Now that we've rolled into the new financial year, the 1st July also marks some changes to most superannuation funds. We've detailed the most important changes below, and most of these changes revolve around the new "Protecting Your Super" laws. These laws include several measures designed to ensure that super account balances are not being unnecessarily eroded by fees and insurance premiums, particularly for accounts that have a low balance or have been inactive for a certain period.

So, how does the new legislation work?

1. Inactive, Low-Balance Accounts
Under the Government's "Protecting Your Super" package, if you have a super account that has been inactive for 16 months with a balance of less than $6000, it will be transferred to the ATO. Workers often end up with multiple inactive super accounts when they open a new account with a new employer but neglect to transfer funds from their old one. If you have ever changed your name, address, job or lived overseas, you may have unintentionally lost track of some of your super. Following the transfer, the ATO will keep your money safe and you will pay no fees. Within 28 days of receiving your money, the ATO will try to transfer the cash into your active super fund, if you have one, and where the transfer would take your balance to $6000 or more.

2. Check Your Super
If you have linked your MyGov account to the ATO, you will be able to see all your super accounts – including any you may have forgotten – in the one place. There, you will also have an ability to consolidate all your funds into your preferred main account, with the click of a button. The process can be completed entirely on the MyGov site, although some follow-up paperwork may be required by some funds.

3. Banning of Exit Fees
Not only can you consolidate funds or switch from one super fund to another more easily, you won't have to pay an exit fee from your current fund. For example, there will be no penalty if you choose to move from a non-performing fund to one of the top investment performers.

4. Removal of Insurance Cover
If your super account was declared inactive, your death and total and permanent disability insurance cover attached to it may have been canceled, to prevent further erosion of funds. Super funds have been busy in the past few months informing fund members via email and the post that their insurance would not continue unless they choose to "opt in" for coverage. If your cover has been canceled but you wanted to keep it, you will now need to re-apply through the insurer's standard application and assessment process. This may require you to provided medical evidence and history to the insurer. We are not in favour of this new legislation as we feel many people will unknowingly lose their insurance cover, which is vital in the event of a claim.

5. Catch-up Contributions
Perhaps the most exciting change is the introduction of the catch-up contributions rule, which the Coalition was able to bring in after winning government. You can now boost your retirement nest egg by utilising unused concessional contributions cap amounts from previous years.To qualify to make catch-up contributions, you must have less than $500,000 invested in your super account as of June 30. You also must not have used your entire $25,000 annual concessional contributions cap in the previous financial year. You can carry forward up to five years of unused concessional contributions caps for use in a later financial year. The five-year carry forward period started on July 1, 2018, meaning that the 2019-2020 financial year is the first in which you can make catch-up contributions. The rolled forward amounts expire after five years.

If you'd like more information on how any of these changes may impact you, please remember we're only a phone call or email away.

Industry Super Funds & Fingers in the Pie

Following the recent royal commission into the banking and finance industry, a huge amount of bad press has ensued for retail superannuation funds. Just to be clear, a retail super fund is a super fund where the trustee role is conducted by a third-party provider, for which a fee is paid. These trustees are normally banks or financial companies.

This compares to an industry super fund where the trustee role is still performed by a third party, but the third party may have close links to a specific industry. For example, the HESTA industry super fund is linked to the health and community services industry. A fee is still paid for trustee duties but the fees are, in many cases, lower than the retail option.
A further comparison is the third option of a Self Managed Super Fund (SMSF) where the trustee role is carried out either by the individual members or a trustee company that is controlled by the individual members.

Industry super funds have historically also been linked to the particular unions in that industry, however, this link was barely discussed in the recent royal commission. An interesting article appeared in the Australian Financial Review on the 15th March 2019 which stated that:

"The Australian Council of Trade Unions has declared that the $1.4 trillion accumulated in industry superannuation funds is workers' money that the union movement will use as an industrial relations weapon to force companies to raise wages and conditions. ACTU president Michele O'Neil told a superannuation conference on Thursday that Australia's business elite was "afraid" working people might realise they had the power, through their super funds, to control decision-making by companies.'"

The article went on further to explain how these super fund investments could potentially be manipulated. For example, if BHP is not providing good enough conditions for its workers, as deemed by the relevant union, the super fund may just reduce its holding in BHP shares – one of the top 5 companies on the Australian stock exchange.

