk level ensures that you don’t get lost in all the noise and stay confident in your long term financial decisions.

“Be fearful when others are greedy and greedy when others are fearful” – Warren Buffett

Beware of the herd! Buffet warns of buying irrespective of prices during a bull market and selling out of fear during downturns. When others are greedy, prices typically boil over, and one should be cautious lest they overpay for an asset that subsequently leads to anemic returns. When others are fearful, it may present a good value buying opportunity. Prime examples of substantial returns include; post Global Financial Crisis (GFC) in 2008/09 and the recent market recovery post the March COVID-19 sell-off. It is often emotionally difficult to make these decisions and act in contrary to the broader market which is why having guidance from a professional adviser can assist in making the tough yet profitable decisions in the long run.

If you can truly understand and take the above investment philosophies to heart then you should have no problem sticking to our own investment strategies, embrace risk and invest in alignment to our own risk appetites and last of all take advantage of short term market mispricing by going against the crowd which would have the greatest chance of securing fruitful returns in the long run.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

A lot has changed since the start of the COVID-19 pandemic and life is slowly getting back to normal as social restrictions are eased at a different pace, state by state. All levels of Government are now shifting their focus to targeted economic stimulus.

HomeBuilder is the latest Federal Government stimulus targeted at the residential renovation and new home construction market. The Government is offering a grant of $25,000 to build a new home or substantially renovate an existing home, where a contract is signed between 4 June 2020 and 31 December 2020.

To be eligible, you must be an Australian citizen and an owner-occupier over the age of 18. You will need to earn less than $125,000 per annum for an individual or $200,000 per annum for a couple (based on 2018-19 tax return).

If you choose to renovate, the cost of the renovation contract will need to be between $150,000 and $750,000. The value of your property must not exceed $1.5 million pre-renovation.

If you choose to build a new home, your property value must not exceed $750,000. Construction for the new build or renovation will need to commence within three months of the contract date.

The State and Territory governments will distribute the HomeBuilding grant when the builder you employ seeks permits and submits appropriate applications. First home buyers are still eligible for the respective State or Territory Government grants on top of the HomeBuilder grant.

HomeBuilder might just be the extra money needed to build your first home, complete that major renovation or build your new home.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

In what seems to be the ever-changing world of superannuation, the Commonwealth Government has amended the regulations that result in closer alignment to the age pension age, which is a good thing.

The eligibility for the government age pension was increased from 65 in line with the following table:

Soon enough, the eligibility for the age pension will be upon turning 67, however, this is out of whack with the superannuation rules, which principally revolve around turning 65.

Under the current superannuation rules, once you turn 65 the only way you can make a voluntary contribution into super is if you satisfy the work test. This involves working at least 40 hours in a consecutive 30-day period in the financial year the contribution is made.

The current system disadvantages those retirees who have turned 65 as they are not yet eligible to apply for the age pension, however, unless they work, they are restricted from being able to make a voluntary contribution into super.  If an asset was realised or they acquire the winning lottery ticket a voluntary contribution into super is not an option.

It’s highly undesirable to expect a retiree to have to go back to work in order to be able to make a contribution into super hence, quite rightly, this mismatch in the system has been removed.

From the 2020/21 financial year people aged 65 and 66 will be permitted to make a voluntary contribution into super without having to satisfy the work test.  This will permit a ‘non-concessional’ contribution to be made up to the $100K maximum limit.

Similarly, the age at which the ‘bring-forward’ rule for non-concessional contributions is before parliament to be increased from 65 to 67.  The bring-forward rule permits two future years of non-concessional contributions to be brought-forward resulting in a maximum of $300K that can be voluntarily contributed into super instead of $100K.

These are positive steps to alleviate gaps in the retirement system that make it fairer for everyone.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

Isn’t it interesting how life forces you to adapt?

Over the last several months, the  COVD-19 situation has spun off many examples of how we’ve been obliged to adapt. However, the one example that I’m specifically thinking of is adapting to ‘virtual meetings’ with clients using ZOOM.

