Can you imagine living mortgage-free? For many homeowners, mortgage repayments represent a large part of their salary and many years of hard work, with the end not clearly in sight.

Whether your goal is to soon be mortgage-free or to reduce your mortgage to allow you renovate, invest or live more comfortably, there are things you can do to make this a reality. And it may be simpler than you think, with a few small changes you can make now.

Make more frequent repayments

The first tip is an obvious one – to make more frequent repayments towards your mortgage so that you can pay it off sooner. What may not be apparent though is that this can be easier to do than you may think.

If you are currently making monthly repayments, consider switching to fortnightly repayments. By doing so, you can end up making the equivalent of an extra month’s repayment every year, given that there are 26 fortnights in a year. Keep in mind though that this only works if the fortnightly repayment is half that of the monthly repayment, so it depends on how your loan payments have been calculated.

There are home loan repayment calculators online, such as on www.moneysmart.gov.au, that can help you crunch the numbers.

Increase your regular repayments

Another way to get ahead on your mortgage and work towards paying it off sooner is to pay a little extra each month or fortnight on top of your minimum repayment.

While this may be more challenging with higher interest rates at the moment, but rounding up your repayments or if you are able to find a lower interest rate paying your previous repayment amount will chip away at your principal repayment and reduce the interest you pay over the life of your loan.

Make additional lump sum repayments

As with the previous tip, by making extra repayments you will reduce the interest you pay and shorten the life of your loan.

These repayments can come from obvious sources, such as your tax return or a bonus, or may come from even such small wins, such as selling an item online – however you are earning a bit of extra money. Do you have a birthday coming up and think there may be a monetary gift? Even making small extra repayments can help chip away at the loan.

Open an offset account

Opening an offset account – a savings or transaction bank account linked to your home loan – is worth considering in order to pay off your mortgage sooner. Interest is then charged on the difference between your home loan balance minus the amount you have in your linked offset account.

Once you have an offset account, you can get your salary paid into it directly so that there will always be money in the account, working to reduce the interest you pay.

You will need to check with your lender as to whether your loan is eligible for an offset account, and if so, if 100% of the balance can be offset against the home loan.

Revisit your home loan

It may also be worthwhile revisiting your home loan and considering whether it’s still fit for its purpose. Read back over your loan’s terms as a starting point to refamiliarise yourself with them.

By considering your goal of paying off your loan sooner, you might see room for improvement, or the need to refinance or switch to a different lender. You might also find that you are paying for features you aren’t using – for example, if you do have an offset account but are not using it, you still might be paying an annual fee for it.

There are also small changes you can make, such as changing the loan type, or frequency of payments.

There’s no doubt that paying off your home loan does involve work, but by keeping these things in mind, you may be mortgage-free sooner than you think. So that we can support you to get there, contact us today to ensure you make the most of great rates and have a loan that suits your financial situation.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Overview

If your relationship with your spouse ends, you should be aware of what can happen to the super entitlements of you both.

The Family Court and super-splitting laws generally enable super interests (accounts in super funds) or super payments (pensions or annuities) to be split by agreement or court order if a relationship breaks down.

There are options for splitting super depending on whether you are the member or non-member spouse of the super fund that reports this information to the ATO.

The ATO may be able to provide information to the family courts on the assets of the other party in family law proceedings where there are concerns that they have not fully disclosed.

A spouse is a person who lived with you on a genuine domestic basis in a relationship as a couple (whether of the same or different sex). This includes a de facto relationship – you do not necessarily need to be legally married.

For more detailed legal information on the law that applies to superannuation in a relationship breakdown, see Attorney-General’s Department (search for ‘Superannuation splitting’).

How super is treated

Superannuation is treated as property under the Family Law Act 1975 but differs from other types of property because it’s held in a trust.

Where the super interest can be split under superannuation law and the super fund rules, the parties can finalise their superannuation entitlements and obligations as part of their settlement, rather than waiting until the member spouse retires.

How an interest in a super fund or a super payment will be split between the member and non-member spouses may be specified by a court order or a superannuation agreement negotiated as part of a financial settlement.

Options for splitting super assets

If the fund’s rules allow it, the non-member spouse can open a new super account for themself in the same fund. If not, the fund can transfer or roll over the interest to another fund in the non-member spouse’s name.

If a non-member spouse meets a condition of release, they may be able to access their interest immediately in the form of a super benefit.

The tax-free and taxable components of the super interest or super payment is calculated immediately before the interest split or payment and divided between the split interests or payments in the same proportion.