This type of potential market manipulation by industry super funds with vested interests is worrying to say the least, and it also leaves other super fund investors open to investment manipulation from which they stand to receive no apparent benefit. The particular industry super fund in question in this AFR article was Australian Super, which just happens to be the largest industry super fund in Australia and also one that has balances for a huge variety of investors, including many who don't happen to work at BHP.

So where does this leave the average person and their super fund, when the banks can't be trusted and perhaps neither can the industry super funds? Superannuation will end up being most people's number one asset besides their house, which means it is incredibly important to consider what happens with this money. Our suggestions are:

1. Whichever super fund you go with, the fund must adhere to the member's best interests form an investment perspective.

2. Consider the fees you are paying on your super fund and whether you are getting value for these

3. The issue of transparency around the underlying superannuation investments is a big deal – know what you're invested in and seek advice around how these investments may or may not be working for you

In summary, superannuation is a tool to get you where you want to be in retirement, and it's an important tool. If you'd like a second opinion on how your fund is meeting your needs, we're only a phone call or email away.

What You Need to Know About Salary Sacrificing

"Salary sacrificing" is the sort of term that gets bandied around on a regular basis, but not many people can actually explain how it works or how it might be useful to their situation. This week we plan on doing just that.
In essence, salary sacrificing is an arrangement between you and your employer where a portion of your pre-tax salary is used to provide benefits of a similar value. This may include things like cars, computers, school fees and super contributions. Our favorite form of salary sacrificing is the type that sends money towards superannuation, and this is where you and your employer agree to pay a portion of your pre-tax salary as an additional concessional contribution to your superannuation account. This is typically a tax-effective strategy if you earn more than $37,000 a year.

So how does it work? If you decide to salary sacrifice into super you will need to ask your employer to redirect a portion of your pre-tax pay to your super fund. Like your employer superannuation guarantee (SG) contributions, salary sacrificed contributions are taxed at a rate of 15% when they are received by the fund. For most people, this will be much lower than their marginal tax rate which is why these contributions are known as "concessional contributions."

Let's have a closer look at some numbers to help illustrate this for an employee with a $90,000 salary. Let's assume this person decides to direct $10,000 of their pay into superannuation, and in doing so they will save $3,450 in tax, with the extra money going into their super fund:

From this example, we can see this person's take-home pay will drop by $6,550, they will save $1,950 in tax on income and super and they will have an extra $8,500 in their super.
If you think this type of strategy might apply to you or if you'd like further ideas on this, please don't hesitate to contact us. We're only a phone call or email away.

***Information sourced from the ASIC MoneySmart Website for more information visit

Much has been going on in the background with the Banking Royal Commission of late, and we feel it would be timely to comment on how this relates to your superannuation funds. As we've mentioned in previous weeks, we're big fans of the wealth accumulation benefits that the superannuation system offers, mainly through tax savings on both contributions and the underlying investments your super holds.

What we're not a fan of is the vertical integration system that many institutional super funds have been using for years, and the negative impact this has had on some people's superannuation fund balances. Sadly, we have witnessed several devastating occurrences when assisting and representing clients who have previously been serviced by the bank and institutional financial planners.

Many (but not all), of the problems highlighted, have stemmed from the vertical integration model that exists within the major banks and institutions. They employ the advisers whom the clients deal with. They own the platforms that host the clients' money. They own and manage the funds where the clients' money is invested. The conflict of interest is immediately apparent. The adviser will inevitably be incentivised to keep a client's money within the corporate structure. As an ASIC report from earlier this year found:

While the big institutions' approved product lists were made up of 21% of in-house products and 79% of external products, when a client's money was invested, 68% of the time it went to their in-house products.

And what happens when the bank or institution is placed before a client? Only 25% of the advice given by the big institutions was considered to be compliant by ASIC. 65% was considered non-compliant, with 10% considered non-compliant with significant concerns. The issue of non-compliance partially stemmed from recommending new financial products when there was no demonstration that a client would be better off.

So how does this relate to your superannuation and why does it matter? When most Australians reach retirement, superannuation is the biggest asset they have alongside their house. It's also the most accessible when it comes to funding income in the retirement years. This means that the more you have in super the better, and you also get a benefit from a higher performance, relative to the risk of the investments.

So what should you do about your super in light of what we're learning from the royal commission?

