Abstract image of a map of financial maze with help to navigate it

Navigating Your Finances: Top Free Resources for Australians

Abstract image of a map of financial maze with help to navigate it

Navigating Your Finances: Top Free Resources for Australians

Step into the world of financial clarity with our guide to Australia's premier free advice websites. Whether you're planning for retirement or looking to maximize your Centrelink benefits, our list connects you to the essential resources needed to make informed financial decisions.

Government and Non-Profit Websites

  1. ASIC's MoneySmart (moneysmart.gov.au)Offers a broad spectrum of financial guidance, including retirement planning, understanding superannuation, and managing debts. Its resources are comprehensive, making it a go-to for Australians seeking financial advice.
  2. Australian Taxation Office (ATO) (ato.gov.au)The ATO provides detailed information on personal taxation, superannuation, and saving on taxes. It's an authoritative source for understanding your tax obligations and benefits.
  3. Department of Social Services (dss.gov.au)For maximizing Centrelink benefits, the Department of Social Services offers guidelines and updates on eligibility and claims for various social security payments.
  4. National Debt Helpline (ndh.org.au)A not-for-profit service offering free advice on managing debt. It's a valuable resource for individuals struggling with financial obligations and seeking ways to get back on track.
  5. SuperGuide (superguide.com.au)Specializes in superannuation advice, helping individuals understand and make the most out of their superannuation funds for retirement planning and tax saving.

International Websites with Global Relevance

  1. Investopedia (investopedia.com)A leading source of financial content, covering a wide range of topics from retirement planning to tax strategies and investment advice. Its comprehensive educational material is useful worldwide.

Specialized Advice Websites

Aged Care Advice and Planning

  1. My Aged Care (myagedcare.gov.au)The Australian Government's starting point on your aged care journey, offering advice on care services, eligibility, and financial information related to aged care.

Saving Tax on Superannuation & Other Taxation

  1. Chartered Accountants Australia and New Zealand (charteredaccountantsanz.com)Provides resources and guidance on various aspects of taxation and financial planning, helping individuals navigate complex tax laws.

Maximising Centrelink Benefit Claims

  1. Services Australia (servicesaustralia.gov.au)Offers comprehensive details on Centrelink payments and services, providing essential information to maximize benefit claims.

Saving Capital Gains Tax on Investments

  1. The Conversation (theconversation.com/au)Offers insightful articles on policy, including taxation strategies and investment advice, written by academics and industry experts.

Managing and Getting Out of Debt

  1. Financial Counselling Australia (financialcounsellingaustralia.org.au)Provides information and support for dealing with various forms of debt, offering access to free financial counselling services.

Mortgage Selection

  1. Choice (choice.com.au)Independent consumer advocacy group that reviews and compares financial products, including mortgages, offering unbiased advice to help consumers make informed decisions.

Life Insurance Selection

  1. Canstar (canstar.com.au)A financial comparison site that provides ratings and comparisons for life insurance products, helping individuals find the right coverage for their needs.

Choosing an Accountant

  1. CPA Australia (cpaaustralia.com.au)Offers a directory of certified practicing accountants in Australia, allowing individuals to find a reputable accountant for personal or business needs.

Choosing a Financial Adviser

  1. Financial Planning Association of Australia (fpa.com.au)Provides a Find a Planner tool that helps individuals locate a certified financial planner who can offer tailored advice based on personal financial situations.

Educational Resources

These websites offer a wealth of educational materials on various financial topics, making them invaluable resources for self-education:

  1. Khan Academy (khanacademy.org)Offers free courses on personal finance, investments, and economics, suitable for beginners and advanced learners alike.
  2. Coursera (coursera.org)Provides access to courses from universities and colleges around the world, including several on financial planning, investment, and tax strategies.
  3. edX (edx.org)Offers online courses from prestigious institutions covering a range of topics, including personal finance and financial analysis.

