Navigating the aged care system can be complex, so it’s best to plan ahead. 

Plan ahead for aged care

Our ability to live independently can be suddenly compromised, especially as we get older. You never know when an accident or sudden illness could mean you or your partner require assistance to continue living at home, or need to move into residential aged care.

As part of your retirement planning, it’s good to know what aged care services are available and how to access them. That way you’ll be better prepared and can stay in control of your future needs.

Your aged care assessment

Australia’s aged care system is designed to support the elderly, either in their own home or a residential aged care facility. Services are available for either the long term or short term, depending on your needs.

The first step is to be assessed by the relevant state service. Your assessment will determine the level of care you require either at home or in residential aged care, and if you’re eligible for any government subsidy.

Visit the government’s My Aged Care website for details on assessments in your state.

Once you’ve been assessed, you’ll be allocated a care package level. Your assessor can help you develop a support plan that suits your needs and also tell you about the service providers in your area. My Aged Care has a list of approved service providers.

Your financial assessment

When applying for aged care, you fill out the Combined Income and Assets Assessment form so that the Department of Health Services (DHS) can work out if you’re eligible for government subsidised home or residential care. If you are, they’ll calculate your fees and charges.

If you wish to access home care packages and you’re eligible, you’ll receive a letter of approval from My Aged Care that sets out the level of home care package and the fee you’re approved for.

You’ll also be placed in a national priority queue for home care packages. There may be a waiting period between your approval and the time you’re assigned a home care package.

Home care

Home care packages provide support to help you stay in your home. Services can include helping you get washed and dressed and help with cleaning, transportation and cooking. You can also have modifications made to your home such as ramps and handrails fitted.

If you have a health setback and want some short-term support to get back on your feet, or your normal carer needs a break, you can also access these services.

Residential aged care

Once approved for residential care, you’ll need to choose some residences and apply for a place. You need to consider location, fees and the type of accommodation and facilities when deciding. It can take time so it’s often good to create a shortlist well before you need access to their services.

Aged care residences charge fees to cover accommodation, daily care and living expenses. These include accommodation fee, basic daily fees and a means-tested fee to cover your care. There will also be additional user-pay fees for extra services such as payTV, a larger room, a glass of wine with your meal, additional leisure activities and extra therapy.

If you’re eligible, some of these fees may be subsidised by the government. There are also a range of strategies for paying them, including refundable upfront deposits, regular payments or a combination of both.

Aged care advice

Starting to use aged care assistance is often an emotional and confusing time. The number of providers and payment options can be overwhelming so it’s recommended to seek advice about the best strategy for you.

The government’s My Aged Care website has links to different sources of information about managing your finances and accessing aged care services. We also have some useful information on coping financially with illness.

You may also want to talk to us on Phone: 07 5641 4134 about your retirement income and assets. They can provide advice and guidance to help you maximise your entitlements and minimise your care costs before you need to apply for an assessment.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://business.nab.com.au/

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

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.

When purchasing an investment property, there are a number of factors that could increase or reduce your potential return on investment. In this case it’s not just location, location, location. 

When considering a property for investment purposes, the most important question to ask is ‘will be attractive to tenants?’. But how do you know what will appeal to someone you’ve never met? Settling on a handful of locations is a good start. “Young families and couples are the ones that drive capital growth and so a location that is within a reasonable distance to schools, entertainment, transport, and an employment hub is one to look out for,” says an MFAA Mortgage and Finance Broker. Other ideal factors are a low vacancy rate and relatively high rental yield.

Although location plays a major role, it’s by no means the only defining factor. “There is a mistruth a lot of people subscribe to when selling investment properties, which is to disregard the quality because you don’t have to live in it,” advises another broker. “You have to buy a homeowner quality property, because someone has to live in it,” the broker says. “And when buying an investment property, you have to have an exit strategy, which will generally involve selling to homeowners as well as investors.”

To get the most value, you need to think about the demographic of renters who are likely to be living in the area. “You have to match the property with the area,” says the broker. “If you put a good quality, decent sized, one bedroom apartment in the inner city, it would be a great investment, however if you put it 30km out, it wouldn’t garner as much interest.”