1. Ask for a second opinion on your fund if you don't know how to look up the fees and performance data or what this actually means for you.
2. Get clear on the type of fund that will work best for you. This might be a basic industry fund, a retail fund with more flexibility, or a Self Managed Super Fund, depending on your goals.
3. Review your super regularly against a reputable benchmark. This is not a set-and-forget asset for you, so make sure you're receiving what you're entitled to.

As always, if you are unclear about your position in relation to your super, make it a priority to seek professional advice. The laws around super are extremely tight, and at best, there are serious penalties for non-compliance, at worst you could well be leaving yourself in a worse financial position during your retirement years.

Choosing the Best Super Fund for You

We talk about Super a lot when it comes to tax planning and wealth creation, but you certainly want to make sure you've got the right vehicle for the job. If you get the selection right, you'll have many happy years of investment returns ticking away in the background. 

If, on the other hand, you get it wrong, you'll literally see thousands of dollars pass you by over the lifetime of your fund. Here are a few things you need to be aware of:

1. Understand the different types of funds available. These fall into three broad categories:
Industry Super funds (including government funds) - In a nutshell, Industry Super Funds are generally lower cost options with a reasonable amount of investment choice. They would appeal to the investor who has a low level of complexity, doesn't what much involvement with their super, and is after lower fees. Where these types of funds won't suit is if your situation is more complex, or if you're wanting a higher degree of control and transparency over the underlying investments you're holding. Our opinion is that these funds are ok for many people in the accumulation phase, but they are less than optimal when it comes to drawing a pension.

Retail super funds - Retail Super Funds come with a higher level of control as well as transparency, meaning you can see what you're invested in most of the time. These funds are often administered through a specific super fund company, many of which are owned by banks or investment companies. This type of fund would appeal to those who like more involvement with their super funds, but who don't need the complexity of an SMSF. The fees can sometimes be higher than an industry fund, so the returns also need to be higher for this to be the best option.

Self Managed Super Funds (SMSF's) - An SMSF is the most complex type of super fund available but they still operate under exactly the same super legislation as the other fund options. The pros of this fund are ultimate control and transparency as well as some additional investment options (such as investment properties).
The cons come in the form of annual tax returns and audits that need to be completed, as well as a possible time commitment to managing the fund. We'd suggest a starting balance of at least $200,000 to make this option worthwhile.

2. Look at the investment options, fees, and performance
When it comes to investment options, these will vary greatly depending on the type of fund you have. But take the time to research what's available and most importantly, consider the asset allocation of your investments. If you're still a long way from being able to access your super, make use of a higher risk option so you can get your returns up over time. Also look at the fees you're being charged and consider if these are value for money. You'll likely encounter administration fees and investment fees, but the ones you really want to avoid are contribution fees or performance fees – these are a gouge. There's also a lot of information online about the relative performance of your super investments and it certainly pays to check this out. If you're after a comparison as to what your fund should have earned, just let us know and we can provide this.

3. Insurances – don't forget these
Lastly, don't forget your insurances. You may automatically have some of these issued in a super fund and many of these insurances are quite a low cost. Weigh up what you think you might need versus what you have in your super funds before you go and change funds quickly – you may just lose the cheapest insurance you had by doing so.

This is a short summary of some considerations for your super funds, but please let us know if you need help in this area. Super is a vital part of your wealth creation journey and it pays to get it right.

The ATO receives around 20,000 reports each year from people who believe their employer has either not paid or underpaid compulsory superannuation guarantee (SG). In 2015-16 the ATO investigated 21,000 cases raising $670 million in SG and penalties. The ATO's own risk assessments suggest that between 11% and 20% of employers could be non-compliant with their SG obligations and that non-compliance is "endemic, especially in small businesses and industries where a large number of cash transactions and contracting arrangements occur."

Celebrity chefs are the latest in a line of employers to publicly fall foul of the rules - one for allegedly inventing details on employee payslips and another for miscalculating wages. But what happens if your business gets SG compliance wrong? Under the superannuation guarantee legislation, every Australian employer has an obligation to pay 9.5% Superannuation Guarantee Levy for their employees unless the employee falls within a specific exemption. SG is calculated on Ordinary Times Earnings – which is salary and wages including things like commissions, shift loadings, and allowances, but not overtime payments. Employers that fail to make their superannuation guarantee payments on time need to pay the SG charge (SGC) and lodge a Superannuation Guarantee Statement. The SGC applies even if you pay the outstanding SG soon after the deadline.

