The impact of student loans when buying a home

The impact of student loans when buying a home

Budgeting, Education, Finance

For many Australians, particularly young Australians, the dream of home ownership is often accompanied by the reality of carrying student loans, known as HECS-HELP debt. Understanding the impact of HECS debt on your ability to secure a home loan can help you plan for and navigate the home loan process. Case Study Sarah, is a 32-year-old marketing professional from Melbourne. She has a stable job with a steady income and has managed to save a decent deposit for her first home. However, like many Australians, Sarah carries a HECS debt from her university education. What is HECS-HELP debt? HECS-HELP is a loan offered by the Australian government to pay for studies at a university or approved higher education provider. Once a person earns above the compulsory repayment threshold, loan repayments are automatically deducted from their pay through the ATO. There is no interest on the loan, but the debt is annually indexed against inflation. Sarah’s Home Loan Goals Sarah’s goal is to purchase a two-bedroom apartment close to the city. She is aiming to take out a $450,000 home loan, considering her savings and the property prices in her desired area. Sarah is concerned about how her HECS debt will affect her home loan application and how she can maximise the amount she can borrow. The Application Process and the Impact of Student Loans When Sarah approached a mortgage broker to discuss her home loan options, she learned that her HECS debt, while interest-free, would still impact her borrowing capacity. Sarah’s potential lenders must consider her ability to meet all financial obligations, including her HECS repayments. This could potentially lower the loan amount Sarah qualifies for, as lenders assess her debt-to-income ratio. Strategies and Solutions Sarah’s mortgage broker advised that there are several strategies she can consider to enhance her borrowing capacity despite her student debt: Outcome By proactively managing her finances, seeking professional advice, and implementing strategies to manage her HECS debt, Sarah was able to strengthen her home loan application. She successfully secured a home loan with a competitive interest rate, allowing her to purchase an apartment within her parameters. The impact of student loans on home loan applications is a significant consideration for many young Australians. But the good news is that there are steps you can take to minimise the impact of HECS-HELP debt. Doing so enhances the chances of securing a home loan, and empowers you to make informed decisions on your financial journey. Reach out to us today and take the first step towards home ownership! The information provided in this article is general in nature only and does not constitute personal financial advice.  

How to Retire Well Webinar

How to Retire Well Webinar

Updated on Webinars

A presentation for those in retirement and those who have it in their sights!​ This presentation is a cumulation of over 26 years in the financial planning industry and the topics that have mattered the most for my clients. ​It is about $, but it’s also about retiring well​​ and building memories to reduce future regret. The number one tool that provides my clients so much comfort. We look forward to having you attend the event! Speakers:

Is your money mindset holding you back?

Is your money mindset holding you back?

Updated on Budgeting, Education

Does your Money Mindset have your back? Or… Is it holding you back?   If you’ve never really thought about it, you’d be forgiven. When it comes to our financial success, we tend to focus on things like income, investments, and expenses. It makes sense to put our financial position down to how much we earn or spend, or the performance of our investments. But what about the role of our Money Mindset?  What is a Money Mindset? A money mindset is your set of beliefs and attitudes about money. It shapes how you make financial decisions, how you perceive wealth, and how you react to financial challenges. Understanding your money mindset is important because it can either support you in achieving financial success, or hold you back from it.  There are various types of money mindsets, but they often fall into two broad categories:  Abundance Mindset vs. Scarcity Mindset Abundance Mindset: An abundance mindset is the belief that ample opportunities exist to earn, grow, and enjoy wealth. People with this mindset see the world as full of potential and possibilities. They tend to be optimistic about their financial future and are willing to take calculated risks.  Scarcity Mindset: A scarcity mindset, on the other hand, is the belief that resources are limited and difficult to obtain. People with this mindset often focus on what they lack rather than what they have. This can lead to fear, anxiety, and a reluctance to take risks.  Fixed Mindset vs. Growth Mindset Fixed Mindset: A fixed mindset in a financial context means believing that your financial abilities and knowledge are static and unchangeable. People with a fixed mindset might think they are either “good” or “bad” with money and that this cannot be altered. Growth Mindset: A growth mindset is the belief that financial skills and knowledge can be developed through effort and learning. Individuals with a growth mindset see financial challenges as opportunities to improve and grow.  Money Mindsets in Everyday Life Having explored the concepts of abundance vs. scarcity and fixed vs. growth mindsets, let’s look at how these money mindsets might manifest in everyday life: Kylie believes there are many ways to grow her wealth. She takes an online investing course, consults a financial adviser, and starts a diversified investment portfolio. She views market fluctuations as learning experiences and opportunities for growth. Jacob believes he will never be good with money and that financial success is reserved for others. He avoids investing due to fear of losing money and prefers to keep his savings in a low-interest account. He often feels stressed about his financial future and is reluctant to seek advice. Taylor is optimistic about her financial future and believes in plenty of opportunities. However, she thinks her financial skills are unchangeable. She sticks to familiar, low-risk investments and dismisses new strategies, missing out on potentially higher returns. Oscar grew up believing money is scarce and financial security is hard to achieve. Despite this, he commits to improving his financial situation through education. He starts with low-risk investments to build confidence and gradually diversifies his portfolio, overcoming his fears over time. Strategies to shift a negative Money Mindset If you’ve identified that your money mindset might be holding you back, don’t worry! The following strategies can be used to help you to shift your mindset to a more positive one:  Your money mindset plays a crucial role in your financial success… it should have your back, not hold you back! By identifying and overcoming negative financial beliefs, you can create a healthier relationship with money and achieve your financial goals. Take the first step today by reflecting on your financial mindset and seeking professional advice to guide you on your journey. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Do you help your children buy a home?

