As of 1^st July 2018, under Comprehensive Credit Reporting (CCR) it is mandatory for credit providers to provide positive credit data to credit reporting agencies.  Prior to July 2018, credit reporting agencies only obtained negative data such as defaults with utility providers, bankruptcies, and court judgements in order to compile your credit report, and determine your credit score.  CCR will ensure that additional information such as the type of credit applied for, amount of credit applied for and repayment history for the last two years will be included in your credit report.

Lenders use your credit score to assist in the assessment of a loan application or credit card.  Your credit score will help a lender decide the potential risk of lending to an applicant, and the likelihood of being repaid on time based on your credit history.   The higher the score, the better the credit risk you are to a provider.

Some of the key factors that impact your credit score include:

• Your total debt.
• Personal details.  Your score will take into account your age, time at current address and length of employment.
• Types/size of credit accounts and relationships, eg. Home loan, personal loan or credit card.  Mortgages have a different level of risk when compared to a credit card.
• If you have credit relationships with specialty finance providers such as debt collection agencies or payday lenders.
• The date your credit file was established.  A newer file may present a higher level of risk when compared to an older file.
• The number of credit enquiries made on your file.  This may have an impact on your score as credit enquiries remain on your file for up to 5 years.  If you’ve shopped around for credit and applied with several providers, you are seen as a higher risk.
• Late payments, defaults, serious credit infringements, court judgements and bankruptcies.

There are a number of ways you may be able to improve your credit score:

• Firstly, obtain a copy of your credit score.  You may be able to get a copy by opening an account via several providers such as:
  • www.finder.com.au/credit-score/verify
  • www.creditsavvy.com.au
  • www.mycreditfile.com.au
  • www.checkyourcredit.com.au
  • www.experian.com.au
• Once you have obtained the score, check which range your credit score falls under.  Typically your score will range from below average to excellent.  If you have a low score, consider reducing your credit card limits, and check for any incorrect negative listings.  You may be able to apply to remove an incorrect negative listing from your credit file.
• If you have multiple personal loans &/or credit cards, consider consolidating the debt under one loan.
• If you have overdue accounts >$150, pay them off as soon as possible.
• Limit the number of credit applications you make.
• Ensure that your loan repayments are always made on time.

Checking your score and getting your finances back on track will be an important step to improving your chances of being approved for a loan.  If you have a low credit score and you are looking to borrow, a rejected application will further reduce your score.

Please note this article provides general advice only and has not taken your personal or financial circumstances into consideration. If you would like more tailored credit advice, please contact us today for a confidential, cost and obligation free discussion about your lending needs.  We would also be happy for you to refer your family or friends so we can also assist them to locate a cost-effective home loan which suits their needs.

You can’t teach an old dog new tricks, or can you?

Who we are today is a reflection of our past experiences and as we age we become more set in our ways. Our habits, what we enjoy and how we respect the people and material things we have rub off on those around us, especially children. What financial habits are you teaching your children?

Adolescence and teenagers are not taught how to manage money at school and it is left to parents to provide them with the knowledge and skills to be good money managers.

I remember at school buying my lunch from the canteen on a rare occasion, the lunch was something of a treat and not the norm. It’s not like my parents couldn’t afford it and at times I felt angry that my friends always bought lunch and I couldn’t.

On reflection, I now understand what my parents were unknowingly teaching me. Preparing my lunches the night before school was a habit they taught me and preparing my lunches has continued into my working life. However, now my wife and I prepare lunches on Sundays for the working week, we eat more nutritious food and avoid the costly takeaway lunch expense.

The $15 to $20 daily work lunch and coffee might not seem like a lot but, preparing our meals saves us thousands each year. Thank you, Mum and Dad, for teaching me how to make good financial decisions on a daily basis.

This is only one example of how my parents taught me to respect and spend money. The only way to save is to spend less than you earn and a bit of frugality is key. What financial habits will you teach your children?

Please note this article provides general advice and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial advice, please contact us today. One of our advisers would be delighted to speak with you.

And we’re not even halfway through it…

It’s certainly been an interesting few months, with the threat of potential changes to the financial planning landscape that would probably have occurred if the federal election result had gone the other way.

As the great Ronald Dale Barrassi once said, “The only constant in life is change.” It’s fair to say everyone in our industry; from clients to those earning a living in it, are looking forward to some stability for the time being.

With the election now a thing of the past and the end of the financial year upon us, it’s time to review some of the strategies that assist with our wealth accumulation objectives.