The SGC is particularly painful for employers because it is comprised of:

1. The employee's superannuation guarantee shortfall amount – so, all of the superannuation guarantee owing
2. Interest of 10% per annum, and
3. An administration fee of $20 for each employee with a shortfall per quarter 

Unlike normal superannuation guarantee contributions, SGC amounts are not deductible, even if you pay the outstanding amount. That is, if you pay SG late, you can no longer deduct the SG amount even if you bring the payment up to date. And, the calculation for SGC is different to how you calculate SG. The SGC is calculated using the employee's salary or wages rather than their ordinary time earnings. An employee's salary and wages may be higher than their ordinary time earnings particularly if you have workers who are paid for overtime.

Under the quarterly superannuation guarantee, the interest component will be calculated on an employer's quarterly shortfall amount from the first day of the relevant quarter to the date when the superannuation guarantee charge would be payable. The penalties imposed on the employer for failing to meet SG obligations on time might seem harsh, but they have been designed that way on purpose. This is really money that belongs to the employee and should be sitting in their superannuation fund earning further income to support the employee in their retirement.

Where attempts have failed to recover superannuation guarantee from the employer, the directors of a company automatically become personally liable for a penalty equal to the unpaid amount.
Directors who receive penalty notices need to take action to deal with this – speaking with a legal adviser or accountant is a good starting point.

If you are uncertain about your SG obligations or would like a compliance audit of this and other key risk areas of your business, give us a call.

What You Need to Let the ATO About Your SMSF

The 1 July 2017 superannuation reforms introduced a new reporting regime for funds. Funds now need to advise the ATO of key events within the fund that impact on retirement income streams (pensions):

1. When you start a pension
2. When you stop a pension or take a lump sum
3. When the fund accepts a structured settlement contribution such as personal injury compensation.

Superannuation funds are also required to report the value of existing superannuation income streams at 30 June 2017. While reporting of these events to the ATO does not formally start until 1 July 2018 for SMSFs, event based reporting still needs to be completed if these events occur from 1 July 2017 – that is, you have a reprieve from the compliance but not the actual reporting.

If we are managing your SMSF's accounting and compliance, we will track most of these events for you electronically where you have enabled us to access feeds from your SMSF's bank accounts. If we see any transactions that could meet the reporting criteria, we will be in touch with you to confirm the nature of these events.Where electronic feeds are not available - if your bank does not support them or where you have opted not to enable the feeds, you will need to let us know about these events at the time they occur. In addition to the new events based reporting regime, SMSFs are also obliged to report any of the following changes to the ATO within 28 days.

1. Fund name
2. Fund address
3. Contact person for the fund
4. Fund membership
5. Fund trustees
6. Directors of the fund's corporate trustee
There is little room for error when it comes to SMSFs, so as always, if you have any questions or concerns, contact us on 5482 2855 and get the correct advice and information for your particular situation.

TWENTY dollars won't get you too far these days. At best, a few cups of takeaway coffee, lunch (maybe),  or a single cocktail at a bar on the weekend. However, $20 goes a long way, for a long time, in your superannuation.

Projections by super industry group ASFA, show that salary sacrificing $20 a week into super can deliver a 20-year-old an extra $435,000 in retirement, or $87,000 in today's dollars. A 30-year-old can build an extra $198,000 ($55,000 in today's dollars), for a 40 year old it's $82,500 ($33,000) and a 50 year old gets $29,700 ($16,500). This is the power of compound interest over many years. There are also tax benefits of salary sacrificing into super!

If you would like us to show you what salary sacrificing $20 a week into your super looks like and forgoing those 4 or 5 takeaway coffees, then give Dominique a call on 07 5482 2885.

How Hard is Your Super Working For You?

The sharemarket shot back above 5700 points on Wednesday, lifted by a rally in bank shares, which enjoyed their best day in eight months after the relief that new capital requirements weren't as tough as many had feared. ANZ soared 3.9 per cent, Westpac gained 3.8 per cent, NAB rose 3.1 per cent and Commonwealth Bank closed 3 per cent higher, for a cumulative gain of about $14 billion in value.
The S&P/ASX200 climbed 0.8 per cent to 5732.1, with gains in the big four banks alone adding more than 50 points to the benchmark index. The chunky gains in the banks disguised the fact that overall there were slightly more losers than winners on the ASX200 as numerous blue chips ended in the red.

What this means for you:

I read an interesting article this week titled "Why picking a superannuation fund isn't like shopping for groceries". Basically, it was about consumer choice, the more choices the better - right?