Do you help your children buy a home?

Updated on Podcast

In this episode, join financial advisers Rob & Amy as they delve into essential strategies to maximise your End of Financial Year (EOFY). Learn how to achieve significant tax wins and optimise your superannuation contributions with our easy-to-follow advice.  Whether you’re looking to improve your personal financial position or simply want to make the most of the EOFY, this episode offers valuable insights and actionable tips to boost your financial well-being! To view the video version of this episode visit https://youtu.be/x89ssPQ0jNQ?si=xeLfRmpKbF6aHfUC Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Smart moves in a high ASX market (& Altium Sale)

Smart moves in a high ASX market (& Altium Sale)

Updated on Podcast

This week we said goodbye to tech stock Altium from the Australian share market as its buyout by Renesas was officially completed… As a result, large cash payouts have been received by Altium shareholders. So, what’s the next step if you receive a substantial cash payout from an investment? Should you invest in the currently high ASX, or leave the cash in the bank? Rob & Amy share some smart alternate options to consider while the ASX is trading high.  To view the video version of this episode visit https://youtu.be/U-LhtxZJTys?si=3lfPLZciVxyuUem_ Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Your super: A scammer’s new target

Your super: A scammer’s new target

Updated on Education, Superannuation

In a recent media release, the Australian Securities and Investments Commission (ASIC) warned about a new scam doing the rounds. Scammers attempt, through cold calls to superannuation savers, to extract personal and super fund details by offering incentives in the form of gift cards, competitions or mobile phones. Some induce victims to create an account on their ‘comparison website’ to legitimise themselves and their advice. Rosie’s story: When you get those phone calls in the evening, you know, around dinner time, you’re immediately suspicious. But Steve rang mid-morning saying he represented a well-known investment firm. He said that his area of expertise was superannuation, and that it would only take a moment for him to explain what he could do for me. He then guided me through the steps for creating an account on his website. Naturally, I was cautious, but Steve reassured me it was just a comparison site, and I wasn’t signing up to anything. He showed me how to compare my super fund’s returns with others, and the website seemed so legit that I felt a bit silly for initially having doubts. I listened to what he had to say, and it all made sense. Gerry’s story: The first I knew about all this was when Rosie called asking me to transfer her super into an alternative fund. A bit of background; Rosie has been a client since we first set up a retirement plan and savings strategy for her, twenty-odd years ago. As her lifestyle changed over time, we reviewed and tweaked her portfolio, and she was on track for a comfortable, self-funded retirement. Rosie is an intelligent woman. She may not be a superannuation expert – that’s my job – but we’ve had some quite detailed conversations about her retirement and savings portfolios. So when she asked me to facilitate her roll-over to this other fund, well, to say I was concerned was an understatement. Scammers pose as financial planners or investment managers. Traditionally, they have targeted individuals searching online using words like, ‘safe’, ‘superannuation or ‘long-term’. Recently, they’ve gone to the next level and begun cold calling. Rosie: When I phoned Gerry, he seemed reluctant to organise my roll-over. He asked me for the details of the fund I was rolling into and said he’d get back to me. I thought he was just a bit miffed that I was talking to someone else. Gerry: Alarm bells were going off in my head. I asked Rosie to sit tight for a day while I researched the fund. I contacted the company this Steve fellow claimed to represent and asked them a few questions. Of course, neither Steve nor the fund existed. Then I checked whether the fund had a USI (unique superannuation identifier). Nothing for that either. I rang Rosie. Rosie: I was shocked, I mean, Steve sounded so genuine – and the website! Wow. What a close call! Gerry told me to report the scam to Scamwatch. They contacted me and said this kind of thing was increasingly common and recommended I join the ‘Do-not-call register’. Lesson learned. I’ve had a great working relationship with Gerry for years, there’s a reason for that! I’m due for my annual review next month – Coffee’s on me! If you suspect a scammer has called you, ASIC recommends you: Above all, never accept financial advice from someone you don’t know, if in doubt, speak to your financial adviser – seriously, if the fund is legitimate, they’ll know about it! The information provided in this article is general in nature only and does not constitute personal financial advice.  