If an income stream has started

If the member has set up a super income stream that has started to be paid before the relationship breakdown, a super agreement or court order can split the income stream.

In most cases, the income stream would be commuted into a lump sum (due to the governing rules of the fund) and the non-member spouse paid their entitlement under the agreement or court order. The fund would pay the rest to the member spouse either as either a lump sum or a reduced super income stream.

If the fund pays the non-member spouse’s entitlement as a super lump sum, they will treat it as a separate lump sum benefit for the non-member spouse. If it is paid as a super income stream, they will treat it as a separate income stream for the non-member spouse.

If the income stream is unable to be commuted, or fully commuted, to a lump sum due to the fund’s governing rules, both spouses will receive an income stream. The split will result in two regular payments from the same income stream – one to the member spouse and one to the non-member spouse. 

Transfer balance cap consequences of splitting super

Splitting an income stream can also have transfer balance cap consequences for both the member and non-member spouses. You may need to notify us of a pension split to manage your transfer balance account.

If the member spouse has started to receive a super income stream before the relationship breakdown, a superannuation split can result in the non-member spouse receiving a lump sum amount or a percentage of member spouse’s super income stream benefits.

Most income streams are in the retirement phase and will count towards the individual’s transfer balance cap. Splitting a retirement phase super income stream can have transfer balance cap consequences for both the member and non-member spouse. To manage your transfer balance account, you may notify the ATO in writing on a Transfer balance event notification form. This split affects the transfer balance account for both spouses.

If the payment split is achieved by the member spouse fully or partially commuting the income stream to pay the non-member spouse a lump sum amount, a debit will arise in the member’s transfer balance account, which their fund will report to us. If the non-member spouse chooses to use that lump sum amount to start a super income stream, a transfer balance credit will arise in the non-member’s transfer balance account, which their fund will report to us.

Tax consequences of splitting super

If the non-member spouse creates a new super interest in the member spouse’s fund, any super benefits subsequently taken by the non-member spouse from the new super interest are taxed according to the current rules for member benefits.

The tax consequences of splitting super on a relationship breakdown are:

• super lump sum and income stream payments are taxed to the two parties separately

• the proportion of the taxable and tax-free components in the member spouse’s existing super interest is applied equally to the amount retained by the member spouse and the amount transferred the non-member spouse

• your total super balance is affected by the amount you received (or lost) from the split

  • for the non-member spouse, this may affect your ability to contribute to super in the future

  • for the member spouse, this may bring you under thresholds, allowing you to make further contributions again.

Self-managed super funds

The same options for splitting super apply to members of self-managed super funds (SMSFs). However SMSF trustees (who are also typically fund members) are also responsible for ensuring the SMSF complies with a superannuation agreement or court order, subject to a member’s directions on what fund their interest is to be rolled over to.

Super splitting and relationship breakdown may mean you need to restructure or wind up your SMSF. The option of continued membership of the SMSF after a relationship breakdown will depend on the SMSF’s trust deed.

Trustees must also ensure the SMSF continues to meet all its legal and reporting obligations while giving effect to a super splitting order or agreement. This includes meeting requirements to implement super splitting imposed on trustees under the Superannuation Industry (Supervision) Act 1993 and its Regulations.

As trustee, you have control over and responsibility for your fund’s investment decisions. You also must manage the fund’s legal responsibilities and always act in the best interests of all members.

Trustees can acquire assets from a related party of a SMSF because of a relationship breakdown

The usual prohibition on acquiring assets from a related party do not apply where the acquisition occurs as a result of the relationship breakdown of a member of the fund.

Visibility of super information for family law proceedings

From 1 April 2022, individuals in current property settlement proceedings can request information from the ATO through the family law courts on their current or former spouse’s super interests. The ATO will disclose this information to the court, which will then provide it to all parties.

This process often results in faster and fairer property settlements.

How to request your spouse’s super information

Step 1: Check you’re eligible to apply

To be eligible to apply, you must be a party to a current permitted family law proceeding in either the Federal Circuit and Family Court of Australia or Family Court of Western Australia.

Step 2: Submit super information request form to court

You or your legal representative will need to submit a ‘Super information request form’ to the respective court – not directly to the ATO.

Check the court website for how to access and complete the form. It must be completed electronically and include the following information on your current or former spouse:

• full name including former names

• any known addresses

• date of birth

• their phone number and/or email address, if known.

The court will verify the ongoing permitted family law proceedings between the parties before submitting the request to us. We will respond, providing the court with any information we have within 5 business days of receiving the request.

