8am-6pm

Monday to
Friday

L1, 6/8 Eddy St

Moonee Ponds
VIC, 3039

Office Ph:

8am-6pm

Monday to
Friday

L1, 6/8 Eddy St

Moonee Ponds
VIC, 3039

Office Ph:

Intergenerational Wealth News

webadmin No Comments

Intergenerational Wealth Monthly Market Wrap August 2019

Intergenerational Wealth Monthly Market Wrap for August 2019

Markets rallied on rate cuts… 

  • The rally from December has continued into July with most equity markets up for the month.
  • Global shares were up 1.1% and 2.3% in hedged and unhedged terms, respectively.
  • Domestically, Australian shares outperformed international markets this month with 2.9% performance in June.
  • Australian health care stocks performed well with Resmed (ASX: RMD) a standout as it saw both profit expansion and strong growth from its portfolio of software offerings that are making its sleep apnoea solutions stickier with patients (and promoting better health practices).
  • The Australian dollar (AUD) fell against major currencies following another cash rate cut by the RBA. This coupled with a tougher than expected US rate outlook (markets have been anticipating more rate cuts there) saw the AUD fall.
  • Fixed income and bond substitutes such as listed property rose in July both domestically and globally. Unhedged assets outperformed hedged equivalents in line with the depreciation of the AUD.
  • International fixed income continued to rise on the prospect of additional central bank easing and following a 0.25% rate cut by the US Federal Reserve. The prospect of falling interest rates makes existing bonds more attractive so much so that almost 26% of the Barclays Global Aggregate is now offering a negative yield. Disappointing PMI results have stoked fears of weaker global growth as well, driving bond yields lower.

With mixed economic news…

Globally

  • US-China trade tensions flared up with new US tariff threats countered by the prospect of China devaluing its currency in early August.
  • These have abated slightly with China limiting further currency depreciation and market volatility still remaining within normal levels.
  • US growth surprised at 2.1% annualised for the June quarter (consensus: 1.8%) with the economy there more reliant on still-strong consumer spending.
  • Global business surveys pointed to weaker manufacturing growth with the Markit Global Manufacturing PMI remaining in contractionary territory

Locally

  • The Reserve Bank of Australia (RBA) responded to its labour market concerns and market pricing by cutting rates by 0.25% in early July and staying on hold in early August. This confirmed market expectations that has seen bonds be bid up and yields fall.
  • Current market expectations suggest another rate cut by October following more trade tension volatility in early August.
  • The unemployment rate remained at 5.2% while employment growth disappointed. Leading business indicators such as the NAB Business Survey suggest weaker labour markets ahead.
  • The Coalition successfully passed its tax reform package in early July. This will see cash tax offsets be offered as part of FY19 tax returns and act as a stimulus to economic growth. This must be balanced on the weaker consumer outlook with the Westpac-Melbourne Institute Index of Consumer Sentiment falling in July. Underlying retail sales in the June quarter also disappointed suggesting caution.
  • We saw an uptick in sentiment towards property markets continue with some slight appreciation in Sydney and Melbourne although credit growth remains subdued.

Major asset class performance

Currency markets

Disclaimer: This report is prepared by IOOF Research for RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429.  RI Advice Group Pty Ltd is part of the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate (“IOOF”). This report is for financial adviser use only – it is not to be distributed to clients. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of RI Advice Group Pty Ltd. This report is current as at the date of issue but may be superseded by future publications. RI Advice Group Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of RI Advice Group Pty Ltd and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither RI Advice Group Pty Ltd, IOOF nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this report (including any projections, forecasts, estimates, prospects and returns and any omissions from this document).   It is important to note that investments may go up and down and past performance is not an indicator of future performance. To the maximum extent permitted by law RI Advice Group Pty Ltd, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred  by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process

webadmin No Comments

How to make working in retirement more enjoyable

How to make working in retirement more enjoyable

Pursuing a job that gives you a sense of purpose and keeping a healthy routine may make working in retirement a fulfilling experience.

Many Australians choose to work part time after retirement instead of hanging up their work clothes completely. Data from the Australian Bureau of Statistics shows that 34 per cent of full-time workers aged 45 or over intended to switch to parttime work before retiring.1 Some people choose to lessen their workload to help ease themselves into retirement. Others want a higher income than what they would receive if they left the workforce altogether. Whatever the reason, working doesn’t have to stop you from enjoying retirement. After all, you have paid your dues, and deserve some flexibility and recreation. Here are some ways to help make your semi-retirement more enjoyable.

