Tag Archives: Financial Adviser

Celebrate your family’s financial security

Towards the end of each year we always focus a lot on celebrating Christmas and New Years, however there’s something else we could also celebrate post-Christmas. We’re talking about celebrating your family’s financial security by having personal insurance in place. Having personal insurance cover in place means you and your family won’t have to deal with financial stress in the event of you being unable to earn an income or even passing away. Ideally all your personal insurance covers should be in place prior to the “Silly Season”, however if you haven’t done so already the new year is a perfect time to review your insurance needs.


With all the festivities and celebrations over and done with, for most of us it’s now time to pick up the pieces and start the New Year a fresh, which is a perfect time to review your personal insurance needs. Research from one of Australia’s largest personal insurance companies have found that only 37% of Aussies aged between 18-69 actually have life insurance and even more disturbingly only 18% have disability cover and income protection insurance. Further findings include how Australians are grossly underinsured. It’s estimated that the underinsurance gap in Australia is approximately $1.8 Billion, meaning there are a lot of Aussies out there who believe they have sufficient insurance cover, but in fact don’t. For most of us, we don’t like to think about insurance and when asked about how much we have, the first response is usually “I don’t know”.


So we come to a point where you should ask yourself, do you need personal insurance? The main reason you would put in place insurance cover, is to secure your family’s financial wellbeing. So if you have a mortgage, loans, kids etc… chances are you will need personal insurance. The question you have to ask yourself is, “if I’m unable to earn an income tomorrow, what would happen”? Then for those of you that already have some form of insurance cover in place, the question you should ask is “how do I know the level of insurance I already have in place now is adequate?” The short answer is to seek professional advice.


Whether you don’t have any insurance at all or looking to review your insurance needs, the best thing to do is see someone who is a professional in the area. Financial Planning firms such as JBS Financial Strategists will be able to determine what your insurance needs are and then formulate a strategy to ensure you have the correct and adequate cover in place. So as a new year’s resolution, do yourself a favour by ensuring you have adequate cover in place so you’ve got something else to celebrate about (your family’s financial security).


– Andy Lay –

Pension Changes Means Reduced Tax Savings

Rule changes occur regularly with the Government in power tweaking legislation to make it fairer for all and ensure that the Government isn’t relied upon to fund everyone’s retirement through the Age Pension. This balancing act means that the strategy you implemented last year may no longer be beneficial for you or worse, not allowed. One change that is due to take effect from 1 July 2017 is the change of the tax treatment for Transition to Retirement pensions.


Transition to Retirement (TTR) pensions were introduced back in 2005 to allow those people that were easing into retirement by dropping their working hours to supplement their wages with an income from their super balance. However, while this was very useful for those in retirement transition, it also proved to be a powerful financial planning strategy, recycling funds through the super system to achieve the same take home pay however a reduced tax liability, meaning more funds are held in your superannuation account building for your eventual retirement. The Government and ATO knew of this strategy however as it was within the bounds of the laws in place, it has been accepted for use.


It does seem, however, that the Government now understands the additional tax that could be found and has implemented changes to take effect 1 July 2017 to make a TTR pension lose its tax-free status. This means that a TTR pension will have the same tax treatment as if it was in a superannuation account (15% tax rate). For those in the retirement transition space, it probably won’t change much as they need to subsidise their income and if the money wasn’t held in pension, it would be subject to the 15% super tax rate anyway. For those who have employed a TTR strategy to reduce tax, the tax savings will be reduced.


The strategy may still be beneficial, especially if you are able to achieve a significant salary sacrifice contribution from a higher income, however the tax savings will drop as the pension fund will now be subject to the 15% tax rate also.





* For the purposes of this simplistic calculation, ‘Tax on Pension Investment’ is the 15% tax on investment income earned (4%) while money is held in a TTR pension. If assets were sold during the year, CGT would also be payable, making it again less tax effective. As this individual is under age 60, pension income is taxable.