When investing in any kind of property, be wary of any danger signs. One of the biggest mistakes Australians make is not knowing what their cash flow is. “Bad cash flow is worse than paying too much for the property,” advises the broker. “It is vital to know how much your chosen property is going to cost after tax, every week after you settle. There’s no point in buying a top quality property if it’s going to send you broke.”

When looking to purchase an investment property, ensure the expert you are dealing with is actually an expert. “Everyone has an opinion on property,” says the broker. Your broker will be able to connect you with trusted professionals in their own network. “You always have to be wary of somebody who tells you that their way is the only way to invest,” advises the MFAA broker. “Only buying for cash flow is flawed, only buying for capital growth is flawed too. You have to buy property that’s going to work for you.”

As well as speaking to a real estate expert, you can speak to us on Phone: 07 5641 4134 to get an understanding on your financial position.

Source: MFAA

Reproduced with the permission of the Mortgage and Finance Association of Australia (MFAA)

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.  Past performance is not a reliable guide to future returns.

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.

With the end of financial year approaching, it’s a good time to review your personal balance sheet. If it’s not as healthy as you would like, perhaps it’s time to do a little budget repair of your own.

Just as governments need to set policy objectives and budget for future spending commitments, households need to feel confident they can meet their current and future financial commitments.

So no matter how much you earn, it’s always a good strategy to check that your spending doesn’t exceed your income. It’s also important to think about how much you need to save today to pay for all the things you want to achieve in the future.

Before we look more closely at your personal finances, it’s worth understanding how you may be affected by the big picture.

Cost of living pressures

The big economic issues for everyone right now, from the federal government and the Reserve Bank to businesses and households, are inflation and interest rates.

While economists talk about inflation, individuals experience this as an increase in their cost of living. Inflation increased by 3.5% in the year to December, with the price of fuel and the cost of buying a new home the biggest contributors. Prices of food, transport, health and insurance are also rising.ⁱ

Rising prices also put pressure on the Reserve Bank to lift interest rates to dampen demand. Lenders respond by increasing interest rates on mortgages and other loan products. While the Reserve Bank recently lifted rates, homeowners and investors need to be prepared for the increase in mortgage repayments.

While higher prices are not a major concern if your income is growing faster than inflation, annual wages growth is lagging inflation at just 2.3 per cent.ⁱⁱ In other words, unless you’re lucky enough to secure a big wage rise your finances could be going backwards in real (after inflation) terms.

Given these challenges, what can you do to get ahead?

Start at the beginning

Money may not buy you happiness, but having enough to afford the life you want to lead certainly helps. So how much is enough?

A recent survey by Finder found 25 per cent of Australians wouldn’t feel affluent unless they earned at least $500,000 a year.ⁱⁱⁱ Not only is this almost nine times the average income of around $60,000, many of today’s rich listers started out with far less.^iv

There’s nothing wrong with dreaming big but you are more likely to achieve your goals by being realistic and to start with, making the most of what you already have.

Before you can build wealth, you need to understand what’s coming in, where your money’s going and where you could make savings, by following these four steps:

1. Add up your annual income from wages, investments and government benefits.

2. Add up your spending on essential living expenses including mortgage or rent, groceries, utilities, transport and insurances; and discretionary spending on the fun stuff like clothes, dining out, entertainment and holidays. If you don’t have receipts, try tracking your spending over three months or so using one of the many free online budgeting apps.

3. Subtract your total spending in step 2 from your total income in step 1. If you spend more than you earn or barely break even, then look for areas where you could save. Things like cutting back on takeaways, impulse spending online, and streaming services you rarely use. Ring your mortgage lender to negotiate a better interest rate and when insurances come up for renewal, shop around.

4. Draw up a budget to track your spending and put a savings plan in place to achieve your goals. Even a simple plan will help with discipline and make regular saving automatic.

Putting it all together

Some of the most popular budget strategies take a bucket approach, with separate money buckets for needs, wants and savings.^v Most aim to set aside around 20 per cent of your income as savings and paying yourself first by setting up regular debits to a savings account. If you have debts or don’t have an emergency fund, then these should be attended to before you direct savings to investments or other goals.