Choose a fulfilling job

Ideally, working in retirement should not be just about earning an income. While getting a regular pay cheque is good for your retirement fund, it’s advisable to be selective about any job you accept. Doing something that’s fulfilling or gives you a sense of purpose may help make it more worthwhile.

Seek flexibility

Having a flexible work schedule or work arrangement is also important. A flexible schedule may allow you to spend more time on creative or leisure activities, while the ability to work from home on some days may help achieve a good work–life balance. You could spend more time with your family and may even benefit from having a quieter and less stressful work environment.

Stay healthy

Staying physically and mentally healthy in retirement is crucial, and maintaining an exercise routine can help. Also consider joining walking, yoga, meditation or other groups in your community to make staying healthy more fun and motivating.

Engage in activities outside work

After working full time for many years, it’s easy to end up spending more time at work than necessary. To break this habit, engage in a regular activity that will keep you busy and help you find fulfilment outside work. It can be as simple as learning a new computer skill or volunteering.

Consider your pension eligibility

Staying employed in retirement may be a great way to boost your income, but keep in mind that your earnings may have implications for your retirement benefits. For
example, working when you have become eligible for the Age Pension may reduce your pension payments.

Seek professional advice before accepting a job. Your financial adviser may help you optimise your retirement benefits while remaining employed.

1 Australian Bureau of Statistics, 2017, ‘Retirement and Retirement Intentions, Australia, July 2016 to June 2017’. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6238.0

Please note: inTouch/The Article is of a general nature only and neither represents nor is intended to give specific advice on any particular matter. This publication does not contain tax advice and it is recommended that you speak with a tax specialist about your circumstances. We strongly suggest that no person should act specifically on the basis of information contained herein but should obtain appropriate professional advice on their own personal circumstances. The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice’s position and are not to be attributed to RI Advice. They cannot be reproduced in any form without the express written consent of the author. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Materials are published by RI Advice Group Pty Ltd. ABN 23 001 774 125 AFSL 238429. The information in this publication is current as of October 2018

webadmin No Comments

How we help you invest for your future

How we help you invest for your future

How we help you invest for your future – Intergenerational Wealth. Having a plan in place to secure your financial future can be a life-changing event. But investing requires you to make big decisions today about a future that is largely uncertain.

 

Markets are challenging because they are inherently unpredictable. Some recent twists and turns include record low interest rates, intermittent volatility (market swings), and intervention by governments on a scale never seen before.

 

To help you plan for your future, we provide robust portfolio solutions to deliver outcomes based on our understanding of your needs. These investment portfolios have been built to match your appetite for investment risk in order to deliver the best outcome for your needs.

 

These portfolio solutions incorporate market insights by our experienced research team, coupled with high quality investment managers.

 

The portfolio we provide has an investment strategy anchored by quality strategic advice principles including:

1. Full understanding of your financial needs

2. Efficient risk management

3. Truly effective diversification

4. Rigorous investment selection process, and

5. Regular monitoring and reporting.

 

If you would like more information, please call us (03) 9326 1594 or visit www.igwealth.com.au

The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on it without first obtaining professional advice specific to your circumstances. RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. RI-IYF/08-14/V1

webadmin No Comments

Plan for someone else to succeed

Business Owners Insight: Navigating the side hustle minefield – Intergenerational Wealth 2019 Video

As a business owner, you spend your working life focused on succeeding.… but who will succeed you?

When it’s time for you to let go of the wheel, or if something happens and you’re forced to, who will take your place? And more importantly, how? And how well?

Business succession requires a lot of careful planning and a great deal of experience to navigate the many shoals and reefs that stand between you and a successful outcome.

Here are just a few of the main elements that typically need to be put in place to ensure the business transitions smoothly and without losing value.

You need to consider:

Contingency plans
When everything is going smoothly it’s easy not to think about what would happen if you hit a rough patch. The stark reality is that there are a great many contingencies that could stand between you and a successful transition of ownership.

Business insurances
Many of these contingencies can be covered by business insurance policies – key person insurance, buy/sell insurance, business continuance insurance, professional and public liability insurance – to name a few. But precisely what type of cover do you need? Who are the best insurers? What are the tax implications?

Transition planning
When the time comes for your succession to happen – and this may not be under your control – who’s going to steer the ship until the actual transition to the new owner is complete – especially if you’re not around to do it?