Step 3: Court will provide available information

The court will provide the super information to those involved in the family law proceeding and/or their legal representatives. This may be distributed electronically. Please check the court’s website for information on how any response will be provided.

The 3 possible outcomes are:

• Individual located and super found

• Individual located and no super found

• Individual unable to be located.

If we can’t locate the individual, you may submit a new request if you have further identifying information that can assist us.

If you don’t have any further identifying information and we have been unable to locate the individual, you may want to consider other legal options available to you.

If we have located super information of a member of an APRA fund or SMSF or someone with ATO-held super we will provide the following:

• super fund name, ABN and unique superannuation identifier

• amount and date of last reported balance

• account phase (whether you are still contributing to super, receiving benefits from your super, or both).

Where the information is blank or listed as ‘not yet reported’, we do not have this information.

We will provide the latest balance of ATO-held super. If the balance shows as zero, there may still be super in the account as super funds are only required to report balances annually. You will need to verify the latest balance with the super fund.

A super fund account may be in accumulation or retirement phase or in some cases both. If we don’t hold account phase information, this can be obtained from the super fund together with latest balance information (see next step).

The ATO information that is provided to the courts is subject to change and may not be up to date. It is unlikely to be sufficient evidence for court proceedings, and you should seek independent legal advice on the information.

A disclosure notice is included in each letter advising that the super information it contains should only be for the purposes of a permitted family law proceeding. Making a record of or disclosing this information may be an offence unless it is for the purpose of the relevant proceedings.

Step 4: Obtain updated information from the super fund

The super information provided by us may not reflect an up-to-date account balance and should not be solely relied on. The latest balance information can be obtained from the super fund directly by completing a Form 6 Declaration in the Superannuation Information Kit for your relevant court:

• Federal Circuit and Family Court of Australia Superannuation Information Kit

• Family Court of Western Australia Superannuation Information Kit (PDF,151KB)This link will download a file.

In some circumstances, such as with public sector defined benefit funds, special rules apply to determine the value of the super interest for family law purposes. In these, the fund will not necessarily give the value for family law purposes in the Form 6 declaration. Instead the fund will include all the information needed for the individual to obtain that value from a lawyer or actuary.

The super information is disclosed for the purposes of property settlement proceedings and should only be disclosed to the parties and their respective legal representatives for the purposes of the relevant proceedings. Parties should be aware that making a record of, or on-disclosing, that superannuation information by a person may be an offence unless it is for the purpose of the relevant proceedings.

If your marriage or relationship breaks down and you need information about your super, contact us.

Source: ato.gov.au August 2023
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/superannuation-and-relationship-breakdown.

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Prime Minister Anthony Albanese has announced proposed changes to address ongoing cost of living pressures with all 13.6 million Australian taxpayers receiving a tax cut from 1 July 2024, compared to the tax they paid in 2023-24.ⁱ

Now is the time to assess what it means to your hip pocket and what implications it may have for end of financial year planning as a result of the new rules, due from 1 July 2024.

The Federal Government has recently announced changes to the third stage of a series of tax reforms introduced by the previous Coalition government almost six years ago which were designed to deliver tax cuts to most, simplify the tax system and protect middle income earners from tax bracket creep.

The proposed changes

The new rules will see the current lowest tax rate reduced from 19 per cent to 16 per cent and the 32.5 per cent marginal tax rate reduced to 30 per cent for individuals earning between $45,001 and $135,000.

The current 37 per cent marginal tax rate will be retained for those earning between $135,001 and $190,000, while the existing 45 per cent rate will now apply to income earners with taxable incomes exceeding $190,000.

In addition, the low-income threshold for Medicare levy purposes will be increased for the current financial year (2023-24).

A single taxpayer with a taxable income of $190,000 paid $59,967 tax in 2023-24. Under the revised rules, they will now pay $55,438 tax, a tax cut of $4,529. While still a reduction in tax paid, this compares with the $7,575 tax cut received if the original Stage 3 tax cuts had proceeded.

On the other hand, low-income earners will receive a bigger tax cut under the revised rules.

A single taxpayer with a taxable income of $40,000 who paid $4,367 in tax in 2023‑24, would have received no benefit from the original Stage 3 tax plan, but will now receive a tax cut of $654 under the revised rules.

Implications for investment strategies

For high-income earners, the key take-away from the government’s new changes to the tax rules is you will now receive a lower amount of after-tax income than you may have been expecting from 1 July 2024.

