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Financial Happenings Blog
Tuesday, May 13 2014

The first budget for the new coalition government has as expected provided some significant changes as well as confirming changes that had been widely anticipated.   This summary will look at the following major changes grouped into three main areas – tax planning, retirement planning and government benefit planning.  The full summary can be found at our 2014 Budget - Personal Finance Summary page.

Posted by: Scott Keefer AT 10:43 am   |  Permalink   |  Email
Thursday, October 24 2013

It has been a number of months since we updated the website with Scott Francis' articles published in the Eureka report.  We have now caught up and welcome you to take a look at these pieces - 17 in total.


Posted by: Scott Keefer AT 03:54 pm   |  Permalink   |  Email
Wednesday, May 09 2012

In the present political climate it is easy to get caught up in the debate over whether it is the right time for the government to be moving to a fiscal surplus.  Rather than focus on the politics of the Budget, we think it is best to focus onthe practical implications and look at how changes impact on individual financial planning strategies.

The budget has provided a number of significant changes impacting on financial planning strategies.  These have been outlined in this summary.  The major changes include:

  • Deferral of higher concessional contributions cap for individuals aged 50 and over from 1 July 2012
  • Higher tax on concessional contributions for very high income earners from 1 July 2012
  • Mature age worker tax offset (MAWTO) to be phased out from 1 July 2012
  • Increased Medicare levy low income thresholds from 1 July 2011
  • Means testing of net medical expenses tax offset (NMETO) from 1 July 2012
  • FTB Part A increase
  • Family Tax Benefit (FTB) A eligibility from January 2013
  • Supplementary Allowance
  • Schoolkids Bonus
  • Aged care reform from 1 July 2014
  • Accelerated real estate review from 1 July 2012
  • Reduced payment period of Australian Government Payments for people who are temporarily absent from Australia from 1 January 2013
  • Australian residency requirements for the Age Pension from 1 January 2014
  • Removal of the capital gains tax discount for non-residents
  • Changes to tax rates for non-residents
  • Company Loss Carry Back
  • Small Business Immediate Write-Off Extension
  • Previous proposals shelved
    • Reduction of the corporate tax rate to 28%. The corporate tax rate will remain at 30%.
    • Standard tax deduction of $1,000 for work-related expenses and the cost of managing tax affairs.
    • 50% discount for the first $1,000 of interest income.

The following changes announced since last year’s budget have also been confirmed

  • Confirmation of changes to marginal income tax rates & thresholds
  • The minimum draw down relief for superannuation pension holders will be extended next year with minimums being 75% of the original rules and returning to the normal rates from July 1 2013.
  • Changes to co-contribution arrangements
  • Superannuation guarantee rate to progressively rise from 9% to 12%
  • Maximum age limit for the superannuation guarantee to be abolished
  • Low income superannuation boost
  • Allowances & supplements  to reduce the impact of the introduction of a price on carbon

Each of the above items has been addressed in a little more detail our 2012 Budget - Personal Finance Summary.

The key strategy considerations stemming from these changes include:

  • Those in the workforce who are 50 or older to reconsider salary sacrifice strategies to ensure that concessional contributions in excess of $25,000 are not made and how to be prepare to make the most of increased contribution thresholds come July 2014.
  • Those earning more than $300,000 of income to consider whether superannuation contributions need to be lifted to replace the extra tax payable on concessional contributions.
  • Non-residents to take extra care in the disposal of assets with realisable capital gains.
  • Salary sacrifice strategies to be re-assessed under the new marginal tax threshold levels and rates.
  • Personal superannuation contributions in order to access the government co-contribution need to be re-assessed in light of the changed thresholds and rate.
  • Those turning 70 to consider the benefits of the continued superannuation guarantee contributions.
  • Continued consideration of pension payment draw downs if looking to draw only the minimum allowed.
  • Small business owners to consider the timing of discretionary capital purchases.
If you would like to discuss the implications for your personal situation please do not hesitate to be in contact.



Posted by: Scott Keefer AT 12:23 am   |  Permalink   |  Email
Thursday, April 19 2012

I have just sat down to a cup of coffee at Starbucks and began reading through some reports I downloaded over recent months.

I found HSBC’s The Future of Retirement Why family matters report very interesting especially as it looked at surveys conducted with 17,000 people across 17 countries but not Australia.  As I read I pondered whether the findings were relevant to Australian families and quickly came to the conclusion that the vast majority of findings would probably be consistent with responses from Australians.

The key findings for me were:

-       65% of men said that they make all or most of the financial decisions in the house without any input from others, compared to just 53% of women who said that they were the sole decision-maker.  This gender gap is apparent across all age groups.

-       The only area where women are more likely to be the sole decision-maker is in household budgeting. Even here, the gender gap disappears among those in their thirties, with younger men taking a stronger interest in this aspect of financial planning than older men.

-       Significantly, women are far more likely to stop working full-time when they have children (47%), compared to just 1-in-6 (15%) men. The onset of parenthood not only reduces women’s role in the workplace, it also reduces their role in making financial decisions in the home. When looking at financial decision-making, the gender gap is greatest among men and women who have children.

-       A major gender gap exists in financial planning: only 44% of women stated that they had a financial plan in place for their own or their family’s future, compared to 54% of men.