1. Give your super a free kick

Now is a good time of the year to make additional contributions into super, especially if you intend to claim those contributions as a tax deduction.

Any surplus cash you have sitting in a bank account earning the current abysmal rate of interest can be contributed into super before June 30 as a ‘personal’ contribution and claimed as a tax deduction.

Providing you haven’t exhausted your $25K concessional contribution cap, that increased tax deduction will most likely result in you obtaining an increased refund from the ATO.

The benefits are twofold; you get an increased tax refund which can be directed however you wish whilst also increasing the wealth you have accumulating in super.

2. Utilising unused concessional contributions

From 1 July 2018, if you have a total superannuation balance of less than $500K as at 30 June the previous financial year, you will be able to contribute more than the general $25K concessional contributions cap for that year by topping up the contribution with the ‘unused’ concessional cap from prior years.

Here’s how it will work:

In the table above, this individual in the 2019-20 year could potentially make a concessional contribution of up to $47K because they had used $3K in the prior year thereby having an ‘unused’ balance of $22K that can be carried forward into the next year.

In the 2020-21 year, because the balance of their super was above $500K on 30 June 2020, the concessional contributions cap is limited to the yearly amount of $25K.  In the subsequent year, 2021-22, the ball game has really opened up due to the super balance dropping below $500K at 30 June 2021 which has provided an opportunity to contribute up to $94K in that year.

This potentially allows for realised capital gains to be ‘transferred’ into super and be taxed at the 15% contribution rate, as opposed to a higher marginal tax rate because the concessional contribution can be claimed as a tax deduction.

This is a strategy to keep in mind over the coming years especially if you’re approaching retirement and have a sizeable amount invested outside the super environment that has significant unrealised capital gains.

3. Check in on your goals

It’s a good time of the year to check in on your life and financial goals to see if you’re on target to making your dreams become a reality.  Similarly, expectations may need to be revised to take account of changes to your circumstances over the last 12 months that have impacted on your wealth accumulation strategies.

At the end of the day, your super is your money and you are ultimately responsible for how it performs and grows.  You need to ensure it is being invested wisely and in line with the timeframe you intend to access it.

Here’s hoping for more stability and certainty on the financial planning front over the next 12 months, at least!

Please note this article provides general advice only and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial or superannuation advice, please contact us today. One of our advisers would be delighted to speak with you.

It was 2006, Grade 12 English and the latest assignment was a 10-minute speech on something that was ‘quintessentially Australian’. I remember being told that there was no right or wrong answer, but we had to show cause and enlighten the audience as to who or what made Australia iconic. There were about thirty of us in the class and only a few that I still remember, so I guess they got something right.

For example, one of my classmates gave a 10-minute history lesson on the Melbourne Cup and how the ‘race that stops the nation’ is the single greatest horse race in the world. All Australians come to a complete standstill on the first Tuesday in November at 3 pm. The entire nation watches the 3-minute race, why? Because we love an underdog. Phar Lap, Makybe Diva, can it get any more iconic than that?

Now I must admit, I felt pretty clever at the time and I thought my topic was unique, but still represented Australia. I don’t remember much of the speech, but it went a little like this… Remember, I was 17 at the time so don’t judge too harshly!

What is it to be Australian? Is it a lifestyle, a destination, a feeling or a thing? Something that is so ingrained in our daily life, that we overlook it, and don’t even give it a second thought. Our history is what makes us who we are and we often forget that our currency tells a story. The $50 note depicts Edith Cowan, Australian first female parliamentarian. AB “Banjo” Paterson is a feature on the $10 note, arguably Australia’s most famous poet. The Man from Snowy River appears in small text in the top left-hand corner. The $20 note, or Redback as it is affectionately known, has a portrait of Reverend John Flynn. He pioneered the world’s first aerial medical service, now known as the Royal Flying Doctor Service.

Illustrated on our coins are native Australian animals, such as the echidna, lyrebird and platypus. Our national emblem, which includes the Australian Coat of Arms, Australian floral emblem (The Wattle) and native kangaroo and emu are depicted on the 50-cent coin. The $2 coin features a traditional Aboriginal tribal elder, the Southern Cross and Australian flora.