This reduction makes it sensible to revisit any investment strategies you had planned to take advantage from your larger tax cut to ensure they still stack up.

For example, the smaller tax cut for some may impact the effectiveness of property investment.

Investment strategies such as negative gearing into property or shares, however, may become more attractive. Particularly for investors close to the new tax thresholds and looking for opportunities to avoid moving onto a higher tax rate.

Timing expenditure and contributions

Investors considering repairs or maintenance for an existing investment property should revisit when these activities are undertaken. Depending on your circumstances, this expenditure may be more suitable in the current financial year given the difference in tax rates starting 1 July 2024.

Selling an asset liable for CGT also needs to be reviewed to determine the most appropriate financial year for the best tax outcome. 

Other investment strategies that may need to be revisited include those involving making contributions into your super account.

If you are considering bringing forward tax-deductible personal super contributions, making carry-forward concessional contributions, or salary sacrificing additional amounts before 30 June, you should seek advice to ensure the timing of your strategy still makes sense.

If you would like help with reviewing your investment strategies or superannuation contributions in light of the new rules, contact us today.

i https://treasury.gov.au/sites/default/files/2024-01/tax-cuts-government-fact-sheet.pdf

In just 15 short years, Airbnb has transformed from a platform helping homeowners earn cash from their spare rooms to a business and property investment strategy.

There are between 100,000 and 350,000 short-term rental properties across Australia, with homes making up approximately 85% of those listings according to various portals.ⁱ

While it might seem like a no-brainer investment decision — making thousands of dollars a week versus simply hundreds, the reality isn’t quite that simple.

Although taking the short-term route can be lucrative, savvy investors need to crunch the numbers to determine whether the figures add up. Just like any investment, there are tax implications with short-term rentals, as well as other possible hurdles including strata by-laws, council restrictions, heavy competition and seasonal impacts.

So, here are some tips to help work out the best property path.

Why are you investing in property?

By understanding your investment strategy, you can plan for the future of your asset. If cash flow is important, you’ll want a property that turns a profit each week (also known as positive gearing). This gain is made after you’ve paid all the holding expenses, but keep in mind a short-term rental attracts additional costs.

Alternatively, if your plan is purely to realise capital gain in the long run, and you’re able to absorb potential losses (also known as negative gearing), ensure you are aware of your out-of-pocket expenses each financial year to know where you stand. While you’ll get a tax break for these outgoings, will the short-term gain be worth the long-term pain?

Taking the short-term path

A quality property in a popular holiday destination can earn a homeowner hundreds, if not thousands — of dollars a night. This can be an incredible income if managed well and might also mean you have a vacation home, or retirement pad, that pays for itself.

Real estate in some sought after holiday locations has also made great capital gains over the last decade, so the strategy could prove to be fruitful for investors willing to play the long game.

Choosing the long-term option

Quality long-term rentals provide financial stability for landlords who don’t want to ride the wave of seasonal markets. A great home in an established neighbourhood with a low rental vacancy rate can be a “set and forget” investment that gives investors peace of mind and a passive income for years.

The truth about short-term letting

Putting your property on Airbnb, Vrbo or Stayz can be advantageous for property investors. According to Airbtics, a short-term rental analytics site, the average annual revenue for Australian hosts on Airbnb is $48,760, which is a healthy passive income, but it can be a volatile market space with hidden costs.ⁱⁱ

Here are some facts potential short-term landlords need to understand before taking the plunge; 

Consider booking frequency – The average Australian occupancy on Airbnb is just 53%, which means your investment could be sitting empty for almost half the year, with some markets already saturated with short-term rentals.ⁱⁱⁱ

Councils are changing heart – Some local governments are realising just how many homes are vacant during a national housing crisis and are starting to restrict short-term rentals, with some limiting letting to just 90 or 180 days in a calendar year.

Stratas aren’t always supportive – Owner’s corporations can refuse short-term rentals altogether so it pays to determine whether it will be allowed in your building.

Holiday hotspots can cool down – Depending on where your short-term rental is located, demand for it could ebb and flow considerably. You’ll need to be sure the months it’s earning will cover those down days.

Beware of hidden costs and taxes – Holiday lets incur additional costs which aren’t usually associated with long-term rentals, including; increased maintenance through greater wear and tear, cleaning, furnishings, higher management costs and insurances. There are also tax implications such as annual income tax and capital gains upon sale to consider.