By utilizing these websites, Australians can gain access to a wealth of information and advice covering all areas of financial planning and management. Whether you're seeking to navigate the complexities of aged care planning, optimize your retirement savings, manage debt, or make informed decisions on investments and insurance, these resources provide the knowledge and tools needed to make confident and informed financial decisions.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Scammer at work

Common Scams and how to avoid them

Scammer at work

Common Scams and how to avoid them

Two, high profile customer data breaches recently have exposed millions of Australians to a new wave of potentially devastating threats from scammers. To mark Scam Awareness Week 2022, we look at two of the most common forms of threat, and what you can do to protect yourself.

Added together, the Optus and Medibank data breaches have put sensitive customer data of roughly half of Australia’s adult population in the hands of cyber criminals!

Changing your password is an important first step when these breaches happen. But the days when a password change could make everything right again are long gone.

What makes these breaches so dangerous for customers who’ve had their data stolen is all the unchangeable, or hard to change data that criminals gain access to.
For example: full name, date of birth, next of kin, mobile number, email addresses, residential address, Medicare, driver’s license and passport numbers, bank and other service provider details.

Armed with just 3 or 4 items from that list it’s very easy for criminals to concoct highly personalised, believable cover stories with which to hoodwink victims.

Two common forms of attack these days are phishing and imposter scams.

Phishing

Phishing is a two stage attack where criminals first trick victims into divulging login or credit card details. Armed with that data, they then commit fraud.

Phishing attacks take many forms and are constantly becoming more sophisticated. But normally the criminal impersonates a service provider or government body, either by electronic communication, or with a phone call. Sometimes they just ask for details. But often, they direct victims to bogus web pages that look legitimate. The victims think they are logging in to a known website, but in fact are entering their log in details into a form controlled by the criminal.

Imposter scams

In this type of attack, the criminals first manage to impersonate close relatives or work colleagues. Soon after they request some kind of money transfer, usually for some urgent reason like an accident, or being stranded somewhere.

A new, and increasingly common form of imposter scam is the “Hi Mum” attack. This
typically starts with a text message from a son or daughter claiming they’ve changed their mobile phone number.

Protecting Yourself

Be Extremely Suspicious of ALL Information Requests and Surprise Notifications

Any time a service provider contacts you, asking for sensitive information, a request to login to their site, for updated information, or a password change, you should treat it as a potential threat.

Likewise, be suspicious of notifications about online orders you don’t remember making, warnings that an important account is about to be suspended, or debts you didn’t know about

NEVER trust links or contact information provided in the notification messages in question. Instead use publicly available contact details to reach out and verify the message.

NEVER Use the Same Password Twice

One of the first thing hackers do when they capture usernames and passwords from any site is try those same details on a list of high value sites such as email providers, financial institutions, Amazon, ebay and social networks. So, if you duplicate passwords, you’re extremely vulnerable and you should expect trouble!

Cyber security experts highly recommend the use of password management apps such as LastPass, Dashlane, LogMeOnce and BitWarden. These not only help you keep track of unique passwords and make it quicker to log into many sites; they also help you generate new, hard to guess passwords.

Keep Abreast of The Latest Scams

Scammers are constantly inventing new ploys to catch people off guard that can be stunningly clever. As such it’s worth keeping up to date with the latest methods.

www.scamwatch.gov.au is one trustworthy source of information that provides a lot of up-to-date information on new threats in Australia and ways to outsmart them. Make a point of checking this site regularly.

Should you ever be unsure whether someone requesting your financial details is a trusted source, don’t hesitate to get in touch for our advice.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


2022 Australian Federal Budget Analysis

Review of Australian Federal Budget October 2022

2022 Australian Federal Budget Analysis

Review of Australian Federal Budget October 2022

In his first Budget, Treasurer Jim Chalmers’ emphasised the three Rs – responsible budget repair and restrained spending, right for the times.

For good measure, resilience also got a mention with spending targeted at building a more modern economy to deal with the challenges ahead.

This is the first budget from a federal Labor government in almost a decade, barely five months since Labor was elected and seven months since the Coalition’s pre-election budget in March, so it was bound to be a little different. The Treasurer used the opportunity to update the shifting economic sands and reset spending priorities to align with the new government’s policy agenda.

For Australians wondering what the Albanese Labor government will mean for them and their family, this is the first piece of a puzzle that will be completed over the next three years.