Tax Implications
This part is really complex – requiring specialist tax advice to ensure that you end up with the optimum setup for your business ownership and policy ownership. Suffice to say this is absolutely critical as tax can decimate the net proceeds that actually flow to you or your successors.

What’s required here is a professional pilot to guide you through the process – the planning and the implementation. Safely and successfully. Talk to us today on (03)9326 1594.

RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429. The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.

webadmin No Comments

Business Owners Insight: Navigating the side hustle minefield

Business Owners Insight: Navigating the side hustle minefield – Intergenerational Wealth 2019 Video

The side hustle – people running businesses “on the side”– is a global phenomenon 

In Australia it’s really taking off. NBN surveyed customers aged 16+. Of these, 41%* already have an online side hustle in play. That’s almost half of the population, and it’s forecast to keep growing It’s not just young millennials who are into it. It’s also stay at home parents, employees who are mid-career, people approaching retirement aiming to boost their nest egg and retired people too.

What’s driving the side hustle phenomenon?

• The internet has lowered the threshold – making it easier and cheaper to run your own business.
• Necessity – for many employees struggling with flat wages; and for retirees dealing with persistently low interest rates.
• Opportunity – to be your own boss, be financially independent, be wealthy.

Are you part of the side hustle phenomenon? Or do you know someone who is? Take heed: it’s a minefield out there…

ATO – If you’re caught with undisclosed income, not only will you have to pay tax on that, you may also suffer heavy penalties.

Centrelink – And if you fall foul of Centrelink not only could you lose your pension, you may have to repay any benefits wrongly received.

Employer – Employers have to be tough on side hustling and it could cost you your job.

CGT – You may have to pay Capital Gains Tax on your home which may be otherwise exempt.

Poor accounts – If you’re audited, go through a divorce or just want to sell your business, and you don’t have proper up to date accounts, it could be a nightmare.

Liability – What if an accident happens and a customer is injured or suffers a loss of some sort? Are you properly covered?

The ATO and Centrelink are cracking down on side hustles

Just because you’re a small fish doesn’t mean you’ll fly under the radar. The ATO and Centrelink have already begun to crack down on side hustlers – for the simple reason that it’s such a big part of our economy now.

*Source: NBN Survey 2017

The good news is you can navigate the side hustle minefield. All it takes is some professional help. Talk to us today on (03)9326 1594.

RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429. The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.

webadmin No Comments

Is your business a threat to your family

Is your business a threat to your family – Intergenerational Wealth 2019 Video

When you start out in business, it’s usually quite straightforward. You start small and paddle like crazy to get through the first year or two. You have few employees, if any, and not a lot of business assets to protect.

Then, as business grows, things get busier and more complex. More people, more assets, more management issues, more to lose. It’s intensely satisfying but also stressful and time-consuming. You now have an asset worth protecting, but somehow there’s always something more important to worry about.

 

What if something goes wrong?

What if you were unable to work for a long period of time… or worse, if you were no longer around? Would the business fail without you? It’s not just your business that’s under threat; your family is too. Would they have to get involved? Would they
be able to steer the ship? Would they know what to do, or would they be “all at sea?”

Would they be lumbered with a mountain of burden and liabilities? It happens. And when it does, all that great work you’ve done; all the long hours and the stress, all the strain on your family, they come to nothing. Or worse.

 

Would your business survive a divorce?

What if you – or a business partner – went through a divorce? One in six marriages do end in divorce – and let’s face it, running a business does put a lot of strain on a marriage, so it’s a common event. Would your business survive? Sadly, few do.

 

So, before any of that happens, what can you do about it?

Is there anything you can do to avoid such a catastrophe? What can you do to ensure that all your hard work, all the fruits of your labour are brought safely home? The short answer to both questions is “plenty”.

Talk to us today on (03)9326 1594 about how to get a professional, comprehensive plan in place to protect the people you love from your business – and also protect your business.

RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429. The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.

webadmin No Comments

Intergenerational Wealth Monthly Market Wrap July 2019

Intergenerational Wealth Monthly Market Wrap for July 2019

Markets rallied on rate cuts… 

  • The rally from December lows resumed in June with most equity markets up for the month.
  • Global shares were up 5.9% and 5.3% in hedged and unhedged terms, respectively.
  • Domestically, Australian shares lagged international markets this month with 3.7% performance in June.
  • Australian communication shares rallied led by strong performance in Telstra (ASX: TLS) while propertyexposed stocks such as REA Group (ASX: REA) benefitted from falling interest rates and an uptick in property market sentiment.
  • The Australian dollar (AUD) rose against major currencies as the prospect of easing monetary policy stances globally saw a bid for the Australian dollar particularly versus the Federal  reserve stance previously to keep rates on hold (which had made the US dollar relatively more attractive.
  • Fixed income and bond substitutes such as listed property rose in June both domestically and globally.
  • International fixed income was up on the prospect of additional central bank easing. The prospect of falling interest rates makes existing bonds more attractive so much so that almost 25% of the Barclays Global Aggregate is offering a negative yield. Disappointing PMI results added to fears of weaker global growth as well driving bond yields lower.