Now, I’ve been aware of ZOOM for some time. I’ve occasionally participated in a ZOOM meeting (organised by someone else), and I have thought to myself, every now and again, ‘I really must find out more about this ZOOM thing…some day.’

Well, that day arrived with a thud in mid-March when, following Government direction, we went from having zero staff working remotely to having 90% of staff working remotely. That presented us with a challenge. A significant aspect of our value proposition to clients involves meeting with them on a regular basis to review their circumstances and preferences and to make any adjustments to their strategy as may be required. These sorts of meetings are best held in person. In the first week or so I tried to replicate these meetings via telephone calls. But of course, now you can’t see your client and you can’t share written reports or data with them.

Then I started watching YouTube videos about ZOOM, and they helped, a little. I only really started to make progress in my understanding of, and comfort with, ZOOM by just trying different things and asking work colleagues lots of ‘dumb’ questions.

So now only a few weeks later I’m feeling pretty proficient at using it. I can now readily organise meetings, adjust the security settings, share a screen, as well as recording the meeting. I particularly enjoy personalising my virtual background (my favourite is the standard beach back-drop.)

And clients love ZOOM! In fact, I look after some clients whom I think we might never see in our offices again. They can get all they need out of our meetings without ever leaving the comfort and safety of their home. Of course, as I mentioned above, sometimes you just need to sit across the table from someone, but going forward I really do think that ZOOM meetings are going to represent a significant part of our interaction with clients.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

We are hurtling towards the end of another financial year. What better time to get your house in order?! Super still remains a low-tax savings environment designed to fund your retirement.

Here is a useful 10-step super checklist that will help you maximise your entitlements:

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.

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 for you.

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.

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.

Co-contribution

If you earned less than $38,564 during the 2019/20 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!

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.

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.

Transition to retirement

If you’re aged between 57 and 64 and still working, a Transition to Retirement (TTR) strategy might be right for you. Despite some of their gloss coming off due to the 2017 super changes, a 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.

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: head to www.ato.gov.au/super/self-managed-super-funds and search for “SMSF videos”. It’s very important to get the right advice before proceeding.

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. An 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 30^th June. 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 provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

Given the escalating numbers of COVID-19 cases in Australia, we have had to change our lifestyle very quickly to incorporate social distancing and more recently put up with state-wide lockdowns. The government has made a series of announcements on the 22^nd of March 2020 which are designed to provide support to people impacted by the virus.

The new measures announced are predominantly in the area of Superannuation legislation and social security.

Summary of these measures;

• Reduction in minimum pension
• Early access to super benefits
• Reduction in social security deeming rates for the incomes test

Reduction in minimum pension

Across the board, minimum pension drawdown rates for market linked income streams are reduced by 50% for the 2019/20 and 2020/21 financial years. The aim of this measure is to support retirees who are not required to draw the current pension minimums and can reduce pension drawdowns to avoid selling investments in a depressed market.

This will not affect you if you need the current minimums to survive, already drawing above the minimum pension or currently drawing an income from a complying lifestyle pension.

Early Access to super benefits

Access to superannuation benefits will be opened up from mid-April. The temporary access allows affected individuals to access up to $10,000 in each of the 2019/20 and 2020/21 financial years for a maximum of $20,000 of tax-free superannuation withdrawals.

You must meet the following criteria’s to qualify;

• You are unemployed
• You are eligible to receive a JobSeeker Payment, Youth Allowance for job seekers, Parenting Payment, Special Benefit or Farm Household Allowance
• On or after 1^st of January 2020, you were made redundant or your working hours were reduced by 20% or more or if your businesses was suspended as a sole trader.

This is designed to be a last resort for those with no other means of attaining funds to meet their current living expenses.

However, this could be a huge trap for those who utilise the withdrawals by meeting the above conditions but do not actually require the funds. Younger Australians in the early stages of building their super could be most at risk, as they could take funds out of super just for the sake of security. Given the power of compound interest, removing $20,000 from a super fund 20 or 30 years prior to retirement access could have a devastating impact on their final retirement balance.