To be successful, a budget needs to be one you can stick to, tailored to your personal goals and financial situation. If you would like us to help plan your personal budget strategy, get in touch on Phone: 07 5641 4134.

i https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release

ii https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release

iii https://www.finder.com.au/average-aussie-needs-330000-to-feel-rich

iv https://www.abc.net.au/news/2021-06-20/are-you-middle-income-see-how-you-compare/100226488

v https://www.finder.com.au/best-budgeting-strategies

Australians are leaving capital cities in droves in a phenomenon being referred to as ‘The Great Relocation’. However, there’s a lot to consider beyond the obvious appeal of waking up to the laughter of kookaburras or enjoying a long walk on the beach.

The terms ‘sea change’ or ‘tree change’ have been around for a while to describe those who decide to make a move from the city or suburbs to a more rural lifestyle.

The pandemic has been responsible for heightening this trend due to frustration with lockdowns and people spending more time at home and in their local area than usual, leading them to reassess their lifestyles and where they would prefer to live. Of course, greater work flexibility as measures were put in place to manage the pandemic, have also been a driving force in the exodus to the regions.

Moving to the regions

There is a long-held belief that the sea change/tree change phenomenon is largely confined to baby boomers or those at or nearing retirement, which is incorrect – as early as the mid-2000s, nearly 80% of people changing from city to regional areas have been under the age of 50.ⁱ

Geographically Sydney and Melbourne recorded large net losses of people through 2020 and early 2021, regions within an hour of those major centres recorded the strongest growth.ⁱⁱ However, statistics show that the population grew in all major regional cities, reversing a 20-year decline in regional Australia’s share of national population growth.ⁱⁱⁱ

The attraction of lifestyle

The reasons for many Australians turning their backs on the big smoke are predominately lifestyle. Those making the break are attracted by the lure of a slower, less hectic life, proximity to the great outdoors, a sense of community made possible by life in a smaller town and last but by no means least, cheaper property prices than those in the big cities.

Things to consider

If the idea of a move to the sea or a rural town is increasingly attractive, it’s important to also consider the potential challenges you may face. For those leaving friends and family behind, there is often a sense of isolation in being far from those you care about, and it can take some time to make new friends and adjust to life in a new community.

It’s also important to consider how the infrastructure in rural areas differs from where you are moving from. If you have children, will you have access to good schools close by? If you are looking to retire, will you have access to the necessary medical facilities as you age? It may also be a good idea to consider local economic forces and job opportunities.

Don’t be hasty!

A knee-jerk decision brought on by a holiday stay in the area under idyllic summer conditions, can be fraught with danger. It’s a good idea to rent in the area or visit regularly over a longer period of time to gauge whether it will be the right fit. If you get it wrong, it can be a stressful and expensive exercise.

According to analyst Mark McCrindle, a sea change or tree change doesn’t work out for one in five people who attempt it, which reinforces the need to do your homework.^iv “People make a decision because they think it’s going to work for them financially or it’s going to be less pressure, less commute time and a nicer lifestyle,” McCrindle says. “But sometimes they find some of these regional areas are too small or too quiet.”

The main thing is to not be swept away by emotion, think about what you value and what you are looking for, and weigh up the pros and cons so that if you make the move it will result in the positive change you are seeking.

If you’re considering a sea-change or tree-change and would like to discuss your finance options, call us on Phone: 07 5641 4134.

i, ii, iv https://www.corelogic.com.au/resources/tree-change-sea-change-what-you-need-know-generate-leads

iii https://www.abc.net.au/news/2021-11-18/migration-to-regional-australia-at-record-levels/100628278

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.

This time of year, people’s thoughts start turning to their tax return, but it can also be a good time to set things up so you don’t pay more tax than required next financial year.

Simply talking to your employer about setting up an arrangement to “sacrifice” some of your pre-tax salary could potentially lower your tax bill – and boost your retirement nest-egg.

Reducing your tax bill

Although it can sound complicated, a salary sacrifice arrangement simply involves coming to an agreement with your employer to pay for everyday items or services you would normally pay for out of your after-tax salary directly from your before-tax salary. This might include things like childcare, health insurance or super. The benefit is that this reduces the level of income the ATO uses to calculate your tax bill.

Salary sacrifice arrangements deliver the biggest benefit to people on mid to higher incomes as it has the potential to reduce their tax-assessable income the most, but anybody can use them.