The best investment strategy will depend on your financial situation, your goals and property location. If you’d like to discuss funding, don’t hesitate to give us a call.

i https://www.airdna.co/resources/industry-report
ii, iii https://airbtics.com/most-profitable-airbnb-locations-australia/

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

When saving for your first (or next) home, it’s common to focus on building up the deposit and servicing your upcoming home loan. However, there are other upfront costs when buying a home that you should be aware of from the get-go.

With it being particularly challenging these days to get your foot onto the property ladder due to higher interest rates, it’s important to factor in these upfront costs so you’re not under too much financial stress. Here is what to keep in mind.

Lenders Mortgage Insurance (LMI)

As the name suggests, Lenders Mortgage Insurance is insurance for your lender in case you are unable to pay back the loan.

LMI will generally need to be paid if you have borrowed more than 80% of the value of the property. If you’re buying in a location that is deemed to be at risk of a large fall in prices, you may also have to pay LMI, even if you haven’t borrowed as much. We can assist you with this but there are also LMI calculators online so you can work out how much you will need to have set aside.

Stamp duty

Stamp duty is a state government tax which varies from state to state, with the amount you need to pay varying as well (depending on the property’s value).

Stamp duty generally needs to be paid at settlement. There are online stamp duty calculators to help you determine how much you’ll need to pay, and the amount is often shown on online property listings as well.

Mortgage fees

There are fees associated with your mortgage, and these depend on which lender you are with and the terms and conditions of your loan.

You will need to pay an upfront fee, and there may also be ongoing fees and an exit fee if you want to refinance. As these fees vary from lender to lender, it is important to check your terms so you know what you will need to pay.

Property inspections

An initial property inspection may be necessary so that your lender can make an independent valuation of your property. This inspection will often need to be paid for by you, with the cost depending on the property’s location and size.

Regional properties are cheaper to inspect than metropolitan ones, as are smaller properties. Like most of the upfront costs, these also vary from state to state. As an example, a one-bedroom apartment in Perth can cost around $230 for an inspection, while the same sized property in Melbourne can cost around $290.ⁱ

Additionally, a building and pest inspection is worth doing as it can save you money in the long run. Even new or well-maintained properties can already have pest issues (think rats, termites or cockroaches), so it’s better to know what you are buying into.

Conveyancing/solicitor fees

You will also need to factor in conveyancing and legal fees related to the sale of the property. These vary depending on the property, location and how complex the sale is, but for example, in Victoria they can range from $500 to $1,800.ⁱⁱ

While you can act as your own conveyancer, it’s worth thinking about the pros and cons of this from a financial standpoint. By trying to save money here, it could add complexity and hassle if you aren’t well-versed in property sales and could end up costing you more in the long run.

Home and contents insurance

Don’t forget about home and contents insurance to cover the cost of repairing or replacing your home and its items should something go wrong. Your lender will generally also want to see a copy of your policy.

Additional fees and bills

Looking forward don’t forget to budget for future costs related to any renovations, as well as body corporate fees and council and utility bills.

Thinking beyond just the sale price of the property will help you plan for the additional upfront costs and prevent any unwelcome surprises. Get in touch today for further advice and to start the process of getting loan pre-approval.

i https://www.rapidbuildinginspections.com.au/building-inspection-costs
ii https://www.oneflare.com.au/costs/conveyancing

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Most Australians want to share their wealth with the next generation but are unsure how to transfer that wealth and need help to plan for an effective transfer. Financial advisers are well-placed to meet those needs, according to the findings of a new report from Fidelity International and independent research firm, MYMAVINS.

To help financial advisers develop investment approaches that meet the needs of retirees, Fidelity International has produced a report, “Rainbow’s End.” The report leverages a survey of Australian consumers undertaken for Fidelity International by MYMAVINS which investigates consumers’ attitudes towards the transfer of wealth to younger generations. 

Download report

“We have heard from 1,500 Australian voices, representing Gen Y, Gen X, Baby Boomers and the Silent Generation; a cross-section of everyday Australians. We have explored their expectations and discovered that while most people aspire to leave a financial legacy, far fewer have made reliable plans to do so,” said Simon Glazier, Head of Wholesale Sales at Fidelity International. 

“For many older clients, planning their legacy is a primary focus, and service offerings will need to evolve from retirement planning to estate planning to ensure their wishes are fulfilled. As it is now, a lack of financial confidence, uncertainty around retirement spending requirements and how to best organise legacy plans can become barriers to effective decision making,” Mr Glazier says.

