In 2010, Wendy was diagnosed with rheumatoid arthritis, an incurable and debilitating condition that changed her life overnight.

At the time of her diagnosis, Wendy, then 47, was loving life, enjoying peak career success working for a pharmaceutical company, and a newfound romance with David, whom she had met six months earlier. At first, Wendy was unable to comprehend the reality of what lay ahead. Just six weeks after her diagnosis, crippling pain meant Wendy could no longer perform her normal duties at work. When it became clear she would have to leave the job she prided herself on and which she loved, the mum of three was devastated.

Just six months prior to her diagnosis, Wendy had met with a financial adviser who suggested she take out income protection. Fortunately, Wendy listened and now, looking back, says it was one of the best decisions she had ever made. She often thinks about what her life would have been like had she not had the financial support income protection provided.

Rather than worrying about how she was going to pay her share of a new mortgage and meet her medical expenses, Wendy could focus on her treatment, and adjusting to a new life that was never part of the plan. It took three years to get her condition to a manageable level and this is where the income protection really assisted Wendy and her family.

Today Wendy is enjoying working part-time as a first aid teacher and keeps her RA symptoms under control through a strict vegan diet and plenty of exercise, especially swimming and cycling. Her health continues to have its ups and downs but her focus now is on staying well and managing her symptoms.

Hope for the best but plan for the worst

This case isn’t unique and instances like this can be found all across Australia, however Wendy was able to manage her financial situation through utilising her income protection insurance. It can make a significant difference by removing additional stress and allowing you to concentrate on recovery. Income protection is just one component that forms a comprehensive financial plan. It may be important to know which options could be available to try and help protect you and your family’s future, in the event of any unforeseen sickness or injury. If you’re unsure of your financial protection requirements, speak to your financial adviser today. They’re here to protect and build your wealth.

General Advice Disclaimer

The information contained in this article is general in nature and does not constitute personal financial advice. It has been prepared without taking into consideration your personal objectives, financial situations and needs. Before acting on any information contained in this article you should consider the appropriateness of the information having regard to your objectives, financial situations and needs.

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Did you know the amount you can contribute to superannuation will decrease from 1 July 2017? Paying extra into your superannuation now may make a big impact later in retirement.

Making before-tax contributions

Right now the total amount you can contribute to your superannuation before tax, is capped at:

  • $35,000 per year if you are aged 50 or over.
  • $30,000 per year if you are aged under 50.

Your before-tax contributions include your Superannuation Guarantee contributions, any other employer super contributions, salary sacrificing (if you do this) and any contributions that you have claimed a tax deduction for.

The cap will reduce to $25,000 per financial year from 1 July 2017, regardless of age. There will be additional flexibility from 1 July 2018 if you have less than $500,000 in total superannuation which will allow you to carry forward your unused before-tax (concessional) contributions for up to five years.

Making after-tax contributions

Take advantage of the current higher after-tax contributions cap to boost your super before it changes. From 1 July 2017, the cap on after-tax contributions will reduce to $100,000 per financial year. It’s currently $180,000 for those under 65 years. From 1 July you will also only be able to make after-tax (non-concessional) contributions if your total super balance is less than $1.6 million. If you have spare cash on hand, whether an inheritance, dividend payments, a bonus or even just change after bills, you might consider contributing this to your superannuation sooner rather than later. And, if you are aged under 65, you can bring forward up to three years of after-tax contributions, allowing you to invest up to $540,000 in one go. This cap will change to $300,000 from 1 July this year.

Entering retirement

If you’re retired or about to retire, there are a few changes you should know about. From 1 July 2017, the maximum amount you can have invested in the retirement phase will be $1.6 million. If you’ve already retired and your balance exceeds this cap you will be required to either

  • Move the excess back to the accumulation phase or
  • Withdraw the amount as a lump sum by 1 July 2017 or have a tax penalty applied.

Note: This deadline is 31 December 2017 if the excess amount is $100,000 or less. If you’re currently invested in a Transition-to-Retirement (TTR) pension, from 1 July 2017, the earnings from this pension will be taxed at up to 15% pa (compared to its current tax-free status). Talk to your Financial Adviser to evaluate whether this style of pension is still right for you. To learn more about end of financial year strategies for your super, please don’t hesitate in contacting us.

General Advice Disclaimer

The information contained in this article is general in nature and does not constitute personal financial advice. It has been prepared without taking into consideration your personal objectives, financial situations and needs. Before acting on any information contained in this article you should consider the appropriateness of the information having regard to your objectives, financial situations and needs.

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A reduction in concessional contribution caps, the lowering of the Division 293 tax threshold, capping tax-free assets in retirement and a non-concessional contributions cap of $100,000 p.a. starting 1 July 2017 are just some of the changes that were in the Budget announcements this year to impact superannuation. These changes may impact your SMSF and retirement planning and require you to reassess your existing strategies or contemplate new ones.