If you set up a salary sacrifice arrangement with your employer, it’s important to understand that while your taxable income is lower, the benefits are still listed on your annual payment summary. For some people, this reduces the tax offsets, child support payments or other government benefits they receive, limiting the value of salary sacrifice.

Salary sacrificing options

The items or services you can pay for using salary sacrifice depend on your employer.

Some employers are prepared to let their employee’s salary sacrifice for expenses such as cars, health insurance, school fees and home phones. Others are not prepared to do this, as they may end up paying Fringe Benefits Tax (FBT) on the benefits you receive.

Employers are usually more willing to allow you to package FBT-exempt work-related items such as portable electronic devices, computer software, protective clothing or tools of trade, as these generally don’t result in FBT bills.

Boost your super account

One of the most common forms of salary sacrifice is redirecting some of your pre-tax salary into your super fund. Most companies are willing to provide this option as it not only helps you build your retirement savings, but it can also earn them a tax deduction.

When you salary sacrifice into your super, your contributions are taxed at 15 per cent when your super fund receives the money. For most people, this is a lower tax rate than if they received the money as normal income.

A further bonus with salary sacrificing into super is you only pay 15 per cent on any investment earnings you receive inside super, instead of your marginal tax rate for investments held outside super.

Find out what’s on offer

If you’re interested in a salary sacrifice arrangement, it’s a good idea to discuss the subject with your employer or HR team to find out the company’s policy.

It’s also a good idea to talk to us before signing a salary sacrifice agreement, as the value of these arrangements needs to be weighed up carefully against your reduced take-home pay and the potential loss of government benefits.

These arrangements should be put in writing before you earn the income you are sacrificing, so you need to talk to your employer prior to the start of the new financial year if your salary will change from 1 July.

If you would like help working out if a salary sacrifice arrangement makes sense for you, call our office today on Phone: 07 5641 4134.

Tips for employers

Allowing your employees to salary sacrifice can help them reduce their tax bill and it boosts engagement with your business. Another overlooked benefit is if your employee salary sacrifices into their super, you can claim a tax deduction for their contributions, as they are considered employer contributions.

To do this, you need to ensure you create an ‘effective’ salary sacrifice arrangement meeting the ATO’s guidelines. Otherwise, the benefits your employee receives are considered part of their taxable income.

Effective arrangements require a clear agreement stating the terms and conditions and they must be documented in writing to avoid any uncertainty or future disputes.

Sacrifice arrangements can only apply to wage and salary payments for work yet to be performed, not past earnings. Salary and wages, leave entitlements, bonuses or commissions accrued prior to the arrangement cannot be used.

A simple way to avoid problems is to document your employees’ salary sacrifice arrangements before the start of a new financial year – or whenever there is a change to their salary – so it covers future earnings.

If your employee chooses to sacrifice into their super, you must pay it into a complying super fund or it will be considered a fringe benefit. Generally, there is no limit on the amount an employee can salary sacrifice into super, but they must not exceed their annual concessional contribution cap or they will pay additional tax.

You need to keep detailed records of these arrangements for five years and list all sacrifice amounts on the employee’s annual payment summary.

Note: Calculations use 2021-22 income tax rates and the LITO and LMITO offsets, but do not include 2% Medicare Levy.

If you’d like to find out more about salary sacrificing contact us today on Phone: 07 5641 4134.

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.

It’s tempting to put price above everything else when choosing insurance for your property. However, whether you’ve just taken out a new mortgage or are hunting for a better deal, making sure you have enough of the right sort of cover is just as important. Here are the main insurance points to consider when comparing home and contents insurance policies.

Covering your home

Home insurance covers the replacement of your home building and permanent fixtures like plumbing and built-in cabinetry. The most common type is ‘sum-insured’, which will cover an amount that is specified by you when you take out the policy, should you need to repair or rebuild. Some insurers offer ‘total replacement’ cover, which covers the cost to repair or rebuild and replace anything destroyed by the event to the same standard but this is usually much more expensive and so not as popular.

Either way, to avoid being underinsured, you need to work out an accurate rebuild cost. You’ll also need to decide if you want to include extras like accommodation during rebuilding and removing debris from the site.

Most insurers have calculators on their websites. Try to find one based on ‘elemental estimating’. It collects a lot more detail about your home’s construction and location, making it more accurate than the rougher cost-per-square-metre estimates.