I did manage to prattle on for 10 minutes about our bank notes and the different icon Australians depicted on each one. I still stand by my initial argument, that our history makes us who we are. I wonder as we move into a digital age, how do we keep our history alive? We are moving away from physical money and into an era where you can pay for groceries on your watch. Do we have a sentimental attachment to currency, because it is part of our national history and culture? With so many different currencies all over the world, wouldn’t it be easier to be completely paperless? But then, what daily reminder will we have of where we come from and who shaped this great nation?

If you are interested in tailored financial advice, please contact us today. One of our advisers would be delighted to speak with you.

“I’ve just received a letter from XYZ Superannuation Fund saying I have an account with them. What does this mean and how did I get any money in the account?”

This is the annual benefits statement provided each year by all superannuation funds.  It is a report to members of the fund that tells the member:

• How much their employer has paid into the fund during the last financial year
• How much was paid to the fund for the administration of your benefit
• What insurance is held through the fund
• How the investments performed during the year
• What investment option your benefits are invested in
• Your total balance
• Whether you have made a beneficiary nomination

“I can see all of that stuff but I don’t know what it means. Can I draw this money out for a holiday?”

No, superannuation is accumulated through compulsory contributions made by your employer during your working life, and you can’t draw from it until you reach at least 60 years of age.

“Wow that’s a long time, and a bit of a waste of time if you ask me.”

Yes, it is a long time but it is not a waste of effort.  Your employer must pay 9.5% of your salary every year into the fund of your choice – imagine how much that might be in 40 years’ time!  Let’s say that your salary is $55,000 per year now – that means your employer has to add at least $5,225 to your fund every year, and the contributed amount will increase every time you get a pay rise. Some of the amount contributed is paid out in tax, and the rest is invested with the object of growing over time. How much it grows will depend on the investment option or asset allocation that you choose.

The Fund must advise you how much you have paid to them in administrative fees during the year. This section is important.  Take some time to compare the fees you have paid in your account with fees in other funds. If your fund is very expensive compared with others, then consider switching funds.

You must compare ‘apples with apples’ – don’t look at a High Growth fund and compare that with a Moderately Conservative fund. The rate of growth may be significantly different and the fees may also be different.

Has your fund performed as well as or better than the fund you compare it with? For example, if your Balanced fund has returned 7.8% in the last financial year and other Balanced funds you have checked are returning 10% for the year, it may be prudent to look a little closer at your own fund and potentially consider a switch.

Check performance over a longer timeframe – 1 year out-performance is good, but has your fund outperformed over 5 years or more?  If not, you may want to look more closely and potentially find a fund that has a better longer-term performance.

Switching decisions should be based on long term performance coupled with the rate of fees you pay each year. Remember that switches come with a cost so you need to have good reason to do so.

“How did I get all of these super funds?”

When you begin a job, you should advise your employer where you want your contributions paid. If you don’t do this, then the employer will send your contributions to the fund it uses by default and that creates a new super account. If you have had a number of jobs and you now have more than one account, you should research all the funds to discover the better performing or lower cost fund, and consolidate (rollover) your benefits into the one account. Make sure you advise your employer if this account is not the one where they are currently paying your contributions.

Here’s an example comparison between 3 funds, made on these assumptions:

• Salary $55,000
• Starting balance $10,000
• Life, TPD & Income Protection insurance in each fund

You can see a big difference in the ending balance between the 3 funds because of the rate of fees, the 1-year performance and the insurance premium paid. If you are invested in Fund C, should you be rolling over to Fund A? You must do the homework to ensure that the long-term performance of Fund A is consistently good. You want to have your benefit invested in a fund that can give you a good and consistent return over a longer period than 1 year.

“Why am I paying for insurance?”

Have a look at the insurance section on your statement so that you know what insurance coverage you have.  You may have a default amount of life and/or total and permanent disablement (TPD) cover.  Life insurance pays a benefit to your family in the event of your death, but TPD will pay a benefit that you can draw on if you are totally and permanently disabled. Be aware that the sum for which you are insured is likely to decrease as you age. This is important, as you may be grossly underinsured at a time where it is most needed.

The other type of insurance you may have is income protection – this one replaces part of your salary if you are unable to work through illness or injury.  Check the premium on your insurances, and check waiting and benefit periods on the income protection policy.

If you consolidate funds, you will lose insurance benefits in any of the funds you roll out of so be aware you may then not have sufficient, or any, insurance. You should consult a qualified professional for insurance advice.