Some clients situations allow them to maintain a tax-free pension or become eligible to establish one in the future. For this reason it is critical that all TTR strategies are reviewed prior to 30th of June 2017 as the new rules may not be applicable to you.


While you need to be making an appointment with your Financial Adviser to discuss the changes and determine if there’s still a benefit for you to continue with your TTR, more than anything this should highlight the need to have an ongoing relationship with a financial planner. Make sure you take up every opportunity to have a regular review of your financial plan, your objectives, determine if you are on track to reaching your goals and determine if the strategies in place are still appropriate. Your situation may not have changed but legislation may have.

Non-Concessional Contribution Changes

In our last CPE article we talked about the recent changes the government has made to the previously proposed non-concessional contribution life-time cap of $500,000.  To re-cap, the Government has back tracked on this proposal and has instead changed it to an annual cap of $100,000, with the ability to bring-forward 3 years’ worth of contributions from 1 July 2017. Your super balance must also be below $1.6 million to be able to make the contributions.


Since then the government has provided further direction on how the proposed bring forward rule and the $1.6 million cap will work.


Under current rules you can make a total of $180,000 in one year or $540,000 if you bring-forward 3 years’ worth of contributions. If you as an individual have triggered the bring-forward rule in FY16 and FY17, but you have not used it fully by 30 June 2017, transitional rules will apply.


If you trigger the bring-forward provisions in FY17, the transitional cap will be $380,000 (which is the current $180,000 cap plus the new $100,000 annual cap for FY18 and FY19). If you triggered the bring-forward rule in FY16, the transitional cap is $460,000 (current annual cap of $180,000 for FY16 and FY17, plus the $100,000 for FY18).


The below table provides an example of how this may work in specific situations, with example one and two outlining how the $380,000 bring-forward cap may work, and example three highlighting how the $460,000 cap works with the example contributions:


In relation to the $1.6 million eligibility threshold, you are unable to make further non-concessional contributions if your super account is above $1.6 million.  Your balance will be determined as at the 30th of June in the previous financial year.  If your balance is close to $1.6 million, you can only make a contribution or use the bring-forward rule to bring your balance up to $1.6 million without going over, this is summarised below.


As always these measures are not yet legislated and therefore could change yet again.  The draft legislation is expected in the next few weeks.


If you have made any non-concessional contributions in the previous three financial years and are concerned how this may affect you and your future contributions, feel free to contact any of the team here at JBS.

Reviewing Personal Insurance

You always hear stories and advice about how important it is to have proper insurance cover, but once it’s in place often everyone sets and forgets about it.  It’s paramount that your insurance policies are reviewed on a regular basis to ensure you’re adequately covered. So how do you know when it’s time to review your insurance policies?  There are several life stages and events, which should trigger you to review your insurance policies.  Whether it be more responsibility such as starting a family, buying a house or even stressful events such as divorce and deaths of family members.  These types of events should trigger a call to action and requires you to review your insurance policies.


HouseStarting a family and/or buying a family home
Whether it be having a first child or buying your first home these are the most memorable and proud moments of your life, however often comes with additional responsibilities.  For those of you who remember to review your insurance needs, it’s often done after you’ve had kids or purchased that home.  This may leave you in a bingle as personal insurance policies can often be complicated and may require lengthy amounts of time to alter.  If bad luck strikes after the purchase of the home and your insurance policies aren’t adequate, this may potentially leave you in financial strife.  Therefore it’s a good idea to review and implement adequate insurance covers before these events.


Deaths of family members
When a close family member suffers from a medical condition, often this triggers you to think about your own morality and whether the same thing can happen to you.  This would normally be followed with thoughts of what will happen to my family if I were to suffer from the same condition?  On a lifestyle level, you might think to yourself and say I’m going to start eating healthier foods and exercising more.  The other question you should ask yourself, is do I have adequate insurance policies in place, if the same thing was to happen to me?  Again these types of events should trigger you to review your insurance needs.