It’s often worthwhile checking if an insurer offers an underinsurance buffer. This is when they add up to 30% to your sum-insured amount if your property is a total loss.

Checking exclusions is vitally important, as all household insurance is based around carefully defined events. That means you need to check that a quote’s definitions, especially natural events like ‘flood’ and ‘fire’, work for your location and likely risks.

Calculating contents insurance

Most contents insurance offers the replacement value of your belongings, or ‘new for old’ cover but it is possible to find fixed value, or sum-insured policies.

With contents insurance, you need to decide what to include in your cover. You’ll also need to check if an insurer repairs or replaces the damaged items or pays you the amount it would cost to repair or replace them.

To calculate the value of your insurance, you’ll need to make a list of the belongings you want to insure and include how much the items would cost to replace today. You may need to add portable technology like tablets and laptops, specialist items like artwork or things valued above the payout limit, like a large TV, bikes or jewellery, under Extras. Accidental Damage, such as a broken vase or stained carpet, is often included as an optional extra here too.

Keeping serial numbers, purchase receipts and photos of items can help with cost assessment if you need to claim. You can find user-friendly calculators on most content insurance websites. Again, check the definition of the events covered by a policy to make sure it meets your needs and to avoid any unpleasant surprises, in the event you need to make claim.

Landlord insurance

Landlord insurance is available for long- and short-term tenancy rentals and can include building, contents, and rental income cover.

Choosing the best quote for you

Try to compare at least three quotes for each type of insurance. They will have Key Fact Sheets and Product Disclosure Statements (PDS) available online.

The main features to compare for any home insurance are;

• premium costs,

• event definitions,

• exclusions,

• extras,

• excess amounts and variations, and

• cover limits.

Also check for discounts on bundling policies, buying online and any safety measures you have adopted. Some may include additional services like replacing locks after a burglary. And while comparison websites can be useful, please remember that they may promote only paying businesses and will not show your full range of options.

While it’s not something we like to think about, minor mishaps and unexpected disasters can arise, so taking your time to select the most appropriate cover for your circumstances can prove valuable in the unfortunate event you need to make a claim.

Talk to us on Phone: 07 5641 4134 or an insurance broker if you need help.

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.

The Australian Taxation Office (ATO) has today announced four key focus areas for Tax Time 2022.

The ATO will be focusing on:

• record-keeping

• work-related expenses

• rental property income and deductions, and

• capital gains from crypto assets, property, and shares.

These ATO priority areas will ensure that there is an appropriate level of scrutiny on correct reporting of deductions and income, so that Australia continues to have a strong tax system that can support the Australian community. Taxpayers can take steps to lodge right the first time.

Assistant Commissioner Tim Loh explained that “The ATO is targeting problem areas where we see people making mistakes.”

“It’s important you rethink your claims and ensure you can satisfy the 3 golden rules” Mr Loh said.

1. You must have spent the money yourself and weren’t reimbursed.

2. If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.

3. You must have a record to prove it.

Record-keeping

“We know there is still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to.”

For those people who deliberately try to increase their refund, falsify records or cannot substantiate their claims the ATO will be taking firm action to deal with these taxpayers who are gaining an unfair advantage over the rest of the Australian community who are doing the right thing.

Lodge right, no worries

We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers. For most people, this information will be automatically pre-filled in their tax return by the end of July. This will make the tax return process smoother, save you time, and get your tax return right. If you want to lodge earlier, you must take extra time to manually add all your income.

“You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in delays to your refund” Mr Loh said.

Available pre-fill information and readiness to lodge can be easily checked in the ATO app this tax time.

“While we receive and match a lot of information on rental income, foreign sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you” said Mr Loh.

Work-related expenses

“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year. If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls” said Mr Loh.

To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances. You can choose from the shortcut (all-inclusive), fixed rate and actual cost methods, so long as you meet the eligibility and record-keeping requirements.

“Each individual’s work-related expenses are unique to their circumstances. If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.”

You can easily keep track of your expenses with myDeductions tool in the ATO app. Just take a photo of the receipt in the app, record the details of the expense and at tax time, simply upload the information directly to your return in myTax or email it to your registered tax agent.