6 steps to a Happy New Financial Year

6 steps to a Happy New Financial Year

Updated on Budgeting, Education

The new financial year provides an opportunity for a fresh start for your finances. Make this the financial year you get on top of yours… for good!  We’ve broken it down into six bite-sized, manageable steps for you to tackle over six months, because real change takes time! The below is a suggested path to a New Financial You, however, you can choose your preferred order and pace. July: Goal Setting What is it that you want? I mean REALLY want? As with any goal, your financial goals should be SMART – Specific, Measurable, Achievable, Relevant, Timely. Whether you’re wanting to build an emergency fund, get out of debt, or save for a specific goal, write down your goals in detail and then revisit these regularly to remind yourself of what you’re working towards. August: Set your Budget A budget helps you see what’s coming in, what’s going out and most importantly how much you have to allocate towards your goals. There are plenty of free templates online so find one that works for you and add in your personal income and expenses.  Tip – Go through your last three months’ bank statements to get details of your spending. September: Set up a Savings Plan You can do this by working out how much money you need for a particular savings goal and by when, then breaking it down into regular amounts to be set aside. Example – If you want to save $2,000 for Christmas by December 1st, you’ll need to set aside $154/week from September 1st. Tip – Automate savings by setting up a regular transfer. October: Super Check It’s time to health check your superannuation:  Make sure your contact details are up to date to ensure you’re not missing out on important correspondence. Do you have a current beneficiary nomination in place? A valid beneficiary nomination will direct your super fund on how you would like your super benefits to be paid, if you were to pass away. How much is your super costing future you? There are a whole range of fees that might be funded from your super, including administration, investment, and adviser service fees, all of which will have an impact on your retirement savings.  Do you know how you’re super is invested? Is it Conservative or Growth? How well has it performed over the long term? Some important things to consider when choosing an investment option include your life stage, investment horizon and comfort for risk. November: Insurance Review There are a range of insurances that offer financial security for you and your family, including:  This month, get to know your current insurances and consider whether the types and amounts are suitable for your needs. December: Estate Planning Estate Planning involves documenting what you want to happen in the event you pass away or become incapacitated. It might include Wills, Powers of Attorney, Health Directives and Guardianship nominations.  If you don’t have these in place already, it’s time to build out your Estate Plan.  If you do, it’s time to dig these out for a review. Congratulations, you made it!  If you’d like some extra support on your journey, reach out to your Financial Adviser today for help with achieving your financial goals!   The information provided in this article is general in nature only and does not constitute personal financial advice.  

Quarterly Economic Update: April – June 2024

Quarterly Economic Update: April – June 2024

Updated on Economy, Finance, Investing

The economy continues to slow, with inflation remaining sticky, the new federal budget making waves, and global events that may have a significant impact. Uncertainty at home and abroad The current outlook indicates uncertainty both domestically and internationally, making it unlikely that inflation will reach the target range of 2-3 per cent in the near future. May forecasts suggested that inflation would return to the target range by the second half of 2025 and reach the midpoint by 2026. However, recent indicators point to weak economic activity, such as slow GDP growth, an increase in the unemployment rate, sluggish wage growth, and uncertain consumption growth. Advanced economies are experiencing a slowdown in growth, although there are signs of improvement in the Chinese and US economies, along with increased commodity prices. Nevertheless, geopolitical uncertainties remain high, which could potentially disrupt supply chains. The Federal Budget focuses on social matters Treasurer Jim Chalmers presented the 2024-2025 Federal Budget on May 14, 2024. The government aimed to alleviate the cost of living without worsening inflation. Key announcements included: Interest rates remain steady, but the pain may not be over The Reserve Bank of Australia (RBA) kept interest rates on hold and the cash rate steady at 4.35 per cent throughout the quarter. At the June RBA board meeting, Governor Michele Bullock stated that the board has not dismissed the possibility of further rate hikes. Interest rates will stay at this level until the RBA’s next board meeting in early August. Inflation persists, despite slowing Inflation remains persistent, with the RBA predicting that it will take some time to consistently stay within the target range of 2-3 per cent. Although inflation has decreased significantly since its peak in 2022, the rate of decline has slowed. At the same time, economic growth has been limited as households cut back on non-essential spending due to income constraints. What are we spending on? Households are continuing to limit their spending on non-essential items. Spending on discretionary goods has shown a slow increase, rising by only 0.6 per cent over the year. On the other hand, spending on non-discretionary goods and services has risen by 5.8 per cent, mainly due to higher fuel and food costs. Household spending on health has significantly increased, showing a 15.7 per cent rise compared to this time last year. Health spending made the largest contribution to the overall 3.4 per cent rise in household spending in April. China lifts Aussie beef bans China has lifted bans on most beef and other exporters. The bans began in 2020 when China suspended beef exports from eight processors and imposed official and unofficial trade barriers on barley, coal, lobster, wood, and wine, costing exporters $20 billion Australian dollars ($13 billion) a year. These measures were viewed as politically motivated actions to penalise Australia, although China claimed they were related to trade issues. With the lifting of these bans, less than $1 billion worth of Australian exports are still being impeded. This marks a significant reduction from the previous $13 billion impact on Australian exporters. Trump down but not out Donald Trump’s conviction on 34 felony counts of falsifying business records has not stopped his campaign for President. As the November election looms closer, economists have expressed concerns about Trump’s campaign promise to impose a 10 per cent tariff on all US imports. If implemented, this and other trade policies could trigger another round of trade wars, disrupt international trade, and impact global growth. The information provided in this article is general in nature only and does not constitute personal financial advice.