Along with the above events, personal insurance covers should be reviewed but not limited to the following situations;

  • Marriages and divorce
  • Starting a family
  • Buying a house
  • New job
  • Kids enrolling in new school or completing their education
  • Illness and death in the family


If you’re unsure on whether or not to review your insurance needs, we strongly advise on picking up the phone and speaking to either your adviser or insurance representative.  There’s no harm is asking questions.


Putting in place personal insurance cover doesn’t necessarily require certain events to occur in your life.  Sometimes you may wish to protect the people around you financially.  For example you may be a 22 year old wanting to provide funds to your parents to look after you if you can’t look after yourself so you might want to look at Total & Permanent Disability (TPD) cover, or you may be a single 40 year old that needs to make sure income keeps coming in as you don’t have any other way to provide for your living expenses if you can’t work so you might consider income protection, or even a business owner that’s planning on the sale of the business to fund your retirement plans so you need insurance to make sure those plans don’t go off track somewhere along the line.


Whether it’s a certain event which occurs or you just wish to protect your family financially, personal insurance is a complicated area and needs to be looked at in depth.  Therefore it’s always strongly recommended that you visit an insurance expert such as JBS to review your circumstances and to ensure adequate insurance cover is in place for you.


To Record or Not to Record

The retention of key documents is an important requirement for the trustees of self-managed super funds. In this day and age, technological advances have seen the ATO update their record-keeping requirements to allow for electronic storage.


What do trustees need to know about record-keeping?
The ATO, on its website, emphasises that it is the responsibility of the trustees to maintain records of documents in such a way that they are accurate and easy to access. This includes all tax documents and records of the super fund, especially minutes of all investment decisions ensuring that all trustees have acknowledged the decision and the reasons of the choice of investment are noted. This specifically ensures that any disputes between trustees over failed investments within the fund, should not occur since trustees cannot claim they were not involved.


What are the benefits of storing SMSF records electronically?
The ATO’s decision to allow the electronic storage of documents was primarily as a way to minimise the cost of running an SMSF, since it can potentially reduce the costs of maintaining the collection of records. Additionally, a well organised collection may help reduce the cost of any audits required.


Data storage. Laptop and file cabinet with ring binders. 3d

What are the negatives of storing SMSF records electronically?
There is a need to ensure that all documents stored electronically can be easily verified for authenticity and are easily accessible. In particular, unknown authenticity of documents held digitally may result in issues when lodging documents with the ATO. Keeping a copy of key documents without the originals may result in difficult questions regarding whether the original was destroyed for the reason other than to simply reduce paperwork. For this reason trustees should strongly consider whether to keep original copies of important documents. The loss of a trust deed, or the existence of one with questionable accuracy, for example, has potentially major implications in case of disputes between trustees, often requiring court decisions for solutions to be achieved.


For how long do documents need to be kept by trustees?
The ATO specifies the need to maintain various documents for various lengths of time.  Should any of these documents not be available within the time period then a penalty must be paid based on penalty points.


Records required to be held for at least five years:

–  Accounting records with the transactions and financial position of the SMSF (If not held, 10 penalty units must be paid)
–  Annual operating statement and an annual statement of the SMSF’s financial position (10 penalty units)
–  Copies of all SMSF annual returns
–  Copies of other statements required to be lodged with the ATO or provided to other super funds


Records required to be held for at least ten years:

–  Minutes of trustee meetings and decisions (10 penalty units)
–  Changes of trustees (10 penalty units)
–  Trustee declarations acknowledging the obligations and responsibilities for any trustee, or director of a corporate trustee, appointed after 30 June 2007 (10 penalty units)
–  Members’ written consent to be appointed as trustees
–  Copies of all reports given to members (10 penalty units)
–  Documented decisions about storage of collectables and personal-use assets


Ultimately the responsibility of retaining key SMSF records falls onto the trustees.  Should any doubts be predicted to exist over the authenticity of a document then care must be taken if making the decision to store SMSF records electronically.