Well it seems in the case of superannuation funds the answer may be no. In comparison to shopping for something like a smart phone, superannuation is a complex product for consumers and too many options can just add even more confusion. With more superannuation products coming into the market and consumers generally not understanding the different fee structures in different superannuation funds or their different investment options, the choice and complexities may become overwhelming. It has been found that about two-thirds of all super fund members have their money in default accounts…. Which is the most important fact I took from this article, as this means that two-thirds of the population are leaving their future stability set to default!

Whilst it seems that many people have become complacent about how their super is invested and the fees that are being charged by super funds, having your super invested in the correct manner for where you are in your life and in-line with your tolerance for risk will stand in you good stead for the day you are able to access your super - retirement. Having this understanding can also mean the difference in retiring comfortably or having to be careful with each dollar you spend in your golden years. Whilst we don't have a crystal ball to predict what markets may or may not do, we can help guide you to make sure that your superannuation is invested wisely and that the fees being charged aren't unnecessarily eating into your retirement income.

If you would like to talk about your superannuation and how it is invested, give us a call. In an optimum situation, your super is working just as hard as you are!

The Australian sharemarket remained in reversal mode, this time to the upside as a mid-session spike in iron ore futures boosted miners. The S&P/ASX 200 index dropped 0.6 per cent in morning trade, but it bounced to close down 6 points, or 0.1 per cent, at 5714.2 as Singapore iron ore futures jumped 3 per cent. The Gold price plunged during the week to a 6 week low, presumably due to a "fat finger" erroneous trade, but prices have now re-stabilised. The Australian dollar also rallied along with miners, rising US0.3¢ to US76¢.

What this means for you:

The new concessional contribution cap of $25,000 kicks in July 1. If your current concessional contributions into superannuation are in line with the existing $35,000 and $30,000 caps (depending on your age) you need to make sure that you revisit your existing contributions come July 1 when the cap reduces to $25,000 for everyone. This means that any existing salary sacrificing arrangements will need to be re-visited. If you need assistance with looking at your salary sacrifice amounts for the new financial year and learning about the new carry-forward rules for concessional contributions that have been legislated give us a call to make an appointment. The Gold price movements during the week add further weight to the argument that investors shouldn't get caught up with daily price movements. Never fall into the trap of making a short-term decision on a long-term asset.

Super Changes Push More to Family Trusts

With the legislated changes to superannuation just weeks away, trusts are becoming more popular as an "alternative" investment vehicle for those who have more to invest than the new super rules will allow. It is important to note that superannuation is still the most tax effective way to invest and that we see a trust as Plan B depending on your circumstances. Financial advisers have noted a marked increase in clients wanting to set one up, either dismayed by how little they'll be able to get into super after July 1 or fed up with government changes to retirement savings. 

But who do they suit and what are the potential benefits? Just like a super fund, a trust is an investment structure into which you put money that's invested for you. A trust is tax-neutral in that it pays no tax on earnings and taxable income flows through to beneficiaries - a spouse, children and wider family members - and they pay tax on what they've been paid (their distribution). By comparison, super funds pay tax on earnings, albeit at a low rate (a maximum of 15 percent). 

This sort of income splitting has long been a key attraction of family trusts. What's pushing them higher on investors' agendas is that after July 1 it's going to be harder to get large amounts into super. 10 years ago someone over 50 could get contribute $105,000 in a year to super. Under the new rules, there will be a flat $25,000 for all ages making pre-tax ("concessional") contributions. Ten years ago you could make an after-tax ("non-concessional") contribution of $1 million but after July 1 it will be $100,000 a year (as long as your super balance is under $1.6 million at the end of the previous financial year). Flexibility is another reason more clients are considering trusts. There are no investment rules, no contribution rules and no preservation requirements (rules on when you can withdraw funds), and unlike super, the trust can buy personal use assets like a holiday house. Family trusts can also be beneficial in the following circumstances -
1. Income splitting
2. Estate planning
3. Business merger
4. Capital gains
5. Asset protection
6. Second marriages
If you would like to discover if a family or discretionary trust can be part of an investment, tax or estate planning strategy please give us a call on 5482 2855.


Can Global Events Impact on Your Super Strategy?

The Australian sharemarket belatedly caught up to the global relief rally on the outcome from France's presidential election. Having lagged on Monday with a 0.3 per cent gain, the S&P/ASX 200 index climbed 40.2 points, or 0.68 per cent, to 5912 after the US S&P 500 index gained 1.6 per cent over two sessions on relief France was set to elect centrist, pro-euro Emmanuel Macron as president on May 7.