The big picture

The Labor government has inherited an improving bottom line, with the deficit for 2022-23 expected to come in at $36.9 billion, an improvement of more than $40 billion on the pre-election forecast. This was due to high commodity prices for our exports and higher tax receipts from a strong labour market and robust corporate profits.

The deficits of $224.7 billion previously forecast for the next four years have shrunk to $182 billion. The difference of around $40 billion will go towards funding the government’s election promises and budget repair.

Labor has also found $22 billion in savings by cancelling or redirecting programs planned by the previous Coalition government, and a further $3.6 billion in cuts to external consultants, marketing, travel and legal expenses. Savings will also come from clamping down on tax avoidance by individuals and foreign corporations.

But as the Treasurer is fond of saying, storm clouds are looming, and he singled out inflation as the biggest challenge.

Economic challenges ahead

Inflation is forecast to peak at 7.75% by year’s end, before returning to 3.5% in 2023-24. Despite low unemployment currently at 3.75% it is tipped to rise to 4.5% by 2023-24, the surge in inflation means wages are unlikely to grow in real terms until 2024 at the earliest. Wages growth is forecast to be 3.75% in 2023-24, overtaking inflation of 3.5%.

With more interest rate hikes expected to tame inflation, debt is also set to climb from $895.3 billion last financial year to a forecast $927 billion in 2022-23 and upwards over the forward estimates.

With global economic headwinds building to gale force, Australia’s economic growth is expected to slow as cost-of-living pressures bite into household budgets.

While Dr Chalmers does not expect Australia to slide into recession like many of our trading partners, economic growth is already slowing. Real gross domestic product (GDP) is forecast to be 3.25% in 2022-23, down from 3.9% last financial year, and 1.5% in 2023-24, 1 percentage point lower than predicted in the March Budget.

Support for families

Childcare and improved parental leave are a priority area for the new government, in an effort to support families, reduce cost-of-living pressures and improve women’s workforce participation.

Already, $4.7 billion has been earmarked for childcare over the next four years, with families earning less than $530,000 to receive extra childcare subsidies from 1 July 2023. An extension of paid parental leave from the current 18 weeks to 26 weeks is also set to be phased in from next July, so neither initiative will add to the current Budget.

Superannuation, pensioners and tax

What’s not in the Budget is also important. There was little new spending to help retirees and welfare recipients, but pensions and payments will increase due to indexation.

As previously announced, the amount Age Pensioners can earn before they begin to lose pension entitlements will temporarily increase from $7,800 to $11,800 this financial year.

While most superannuation fund members will welcome the lack of tinkering to the super rules, the investment potential of the new affordable housing initiatives should provide a valuable source of income to super funds and their members.

Expanding eligibility age for downsizer contributions to 55 and over

Downsizer contributions allow those who are eligible to contribute up to $300,000 to superannuation from the sale of an eligible main residence. The minimum qualifying age had been 65 which was then reduced to 60 from 1 July 2022. In August 2022 a bill was introduced, currently before the Senate, further reducing the minimum qualifying age to 55. The commitment to this proposal was reaffirmed in the Federal Budget.

Superannuation Guarantee legislated increases to continue in accordance with original timetable

SG is currently 10.5% and will increase by 0.5% at the beginning of each financial year until it reaches 12% in 2025

No extension to the halving of SIS minimums beyond the 2022-23 financial year

There was no announcement to extend the 50% reduction in SIS minimums relating to eligible income streams beyond this

Freezing deeming rates until 2024

The Government recommitted to freezing the current deeming rates until 30 June 2024.The deeming thresholds will continue to be indexed on 1 July each year

Home sale proceeds exemption

The Government recommitted to extending the exemption period for proceeds from selling the principal home to purchase or build another home. Specifically,

  • the assets test exemption for principal home sale proceeds will be extended from 12 months to 24 months. In certain circumstances, such as experiencing delays beyond a person’s control, the exemption can be extended to 36 months, and
  • the income test will be amended to treat the principal home sale proceeds as a separate pool to the individual’s or couple’s other financial assets for the purpose of calculating deemed income. Only the lower deeming rate (currently 0.25%) will be applied to these proceeds for the duration of the assets test exemption.