For more information visit ato.gov.au/deductions

Rental income and deductions

If you are a rental property owner, make sure you include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain.

“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance. If we do notice a discrepancy it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return. We can also ask for supporting documentation for any claim that you make after your notice of assessment issues” Mr Loh said.

For more information visit ato.gov.au/rental

Capital gains from crypto assets, property and shares

If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.

Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it.

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can’t offset your crypto losses against your salary and wages” Mr Loh said.

“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations” said Mr Loh.

For more information visit ato.gov.au/crypto

If you need assistance with your tax this financial year, contact us on Phone: 07 5641 4134.

Source: ato.gov.au
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Media-centre/Media-releases/Four-priorities-for-the-ATO-this-tax-time/.

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.

It’s a big decision when you decide you’re going to start saving to buy a home. It may seem like it’s going to take forever, but there are ways you can get there more quickly. We’re going to look at some of these in our three-part home deposit series.

The key to a successful savings goal is to be realistic about what you can afford to buy. Read our advice on how to manage your expectations and buy an affordable home. For most of us, our first house is a step on the property ladder rather than our forever home. But how much do you need to save?

How much do I need for a house deposit?

According to the Australian Bureau of Statistics the mean house price is now over $600,000, and more in the capital cities. Your house deposit will generally need to 20% of the purchase price, if you want to avoid paying Lenders’ Mortgage Insurance. This could be less if you’re eligible for the First Home Deposit Scheme.

There are steps you can take to save faster. In our case studies, we’re going to look at two sets of aspiring first homebuyers. In our first case study, we’ll introduce Alicia who’s looking to buy on her own. In our second case study, we’ll follow Todd and Renima a couple who are saving for their first home deposit together.

Let’s look at some general home deposit-boosting tips.

Analyse what you’re spending, then cut costs

It’s easy to spend money without thinking about it. Daily coffees, taxis, clothes and subscriptions all add up and affect your ability to save.

The first thing you’ll need to do when you decide to start saving is to analyse exactly where your money is going. To begin with, go through your bank account and make a note of every dollar that you’ve spent in the past month. You can use our budget planner to help you get started.

Here are some changes you can make now to help you save faster.

Move back home or into a share house

If it’s a realistic option for you, sharing a home with family or friends could be a good idea. Living in a sharehouse could help to potential save some money by cutting down on the cost of rent and bills.

To assist you with your decision speak with us on Phone: 07 5641 4134.

Get rid of your car

It’s easy to underestimate how much your car costs to run. It’s more than just petrol. Add in insurance, repairs, maintenance and depreciation. That can add up to thousands of dollars a year. If you’re in a city with decent public transport (and good bike lanes), you could possibly save some cash by going car free.

If you have no other choice than to drive, read the cost saving tips for running a car. Or, check out your state or territory’s car club website. For example, the RACV has put together some handy cost guides to help guide you on the real cost of owning a car.

Review your lifestyle

Minor lifestyle changes, like limiting takeaway meals and coffees, can incrementally add up. That might mean drinking the instant coffee at work each morning for a while.

Reduce your nights out and entertainment costs. Start finding some cheaper ways to have fun. If you have friends in the same situation, consider taking it in turns to host dinner parties at home, or movie and games nights.

Cut out things you don’t use

A simple way to save is to stop paying for things you don’t use or need. Start looking for discounts and cheaper options on things like memberships, subscriptions, utilities and insurance. It’s worth taking the time for the longer-term gain.

Set up a savings account and savings plan

Keep track of your finances 

Saving takes dedication and a little planning. Get help with your savings plan by using savings tools. This tool can help you budget, track your spending and set up a realistic savings goal.

Set up a designated account

One great way to ensure you meet your savings goals is to set up a designated ‘house deposit’ account. This is easy to do using budgeting apps. 

Consider a term deposit

You might also want to consider a term deposit as a saving option to help you reach your savings goal. These savings products offer fixed, competitive interest rates and you can choose a term to suit your needs. 

A term deposit is a type of savings account that allows you to lock away your money for a period with a set interest rate. Having the funds locked away for a period could help you save. But, if you need to access the funds you can request early closure with 31 days’ notice. Accessing your funds early may impact the interest you’re eligible for. Call us on Phone: 07 5641 4134 for more information.