What not to do in Retirement

What not to do in Retirement

Updated on Podcast

In this episode, we provide essential advice for a fulfilling and financially secure retirement. We discuss the importance of balancing frugality with enjoying your time and making memories. Staying active through hobbies and volunteering can give your days purpose. Many retirees also underestimate their lifespan, risking their savings with overly conservative investments. We cover the dangers of spending too much too soon and the need for regular financial projections with your adviser. We also stress the importance of prioritising your retirement security over gifting early inheritances. Tune in to learn how to navigate retirement wisely and confidently. To view the video version of this episode visit https://youtu.be/LetjQa5jjic?si=yAK2xltSmtine-am Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

How to avoid scams when completing your tax return

How to avoid scams when completing your tax return

Tax

CPA Australia Australians should always be wary of online scams, but we are particularly vulnerable at tax time. Cyber criminals use a mix of tried-and-tested and new methods to attempt to defraud taxpayers, which is why CPA Australia is urging Aussies to be extra vigilant and take some simple measures to help protect themselves. Speaking on CPA Australia’s With Interest podcast this week, the ATO’s Assistant Commissioner of Cyber Governance, Joda Walter, said that ATO-branded SMS and emails containing links to fake myGov web pages remain one of the most common types of scams. Mr Walter also warned Aussies to be wary of fake social media accounts using the ATO and myGov brands. Most prominent on Facebook and X, these fake accounts interact with users and try to trick people into clicking links. How to spot tax time scams Distinguishing between legitimate and scam messages from the ATO is becoming increasingly difficult, however there are signs. “Scammers take advantage of any situation, and at tax time that means targeting unsuspecting individuals through unsolicited messages claiming to be the ATO or another reputable organisation – known as ‘phishing’ scams,” says CPA Australia spokesperson Gavan Ord. “These messages trick individuals into acting quickly and letting their guard down on the promise of financial gain or by convincing them they have done something wrong and need to rectify the situation quickly to avoid penalties. These scams prey on our natural instincts, which is why we need to stop and think before we click any links or give over any personal information.” “If in doubt, always stop, think, and don’t share any personal information, including your tax file number or bank details.” Young Aussies being caught out The ATO says that young Aussies aged 25-34 have been most likely to inadvertently share personal information to ATO impersonation scammers, but everyone is a target. “It can be hard for anyone to spot tax time scams and the fact that young, tech savvy Aussies are most likely to be the victim of ATO impersonation scammers should be a wake-up call to everyone,” said Mr Ord. “It’s definitely a good idea to check in with elderly and vulnerable family and friends to make sure they are aware of common scam types, but also remain vigilant yourself. It only takes a momentary lapse in judgement to be a victim.” Source: CPA Australia The information provided in this article is general in nature only and does not constitute personal financial advice.  

Finding your ideal Financial Adviser

Finding your ideal Financial Adviser

Updated on Podcast

In this episode, we walk you through the essential steps to finding the right financial adviser for you. From using online tools (like Adviser Ratings and Google Reviews), and seeking recommendations from professionals, to the importance of selecting an adviser who prioritises client education and fee transparency, we cover it all. Qualifications such as a bachelor’s degree and ongoing professional development are key, and we recommend the use of resources like the MoneySmart Adviser Register for credential verification. Whether you’re planning retirement or managing investments, this episode equips you with the knowledge to confidently select an adviser who fits your needs. To view the video version of this episode visit https://youtu.be/LjMJsXuBl-M?si=Mv4b2L6PrWzUmmqF Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Navigating the reality of divorce after 50

Navigating the reality of divorce after 50

Updated on Budgeting, Education, Retirement

Adjusting to life after divorce, particularly later in life, is akin to navigating through some of life’s most challenging events, psychologists say. It’s a journey comparable to coping with loss, relocation, major illness or injury, or job loss. While these upheavals are often beyond our control, how we choose to manage them greatly impacts our recovery. Is grey divorce on the rise? Unfortunately, yes. Despite overall divorce rates declining since the 1990s, both the age at divorce and the rate of divorces among couples in long-term marriages are on the rise. According to data from Australian Seniors and the ABS, 32% of divorces now occur after the age of 50. What are some of the key financial impacts of divorce? Superannuation is typically regarded as part of the assets in any pre-divorce financial settlement. Understanding that superannuation can be divided without the need for fund withdrawals or meeting specific conditions is crucial if no prior agreement has been reached with your partner. While splitting it isn’t obligatory, ensuring its inclusion in the settlement is vital due to its significant role in overall wealth. However, dividing it can substantially diminish what was once a solid nest egg, potentially impacting retirement plans. Aside from the emotional toll of asset division, the process can be difficult. Factors like investment properties, primary residences, or self-managed super funds (SMSFs) with less liquid assets—such as business holdings, real estate, closed funds, or art—can further complicate matters. Selling assets without proper advice can trigger capital gains, while shifting assets from tax shelters like superannuation or trusts can result in hefty tax liabilities. Centrelink entitlements and thresholds will also alter with your changed circumstances. Seeking the professional advice of more than just a lawyer is the smartest thing to do. Divorce is also expensive Many shared expenses, such as utilities, become the sole responsibility of each party post-divorce. For instance, while the average monthly living expenses for an Australian couple total around $4,118 ($2,059 per person), for a single person living alone, it’s estimated at $2,835. In essence, each individual spends roughly 70% of what a couple would spend. After divorce, with each person potentially having only half of their assets but needing around 70% of their income to cover living expenses, budgets become tight. So, how can you rebuild financial stability post-divorce? In other words, review your financial plan and seek professional advice. A qualified financial adviser can help you learn to take control of your finances and plan your future. Remember, the benefits of compounding mean that the sooner you start, the better off you’ll be! The information provided in this article is general in nature only and does not constitute personal financial advice.  