The changes are scheduled to commence from the later of 1 January 2023, or one month after the enabling legislation receives Royal Assent.

Health and aged care

Pressures on the federal health and aged care budget are mounting in the wake of COVID and an $8.8 billion blowout in the NDIS budget which will reach $166.4 billion over four years. An extra 380 staff will be hired at a cost of $158.2 million to speed up claims and make the system more efficient.

$750 million will be spent strengthening Medicare and $235 million over four years to roll out Urgent Care Clinics to reduce pressure on public hospitals.

Following revelations from the Aged Care Royal Commission and lessons learned during the pandemic, the government has pledged to fund an increase in aged care workers’ wages.
And the cost of subsidised prescription medications will be cut from $42.50 to $30 from January 1, at a cost of $756 million over four years.

More affordable housing

A centrepiece of the Budget to improve housing affordability and chronic shortages is a new Housing Accord to build 1 million new houses in five years beginning in 2024.

The new $10 billion Housing Australia Future Fund will provide a sustainable funding source to increase housing supply, including 20,000 new social housing dwellings, 4,000 of which will be allocated to women and children impacted by family and domestic violence and older women at risk of homelessness.

The plan paves the way for significant public and private investment in new housing across the country, following an historic agreement between the federal government, the states and private investors including superannuation funds.

Jobs, skills and education

Federal, state and territory governments have committed to a $1 billion one-year agreement to deliver 180,000 fee-free TAFE and community-based vocational education places from January 2023. Support will be targeted to priority groups, including First Nations people, and priority areas such as care sectors.

The government will also create 20,000 more subsidised university places over 2023 and 2024. The initiative will be targeted at disadvantaged groups to study courses where there are skills shortages.

Nation building and future-proofing

As part of its budget review, the government will ‘’realign” $6.5 billion of existing infrastructure spending. It will spend $8.1 billion on key infrastructure projects including the Suburban Rail Loop East in Melbourne, the Bruce Highway and other important freight highways.

The government has also committed to at least $40 billion in new borrowing to set up funds and companies to invest in policy promises. These include the $20 billion Rewiring the Nation Corporation to invest in the electricity grid, $15 billion National Reconstruction Fund for local manufacturing and the $10 billion Housing Australia Future Fund to invest in social housing.

In an acknowledgement of the increased frequency and severity of natural disaster, up to $200 million per year will be set aside for disaster prevention and resilience.

Climate change

A more comprehensive approach to climate change is also back on the agenda, with total climate-related spending of $24.9 billion over 2022-23.

As many of the nation’s largest emitters are in regional areas, the government will establish a $1.9 billion Powering the Regions Fund to help transition regional industries to net zero. And $345 million will be made available to increase uptake of electric vehicles.

Women’s safety

The Treasurer pledged a record investment of $1.7 billion to support implementation of the new National Plan to End Violence Against Women and Children. This will include funding for 500 new frontline service and community workers to support women in crisis.

The Government is also legislating 10 days of paid family and domestic violence leave for all types of employees.

Looking ahead

The next 12 months are likely to be challenging for the economy and for households trying to budget for rising prices and interest rates, including higher mortgage repayments, at a time when home values are falling and real wages are going backwards.

The Treasurer has tried to walk a fine line between budget repair and responsible spending with long-term economic benefits for individuals and the nation.

Coming just months after the federal election, this Budget should be seen as laying the groundwork for the three Budgets to follow.

Information in this article has been sourced from the Budget Speech 2022-23 and Federal Budget Support documents.

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Australian Federal Budget Analysis 2022-2023

Analysis of Australian Federal Budget 2022-2023

Australian Federal Budget Analysis 2022-2023

Analysis of Australian Federal Budget 2022-2023

Treasurer Josh Frydenberg’s fourth Budget is billed as a one for families, with a focus on relieving short-term cost of living pressures. But he clearly has May's the federal election in in mind too.