Nominating a beneficiary to receive your benefit upon your death, and keeping this nomination current, is important. Many nominations lapse in 3 years from when they were made, so you should regularly check your nomination remains current. Another thing to look out for is a nomination made to an ex-spouse. If you separate from your partner, you should make a new nomination. If you don’t, then your benefit is going to be paid to that ex-spouse, even if you have entered another marriage.

Please note this article provides general advice only and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial or superannuation advice, please contact us today. One of our advisers would be delighted to speak with you.

If I asked you, “what is your most valuable asset?” would your answer be your house, investment portfolio, motor vehicle? Maybe. But what about your income? Assuming an increase of 3.5% per annum and continuous income, if your current annual salary is $80,000, over the next 15 years your income is worth up to $1,544,000 or over 30 years it’s worth an incredible $4,130,000.

Now what do you think is your most valuable asset? That’s right, it’s your ability to earn income!

According to TAL Life, the top 5 reasons for claims on Income Protection are, injuries and fractures, mental health, musculoskeletal and connective tissue diseases, cancer and diseases of the circulatory system (heart attack and stroke). These injuries and illnesses are nothing to be messed with and unfortunately no one knows what the future will hold.

Two of my clients never expected to be on an income protection claim, let alone for over 12 months! Both clients have received peace of mind that every month they will receive their benefit to help towards the mortgage, bills and general living expenses. By knowing that they have this regular income, they are able to focus on their rehabilitation without the stresses of money.

There are many factors to consider when taking out an income protection policy. Speak to one of our friendly advisers today to see how your policy stacks up, or if you’re looking for a new policy.

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

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has seen the Big 4 Banks come under fire for a number of things, including their ‘take it or leave it’ attitude to the Anti-Money Laundering (AML) and Counter-Terrorism Funding (CTF) Act. In 2017, the Australian Transaction Reports and Analysis Centre (AUSTRAC) brought charges against the Commonwealth Bank of Australia (CBA) for contravening the Act, and were treated to a cool $700 million penalty which barely made a dent in CBA’s fiscal 2018 cash profit of $9.9 billion.

The fallout from these charges and others alike, has resulted in an industry-wide crackdown on the enforcement of AML/CTF policies. Among other things, the Act mandates that you must identify and verify a customer’s full name, residential address and date of birth. While this seems pretty straight forward it’s causing headaches for customers who have used aliases in the past. John or Jack, Anthony or Tony, Amanda or Mandy, James or Jim and Susan or Sue are just a few examples of common aliases which have caused problems when adhering to AML/CTF obligations.

Different spelling variations of the same name have also been put under the microscope and in some cases, have required statutory declarations to confirm that the likes of Anne or Ann and Marie or Maree are one and the same person. Some financial institutions have gone as far as requiring your share holdings to be updated if your middle initial is only noted as ‘A’ on the registry, but your identification spells out your full middle name of ‘Albert’.

Locally, one of the problems we have had in the Rockhampton office is the change in suburbs as the city continues to expand. What was once Rockhampton is now broken up into several different suburbs such as Allenstown, North Rockhampton, Koongal etc. Although identification documents (Drivers Licence) might reflect the correct suburb of ‘Allenstown’ long standing bank accounts or shares acquired many moons ago may reflect the original suburb of ‘Rockhampton’. This small difference causes issues under the Act when identifying and verifying a client’s residential address.

It might be a good idea to do a bit of a tidy up of your financial affairs if you’ve had issues in the past with the spelling of your name or if you use an alias. Ensuring your address is up to date and your personal information matches your identification is another good habit to keep. A few places where we have encountered discrepancies include Wills, Power of Attorney documents, Holding Statements and Bank Statements.

Please note this article is provided as general advice only and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial advice, please contact us today. One of our advisers would be delighted to speak with you.

That is the question. As we are in a record low interest rate environment, many home loan borrowers are considering whether or not to fix the rate on the total amount owing on their mortgage.

Whilst there are lenders offering some very attractive rates on fixed loans, the following should be considered before obtaining a new loan, or changing an existing loan to a fixed rate:

• Many fixed rate home loan products will limit the extra repayments which can be made in addition to the minimum owing. Depending on the product, this could be on an annual basis, or for the fixed rate period selected.  The additional repayments could be capped on a percentage basis, or a dollar basis for each year, or the entire fixed rate period without penalty.  If you exceed the additional repayment cap, you could be penalised.  If your objective is to accelerate the repayments on your home loan, fixing the total loan amount may not be your preferred option.
• If the lender decreases their variable rate and your fixed rate is higher, your repayments will not reduce.
• Fixed rate loans may be less flexible, and offer less features such as redraws or offset accounts.
• If your circumstances change, and you need to switch to a different product, or if you wish to repay earlier than the fixed rate term, the lender may charge you with a break cost. The break cost is typically calculated to compensate the lender for the loss in profit that has been factored into the fixed rate period.
• When the fixed rate period expires, the loan may revert to a much higher variable rate.