If you’re receiving full service SMSF administration from JBS, you’ll be happy to note that we do all the recording of documents for you electronically, however we still keep a copy of the original documentation of key documents such as trust deeds, pension documentation and binding death benefit nominations. This allows easy access to documents for members, trustees, auditors, and the ATO. If you are running your own SMSF, make sure you adhere to all document storage requirements or alternatively, contact JBS to discuss how we can help.

Save the Date

Who’s excited?? Budget night is fast approaching and it’s that time again where the all-powerful politicians decide the fate of us all through some tweaks or even major changes to the rules that this great land is governed by. So what’s in store this year – unlike every other year, there haven’t been too many early leaks which is making some economists, financial planners, accountants and other professionals very concerned.


While there has been talk of leaving the superannuation system alone for a while, it inevitably gets a change here and there and this year there is discussion about the possibility of movements on the contributions caps. This may indicate a reduction in the amount that you can contribute to super. There is also speculation around the taxation treatment of some contributions in or payments on the way out but nothing solid as yet; as any TV lawyer would say “its hearsay”.



There has also been speculation around the Transition to Retirement (TTR) pension. This pension was introduced to allow older Australians transition into retirement by reducing work hours without reducing income however there was a loop hole which allowed everyday working Australians over age 55 to utilise a strategy of cycling the money through super and receive a pension to gain a tax deduction meaning more money for you and less for the tax office. While this strategy has been known by the Government for a number of years, they have never done anything about this loop hole until now. And the whispers are that they may stop TTR pensions all together from budget night or at least for those who have not reduced their working hours.


These are not the only measures being discussed or those that will affect all Australian but just a quick example of items on the agenda. Budget night will also bring surprises in relation to tax, child care assistance, health, housing, Centrelink assistance, and much, much more. While many don’t take much notice of Budget night, almost all Australians will be affected by its outcomes.


Budget night is usually the 2nd week in May however with talk of a double dissolution election in July, budget night has been moved a week earlier – now May 3. In addition, previous history has shown us that some Budget night announcements take effect from when the Treasurer addresses Parliament at 7.30pm (AEST). Retrospective legislation has never been introduced, so it’s unlikely that any strategies implemented now will need to be unwound.


What does this all mean for you? Well, if you have plans to do anything with your money matters you should contact our office as soon as possible to get your strategy sorted.


So if you were intending on making that non-concessional contribution to super sometime this financial year, consider doing it earlier or if you were planning on starting a TTR pension, this might push you into getting advice today.


Call us and one of the guys will be able to chat about the changes, the impact it may have on you and your financial plan or you can organise for a full review to make sure you’re on the right track regardless of Budget night changes.


Reversionary vs. Non-Reversionary Pension

If you’re approaching retirement or looking to undertake a Transition to Retirement Pension you may want to consider whether to have a reversionary or non-reversionary pension.


A non-reversionary pension is an income stream paid to a superannuation member that ceases upon the member’s death.  Upon the member’s death, their benefits will need to be Pensionpaid out of their super either as a lump sum or income stream. Under the super laws, the deceased’s superannuation can’t remain in their super account and must be paid out as soon as practicable.


With a reversionary pension, upon the member’s death, the pension will continue to be paid to a nominated reversionary beneficiary (e.g. spouse). In this case the pension does not stop upon the death of the deceased member, but continues to be paid to the reversionary pensioner. The only thing that changes with the pension is that when the pension is paid in the financial year following the member’s death, the minimum pension payment requirement is based on using the reversionary pensioner’s age.


For members of a self -managed super fund (SMSF), you need to make sure that your SMSF Trust Deed allows for a reversionary pension to be put in place and you must follow the procedures outlined in the Trust Deed to be able to access the pension.