According to modelling from the Productivity Commission, Australia is expecting to see $3.5 trillion pass from the older generations to younger generations this decade, a phenomenon known as ‘The Great Wealth Transfer’. The Rainbow’s End report reveals that while nearly 2 in 3 intending to leave a bequest have a will, less than 1 in 10 have a comprehensive estate plan to transfer their wealth and fulfil their legacy wishes.

“As many as 1 in 2 are only somewhat or not confident at all they know how to ensure their financial legacy goals are fulfilled. So while 1 in 2 Australians wants to leave a lasting financial legacy, they don’t really know how to make it happen. Many people feel the superannuation system is not well designed to support their legacy wishes and this calls for expert support to navigate effectively.”

The report reveals that around 2 in 5 people prefer to share their wealth as a living legacy, compared to the 1 in 5 who prefer to just share their wealth as a bequest. Almost 3 in 5 plan to leave behind their superannuation savings to their loved ones after they pass away.

Of those with plans in place to transfer wealth to younger generations, over 3 in 4 think financial advisers should play a role in teaching the next generation in financial literacy. 

“What becomes clear is that financial advisers are in the box seat to make the most of the opportunities. There is clearly a need for professional support and financial planning can play an important role here as it can help investors determine how much wealth is needed to achieve financial legacy goals and planners can also work between family members to ensure legacies are transferred fairly and as efficiently as possible,” says Mr Glazier.

“In the traditional financial planning process, estate planning plays an important but peripheral role. Legal instruments such as wills and powers of attorney are important, but the successful transfer of a lifetime’s wealth while preserving family relationships requires more careful planning than that.” 

The report reveals an important role for financial planners to act as mediators between family members when wealth discussions are undertaken.

“Most people intending to leave a legacy emphasise the importance of open discussions and documented planning with their family, but this can be easier said than done. This suggests a role for financial planners to help provide structure and mediation for these sometimes difficult discussions on how wealth can be transferred, to whom and when,” says Mr Glazier.

Helping loved ones achieve greater financial security is the top goal for leaving a legacy across generations, but there are several other less tangible goals that are still top of mind, according to the report. Aside from providing greater financial security, the top goals for leaving a legacy include expressing gratitude for family, supporting family goals, personal fulfillment, sense of purpose and preserving family values and traditions.

Speak to us if you’d like to discuss what type of legacy you’d like to leave. 

Source:
Reproduced with permission of Fidelity Australia. This article was originally published at https://www.fidelity.com.au/insights/investment-articles/australians-need-help-on-how-to-manage-huge-wealth-transfer/

This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information. You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity Australia’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise.
© 2023. FIL Responsible Entity (Australia) Limited.

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The new year is a time when most people sit back and set some goals for the year ahead. But why not think about your goals for next year now? If you are thinking of buying a property, get a jump-start on 2024 and be ready to buy by starting the pre-approval process and doing your research now.

Prepare a budget

If you haven’t already, prepare a budget so you have a clearer understanding of your purchasing power. Calculate your monthly income, subtracting your monthly expenses and any debts – this will show you the amount that’s left over, so you have a clearer idea on what you can afford for your monthly mortgage payments.

Keeping track of what’s going into your bank account (income, payments) and what’s going out (expenses) can also identify what you can cut back on – such as forgoing the daily café coffee or cancelling some subscriptions or memberships.

While setting a budget can be a simple process, it can also be a good opportunity to get professional advice during this stage. A broker can shine a light on things you may not have thought of, as well as provide a realistic perspective on what you can afford.

Begin the pre-approval process

It is also worthwhile starting the pre-approval process, if you’re looking to buy early in the new year. Having a pre-approval shows the seller that you are serious and can give you a leg-up on the competition. Also known as conditional approval, pre-approval gives you an indication of how much you will be able to borrow, which can help you when it comes time to bid.

You will want to get your paperwork ready including your ID, payslips, bank statements in order to submit an application form.

It’s generally free to get pre-approval. But keep in mind that pre-approvals expire – they are generally valid for three to six months – so this step is for when you’re closer to being able to buy. 

Do your research 

Now is also a great time to do your research. If you know which area you’re looking to buy in, research how the area is performing (realestate.com.au/sold/ is a great resource). You can also refer to real estate institutes websites as they list data such as the top growth suburbs by median house and unit prices. As well as researching online, get out and attend some auctions, especially in the locations you’re interested in.

It’s also worth narrowing down your needs and wants for a property. Most of us need to compromise somewhat given the cost of housing, so be realistic, but also be clear on what is a must – do you need a certain number of rooms, a backyard, parking spaces, etc? Are you able to buy a fixer upper and renovate or do you need move-in-ready?