A common strategy to reduce the impact of the above disadvantages with fixed rate loans is to ‘split’ your home loan by making it part fixed and part variable.  The fixed component of your loan will provide the ability to budget for the repayments over the fixed rate period.  The fixed portion of the loan will mitigate the risk of future interest rate increases, and ensure your repayments are set over the fixed rate period.  The remainder of the loan balance can be held at a variable rate so you can make unlimited repayments, and enjoy the benefits of access to redraws, and a linked offset account.

When obtaining a new loan or refinancing an existing loan, there are several options to consider.

Please not this article provides general advice only and has not taken your personal or financial needs into consideration. If you would like more tailored mortgage or financial advice, please contact us today for a confidential, cost and obligation free discussion.

Most funds have either an online application form or a PDF application form (this is usually found in the Product Disclosure Statement for the chosen fund) that you can complete. There are some things you need to have, or to have decided, before you submit your form:

• Your Tax File Number
• ABN for the employer
• Choice of Risk Profile, or Investment option
• Life and TPD Insurance requirements
• Income Protection Insurance needs
• Beneficiary nomination

In completing the application, whether by a PDF or online, after entering all of your basic personal details including Tax File Number, you will then need to make choices in regard to your super account.

Beneficiary Nomination

This is the person or people you wish to receive your benefit upon your death. Nominations can be binding or non-binding and most funds offer both options. A non-binding nomination means that the trustee of your super fund is not bound to pay your benefit to the person/people nominated, but will be guided by your direction, whereas a binding nomination means that the fund must pay to your nominated beneficiaries.

It is worth remembering that most beneficiary nominations lapse after 3 years, so you need to review regularly to ensure it remains current and still reflects your wishes.

Insurance

Insurance is optional, but most funds offer a default amount of life, TPD and income protection insurance. If you do not require insurance you should opt out, but make sure that you have proper advice from a qualified professional that you do not need insurance.

Most industry funds offer insurance on a unitised basis, where the sum insured will decrease as you age, while the premium remains reasonably level. There is usually also an option to take out insurance for a fixed sum.  This is likely to incur a higher premium but may be a better option to ensure you have an adequate amount of cover.

For income protection insurance of more than the default amount, you will need to provide your annual salary and details of your occupation. The occupation has a bearing on the premium you will pay if you opt for other than default income protection insurance. You can choose a preferred waiting period i.e. the period to expire before your benefit begins to be paid. A shorter waiting period will result in a higher premium.

If you seek more than the default amount of insurance, you may need to complete health questions so that the fund can calculate your premium based on any health or occupation risks.

Investment Option

Funds offer a range of investment options from an automatic premix of asset types to a more customisable mix of asset types. Unless you really know what you are doing, you may be best to stick to premixed options. The basic premixed option is available for all risk profiles, which generally fall into about 5 main categories, with a multitude of variations between funds:

• Conservative
• Moderately Conservative
• Balanced
• Growth
• High Growth

Asset allocation refers to the mix of what is called ‘growth assets’ and ‘defensive assets’.  Growth assets are assets that can grow in value, such as shares or property – they are generally higher risk but have a higher return potential.  Defensive assets are lower risk, with potentially lower returns and usually relate to assets like cash, term deposits and other fixed interest investments like bonds.

The 5 investment options shown above have a different mix of growth and defensive assets, moving from low risk (Conservative) to high risk (High Growth). A Balanced portfolio, is typically middle-of-the-road in terms of asset allocation and may consist of 60% Growth assets and 40% Defensive assets, while a High Growth portfolio may have only 5% or so in Defensive assets and 95% more or less, in Growth assets.

Asset allocation with a higher proportion of Growth assets has the potential for higher growth, but there is a greater risk of negative returns and an increased level of volatility, or value fluctuation. An asset allocation skewed towards Defensive assets reduces the risk of negative returns but also protects against extreme volatility (price fluctuation), and returns over the longer term are likely to be lower.