At the same time, the government is relying on rising commodity prices and a forecast lift in wages as unemployment heads towards a 50-year low to underpin Australia’s post-pandemic recovery.

While budget deficits and government debt will remain high for the foreseeable future, the Treasurer is confident that economic growth will more than cover the cost of servicing our debt.

The big picture

The Australian economy continues to grow faster and stronger than anticipated, but the fog of war in Ukraine is adding uncertainty to the global economic outlook. After growing by 4.2 per cent in the year to December, Australia’s economic growth is expected to slow to 3.4 per cent in 2022-23.i

Unemployment, currently at 4 per cent, is expected to fall to 3.75 per cent in the September quarter. The government is banking on a tighter labour market pushing up wages which are forecast to grow at a rate of 3.25 per cent in 2023 and 2024. Wage growth has improved over the past year but at 2.3 per cent, it still lags well behind inflation of 3.5 per cent.ii

The Treasurer forecast a budget deficit of $78 billion in 2022-23 (3.4 per cent of GDP), lower than the $88.9 billion estimate as recently as last December, before falling to $43 billion (1.6 per cent of GDP) by the end of the forward estimates in 2025-26.

Net debt is tipped to hit an eye-watering $715 billion (31 per cent of GDP) in 2022-23 before peaking at 33 per cent of GDP in June 2026. This is lower than forecast but unthinkable before the pandemic sent a wrecking ball through the global economy.

Rising commodity prices

The big improvement in the deficit has been underpinned by the stronger than expected economic recovery and soaring commodity prices for some of our major exports.

Iron ore prices have jumped about 75 per cent since last November on strong demand from China, while wheat prices have soared 68 per cent over the year and almost 5 per cent in March alone after the war in Ukraine cut global supply.iii,iv

Offsetting those exports, Australia is a net importer of oil. The price of Brent Crude oil prices have surged 73 per cent over the year, with supply shortages exacerbated by the war in Ukraine.v Australian households are paying over $2 a litre to fill their car with petrol, adding to cost of living pressures and pressure on the government to act.

With the rising cost of fuel and other essentials, this is one of the areas targeted by the Budget. The following rundown summarises the measures most likely to impact Australian households.

Cost of living relief

As expected, the Treasurer announced a temporary halving of the fuel excise for the next six months which will save motorists 22c a litre on petrol. The Treasurer estimates a family with two cars who fill up once a week could save about $30 a week, or $700 in total over six months.

Less expected was the temporary $420 one-off increase in the low-to-middle-income tax offset (LMITO). It had been speculated that LMITO would be extended for another year, but it is now set to end on June 30 as planned.

The extra $420 will boost the offset for people earning less than $126,000 from up to $1,080 previously to $1,500 this year. Couples will receive up to $3,000. The additional offset, which the government says will ease inflationary pressures for 10 million Australians, will be available when people lodge their tax returns from 1 July.

The government will also make one-off cash payments of $250 in April to six million people receiving JobSeeker, age and disability support pensions, parenting payment, youth allowance and those with a seniors’ health card.

Temporarily extending the minimum pension drawdown relief

Self-funded retirees haven't been forgotten. The temporary halving of the minimum income drawdown requirement for superannuation pensions will be further extended, until 30 June 2023.

This will allow retirees to minimise the need to sell down assets given ongoing market volatility. It applies to account-based, transition to retirement and term allocated superannuation pensions.

More support for home buyers

A further 50,000 places a year will be made available under various government schemes to help more Australians buy a home.

This includes an additional 35,000 places for the First Home Guarantee where the government underwrites loans to first-home buyers with a deposit as low as 5 per cent. And a further 5,000 places for the Family Home Guarantee which helps single parents buy a home with as little as 2 per cent deposit.

There is also a new Regional Home Guarantee, which will provide 10,000 guarantees to allow people who have not owned a home for five years to buy a new property outside a major city with a deposit of as little as 5 per cent.
<h4">Support for parents

The government is expanding the paid parental leave scheme to give couples more flexibility to choose how they balance work and childcare.

Dad and partner pay will be rolled into Paid Parental Leave Pay to create a single scheme that gives the 180,000 new parents who access it each year, increased flexibility to choose how they will share it.