Look into what government initiatives are available to you as a buyer, such as the Regional First Home Buyers Support Scheme or the First Home Buyer Scheme. State Government websites (such as revenue.nsw.gov.au) contain helpful information on the current schemes and grants.

Planning to sell

If you have an existing property, prepare a plan for selling. You will need to give yourself time to spruce up the property if needed, style it, have photos taken and put it on the market. Again, this is a good time to research the market as well to see what similar properties in your location are selling for.  

If you didn’t buy the home of your dreams this year, try not to get discouraged, but also be realistic. As there have been significant increases in the cash rate which have flowed onto interest rates, it might be a time to re-evaluate where and what type of property you can now reasonably afford. Whatever your financial situation, we can help you start the process to prepare to buy in the future. 

Many people assume there is no tax payable on super benefits received after someone passes away, but that’s not always the case.

Whether or not tax is paid on a super death benefit depends on the beneficiary’s relationship with the deceased. Although some beneficiaries receive their money tax-free, others can find themselves paying significant amounts of tax on the funds they receive.

Dependant for tax purposes

The key point in understanding who will be required to pay tax on a super death benefit is whether or not the beneficiary is considered a death benefit dependant for tax purposes.

Although you are permitted to nominate a wide range of people as dependants under super law, the definition for tax purposes is different and narrower.

A death benefit dependant for tax purposes is limited to the deceased’s spouse, de facto, or former spouse or de facto; their child under age 18; any person with whom they had an interdependency relationship; and any other person financially dependent on them just before their death.

A common trap in this area is nominating financially independent adult children as death benefit beneficiaries, as this is permitted under super law. Under tax law, however, they are not defined as dependants for tax purposes and so are required to pay tax on the taxable component of any death benefit they receive.

Tax on lump sum death benefits

When it comes to paying a death benefit, your dependants for tax purposes are free to choose whether they want to receive your super death benefit as a lump sum or as an income stream.

If a beneficiary decides to take their benefit as a lump sum, the benefit will be free of any tax, provided they are considered a death benefit dependant under tax law.

If they are not considered a death benefit dependant for tax purposes, they must take the benefit as a lump sum. These lump sums are taxed at a maximum rate of 15 per cent plus the Medicare levy on the taxed element (which is super that has already had tax paid on it within the fund).

In addition, any untaxed elements of the taxable component in the lump sum will be taxed at a maximum rate of 30 per cent plus the Medicare levy.

If the benefit is paid to the estate, it is paid as a pre-tax lump sum and the estate is responsible for paying any necessary tax depending on the dependant status of the end-beneficiaries.

Death benefit income streams and tax

Some tax dependants prefer to take their death benefit as an income stream (or pension).

Death benefit income streams are tax-free if either the deceased or the beneficiary are aged 60 or older at the time the income stream payments are made.

Otherwise, beneficiaries will generally pay some tax on the death benefit income stream until they reach age 60, after which age the payments are tax-free.

For beneficiaries under age 60, there is no tax on the tax-free component of the death benefit income stream, but the taxable component is included in their assessable income with a 15 per cent tax offset.

Death benefits and the transfer balance cap

The transfer balance cap (TBC) rules also come into play when it comes to super death benefits.

These rules limit the amount of super savings you can transfer into the retirement or pension phase.

Tax penalties apply if amounts in excess of the beneficiary’s TBC are transferred into the retirement phase as an income stream.

The rules governing this area are very complex, so you should always seek professional advice before deciding on a death benefit nomination, as it can make a big difference in how much tax your beneficiaries will pay when they receive their death benefit payment.

If you would like more information about tax and super death benefits, call our office today.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Here are some quick ways to reduce your living costs. Having a money plan helps you stay on top of your spending and bills. There’s also free support and services to go to if you’re feeling overwhelmed.

If you’re in crisis and struggling to pay for essentials, there are services to help you with food, bills and housing. 

Easy ways to reduce living costs

Start small. Instead of trying to look at all your living costs at once, focus on one area at a time. This feels easier and gets you into the mindset to make more changes. You can do this.

For example, take note of your daily spending for a week. This can help you find quick ways to reduce your spending — at least for a while. See track your spending.

In many households, groceries and electricity bills are where rising costs bite the most. For ways to reduce these and other costs.

Smooth out your big bills

Some services, like electricity, council rates or insurance, offer ‘bill smoothing’. This is where you pay bills in smaller amounts, instead of paying the whole amount in one go.