Choice of investment option should be based on your attitude to risk, your investment timeframe, financial circumstances and your retirement goals.  What is your attitude towards risk? Can you accept some shorter-term losses in order for higher returns over the longer term, or would you rather play safe so that the value of your account doesn’t decrease?

What is your investment timeframe? This is the period between the present and when you retire. If you have a long time until retirement, are you willing to accept some additional risk in order for a better long-term return that will provide you with a bigger balance at retirement, or would you prefer to have a smoother ride knowing that at retirement you will have a smaller retirement sum?  If you only have a short time until you retire, do you want to risk what you have already accumulated by using a risky asset allocation in the hope that you will quickly accumulate a larger balance?

The selection of investment option is one of your most important decisions so far as your superannuation funds are concerned. Don’t take it lightly and do seek qualified professional advice to assist you to build your super balance so that you can achieve your retirement dreams.

Please note this article provides general advice only and has not taken your personal or financial circumstances into consideration. If you would like more tailored financial or superannuation advice, please contact us today. One of our advisers would be delighted to speak with you.

What I really enjoy about being an adviser is the opportunity to resolve client puzzles. Each situation is unique and the solutions are an opportunity to make a real difference to a family’s life.
Recently, I was asked by a client how to protect their child with special needs from potential future financial mistreatment. This was an opportunity for me to dust off my knowledge of trusts and more specifically, special disability trust.

The purpose of a special disability trust

A trust is a legal obligation that details how you want property or assets held for the benefit of a beneficiary administered and managed.

Special disability trusts are primarily established to assist succession planning by parents and family members, for the care and accommodation needs of a child or adult with a severe disability. The name ‘special disability trust’ relates to the social security treatment of the trust, not the actual disability.

The legal requirements for setting up a special disability trust

The first step is to make sure that the special needs person qualifies for a special disability trust. They need to meet the definition of severe disability as detailed in the Social Security Act 1991. The individual will have to go through a process where they are interviewed and assessed by social security. Centrelink has a special division that makes an assessment regarding whether they meet the criteria under section 1209M of the Social Security Act.

The Social Security Act recognises that people with special needs work and positively contribute to our society. If the special needs person is working, the act states that a condition of a disability restricts them from working more than 7 hours a week for a wage that is at or above the relevant minimum wage.

The trust deed must comply with certain conditions, and incorporate compulsory clauses as defined in the model trust deed as laid out by the Department of Social Services.

Anyone except the special needs person or the settlor can be a trustee of a special disability trust. There are two types of trustees and they both must be Australian residents (must be assessed by the Department of Social Services).

1. Independent (corporate) trustee – does not have any relationship with the special needs individual and has to be a professional person or a lawyer.
2. Individual trustee – A minimum of two trustees are required to ensure the special needs individual’s interests are protected.

The trust can either be activated while you are alive – this gives the special needs individual more independence or set up as part of a will – to protect the special needs individual.

The special disability trust can only have one beneficiary (the special needs individual) and the beneficiary can only have one trust. There are two main restrictions placed on the beneficiary, their living situation and gifting.

The Social Security Act stipulates that the beneficiary is not able to reside permanently outside of Australia – the reasonable primary care and needs for the beneficiary must be met in Australia.

There is also a gifting concession available and the contribution made must be unconditional (you can’t get it back), and without the expectation of receiving any payment or benefit in return (if gifted by you). The beneficiary is only able to give money that they received as an inheritance within 3 years of receipt into the trust. Also, a gifting concession, that does not impact any Centrelink benefits is available for the first $500,000 of gifts contributed to the trust.

The social security implications of a special disability trust

There is no limit to the dollar value of assets that can be held in a special disability trust, however, there is an asset test exemption (for Centrelink benefits) of up to $669,750 (indexed 1 July each year) available to the beneficiary. Another advantage is no income is assessed under the social security income test for the beneficiary. The special needs individual can also have their primary residence in the special disability trust, which is also exempt.

Centrelink has also added a limit of $11,750 to ‘discretionary expenses’ for beneficiaries to improve their level of health, wellbeing, recreation and independence.

Further information about special disability trusts can be found on the Department of Veteran’s Affairs site and the Department of Social Services site.

In conclusion, the aim of establishing a special disability trust is to provide protection and to ensure that those we love have a secure financial future.

Please note this article provides general advice and information only, it has not taken your personal or financial circumstances into consideration. If you would like more tailored financial advice, please contact us today, one of our advisers would be delighted to speak with you.