Get all the first home buying assistance you can

First Home Owner Grant

If you’re starting out, you might qualify for a First Home Owner Grant (FHOG). How much you get, and the rules and conditions vary from state to territory and can change from time to time.

We’ve got more information about the FHOG in our First Home Owner Grant story. NAB has a summary of the various schemes (with links to each state/territory’s website).

Most states and territories offer grants for newly built homes now rather than established homes. The grant amounts differ depending on your state or territory but range from $10,000 to $15,000 on average.

As of 2016, only the Northern Territory offers grants over $15,000. You can check your state or territory’s grant eligibility and amounts on their websites.

Stamp duty concessions

If you’re buying your first house, you may also qualify for stamp duty concessions (depending on the state/territory). Since stamp duty can add another 3-5% to the purchase price, this is a real help.

We know that the home loan process can be daunting. When the time comes, don’t feel like you have to do it on your own. Call us on Phone: 07 5641 4134. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/buy-first-home/deposit-saving

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

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.

It is important to understand where this income will come from, how long it will last, and whether your retirement investments are on track, or whether some adjustments need to be made to get you there.

Work out how long your super or account-based pension will last

There are many variables that come into play when calculating how long your super or account-based pension will last in retirement, and it can be challenging to figure it out alone.

If you’ve transferred your super to a pension account already, then you can use the MoneySmart calculator to help estimate how long your pension will last. And if you haven’t, we recommend you speak to us on Phone: 07 5641 4134 or an adviser who can discuss with you different considerations that will impact how long your account-based pension will last.

Here are some of the fundamental things you need to know about a couple of other retirement income options.

Account-based pensions

Account-based pensions are a popular retirement income product. They fluctuate in value and are linked to the market so your investment, and therefore your long-term income, isn’t guaranteed.

How long an account-based pension lasts will depend on:

• the amount of initial capital invested

• the return from the underlying investments

• the amount of fees charged

• how much you withdraw as income each year.

The tax benefits of account-based pension are:

• you don’t pay tax on pension payments from age 60

• if you’re aged between preservation age and 59, the taxable portion of your pension payments will be taxed at your marginal tax rate less a 15% offset

• you don’t pay tax on investment earnings.

In some cases, the underlying investments for most pension accounts are chosen to minimise fluctuations but still provide a bit of growth.

Defensive assets

These include cash and fixed income. In general, they’re lower risk and provide lower returns over the long term.

Growth assets

These include equities and property. They’re usually open to market fluctuation but tend to provide higher returns over the long term.

Generally, defensive assets provide you with a relatively steady return and, therefore, income. However, some growth assets are usually needed to keep your funds growing during your retirement, so they last longer. With an account-based pension, you can mix defensive and growth assets to a ratio that you’re comfortable with.

Annuities

Some annuities could provide you with regular and guaranteed income for either a fixed period or for life. They are more secure than account-based pensions as your income is guaranteed regardless of what the share market and interest rates do.

The downside is that you’re locked in to the agreed income for the whole term or the rest of your life. If your circumstances change, you generally can’t withdraw a lump sum. A lifetime annuity also has no residual capital value, which means you can’t leave it to someone in your will.

The best of both systems

Continuing to build your investments, including your super funds, is still crucial in retirement. They need to keep growing to ensure your retirement income lasts as long as possible.

This means it becomes increasingly important to protect your super growth funds from market falls while still allowing them to grow if the market goes up.

Other things to consider

Age pension eligibility

When it comes to the Age Pension, there are several rules to determine your eligibility. You can learn more by visiting Services Australia but some of the basic rules are:

• You must have reached your Age Pension age, which is currently 66 (after 1 July 2019, age pension age will go up 6 months every 2 years until 1 July 2023).

• You must be a resident of Australia.

• You must pass income and asset tests.

If you don’t meet the income and assets tests to be eligible for the Age Pension, you may be able to access the Commonwealth Seniors Health Card (if you pass an income test). This card provides affordable medicine, bulk billed doctor visits and depending on what state you live in, there may be some other concessions that you’re entitled to. You can find out more from Services Australia.

Speaking to a financial planner

With so many options, it’s a good idea to seek help to ensure you’re investing in a way that suits you. Particularly as there are some more complex considerations, such as tax implications. You can talk to us on Phone: 07 5641 4134. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/work/plan-retirement/income

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any advice or information in this publication is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your personal objectives, financial situation and needs. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. 