The bounce in global stocks also raised hopes the global reflation rally would gain fresh impetus, prompting some rotation from bonds into stocks. US 10-years to 3 points to 2.30 per cent, while Government 10-year yields rose 3.5 points to 2.63 per cent as consumer inflation came in at 2.3 per cent, below the consensus forecast but in the Reserve Bank's target range for the first time in almost three years. The Australia dollar lost US0.5¢ to US75.10¢ as higher US yields strengthened the US dollar against most currencies except the euro.

What this means for you:
For most people events like the French election have little impact on their lives but global events like this can have an impact on our superannuation and other investment funds particularly if there's exposure to global markets. When we meet with clients to discuss their superannuation and investments we always look at their risk profile so we have a strong understanding of how they feel, and how they would react to movements in global markets.

This risk profiling along with understanding our clients goals ensures that we recommend the most appropriate superannuation or investment accounts for our clients. If you would like to find out more about reviewing your superannuation or investment goals then give us a call.
If you would like to review your current structures, contact us today on 5482 2855.

The Low Down on Coming Changes to Super

As you may already be aware, there are some superannuation rule changes coming into play from 1 July 2017. Therefore, it may be in your interest to take advantage of the current opportunities before the financial year ends.

* At any time during this financial year Please note, if you're 65 or over at the time of making a contribution, a work test must first be satisfied.

Total pension amounts will be limited From 1 July 2017, if you're converting your super into a pension to derive an income in retirement you'll be restricted to transferring a maximum of $1.6 million into a tax-free pension account, not including subsequent earnings. If you already have a pension balance above that, the excess must be placed back into the super accumulation phase (where earnings will be taxed at the concessional rate of 15%) or taken out of super completely before 1 July 2017 to avoid potential penalties.

Also note, if you do transfer $1.6 million into your pension, even if your balance reduces over time, you won't
be able to top up your pension a second time. Transition to retirement pensions will lose their tax exemption Investment earnings on super fund assets that support a pension are currently tax-free. However, this will no longer apply to transition to retirement (TTR) income streams. Earnings on fund assets supporting a TTR income stream will be subject to the same maximum 15% tax rate that applies to super accumulation funds from 1 July 2017.

Opportunities before 30 June 2016
Take advantage of the higher concessional contribution caps before these drop to $25,000 for everyone.
Consider making a larger non-concessional contribution this year in order to maximise what's in super.
Revisit whether you need to continue your transition to retirement if you're not yet 65. It may be worth your while to place the funds back in accumulation mode if you don't need the pension income for your cash flow.

As always, please contact us on 5482 2855 if you'd like personalised advice in this area.

Tumbling commodity prices on rapidly fading global reflation hopes dragged the Australian share market lower again this week but bargain hunting in the major miners and telcos helped trim losses. Following a 0.3 per cent loss on the US S&P 500 index, the S&P/ASX 200 index opened almost one per cent down, before bouncing to 0.2 per cent loss as a rally in iron ore futures boosted miners. Selling returned and it held above the psychological 5800 point level to close down 32.7 points, or 0.56 per cent, at 5804 on volume 17 per cent above average. The Australian dollar dropped US0.6¢ to US75.20¢ despite broad US dollar weakness as the deteriorating commodity outlook weighed on the Aussie. Currency market volatility spiked and the British pound leapt 2.2 per cent against the greenback and 3.2 per cent against the Aussie after the surprise announcement by British Prime Theresa May of a snap June 8 poll to secure a strong mandate for Brexit negotiations.

What this means for you:
The thing still dominating our immediate world at the moment are the superannuation changes coming into effect on July 1. From 1 July 2017, the general concessional contributions cap will be lowered to $25,000 (2017/2018 year) from $30,000 (2016/2017 year), and the over-50s cap of $35,000 (2016/2017 year) will be dead from 1 July 2017. So if you are making general concessional contributions you only have a little over two months to take advantage of the higher caps.

The one upside to the cut in the annual concessional (before-tax) contributions cap, is that the government has introduced catch-up concessional contributions. The catch-up contributions opportunity was initially planned from 1 July 2017, but the measure has now been delayed. Instead, the start date for the catch-up provisions is 1 July 2018. What this new measure means is that unused portions of the concessional cap each year can be carried forward on a rolling basis for up to 5 years, for the annual caps applicable from July 2018, but only if you have an account balance of less than $500,000. If you would like to find out more about concessional contributions and the changes to superannuation, give us a call.