Ask your service providers if you can pay fortnightly or monthly, to avoid the shock of a large bill.

If you get a Centrelink payment from Services Australia, you can use their free Centrepay service to do this.

For utility vouchers, rebates and tips on how to deal with different bills, see problems paying your bills and fines.

Prioritise your rent or mortgage payments

When you’re looking at payments, make your rent or mortgage a top priority.

If you’re struggling to pay your rent, see rent steps to take on the National Debt Helpline website.

Talk to your lender straight away if you’re having problems paying your mortgage. The earlier you get help, the more options you have.

Make a money plan

Take charge of where your money goes day-to-day by doing a budget. This lets you look at needs and wants, and prioritise what matters most.

Even if you can only save a little, start saving for an emergency fund. This helps you cope better with big bills, and look after you or your family when needed.

Avoid borrowing to pay off another loan, buy now pay later or credit card. Get help if you’re having trouble with money.

Get help if you need it

If you’re not sure where to start, there is free help available.

Financial counselling

Speak to us if you need any help with managing your day-to-day finances.

Emotional support

Call Beyond Blue on 1300 224 636, 24 hours a day. Or live chat 24 hours a day.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/budgeting/manage-the-cost-of-living

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Key points:

• Dr Vincent Candrawinata founded Renovatio Bioscience in 2016 following antioxidant research at the University of Newcastle

• Dr Candrawinata is among many researchers who believe that a person’s intelligence quotient, commonly referred to as IQ, can be increased — instead of simply remaining static throughout life

• As a lauded expert in the field of dietary science and wellness, Dr Candrawinata became one of the youngest PhD holders and was recognised by the Australian Government as an Individual with a Distinguished Talent in Research and Academia

According to Dr Vincent Candrawinata, a respected food scientist, clinical nutritionist and health researcher, many different factors influence your intelligence quotient or ‘IQ’ as you age, such as diet, genetics, upbringing, lifestyle and education.

The founder of Renovatio Bioscience, a former researcher, has claimed that activated saffron can potentially facilitate mental agility and stimulate brain function when trying to boost a person’s intelligence.

“Activated saffron together with activated phenolics support mental and nervous system well-being, healthy mood balance and sleep quality. Activated saffron is known for its ability to relieve symptoms of stress and mild anxiety, decrease restless sleep and promote deep sleep and reduce nervous tension,” Dr Candrawinata said.

“This supports the brain to function at optimum levels which is important when seeking to increase your IQ. We have seen the extraordinary results supplements can deliver.”

“We conducted a trial this year where we asked 20 people to take an IQ test and then consume activated saffron in the form of mental resilience chewables every day for two weeks.”

“They then undertook an IQ test after these two weeks and the group experienced an increase in their IQ test of over five points.”

A previous study found that better mechanical reasoning and memory skills during high school were associated with a decreased risk of dementia later in life.

Dr Candrawinata said that engaging in mentally stimulating tasks was essential to improving your cognitive abilities, in addition to dietary supplements.

“It is possible to increase your IQ by training your brain to work faster and more efficiently. This involves undertaking simple daily activities and improving your lifestyle,” the doctor added. 

“Like your overall fitness, IQ improves over time. So if you undertake these activities consistently, over time, your IQ will gradually improve.  If you maintain these activities, you will minimise loss of IQ.”

Dr Candrawinata listed the different ways that people can keep their minds at work to stay sharp, quick-witted and on the ball, including:

• Playing games

• Reading

• Improving visuospatial skills

• Improving executive control activities

• Maintaining a healthy lifestyle

“It is said that reading just 30 minutes a day can improve your IQ over time.” the doctor said.

“This is a pretty powerful reason to read. Reading, whether you are reading fiction or non-fiction, helps to improve your cognitive abilities and support brain development. It also improves memory, imagination and spatial skills.”

“The majority of IQ tests assess your visuospatial skills in some way. This measures your ability to comprehend and envision the physical representation of objects in your mind. In simple terms, it means you can determine the space and location of objects.”

“Hobbies such as photography, jigsaw puzzles, memory games, geography, origami, chess and drawing are also good for developing your visuospatial skills.”

“Games that push you to think such as word games, knowledge games and activities that require you to strategise and process activities, organise and plan are also very good for your brain.”

By combining each of these in your day-to-day activities, you can help keep your mind active later in life.

Source: This article was originally published on https://www.agedcareguide.com.au/talking-aged-care/how-to-increase-your-iq-for-later-in-life.
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.