Financial First Steps for New Grads

Financial First Steps for New Grads

Updated on Podcast

In this episode, Financial Advisers Rob & Amy share essential tips for graduates to kickstart their financial journey. Discover the key steps you should take to manage your finances effectively, from budgeting and saving to maximising your super fund contributions. Whether you’re entering the workforce or continuing your education, this episode is a must-listen to help you build a strong financial foundation right from the very start.  To view the video version of this episode visit https://youtu.be/cLqV7ydeE2M?si=8eQLiqnzDupmoaoV Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Is your number up this tax time? Claims the ATO will scrutinise

Is your number up this tax time? Claims the ATO will scrutinise

Updated on Tax

CPA Australia No one likes being treated as just a number, but with millions of returns and tens of billions of dollars at stake, that’s the reality when it comes to how the Australian Taxation Office (ATO) assesses tax returns. The ATO uses data-driven profiles based on things like employment type and financial investments to identify where some people may be pushing the boundaries. If your claims are disproportionate to what the ATO would expect from someone in a similar job to you, or with similar financial investments, you may be asked to provide additional evidence to validate your claims. That’s why CPA Australia is urging Aussies to be thorough with their tax returns, including declaring all earnings and having evidence to back up any deductions. Anything that stands out from the crowd may attract the ATO’s attention. “It’s important that everyone pays the right amount of tax and claims what they are entitled to,” said CPA Australia spokesperson Gavan Ord. “The ATO uses highly sophisticated analytics to scrutinise all claims, including those relating to working from home and motor vehicle expenses, income from rental properties, as well as undeclared income from investments like cryptocurrency. “Your tax return is your personal responsibility, and you should be as thorough as possible when declaring your income and claiming deductions. Failure to properly declare all of your income, or over-the-top expense claims, may set off alarm bells and your claims could be rejected if you don’t have the evidence.” Work-related expenses  Work-related deductions are the biggest deduction in most Australians’ tax returns, and some individuals may be tempted to overstate their expense claims in this area. Others may put in claims without sufficient evidence to support them. The ATO is focused on ensuring the correct apportioning of expenses between work and private use, including when you work from home. Keeping a diary of all your work-related activity and having the corresponding receipts is crucial. Your record should include: There are two ways to calculate working from home deductions – the fixed rate method (when you can claim a set rate of 67 cents for every hour worked from home) and the actual cost method. Having records mean you can choose which works best based on your individual circumstances. Motor vehicle expenses There are two methods of claiming a tax deduction for motor vehicle use for work purposes, but whichever is used, you must ensure the claim is accurate and properly evidenced, whether it’s for fuel, servicing or lease payments. If you use a motor vehicle for both business and private use, you must be able to correctly identify and justify the percentage you are claiming as business use. The percentage that is for private use isn’t claimable. To claim accurately, you will need to use a logbook or diary to record private versus business travel. Travelling from home to work is considered private use, unless you are a home-based business and your trip was for business purposes. Income from rental properties For rental property claims, the ATO is focusing on owners who make claims for renovations as repairs. Repairs to the property because of wear and tear or damage from tenants are tax deductible. However, if the work results in an improvement rather than just repairing damage, or results in the replacement of an asset, the expenses will be capital in nature and you can only claim a depreciation expense, not for the entire cost in the year it was spent. Claiming mortgage interest in full when there were drawdowns for private purposes, as well as declaring net income after expenses from annual rental summary of real estate as gross income, will also be under the microscope. Undeclared income (e.g. crypto profits) The ATO is also focused on undeclared income, now including money made from cryptocurrency. The most common use of crypto is as an investment, in which case the crypto asset is subject to capital gains tax (CGT). If you acquire a crypto asset as an investment, transactions such as disposal, exchange or swaps are a CGT event, and you may make a capital gain. If you hold the crypto asset as an investment, it will not be exempt from CGT as a personal use asset. You will make a capital gain if the proceeds from the disposal of your crypto asset is more than its cost base. To work out if you made a capital gain or capital loss from each CGT event, keep your records for each crypto asset and your transactions. You may be able to reduce capital gains using the CGT discount if you hold your crypto asset for at least 12 months. Source: CPA Australia The information provided in this article is general in nature only and does not constitute personal financial advice.  

5 ways to boost your super (with contributions) before EOFY

5 ways to boost your super (with contributions) before EOFY

Updated on Superannuation, Tax

Looking to give your super a boost before the end of the financial year? Look no further! Follow these five strategies to maximise your contributions and make the most of your superannuation savings: 1.Consider additional Concessional Contributions (Pre-Tax Contributions) Why? Because these contributions are taxed at just 15%, potentially lowering your taxable income. It’s like giving less to the taxman and more to future you! You’re allowed up to $27,500 annually, including your employer’s 11% contribution. However, there is one exception to this… 2.Catch-up on Unused Concessional Contributions If you haven’t maxed out your concessional contributions from previous years, legislation now allows you to make ‘catch-up’ contributions if your super balance is under $500,000. Look back up to five years to see if you’ve got unused caps you can access. 3.Take Advantage of Non-Concessional Contributions (After-Tax Contributions) If you’re a low- or middle-income earner, the government co-contribution scheme is a great way for you to contribute to superannuation personally AND get a little bonus top up from the government. It’s also a great way to add larger amounts to super, because you’re allowed to contribute up to $110,000 per year (or $330,000 if you are eligible to ‘bring forward’ future contributions). 4.Sharing the Super love with Spouse Contributions If your partner’s income is on the lower side, contributing to their super could earn you a tax offset of up to $540. It’s a win-win: you help increase your family’s total super savings while scoring a tax perk for yourself. 5.Or consider Contribution Splitting with your Significant Other You may be able to split up to 85% of your concessional super contributions with your spouse. This strategy can help even out your super balances, potentially reducing the tax paid on super pensions in the future. It’s a smart move, especially if one of you is taking a career break or working part-time. With the end of the financial year fast approaching, now is the perfect time to reach out to your Financial Adviser and take action to grow your retirement nest egg and boost your super. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Planning for Aged Care Webinar