With disappointing economic news…

Globally

  • Chinese economic numbers disappointed expectations with weaker than expected industrial production and manufacturing PMI in contractionary territory.
  • Global business surveys pointed to weaker growth with the Markit Global Manufacturing PMI remaining in contractionary territory.
  • The US Federal Reserve left interest rates on hold but took a dovish tone in recent remarks and projections seeing markets price in rate cuts (with bond yields falling as a result)

Locally

  • The Reserve Bank of Australia (RBA) responded to its labour market concerns and market pricing by cutting rates by 0.25% in early June and again by 0.25% in early July. This confirmed market expectations that saw bonds be bid up and yields fall.
  • The unemployment rate remained at 5.2% although employment growth surprised on the upside. Leading business indicators such as the NAB Business Survey and job vacancies still suggest weaker labour markets ahead.
  • The Coalition successfully passed its tax reform package in early July. This will see cash tax offsets be offered as part of FY19 tax returns.
  • We saw an uptick in sentiment towards property markets continue with the correction in property prices slowing further.

Major asset class performance

Currency markets

 

Disclaimer: This information is current as at 30 June 2019 but is subject to change. This information has been prepared on behalf of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 (“RI Advice”), a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522. Whilst care has been taken in preparing this information, RI Advice and its related entities do not warrant or represent that the information is accurate. To the extent permitted by law, RI Advice and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of capital is not guaranteed. The information is not to be construed as investment or financial product advice and should not be relied upon as a substitute for professional advice. The information provided is of a general nature and has been prepared without taking into account a potential investor’s objectives, financial situation or needs. Before acting on this information, potential investors should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429 is a wholly owned subsidiary of IOOF Ltd ABN 21 087 649 625 AFS Licence No. 230522

webadmin No Comments

Salary sacrifice

Sacrificing some of your salary into superannuation can be a tax effective
way to boost your savings for retirement.

What is salary sacrifice into superannuation?

Salary sacrifice is an arrangement between you and your employer where you agree to forgo part of your before-tax salary in return for your employer making super contributions of the same value.

What are the benefits?

Salary sacrificing into super may increase the level of your retirement savings and may have the added benefit of reducing the income tax you pay. This is because the ‘sacrificed’ portion goes directly into super and is generally taxed at a maximum rate of 15%1 instead of your marginal tax rate.

Who can salary sacrifice?

Whether salary sacrifice is right for you will depend on your personal circumstances and income level. Generally speaking, if having a more comfortable retirement is your goal and your marginal income tax rate is 19% or higher, salary sacrifice may be a tax effective way to save for your retirement. If you are able to contribute more towards your retirement now, salary sacrifice may make good financial sense.

 

What are the caps relating to salary sacrifice?

While there are many factors that determine the appropriate amount of salary sacrifice for you, one of the main considerations is the concessional contributions cap.

Contribution caps limit how much you can contribute to your super before additional tax is charged.

The concessional contributions cap is $25,000 for the 2018/2019 financial year, regardless of age. If you exceed your concessional contributions cap the excess contributions are generally included in your assessable income and taxed at your marginal rate. You will receive a non-refundable tax offset equal to 15% of the excess contributions.

An interest charge also applies to account for the deferral of tax2. Concessional contributions include, but are not limited to, salary sacrifice contributions, superannuation guarantee contributions, other employer contributions and personal tax deductible contributions.

Individuals with income plus concessional contributions greater than $250,000 for the 2018/19 financial year may have certain concessional contributions taxed at 30% (up to an additional 15%). The higher rate will not apply to concessional contributions exceeding the concessional contributions cap. These are already subject to the individual’s marginal income tax rate.

You should also consider what age you intend to retire and access your super. If you are under 60 years of age, you may pay tax on withdrawing a portion of your benefit.