In addition, single parents will be able to take up to 20 weeks of leave, the same as couples.

Health and aged care

One of the Budget surprises in the wake of the Aged Care Royal Commission findings, was the absence of spending on additional aged care workers and wages.

Instead, $468 million will be spent on the sector with most of that ($340 million) earmarked to provide on-site pharmacy services.

The Pharmaceutical Benefits Scheme (PBS) is also set for a $2.4 billion shot in the arm over five years, adding new medicines to the list. PBS safety net thresholds will also be reduced, so patients with high demand for prescription medicines won’t have to get as many scripts.

A $547 million mental health and suicide prevention support package includes a $52 million funding boost for Lifeline.

And as winter approaches, the government will spend a further $6 billion on its COVID health response.

Jobs, skills development and small business support

As the economy and demand for skilled workers grow, the government is providing more funding for skills development with a focus on small business. It will provide a funding boost of $3.7 billion to states and territories with the potential to provide 800,000 training places.

In addition, eligible apprentices and trainees in “priority industries” will be able to access $5,000 in retention payments over two years, while their employers will also receive wage subsidies.

Small businesses with annual turnover of less than $50 million will be able to deduct 20 per cent of the cost of training their employees, so for every $100 they spend, they receive a $120 tax deduction.

Similarly, for every $100 these businesses spend to digitalise their businesses, up to an outlay of $100,000, they will receive a $120 tax deduction. This includes things such as portable payment devices, cyber security systems and subscriptions to cloud-based services.

Looking ahead

With an election less than two months away, the government will be hoping it has done enough to quell voter concerns about the rising cost of living, while safeguarding Australia’s ongoing economic recovery.

The local economy faces strong headwinds from the war in Ukraine, the cost of widespread flooding along much of the east coast and the ongoing pandemic.

Much depends on the hopes for the rise in employment and wages to offset rising inflation, and the timing and extent of interest rate rises by the Reserve Bank.

If you have any questions about any of the Budget measures, don’t hesitate to call us.

Information in this article has been sourced from the Budget Speech 2022-23 and Federal Budget support documents.

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

https://tradingeconomics.com/australia/gdp-growth-annual

ii https://www.abs.gov.au/media-centre/media-releases/annual-wage-growth-increases-23

iii https://tradingeconomics.com/commodity/iron-ore

iv, v https://tradingeconomics.com/commodities

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Introduction to House of Wealth: Mulgrave Accountant and Property Financial Advisor

Introduction to House of Wealth

To schedule a free consultation with House of Wealth get in touch here.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Winter 2021: Economic News

Winter 2021: Economic News

It’s June which means winter has officially arrived. As we rug up and spend more time indoors, it’s a perfect time to get your financial house in order as another financial year draws to a close. And what a year it has been! The local economic news in May was dominated by the federal Budget, and much better-than-expected economic data.

Australia’s budget deficit is smaller than expected just six months ago, at $177.1 billion in April. This was underpinned by rising iron ore prices, up 22% this year, and higher tax receipts from more confident businesses and consumers.

The NAB business confidence and business conditions ratings hit record highs in April of +26 points and +32 points respectively. New business investment rose 6.3% in the March quarter, the biggest quarterly lift in nine years.

Housing construction is also going gangbusters, up 5.1% in the March quarter while renovations were up 10.8% thanks to low interest rates and government incentives.

Retail spending is also recovering, up 1.1% in April and 25.1% on a year ago. The ANZ-Roy Morgan weekly consumer confidence index rose steadily during May to a 19-month high of 114.2 points, well above the long-term average.

As a result of the pick-up in economic activity, unemployment fell from 5.7% to 5.5% in April.

In response to all this, the Reserve Bank lifted its economic growth forecast to 9.25% for the year to June and 4.75% for calendar 2021. If realised, this would be the strongest growth in 30 years, albeit rising out of last year’s COVID recession.

The major sticking point remains wages. Wage growth was 0.6% in the March quarter but just 1.5% on an annual basis, below inflation. The Aussie dollar finished May at around US77c after nudging US79c earlier in the month.