Planning for Aged Care Webinar

Updated on Webinars

Don’t miss our exclusive “Planning for Aged Care” seminar, specially designed to help you secure a comfortable future. With medical advancements increasing longevity, aged care is becoming a reality for more Australians. Over one million people currently receive aged care, and planning ahead is crucial for ensuring the best possible outcomes. Join us to discover: Take control of your future and make informed decisions. Secure your spot today! Speakers:

ATO flags 3 key focus areas for this tax time

ATO flags 3 key focus areas for this tax time

Tax

Australian Taxation Office As ‘tax time’ approaches, the Australian Taxation Office (ATO) has announced it will be taking a close look at 3 common errors being made by taxpayers: • Incorrectly claiming work-related expenses• Inflating claims for rental properties• Failing to include all income when lodging ATO Assistant Commissioner Rob Thomson said the ATO is focused on supporting taxpayers to get their lodgment right the first time. ‘These are the areas that people are most likely to get wrong, and while these mistakes are often genuine, sometimes they are deliberate. Take the time to get your return right.’ Work related expenses In 2023 more than 8 million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home. Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included, increase the rate, and adjust the records you need to keep. These changes are now in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction. To use this method, you need records that show the actual number of hours you worked from home (like a calendar, diary or spreadsheet), and the additional running costs you incurred to claim a deduction (like a copy of your electricity or internet bill). ‘Deductions for working from home expenses can be calculated using the actual cost or the fixed rate method, and keeping good records gives you the flexibility to use the method that works for you, and claim the expenses you are entitled to.’ ‘Copying and pasting your working from home claim from last year may be tempting, but this will likely mean we will be contacting you for a ‘please explain’. Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.’ Mr Thomson said. Remember, there are 3 golden rules for claiming a deduction for any work-related expense: Rental properties Rental properties continue to remain in the ATO’s sights. Our data shows 9 out of 10 rental property owners are getting their income tax returns wrong. ‘We often see landlords making mistakes when it comes to repairs and maintenance deductions on rental properties, so we’re keeping a close eye on this.’ ‘This year, we’re particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit,’ Mr Thomson said. Performing general repairs and maintenance on your rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are not deductible as repairs or maintenance. ‘You can claim an immediate deduction for general repairs like replacing damaged carpet or a broken window. But if you rip out an old kitchen and put in a new and improved one, this is a capital improvement and is only deductible over time as capital works.’ ’We encourage rental property owners to carefully review their records before lodging their return and take care to ensure they are claiming deductions correctly,’ Mr Thomson said. As reporting rental income and deductions can be complex, many individual rental owners choose to use a registered tax agent to help them prepare their income tax returns. ‘Ensuring you provide full and complete records to your registered tax agent allows them to prepare your tax return correctly, so you claim everything you’re entitled to and nothing that you’re not,’ Mr Thomson said. Get it right – Wait to lodge The ATO is also warning against rushing to lodge your tax return on 1 July. If you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging. ‘We see lots of mistakes in July where people have forgotten to include interest from banks, dividend income, payments from other government agencies and private health insurers,’ said Mr Thomson. 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 help you get your tax return right. ‘By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.’ ‘We know some prefer to tick their tax return off the to-do list early and not have to think about it for another 12 months, but the best way to ensure you get it right is to wait for just a few weeks to lodge.’ ‘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 unnecessary delays,’ Mr Thomson said. Source: Australian Taxation Office The information provided in this article is general in nature only and does not constitute personal financial advice.  