You also need to have the relevant documentation completed to indicate your nomination at the commencement of the pension. This is required by all superannuation funds, including SMSFs that must satisfy their auditor and the ATO. For an industry, retail or other super fund, it will be their standard pension application forms with the reversionary beneficiary nominated. For an SMSF, the documents required are things such as the notification to your SMSF that you’ve commenced a pension, trustee minutes documenting the decision, and a pension agreement.


You need to take into consideration that you can’t nominate just anyone to be a reversionary pensioner.  The reason for this is that under the Income tax law, only certain people are eligible to be paid a pension. These allowable reversionary beneficiaries include a spouse, a child under 18, a child between 18 to 24 who is financially dependent, or a child over the age of 24 with a disability can be nominated.  With reversionary pensions you can only nominate one beneficiary.


A reversionary pension has many benefits such as ensuring your super benefits stay within the tax-free pension environment and most importantly an income continues to your surviving beneficiary to help them support their lifestyle.  However, a main disadvantage in receiving a reversionary pension is that in situations where a member divorces or separates from the reversionary beneficiary, the member will need to stop the pension and begin a new one and nominate a new reversionary beneficiary, which could come at a cost.


If the reversionary beneficiary decides that a pension is not the most appropriate strategy for them, dependent on the rules of the fund, they can choose to take the funds as a lump sum and pay the tax accordingly.


Feel free to contact the team at JBS to discuss your options with Reversionary or Non-Reversionary Pensions.


Welcome Back

Bring on 2016 – the JBS team have all enjoyed some time off and are now ready to kick start the year.

For many of us, the start of a new year allows us a fresh start, a new beginning or a clean slate. This time of year also presents a great opportunity for you to review your financial strategies and goals.


Financial reviews should take place regularly when you have the opportunity to make informed decisions and factor any changes into your financial plan. Below are some simple tips to tidy up your finances for the year ahead.


Have your key financial goals changed?
Our lives are not constant and our goals change slightly (or greatly) from year to year. Also, major life events such as serious illness, the birth of a child, inheritance, marriage and the death of a parent or spouse can all result in significant changes to our wealth management goals.


Prioritise your goals
It is important to rank and prioritise goals and decide in what timeframe you want to achieve them. Being realistic about your timeframe is essential to ensuring that your goals will be achieved.


Short, medium or long term?
Most industry experts agree that a short-term goal is one that can be achieved within a year or so. Medium term goals typically require two to five years, and long-term goals usually take longer than five years.


If your financial goals have changed, how will this affect your financial strategy?
This is where the advice of a financial adviser is critical. Advisers have the tools and knowledge to create projections that take into account changes to your goals and changes to your timeframes for achieving them. These projections will help you to see where your plans for savings, assets or investment contributions may need updating.


Be savvy
Make sure that your investments and level of protection support your level of risk and your goals.


Be sure to contact the JBS team if any of your circumstances have changed to ensure you are on track to reach your financial goals.


JBS would like to wish you a fabulous year ahead and hope that you are sticking to all those resolutions and goals you have set yourself for 2016.


Tips to Start Saving Money

No matter where you are on your financial journey, you need to know that it’s possible for anyone to turn their financial life around. As with most things, sometimes that very first step is the hardest part. We have created a list of tips to start saving money today.


None of these tactics will be life-changing on their own, but they can make a difference over time if you are able to implement more than one. Some of these suggestions take just a few minutes, while others require a bit of regular effort. Still, they’re all incredibly simple – anyone can do them.


So here we go with our money saving ideas:

– Have a save buddy. Saving while hanging out with spenders can mean your money goes Tips for Saving Moneyon impulsive or unnecessary items

– Review your bank accounts. Are you paying fees? Are there cheaper offerings? Are you restricted on what you can do with your money?

– Master the 30-day rule, waiting 30 days to decide on a purchase can give you better perspective on whether it’s truly worth the money, often the urge to buy the item has passed

– Write a shopping list before you go shopping to avoid impulse buying

– Lock up your credit card for a month and only pay for things with cash

– Set a limit for birthday and Christmas presents and don’t go over

– Buy in bulk

– Have a portion of your salary paid directly into your separate savings account

– Set a savings goal

– Pay your bills on time to avoid late fees

– Shop around for necessities such as car insurance, house and contents insurance, gas, electricity, phone, etc.