50% Pension Drawdown Requirements

Prime Minister, Scott Morrison has recently announced that the temporary rule change, reducing the minimum superannuation drawdown by 50%, has been extended until 30th June 2022.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Budget 2021-2022 Focus on Tax

Federal Budget 2021-22: Focus on tax

Budget 2021-2022 Focus on Tax

Federal Budget 2021-22: Focus on tax

Support for Australia’s businesses and our personal finances was at the heart of this year’s Federal Budget as the Morrison Government continues its attempts to strengthen the post-lockdown economy.

Once again Treasurer Josh Frydenberg made tax measures a key part of his Budget speech, announcing extensions to several of the Government’s signature tax support measures, together with new tax incentives and funding for job training and skills. These measures are designed to boost the continuing recovery of small and family businesses, which the Treasurer called the “engine room of the economy”.

LMITO extended again

With a federal election due next year, a key Budget announcement was another one year extension to the low and middle income tax offset (LMITO) for 2021-22. This measure will provide a tax offset of up to $1,080 for individuals and $2,160 for dual income families.

Continuation of full expensing and loss carry-back

The temporary full expensing and loss carry-back measures announced last year are also being extended to help businesses bring forward investment and access tax benefits. Eligible businesses with an aggregate annual turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets until 30 June 2023.

Eligible companies can also carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as 2018-19. This tax refund will be available when companies lodge their tax returns for the 2020-21, 2021-22 and 2022-23 financial years.

Patent box

To provide incentive for Australia’s medical and biotechnology companies to commercialise their research, the Government is introducing a new ‘patent box’ from 1 July 2022. Income from patents will be taxed at a concessional rate of 17 per cent, which is significantly lower than the normal 30 per cent corporate rate. The new tax incentive is designed to encourage locally-based R&D and may be extended to the clean energy sector.

Adopting digital technology

As the digital economy continues to change the way we do business, small businesses will be supported to adopt digital technologies through a $12.7 million expansion of the Digital Solutions – Australian Small Business Advisory Service. They will also benefit from further $15.3 million in funding to help with the introduction of e-invoicing.

Employee share schemes reintroduced

To help businesses attract and retain talent, the Budget removes the cessation of employment taxing point for tax-deferred employee share schemes. This means tax on shares received as part of these schemes can now be deferred for up to 15 years.

New apprenticeship funding

The Government announced an additional $2.7 billion in funding for apprenticeships and traineeships. Businesses will be paid a 50 per cent wage subsidy over 12 months for new apprentices or trainees signed up by 31 March 2022.

There will also be an additional $500 million for low-fee or no cost training through the existing JobTrainer program to support training in digital skills and upskilling in industries like aged care.

New tax umpire

The Government is also making it easier for small businesses to pause or modify the collection of debts under dispute with the ATO. They will be able to apply to the Small Business Taxation Division of the Administrative Appeals Tribunal to have an ATO debt recovery action paused until their case is decided.

Removal of SG threshold

Small businesses with low-income or part-time employees will need to revisit their Superannuation Guarantee (SG) contributions. This follows the Government’s commitment to remove the current $450 per month threshold before an employer needs to start making SG contributions for an employee.

Tax cut for brewers and distillers

And finally, it’s cheers all round for our artisan brewers and distillers. From 1 July 2021, those eligible will receive full remission (up from 60 per cent) of any excise paid on alcohol produced up to the new $350,000 cap on the Excise Refund Scheme.

Information in this article has been sourced from:

- The Budget Speech 2021-22 - https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/ speeches/budget-speech-2021-22

- and Federal Budget support documents - https://budget.gov.au/

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


interest rate drought image

What’s to do when interest payments on your cash are worth so little?

What’s to do when interest payments on your cash are worth so little?

Cuts in interest rates are welcomed by homebuyers and other borrowers. But for retirees and others who depend on interest payments for their income, falling interest rates can be disastrous.

For them, a drop in interest rates from 3% to 1% meant a massive 67% drop in income. And with rates falling again from 1% to 0.5% they’ve suffered a further 50% reduction in income.