Understand the major changes to superannuation and how they may affect you with this snapshot and easy to digest superannuation changes information guide.

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2017 Budget – Superannuation Changes That May Affect You

A reduction in concessional contribution caps, the lowering of the Division 293 tax threshold, capping tax-free assets in retirement and a non-concessional contributions cap of $100,000 p.a. starting 1 July 2017 are just some of the changes that were in the Budget announcements this year to impact superannuation.  These changes may impact your SMSF and retirement planning and require you to reassess your existing strategies or contemplate new ones.

The key changes proposed for superannuation:

1.    Lowering the concessional contribution cap to $25,000 for all individuals

The Government proposes to lower the concessional contribution cap to $25,000 for all taxpayers from 1 July 2017.  You can continue contributing up to the current concessional contribution caps of $30,000 for people aged under 50 and $35,000 for those aged above 50 for the 2015-16 and the 2016-17 financial years.

2.    Lowering the threshold of Division 293 tax

From 1 July 2017 the Government is proposing to lower the Division 293 tax threshold from $300,000 to $250,000.  This means that if you have an adjusted taxable income of $250,000 or above, Division 293 tax will be charged at 15% on your concessional contributions above the $250,000 threshold from the 2017-18 financial year onwards.

3.    Introducing a $1.6 million superannuation transfer balance cap

From 1 July 2017, the Government is proposing to limit the amount an individual can transfer from accumulation phase to retirement phase to $1.6 million.  Individuals that have in excess of $1.6 million will be able to maintain those amounts in accumulation phase where the earnings will be taxed at the current rate of 15%.  If you are already in retirement phase and your balance is in excess of $1.6 million you will be required to reduce your balance to $1.6 million by 1 July 2017 by either retaining the excess amounts in accumulation phase or withdrawing it from the super fund.  Any amounts over $1.6 million in retirement phase after 1 July 2017 will be taxed on both the amount over $1.6 million and any earnings on the excess amount.

4.    Removing the tax-free treatment of assets supporting transition to retirement income streams

The Government proposes removing the tax-exempt status of assets supporting a transition to retirement income stream (TRIS) from 1 July 2017.  The new tax treatment will apply to all TRIS irrespective of when they commenced.  You will also not be able to elect to treat TRIS payments as lump sums for tax purposes. There are a number of other proposed superannuation changes that may affect you from 1 July 2017.  These changes are:

  • Allowing catch-up concessional contributions — people who have balances under $500,000 will be able to carry forward any unused concessional contributions caps on a rolling 5 year basis.
  • Tax deductions for personal superannuation contributions — all Australians under the age of 75 will be able to claim an income tax deduction for personal contributions made to their superannuation funds. Currently, this type of deductible contribution is generally available only to self-employed people.
  • Harmonising contribution rules for those aged 65 to 74 — people will no longer have to meet the work test before making concessional and non-concessional contributions to their super fund if they are aged from 65 to 74 (including making contributions for a spouse aged under 75).
  • Improving superannuation balances of low income spouses — the eligibility rules for low income spouse superannuation tax offset will be extended by raising the threshold from $10,800 to $37,000.
  • Introducing a Low Income Superannuation Tax offset (LISTO) — the LISTO will replace the current Low Income Superannuation contribution (LISC) to ensure that people with adjusted taxable income up to $37,000 do not pay higher tax on their super contributions than their take-home pay.
  • Removing the anti-detriment provision — super funds will no longer be able to use these provisions to increase a death benefit paid to certain death benefit beneficiaries on the basis of refunding contributions tax paid by the deceased fund member throughout their life.

How can we help?
If you have any questions or would like to discuss any aspect of this letter, please contact our SMSF team or your Anne Street Partners Financial Adviser on 135 444. We’ll be happy to help.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide.

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Members of The Anne Street Partners Executive Leadership Team were delighted to join The Hon. Adrian Piccoli, Minister for Education and The Hon. Luke Foley, Leader of the Opposition to launch the “Duke of Ed Employer” initiative to a group of over ninety attending MPs, business supporters and community organisations at Parliament House, Sydney on Wednesday. This initiative is designed to encourage young Australians to take part in the Award, then recognise the achievements by endorsing the Award during the recruitment process.

As a Duke of Ed Employer, Anne Street Partners is proud to support The Duke of Edinburgh’s International Award Australia and the incredible work they undertake to support, develop and challenge young Australians to reach their potential with both our charitable activities and during our recruitment process. Here our Group CEO – Michael Adamson, GM of Strategy & Distribution – Jason Dunn are joined by The Hon. Shane Stone and The Hon. Sandra Nori at the Launch on Wednesday.

Read more here.

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