As the end of the financial year approaches, now is a good time to check your super and see what you could do to boost your retirement nest egg. What’s more, you could potentially reduce your tax bill at the same time.

There are a handful of positive changes to super due to start next financial year, but for most people, these will not impact what you do before June 30 this year.

Changes ahead

Among the changes from 1 July, the superannuation guarantee (SG) will rise from the current 10 per cent to 10.5 per cent.ⁱ

Another upcoming change is the abolition of the work test for retirees aged 67 to 74 who wish to make non-concessional (after tax) contributions into their super. This will allow eligible older Australians to top up their super even if they are fully retired. Currently you must satisfy the work test or work test exemption. This means working at least 40 hours during a consecutive 30-day period in the year in which the contribution is made.ⁱⁱ

But remember you still need to comply with the work test for contributions you make this financial year.

Also on the plus side, is the expansion of the downsizer contribution scheme. From 1 July the age to qualify for the scheme will be lowered from 65 to 60, although other details of the scheme will be unchanged. If you sell your home that you have owned for at least 10 years to downsize, you may be eligible to make a one-off contribution of up to $300,000 to your super (up to $600,000 for couples). This is in addition to the usual contribution caps.ⁱⁱⁱ

Key strategies

While all these changes are positive and something to look forward to, there are still plenty of opportunities to boost your retirement savings before June 30.

For those who have surplus cash languishing in a bank account or who may have come into a windfall, consider taking full advantage of your super contribution caps.

The annual concessional (tax deductible) cap is currently $27,500. This includes your employer’s SG contributions, any salary sacrifice contributions you have made during the year and personal contributions for which you plan to claim a tax deduction.

Claiming a tax deduction is generally most effective if your marginal tax rate is greater than the 15 per cent tax rate that applies to super contributions. It is also handy if you have made a capital gain on the sale of an investment asset outside super as the tax deduction can offset any capital gains liability.

Even if you have reached your annual concessional contributions limit, you may be able to carry forward any unused cap amounts from previous years if your super balance is less than $500,000.^iv

Once you have used up your concessional contributions cap, you can still make after-tax non-concessional contributions. The annual limit for these contributions is $110,000 but you can potentially contribute up to $330,000 using the bring-forward rule. The rules can be complex, especially if you already have a relatively high super balance, so it’s best to seek advice.

Government and spouse contributions

Lower income earners also have incentives to put more into super. The government’s co-contribution scheme is aimed at low to middle income earners who earn at least 10 per cent of their income from employment or business.

If your income is less than $41,112 a year, the government will contribute 50c for every after-tax dollar you squirrel away in super up to a maximum co-contribution of $500. Where else can you get a 50 per cent immediate return on an investment? If you earn between $41,112 and $56,112 you can still benefit but the co-contribution is progressively reduced.^v

There are also incentives for couples where one is on a much lower income to even the super playing field. If you earn significantly more than your partner, ask us about splitting some of your previous super contributions with them.^vi

Also, if your spouse (or de facto partner) earns less than $37,000 a year, you may be eligible to contribute up to $3000 to their super and claim an 18 per cent tax offset worth up to $540. If they earn between $37,000 and $40,000 you may still benefit but the tax offset is progressively reduced.^vii

As it can take your super fund a few days to process your contributions, don’t wait until the very last minute. If you would like to discuss your super options, call now on Phone: 07 5641 4134.

i https://www.superguide.com.au/how-super-works/superannuation-guarantee-sg-contributions-rate

ii https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions—too-much-can-mean-extra-tax/?anchor=Acceptanceofcontributionsandworktest#Worktest

iii https://www.ato.gov.au/General/New-legislation/In-detail/Super/Flexible-super—reducing-the-eligibility-age-for-downsizer-contributions/

iv https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions—too-much-can-mean-extra-tax

v https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?page=25

vi https://www.ato.gov.au/Forms/Contributions-splitting/

vii https://www.ato.gov.au/individuals/income-and-deductions/offsets-and-rebates/super-related-tax-offsets/

Any advice or information in this publication is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your personal objectives, financial situation and needs. Past performance is not a reliable guide to future returns. 

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.