 

Case study – meet Carol

Carol (age 45) earns $70,000 p.a. and wants to increase her retirement savings. She has $3,275 of after-tax income (surplus cashflow) to invest. This is equivalent to $5,000 p.a. of pre-tax income she can salary sacrifice into super.

Carol decides to salary sacrifice her $5,000 p.a. and looks forward to being $60,406 better off by the time she’s 65. The net value of Carol’s super benefit increases at age 60 as any withdrawal from super will be tax free.

Is there a downside to salary sacrificing?

  • Your employer may decrease your superannuation guarantee (SG) contributions because salary sacrifice contributions are considered to be employer contributions which count for SG purposes. This could reduce some of the benefits gained by salary sacrificing.
  • Once you put money into superannuation it is ‘preserved’. Generally this means that it must remain there until you retire on or after preservation age or you reach age 65.
  • Your employer may place a limit on the amount of your salary that can be sacrificed to superannuation.
  • Salary sacrifice contributions count as a measure of income for many Government benefits and concessions.
  • The potential to exceed the concessional contributions cap, which may result in additional taxes.
  • Superannuation and tax laws do not govern when salary sacrifice contributions deducted from your salary must be paid to your superannuation fund. You will need to address this in your salary sacrifice agreement.

From 1 July 2017, wages and salary earners may wish to consider personal tax deductible super contributions as an alternative to salary sacrifice.

Need more information?
If you would like to discuss this further or how it might impact you, call your financial adviser.

 

This information is of a general nature and has been prepared without taking account of your personal needs, financial circumstances or objectives. Before acting on this information you should consider whether the information is appropriate for you having regard to your personal needs, financial circumstances or objectives. This information is current at May 2019 but may be subject to change. The case study and effective tax rate are hypothetical and are not meant to illustrate the circumstances of any particular individual. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives. This information is our interpretation of the law and does not represent tax advice. Please see your tax adviser for advice taking into account your individual circumstances. RI/SCCS/0619 RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429

webadmin No Comments

Government superannuation co-contribution

Government superannuation co-contribution

An Australian Government initiative to help you save more for your retirement

What is the Government co-contribution?

The co-contribution is a payment the Government makes to your superannuation if you are in the low to middle income thresholds, make voluntary aftertax contributions to your super and satisfy other eligibility criteria.

Generally, income thresholds are indexed each year and the matching rate is up to $0.50 for every $1 you contribute (up to a maximum of $500). This is an incentive for you to contribute to your super.

 

Who is eligible?

You are eligible for the co-contribution if, in a financial year (1 July to 30 June):

• you make personal, after-tax superannuation contributions by 30 June to a complying superannuation fund or retirement savings account (RSA)

• your total income is less than $52,697 (2018/19)1

• you receive at least 10% of your total income from eligible employment or carrying on a business, or a combination of both2

• you are under 71 years of age at the end of the financial year

• you don’t hold a temporary resident visa at any time during the financial year except where a temporary visa holder is also a New Zealand citizen or holder of a subclass 405 (Investor Retirement) or subclass 410 (Retirement) visa

• you lodge an income tax return for the relevant financial year

• your non-concessional contributions for the financial year do not exceed your nonconcessional contributions cap.

• your total superannuation balance at 30 June of the previous financial year is less than $1.6 million.

 

What is total income?

Total income is defined as assessable income plus reportable fringe benefits and reportable employer superannuation contributions (generally salary sacrifice contributions).3

How is the co-contribution calculated?

The co-contribution amount depends on how much you contributed and your total income for the financial year ending 30 June. This table shows the approximate co-contribution amounts payable in 2018/19 for people on a range of incomes:

How will the Government pay your superannuation co-contribution?

You don’t need to claim the co-contribution because, if you qualify and submit a tax return for the year ending 30 June, the Government will automatically forward the co-contribution amount to your superannuation fund. It might take a few months for the money to be deposited into your account, and in some cases you may need to inform the Australian Taxation Office which fund to send it to. You will receive a confirmation letter from the Australian Taxation Office once completed.

 

Notes:
1. If you are a self employed individual, allowable business deductions reduce your assessable income when determining whether your total income is less than $52,697 for the purposes of calculating the amount of co-contribution payable.
2. When determining the 10% test do not reduce the business and total income by the tax deductions you qualify for as a result of carrying on a business. Reportable employer super contributions count as income from eligible employment.
3. ‘Income’is generally the sum of assessable income + reportable fringe benefits + reportable employer super contributions less amounts for which the person is entitled to a tax deduction as a result of carrying on a business. Note, that a person’s share of partnership profits is included in their assessable income net of allowable partnership tax deductions.