And sadly, that’s not the end of the story. There’s inflation to consider too!

Right now, the headline inflation rate, as measured by the Australian Consumer Price Index, is running at approximately 1.3%. That means, the real value of your money, i.e., the purchasing power of your cash, has fallen by 1.3% over the last 12 months.

With interest rates sitting at around 0.4%-0.5%, the interest you can accrue from your cash is not enough to cover for that 1.3% loss from inflation.

So, the harsh reality right now is, if your money is sitting in cash it’s actually costing you to keep it there!

If you’re not a retiree the story gets even worse, because there’s tax on interest to consider too!

What Are The Alternatives?

The big challenge for a retiree when looking for alternatives is acquiring cashflow that carries acceptable risk.

Aside from the term deposits favoured by many retirees, annuities are worth considering. An annuity effectively exchanges an up-front lump sum for regular income payments. They are generally considered to be low risk. However, as an interest-producing investment, returns are low when interest rates are down.

High dividend yielding shares have also been a traditional source of income for retirees, offering not just income but also the prospect of capital growth. However, shares can also fall in value, and the economic uncertainty precipitated by COVID-19 saw many companies cut or cancel their dividends as their profits fell.

Hybrids offer attractive middle ground between regular shares and bonds

Hybrids such as convertible shares, preference shares and capital notes have elements of debt and equity (share) investments. Their prices are usually more stable than ordinary shares, and they pay either a fixed or floating rate of interest, often as a fully-franked dividend, above a particular benchmark, usually the Bank Bill Swap Rate.

Lately at House of Wealth, we’ve been helping a lot of retiree clients take advantage of Convertible Notes issued by some of the major Australian banks. These offer security of your principal along with the potential to participate in share price gains.

For retirees preferring a less hands-on approach to managing their portfolios as well as diversification away from individual securities, a vast range of managed funds are available that suit all risk tolerance levels, and can provide regular income over and above the insulting rates of interest currently on offer.

Portfolio Balancing Can Help You Go the Extra Distance

With interest rates at unprecedented lows, many retirees will have no choice but to dip into their capital to meet their cash flow needs. If the portfolio contains a reasonable allocation to growth assets and depending on market conditions, then capital growth may be sufficient to cover cash withdrawals.

A long-term perspective

In abnormal economic times it’s important to keep some perspective. Economic upheavals are often short term. Retirement, on the other hand, can last for decades.

To ensure your retirement portfolio is optimised to weather the current interest drought, contact us today.

And if you’ve not already done so over the last 12 months, feel free to book in for a free financial health check, where we can discuss your options.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Economy and Market Update Feb 2021

Economy and Markets Overview: February 2021

Economy and Market Update Feb 2021

Economy and Markets Overview: February 2021

It’s February, the kids are back at school and the nation is getting back to business. It’s still not business as usual, but with the vaccine rollout about to begin there is a growing sense of optimism.

International Markets

There was a sense of relief on the global economic front in January as Joe Biden was sworn in as US President.

Financial markets rallied on expectations of more US government financial stimulus and a stronger focus on containing the COVID-19 health crisis.

There were also positive economic signs from our other major trading partner, China where a V-shaped recovery is underway.

China’s economy grew by 2.3% in 2020, the best performance of any major economy even though it was China’s slowest growth since 1976.

Australian Markets

Here in Australia, there were also signs of a cautious economic recovery. Consumer confidence hit a 14-month high in January, due to our success in dealing with the pandemic and supporting jobs.

The ANZ-Roy Morgan consumer confidence rating hit 111.2 points, just below its long-term average of 112.6.

Unemployment fell from 6.8% to 6.6% in December, a time when businesses typically hire casual staff for the Christmas-summer holiday rush.

Retail trade fell 4.2% in December but was still up 9.4% over the year. Inflation remains weak, with the consumer price index (CPI) up 0.9% in the December quarter and also up 0.9% in 2020 overall.

The exception is house prices, up 3% in 2020. This was reflected in the value of new home loans which rose 5.6% in November due to record low interest rates and government policy initiatives. The Aussie dollar finished the month slightly lower at US76¢.