The Australian share market swung in and out of the red before closing firmer as iron ore prices fell and geopolitical tensions drove buying of safe-haven government bonds. The S&P/ASX remained in outperformance mode as it opened 0.3 per cent up on insatiable demand for the major banks, but it dropped to a 0.2 per cent loss and bounced again to close up 4.7 points, or 0.08 per cent, at 5934. Weaker Chinese inflation data signalled the reflation narrative was rapidly losing steam. The Australian dollar has fallen as global concern rises over the conflict in Syria and tensions on the Korean peninsula. At 6.30am AEST, the Australian dollar was at 74.96 US cents, down from 75.03 cents on Thursday.

What this means for you:
We've got some superannuation changes that are fast approaching as we get closer to 1 July. One of these changes is the tax effectiveness of the Transition to Retirement Pension, with the earnings on your pension assets no longer being tax free. Our suggestion would be to cease taking a transition to retirement pension if you don't need the income to support your lifestyle.

With the current international events around Syria and North Korea, a lot of people are asking what our opinion is on the future. The only certainty is uncertainty, when it comes to future events. However, if you have a well-structured and diversified investment portfolio, you'll be able to ride out all the ups and downs that may or may not happen.

Fading hope for "Trump reflation" was the main catalyst for the Australian share market falling the most in four months, but intensifying Chinese banking risks compounded the pressure on miners. The S&P/ASX 200 index tumbled 90.1 points, or 1.56 per cent, to 5684.5 as it followed the 1.2 per cent fall in the US S&P 500 last night, its biggest loss since November, after equity markets finally reacted to warnings President Donald Trump would struggle to implement his pro-market policies. The Australian dollar is trading at 76.78 US cents at the close Wednesday.

What this means for you:
When the mining shares in Australia drop, our whole market tends to come down for the day as well. This is because our hare market is highly concentrated with either mining-related or financial companies. Don't neglect holding some international shares to increase your exposure to other industries such as manufacturing and pharmaceuticals.

While it's still a little way off, from 1 July 2018, people with superannuation balances of less than $500,000 will be able to access their unused concessional contributions cap space to make additional concessional (before-tax) contributions. Individuals will be able to access their unused concessional contributions cap space on a rolling basis for a period of 5 years. Only unused amounts accrued from 1 July 2018 can be carried forward. This will be a handy way for people with smaller account balances to top them up where possible.

The ASX 200 index ignored the stronger overnight lead from Wall Street as it dropped 0.3% in early trade, due to weak wage and construction data. On the US market, investors are looking ahead to the Federal Reserve's minutes of its most recent meeting for clues on the timing of the next interest rate hike. The Australian dollar is up against the US, finishing at 76.79 US cents on Tuesday.

What this means for you:
Have you checked your nominated superannuation fund beneficiary recently? Your super fund assets don't automatically pass into your estate on death, as the beneficiary nomination will direct where those assets go. For industry funds, this nomination can sometimes lapse after 3 years, so it pays to revisit this. You also need to consider whether you'd like to leave the super fund assets to your children, as they may be forced to pay tax on the benefit amount. Nominating a spouse as your beneficiary will mean they receive the assets tax-free.

Overall the market has had a very strong 12 month period, which is great news for investors. For those who have been long-term investors, you're being rewarded for staying the course during both good and bad years.

It has been a weary 12 months in politics across the world and as the USA begins to realise the full effect of a Trump leadership, we in Australia are now seeing the residual effects of our own 2016 federal election. Towards the end of 2016, a number of proposed changes to taxation, superannuation and social payments such as pension were set in place. In relation to Superannuation, a number of changes originally proposed in the 2016-2017 Federal Budget were legislated when the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 passed parliament on 23 November 2016.

The changes are positive overall, improving the equity, efficiency, and sustainability of super tax concessions and include:

1. Introduction of a transfer balance cap.
A $1.6 million cap has been introduced on the amount that can be transferred to super in retirement phase when earnings are tax-free. Additional savings can remain in an accumulation account (where earnings are taxed at 15 percent) or remain outside super. This comes into effect from 1 July 2017 and will be indexed in following years. Retired people with retirement phase balances below $1.7 million on 30 June 2017 will have 6 months from 1 July 2017 to bring their balances under $1.6 million.