Need more information?
If you would like to discuss this further or how it might impact you, call your financial adviser.

This information is of a general nature and has been prepared without taking account of your personal needs, financial circumstances or objectives. Before acting on this information you should consider whether the information is appropriate for you having regard to your personal needs, financial circumstances or objectives. This information is current at May 2019 but may be subject to change. The case study and effective tax rate are hypothetical and are not meant to illustrate the circumstances of any particular individual. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives. This information is our interpretation of the law and does not represent tax advice. Please see your tax adviser for advice taking into account your individual circumstances. RI/SCCS/0619 RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429

webadmin No Comments

Spouse contributions

Personal deductible contributions

Contribute to your spouse’s super to receive a tax offset and build retirement savings.

What are spouse contributions?

A spouse contribution involves making a contribution to a spouse’s super fund to build their retirement savings.

 

What are the benefits?

• You may receive a non-refundable tax offset up to $540 for contributions made on behalf of a low income earning or non-working spouse.

• Boost the super balance of a spouse who has little or no super and grow your retirement savings as a couple.

• Accumulate wealth since earnings within super may be taxed at a lower rate than investments outside super.

Who can this strategy work for?

If your spouse is earning less than $40,000 in the 2018/19 financial year, you may eligible to claim a tax offset for spouse contributions you make for them.

To claim the tax offset for spouse contributions in the 2018/19 financial year:

• Both you and your spouse must be Australian residents for tax purposes and not be living separately and apart on a permanent basis

• Your spouse’s assessable income (plus reportable fringe benefits and reportable employer super contributions) is less than $40,000 for the year

• Your spouse has not exceeded their nonconcessional contributions cap for the year

• Your spouse’s total superannuation balance is less than $1.6 million on 30 June 2018

• The contribution is made to a complying super fund.

 

How does it work?

If your spouse’s assessable income (plus reportable fringe benefits and reportable employer super contributions) totals $37,000 or less, you could be eligible to reduce your tax by up to 18% on the first $3,000 of after-tax income you contribute into their super.

This means you could be eligible get $540 back on the $3,000 you contribute.

This may not sound like much as a one-off, but over time it can grow to a substantial saving.

The tax offset decreases as your spouse’s income exceeds $37,000 and cuts off when their income is $40,000 or more. This doesn’t mean you can no longer contribute, it just means you won’t receive a tax offset.

Spouse contributions are not subject to the 15%1 contributions tax and they are tax-free on withdrawal. Contributions you make on behalf of your spouse will count towards their nonconcessional contributions cap.

The non-concessional cap for the 2018/19 financial year is $100,000 and is available to your spouse if their total superannuation balance at 30 June 2018 is less than $1.6 million. If your spouse is under 65 years of age on 1 July 2018, they may be able to bring forward up to two years’ contributions caps, depending on their total superannuation balance. This may allow your spouse to contribute up to $300,000 in one financial year.1 Spouse contributions can only be made for a spouse under the age of 70.

You should take care in not exceeding non-concessional contribution caps as penalties apply.

1. Assuming they haven’t triggered the bring forward in the previous two financial years. A contribution work test applies where contributions are made for someone 65 years or older.

 

Case study – Meet Craig

Craig is 35 years of age and currently earns $95,000 p.a. Each year he salary sacrifices to super to fully utilise his concessional contribution limit.

He is married to Angela, also 35 years of age, a stay at home mum who does not earn any income. Craig receives an annual bonus of $5,000 (net of tax).

Craig speaks to a financial adviser to assess his options. His adviser suggests he contribute the $5,000 into Angela’s super fund as a spouse contribution.

By doing this, Craig receives a $540 tax offset for the first $3,000 he contributes. Not only does he save on tax, but this also helps Craig and Angela build their retirement savings.

Need more information?
If you would like to discuss this further or how it might impact you, call your financial adviser.

This information is of a general nature and has been prepared without taking account of your personal needs, financial circumstances or objectives. Before acting on this information you should consider whether the information is appropriate for you having regard to your personal needs, financial circumstances or objectives. This information is current at May 2019 but may be subject to change. The case study and effective tax rate are hypothetical and are not meant to illustrate the circumstances of any particular individual. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives. This information is our interpretation of the law and does not represent tax advice. Please see your tax adviser for advice taking into account your individual circumstances. RI/SCCS/0619 RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429

Top