-       Married people plan ahead in greater numbers and experience a smaller gender gap when looking at who exercises financial responsibility – 55% of married women and 62% of married men have made a financial plan.

-       In spite of the changing financial needs throughout people’s lives, 60% of respondents have never sought professional financial advice to help them, relying instead on their own knowledge or that of friends and family.

-       The majority of households have a predominantly risk-averse attitude, and are more likely to forego the benefits of long-term investing in favour of security in the short term. This view is particularly prominent among women especially in Western countries.

-       (Somewhat surprisingly) Only 13% of men and 18% of women thought that investing in stocks and shares was extremely risky.

From their findings, the writers suggest 4 key points of action households can implement to improve future financial well being :

1. Share decision-making. It is important that household financial planning is shared and takes into account the family unit and the potential financial needs of spouses, children and any other dependent relatives.

2. Review financial plans in light of major life events. Financial planning should not be static. Family events like births, deaths and marriages should act as triggers to start or review the family’s financial arrangements.

3. Sense-check decisions with a professional financial adviser. Even where plans are put in place, they will contain gaps. Seeking professional advice can help to identify and plug any gaps that might arise.

4. Take a balanced approach to managing investment risk. Households should balance the need to protect their investments in the short and medium term with the need to generate an adequate retirement income in the long term.

These are pretty common sense steps for households.  If you would like to discuss details further or engage an adviser to work with you on securing your future financial well being please do not hesitate to get in cotact. 


Posted by: Scott Keefer AT 07:00 pm   |  Permalink   |  Email
Wednesday, May 11 2011
We have put together a concise summary of the issues raised in the 2011-12 Budget statement as they relate to personal finances.  Please take a look at the page on our website for more details - 2011 Budget - Personal Finance Summary.
Posted by: AT 09:23 am   |  Permalink   |  Email
Monday, May 17 2010
Scott Francis' latest contribution to Alan Kohler's Eureka Report provides an investor's perspective of the budget.  In his article Scott focuses on the following issues:
  • Making the most of the income tax cuts
  • Reductions in tax payable on interest income
  • Further restrictions on the government co-contribution
  • Clarity for SMSFs on instalment warrants
  • The benefit to investors from a reduction in company tax rates
  • Future increases to contributions going into superannuation

To read all of Scott's thoughts please refer to his article - Time to tweak the portfolio
Posted by: AT 05:43 am   |  Permalink   |  Email
Tuesday, May 11 2010

We have just emailed out our summary of the 2010 Budget as it relates to  personal finances and financial planning strategies.

This year's budget has provided a number of significant changes impacting on financial planning strategies.  These have been outlined in this summary.  The major changes include:


-          Confirmation of income tax changes from July 1st 2010 increasing the effective tax free threshold from $15,000 to $16,000 for those earning $30,000 or less, the bottom of the 30% marginal tax rate threshold increasing from $35,000 to $37,000 and the current 38% marginal tax rate being reduced to 37%.


-          A 50% discount commencing July 1st, 2011 on the tax payable on the first $1,000 of interest income generated by bank, credit union and building society accounts along with income from bonds, debentures and annuity products.


-          A $500 standard deduction for work related expenses starting 2012-13, increasing to $1,000 for 2013-14 to simplify tax returns and lead to tax savings for many individuals.


-          Superannuation guarantee contributions to rise from the current 9% to 12% by July 2019.


-          A $500 superannuation tax rebate, commencing July 1st, 2012, of the contributions tax for those with incomes of up to $37,000.


-          The superannuation guarantee age limit to rise from 70 to 75 starting July 1st 2013.


-          A reduction in the company tax rate from 30% to 29% in 2013-14 and 28% in 2014-15.


-          The company tax rate reductions to be brought forward for small businesses with the rate of 28% applicable from 2012-13.


-          Small businesses to be able to immediately write off asset purchases of less than $5,000 compared to the current limit of $1,000.


-          A permanent extension from 1st July 2012 of the eligibility for those over 50 to receive $50,000 of concessional contributions into super p.a. as long as superannuation balances do not exceed $500,000.


-          The Net Medical Expenses Tax Offset to increase from $1,500 to $2,000

To take a look at the full summary please click on the following link - 2010 Budget - Personal Finance Summary

Scott Keefer

This Summary has been prepared as a brief summary of the 2010 Federal Budget as it impacts on personal finances.  It is a publication of A Clear Direction Financial Planning.  It contains general financial information.  Readers should check this information with a professional financial adviser before acting on any of the material contained in this document.

Posted by: AT 10:00 am   |  Permalink   |  Email
Wednesday, May 05 2010
Scott Francis in his latest Eureka Report article highlights three key changes from the Henry tax review including:
  1. Employer contributions to rise to 12% gradually from July 2012
  2. Superannuation splitting strategy becomes more useful
  3. Lower company taxes means bigger dividends
Scott concludes that the new shape of superannuation, and more generally personal finance strategies, might be summarised as:
  • A focus on employer contributions and non-super investments until the age of 50.
  • The return of income splitting between spouses to take advantage of concessional contribution limits.
  • Renewed focus on building wealth through superannuation for the over 50s until retirement.
Click on the following link to read Scott's full article - Reforms and your super
Posted by: AT 07:17 am   |  Permalink   |  Email
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