2024-25 Federal Budget Recap 

2024-25 Federal Budget Recap 

Centrelink, Economy, Superannuation, Tax

In his 2024 Federal Budget speech, treasurer, Jim Chalmers, announced that ‘The number one priority of this government and this Budget is helping Australians with the cost of living’.  But what exactly does that mean?   Let’s take a closer look at what the 2024 Budget proposes –   An average tax cut of $1,888 in 2024-25  The budget proposes significant tax relief for ALL Australian taxpayers to alleviate cost-of-living pressures, including reduced tax rates, adjustments to the income thresholds, and increased low-income thresholds for the Medicare levy.   This measure aims to boost disposable income and encourage economic activity by allowing Australians to retain more of their earnings.  $300 back in the pocket for ALL Australian Households  To combat rising energy costs, the government has allocated $3.5 billion for a one-time $300 energy bill rebate for all Australian households, designed to directly reduce headline inflation by about 0.5 percentage points in 2024-25 without adding to broader inflationary pressures.  This initiative also extends to one million small businesses, receiving a $325 rebate.  Superannuation contributions on paid parental leave  The 2024 budget integrates enhancements to parental leave and childcare into comprehensive support for families. It includes a $1.1 billion investment to extend superannuation contributions to government-funded Paid Parental Leave, improving financial security for new parents.   Additionally, the budget boosts childcare support, aiming to make childcare more affordable through increased subsidies, reducing the financial burden on families and supporting parents’ return to work.   These measures are part of a broader effort to provide more robust support for families and promote gender equality.  $3 billion in student debt… wiped  In an effort to alleviate the burden of education costs, the budget proposes a change to the way the government calculates HELP debt indexation, erasing $3 billion in student debt for over 3 million Australians.   An investment in education for Australians  The budget commits to reforming tertiary education and increasing vocational training funding, aligning skills training with market needs.   Specifically, it allocates $88.8 million to provide 20,000 new fee-free TAFE places, including pre-apprenticeship programs relevant to the construction industry.   Additionally, the government is introducing Commonwealth Prac Payments to support students undertaking mandatory placements, offering $319.50 per week to more than 73,000 eligible students, which includes those in fields like nursing and social work.   This investment is part of a broader effort to align skills training with labor market demands and support sectors critical to economic growth.  Supporting small businesses  To aid small businesses, the 2024 budget extends the $20,000 instant asset write-off for an additional year, enabling continued investment in necessary business equipment. This extension is designed to enhance the cash flow of small enterprises and encourage further economic activity among local businesses.   Additionally, the budget includes investments to support the mental and financial well-being of small business owners, recognising the unique challenges they face and bolstering the resources available to them for sustainable operation.  Access to affordable medicines  The budget allocates up to $3 billion to reduce the maximum PBS co-payments. This includes a one-year freeze on the maximum patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders, ensuring that no pensioner or concession card holder will pay more than $7.70 for PBS-listed medications until 2030.  … And an increase to health funding  The budget allocates $888.1 million to expand mental health services. This includes funding for new and existing programs that provide critical support for individuals facing mental health challenges.    An additional $2.2 billion is directed towards improving the aged care system, and investments are made in strengthening Medicare with a focus on urgent care clinics, reducing hospital admissions, and supporting regional and remote health services.  This expansion aims to provide wider access to necessary health services, significantly improving health outcomes and making healthcare more affordable and accessible to more Australians.  A 10% increase to Commonwealth Rent Assistance  In response to the housing affordability crisis, the budget increases Commonwealth Rent Assistance by 10%, benefiting nearly 1 million households. This follows a 15% increase from the previous year, marking a substantial boost to aid renters, especially given the rising rental market costs.  Housing affordability  The government is investing $6.2 billion in new housing initiatives to tackle affordability and accessibility.   This funding supports the construction of more homes, including affordable and social housing options, addressing critical housing shortages and supporting community infrastructure development.   The 2024-25 Federal Budget is strategically focused on alleviating financial pressure through targeted support measures. By understanding and applying these benefits, Australian households can better navigate the challenges of rising living costs.  For tailored advice on how to adjust your financial plan in light of the new budget measures, consider consulting with a financial adviser or accountant. They can help you understand the specific impacts on your personal finances and strategise accordingly.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

Investment Market Update

Investment Market Update

Podcast

Join us as we dissect the current investment market, analysing recent trends, discussing the surge in market values and what it means for our investment portfolios. Who determines if things are overvalued? And can we time the market effectively, especially in the short term? With US equities yielding less than 2%, and giants like Microsoft, Apple, Meta, Alphabet, Amazon, Nvidia, and Tesla dominating the S&P500, what’s on the horizon? Is a correction imminent?   Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Get ready for June 30 now!

Get ready for June 30 now!

Updated on Superannuation, Tax

When it comes to getting the most (money) from your annual tax return, there is usually a lot to think about, so we’ve identified a few options that could open the door to some opportunities to save on tax. The key here is to plan ahead. Deductions — lower your tax liability If you have some spare cash available, paying for certain expenses before June 30 could mean you get your tax break back from the ATO earlier. Expenses paid in July could leave you waiting more than 12 months for the return. A popular expense in this category is prepaying interest on an investment loan, but be careful because not all expenses qualify for a tax deduction in advance. This year the ATO is focusing on work-related expenses. If you are planning to claim expenses for things like a home office, mobile phone, tools and equipment, etc, make sure you claim only eligible expenses and have the paperwork to substantiate them. You can claim the premiums you have paid for your income protection insurance as a tax deduction. Note that you can only claim the portion of the premium that covers you for loss of income, not for any benefits of a capital nature. Premiums for other personal insurance cover such as life, critical care or trauma cannot be claimed. You also can’t claim deductions for premiums that are paid from your superannuation contributions if your policy is held in your fund. Super contributions — don’t waste the limits June 30 is not just about deductions for expenses. It’s also a good time to review your superannuation contributions to date and take advantage of the annual caps. The annual limit for these types of tax-deductible contributions is $27,500 per annum, regardless of age. If you’re an employee, this limit covers both employer super guarantee and salary sacrifice contributions. How much has your fund received in contributions so far this year? Do you need to review and adjust your current arrangements? Anyone under 65 (whether working or retired) can contribute $110,000 each year to super as after-tax or non-concessional contributions. You can also contribute $330,000 in a single year by bringing forward the limit for the following two years. But – when it comes to super there’s usually a ‘but’ – check your total super balance to ensure any extra contributions do not exceed the general balance transfer cap which is currently $1.9 million. And one final point on super contributions – the total contributed is based on how much is received by your fund, not when you sent it to the fund. Another reason why planning ahead is crucial. These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Your licensed adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late. The information provided in this article is general in nature only and does not constitute personal financial advice.  