2. Concessional superannuation contributions cap reduced.
The annual concessional contributions cap has been reduced to $25,000 (from $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise). This comes into effect from 1 July 2017.

3. Concessional superannuation contributions tax threshold reduced.
The threshold at which high-income earners pay Division 293 tax on their concessional taxed contributions to superannuation has been reduced from $300,000 to $250,000. This comes into effect from 1 July 2017.

4. Non-concessional contributions cap reduced and criteria introduced.
The annual non-concessional contributions cap has been reduced from $180,000 to $100,000. In addition, criteria for an individual to be eligible for the non-concessional contributions cap has been introduced and other minor amendments to the non-concessional contributions rules have been made. These changes come into effect from 1 July 2017.

5. Greater deductibility of personal contributions.
The requirement that an individual must earn less than 10 percent of their income from employment to be able to deduct a personal contribution to their super to make it a concessional contribution has been removed. This will apply from the 2017-18 income year.

6. Allowing 'catch-up' concessional contributions.
Individuals whose superannuation balance at the end of the previous financial year is less than $500,000 will be able to carry forward unused concessional cap amounts from the previous five years. This applies to working out an individual's concessional contributions cap from the 2019-20 financial year onwards.

7. More tax offsets for spouse contributions.
This increases the amount of income an individual's spouse can earn before the individual stops being eligible to a tax offset for contributions made on behalf of their spouse. This will apply from the 2017-18 income year.

8. Abolishing the anti-detriment rule.
The anti-detriment provision which allows superannuation funds to claim a tax deduction for a portion of the death benefits paid to eligible dependents will be removed from 1 July 2017.

Super Guarantee rate increase changes were previously legislated to increase according to the following timetable: 

The Super Guarantee contribution rate is set to reach 12% in 2025

With the above-mentioned changes taking effect primarily around the new tax year, 1 July 2017, now is the perfect opportunity and time to review your current Superannuation structures and see how you can take advantage of the upcoming opportunities.

The Schuh Group Financial Planning Team are offering free "Super Strategy Sessions" from February 1, 2017, for any client wanting to position themselves for continued growth and success. Contact Dominique Schuh direct at
The Australian share market rallied for the third straight session to close at a 2016 high despite steep falls in iron ore prices. The S&P/ASX 200 again jumped 0.7 per cent at the open, before slipping to close up 22.4 points, or 0.4 per cent, at 5613.5 on volume 12 per cent below average as miners defied weakness in ore prices and banks continued to rally. The Australian dollar is moving within a narrow range and remains relatively steady against the US dollar. The local currency was trading at 72.66 US cents at 1200 AEDT, up from 72.52 US cents on Tuesday.

What this means for you:
The ATO has released data saying that the number of SMSF's has risen dramatically in the last five years (grown by 31 per cent) but the overall returns haven't been as positive. Our suggestion would be to hold off having an SMSF unless you've got a balance of at least $200,000 and you're contributing to it regularly. Otherwise, the costs of a tax return and audit can erode too much of the rate of return each year.

If you're looking for savings in the new year, you may want to get a second opinion on your insurance structure. Making use of your superannuation to hold some of your cover can be an effective way to reduce the overall cost of the premiums. But, you need to make sure you structure matches your situation and where you'd like any benefits to be paid. Drop in and see us in the new year for a free second opinion.

ASX outperforms again with a strong rise. The Australian sharemarket outpaced global markets for the second session as commodity-rebound optimism steadily developed into a resource-stocks scramble. The US S&P 500 index gained 0.2 per cent last night, but the S&P/ASX 200 index climbed 71.1 points, or 1.31 per cent, to 5484.4 as iron ore prices surged again, leaving the index up 6.4 per cent since the US election.

What this means for you:
The rise in the Australian share market over the last 6-12 months has been a welcome change to investors who hold Australian shares. If we go back in time and assess the returns over the last 5 years, it's been the internationals that have outpaced Australian equities. Don't make a rash decision with your asset allocation and go all in with Australian companies – diversification is the best friend for long term investors.

If you're considering building your super fund with a bulk investment, this financial year is the time to take advantage of that. This year will be the last for some time that we're able to make use of the "bring forward rule" that allows three years' worth of non-concessional contributions to go into super for those under 65. This means that a bulk amount of $540,000 can be contributed to super this year for those who are eligible.
If you would like to review your current structures, contact us today on 5482 2855



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