Reduced social security deeming rates

A direct loosening to Centrelink’s income test, whereby the upper and lower social security deeming rates will be reduced from 1^st of July 2020 to 0.25% up to the threshold and 2.25% above the threshold. This is an overall reduction of 0.75% from the default 1% up to the threshold and 3% above the threshold.

An individual with $550,000 in financial assets on the default deeming rates of 1% and 3% will have their age pension reduced by $65 each per fortnight. Under the new transitional deeming rates, their pensions will only be reduced by $32 per fortnight. The key to consider is that deeming is only a part of the incomes derived by the client, which is dependent on the level of financial/investable assets and the loosening of the deeming rates will not help if your prevailing test is the Assets test.

Further measures are set to be announced in the coming weeks, however, it seems as though these initial changes will provide relief to those who are impacted.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

Well…who saw that coming!!

Just when you think you’ve seen it all, how quickly things can turn from chocolates to boiled lollies…

For the golfers out there, spring in the northern hemisphere gets us fired up for the 1^st major of the year, the Masters Tournament played at the mighty Augusta National Golf Club in Georgia. Sadly, the Masters won’t be played in April…it may get a run later in the year, however, it won’t be the same.

The speed at which equity markets dropped from peak to trough in about 4 weeks brings to mind how quickly damage has been inflicted over the years to some of the finest golfers in the world on the 140 metre, par 3, 12th hole at Augusta National, known as “Golden Bell”…the middle of “Amen Corner”.

Many have arrived at “Golden Bell” on the final round on Sunday appearing to be in total command of their game and on path to secure that highly sought after ‘green jacket’ when from nowhere, Raes Creek comes to life and mysteriously drowns those green jacket aspirations before the poor sod can catch his breath and ask his caddie; “what happened there?”

This year, COVID-19 has done to the world what Raes Creek would surely have been doing to some unsuspecting golfer or two had the Masters been on track.  Just as those golfers must dust themselves off and ‘get back on the horse’, we must play the hand of cards COVID-19 has dealt us whether we like it or not.

In relation to superannuation, COVID-19 has necessitated the following changes to assist with the financial consequences it has brought.

Early release of superannuation

Individuals in ‘financial stress’ can access their superannuation savings (i.e.; accumulation mode accounts) up to a cap of $10K in 2019-20 and again in 2020-21, from 1 July 2020 to 24 September 2020.

To qualify for this:

• You must be unemployed.
• You must be eligible to receive a jobseeker payment, youth allowance for jobseekers, parenting payment, special benefit or the farm household allowance.
• On or after 1 January you were; made redundant, or your working hours were reduced by at least 20% or if you were a sole trader, your business was suspended or turnover reduced by 20%.

If someone is considering this option, attention needs to be given to how the withdrawal might impact personal risk protection insurance held inside their super such as; income protection, life, and total permanent disability cover.

Reducing the minimum amount required to be withdrawn in pension mode

The government has announced a temporary 50% reduction in the amount a superannuant is required to withdraw from account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities for the 2019-20 and 2020-21 financial years.

This initiative is designed to avoid investments being sold down at the worst possible time to meet annual minimum withdrawal requirements and thus increasing longevity risk i.e.; the risk of running out of money.

To promote the longevity of your retirement savings, revisit or complete a budget for your living costs.  The amount you need to pull out of super to fund your lifestyle will drop out naturally which can then form the base for your pension withdrawal.  Additional or ‘one-off’ withdrawals can always be taken as and if needed.

If there’s a positive out of this we should be spending less because we can’t damn well do anything or go anywhere and the minimum required to be withdrawn in 2020-21 should be reset lower due to depressed asset prices.

Isolation might be a good time to dust of the playing cards for a good old-fashioned game of ‘patience’…or perhaps 500, which would be my preference…but restricted to a group of 4 of course.

Stay COVID-19 free out there and see you on the other side of COVID-19.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.