Investing for Minors

Investing for Minors

Updated on Podcast

Unlock the secrets to investing for minors in our latest episode! From adult-managed trusts to tax rules, we’ve got you covered. Discover strategies to mitigate tax impact and explore alternative investment options like Listed Investment Companies (LICs). Learn how to give money to children at certain ages and delve into the benefits of education bonds. Plus testamentary trust options for added protection and flexibility. Don’t miss out on valuable insights for securing your child’s financial future!   Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Phases of Retirement: Go Go, Slow Go, No Go!

Phases of Retirement: Go Go, Slow Go, No Go!

Updated on Podcast

“Increase the memories to reduce the regret” – Rob Goudie From the adventurous “Go-Go Years”, to the reflective “Slow-Go Years” and the contemplative “No-Go Years,” we explore the three phases of retirement, ensuring you get the very most out of every stage of retirement. Tune in for expert advice on navigating your golden years with financial confidence and zero regrets.   Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

Regaining financial control after a scam 

Regaining financial control after a scam 

Updated on Budgeting, Education, Retirement

A year before retirement, Tess’s superannuation plan was on track, and she was imagining her post-work life. With savings of $34,000 at the bank, she was looking to park it somewhere it could earn better interest while rates were rising.   Considering herself reasonably savvy with money, she began investigating her options.  After hearing about someone who’d made a fortune with cryptocurrency, Tess was intrigued and decided to look into it.   Tess researched crypto-companies and compared what was on offer. When eventually she made her decision, she believed she’d chosen the right investment – how wrong could she be!   Within hours Tess realised she’d been scammed.  Shocked and feeling ill, she reported it to ScamWatch, but over the following days the self-blame settled in.   How could she be so gullible? So naïve?  What was she thinking?! How could she have fallen for such an obvious fraud?   Who knew that financial shame was a thing? But there it was in the form of an empty bank account.  Deeply embarrassed, her financial security shattered, Tess lay awake every night berating herself; through her foolishness she’d lost all her cash savings! She became withdrawn, declined social events and refused to unburden herself, even to close friends.   Finally, in desperation, she decided to speak with a counsellor. Tess discovered organisations like Beyond Blue, ScamWatch and Lifeline offered advice and emotional support. She chose one that felt right for her.  Initially, it was difficult to open up and acknowledge her mistake, but the counsellor explained that part of her recovery was confronting her feelings head-on and realising that victims came from all cultures, backgrounds and levels of education. Feelings of humiliation and shame were normal, although unjustified, as the crooks were highly skilled criminals with access to the latest technology.  Heartened by the counsellor’s words, Tess learned to stop blaming herself and confided in her daughter Louise.  What a relief that was! Louise was gentle and supportive, and introduced Tess to her friend Jarrod, a financial adviser.  Throughout Jarrod’s career, he’d assisted innumerable people who’d fallen victim to scams. Most felt insecure and vulnerable, so his approach was to assist them with practical advice around getting their finances back on track.  He believed that Tess would benefit from a temporary, part-time job. She could rebuild her cash savings, and staying busy would distract her from her worries and help her move on.   When discussing her interests and skills, Tess mentioned she loved animals so Jarrod suggested she consider pet-minding or dog-walking, adding that he could setup the necessary insurance.  Then, Jarrod explained, that while her superannuation was on target, there was a difference between investing for retirement and investing for wealth.  Retirement investing was about saving to fund an income stream that met post-work lifestyle goals. Complying retirement funds offered tax advantages and focused on generating returns.   Conversely, investing for wealth involved accumulating assets beyond what is needed to provide retirement income.   For Tess, financial security was critical, so Jarrod considered her risk tolerance and structured a tax-efficient portfolio of growth assets to support capital appreciation and wealth accumulation.   It also meant that Tess could leave something behind for Louise – a legacy she hadn’t felt was important, until she realised how financially exposed the scam had left her.  Tess’s recovery wasn’t without its challenges. It took time and sacrifice, but along the way she developed a greater sense of independence and resilience.   She delayed retirement by a year, so she could recoup her lost savings and contribute the money from her new side hustle to her wealth portfolio.   In the end, Tess’s Dog Minding and Walking Service continued well after Tess’s retirement, for the sheer enjoyment she derived from hanging out with dogs.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

How to feel financially secure

How to feel financially secure

Updated on Podcast

Explore the keys to securing your financial future in our latest podcast episode. From gaining clarity and direction to sidestepping costly mistakes, we delve into the transformative benefits of professional financial advice. Tune in to discover how expert guidance can bolster your confidence, ease stress, and optimise your resources. Join us for an insightful discussion on prioritising what truly matters for your financial well-being. Take the first step towards a more secure financial future with us today!   Robert Goudie, CFP, GradDipFP (ASIC Reg 235974) and Amy Lehmann, BBus (FinPlan), BBus (Acc) (ASIC Reg 1292710), are authorised representatives of Consortium Private Wealth Pty Ltd | ABN 74 616 250 965 AFS Licence 495401. 

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