– Unsubscribe from sale email alerts. This is just constant temptation

– Stop buying bottled water! Buy a water filter instead if you can’t drink tap water

– Only purchase classic clothing that you can wear again. If you know you’ll only wear it once or twice, consider borrowing from someone rather than buying that sequent and lace floor length ball gown

– Empty your pockets and wallets of coins at the end of each day into a jar. But make sure to deposit into your savings account and not dive into because you want a coffee

– Double down. If you do have to buy luxury items, like makeup, wine or clothes, try saving the same amount. $15 on that gorgeous red lippy you had to have might not seem so great when it comes with another $15 savings requirement. If you can’t afford both, then you have to step away.


If you struggle to manage your money and wonder where your savings disappear to each month, fear not! Our comprehensive program will put you back into the driving seat, using high impact track and reporting technology teamed with expert advice. We’ll help you get your finances on track, so you can achieve your goals, plan for the future and say hello to a happier, healthier life where YOU are in control.


Cash Coach is a program run by JBS Financial Strategists. We believe that the biggest influence on achieving your goals is how you use your cash flow, so we start from there and help you develop great money management skills. Our aim is for you to consistently have money left over at the end of the month, so you can direct it towards the stuff that really counts!


If you’re not sure where to start – contact the team at JBS and we can run through a financial health check with you. This is a great way to understand your financial position and the team can identify any trouble areas, offer possible solutions and could also find growth areas you may not have considered.


Happy Saving 🙂

Having Life Insurance in Place

Life insurance is an effective way to protect your family against financial hardship if the unthinkable event happened and you pass away prematurely. Unlike other forms of insurance, such as income protection or critical illness insurance, life insurance can be put in place relatively easily depending on your health status and age.


Having appropriate life insurance policy in place, will mean your beneficiaries receive a lump sum payment to fund for everyday expenses, such as mortgage / rent, bills, childcare costs and kids’ education. The thought of losing our partner is unbearable, which makes the topic of implementing life Insuranceinsurance one we prefer to avoid however is necessary. Most Aussie families would find it difficult and almost impossible to meet daily living expenses should the main income earner pass away. This often leads to families having to move back in with relatives, increasing debt levels and even losing the family home.


Latest studies on the underinsurance issue of Australian families suggest the average household should have at least $680,000 of life insurance in place. This is because it takes into account not only debt and possibly medical costs but also lost income, even for the surviving spouse as the likelihood that you would need to take additional time on top of the obligatory 2 days bereavement leave is very high. In reality however the average household has less than half the required cover or even no insurance at all. Most Aussies believe that they have automatic insurance inside their Super Fund and this is sufficient enough. Furthermore hurdles such as having a perception of life insurance being expensive or time consuming to implement, further deters us from implementing life insurance covers.


Depending on your health and age, Life insurance is one of the most simple and cost effective types of personal insurance to put in place. It’s understandable that most of us would prefer to avoid the topic, however you do so at the risk of leaving your families without financial protection in the future. There are lots of options out there for setting up insurance; inside superannuation, through your bank, online or over the phone cover or insurance through an adviser. Any options outside seeing an adviser means that you have to determine the levels of cover and structure yourself, which is usually the part with the greatest benefit. Knowing how to calculate the level of cover required, including additional amounts if held through super and is ongoing to be paid to a non-tax beneficiary to cover tax, or making sure it’s structured right to pay the least amount of tax or even gain a tax deduction, is very important and shouldn’t be overlooked. This is more important than the product that you choose to take up.


So, before you go out and purchase life insurance, we strongly recommend you speak to an expert. Everyone has different needs for personal insurance and therefore it’s important to visit a financial adviser, like your friendly JBS team member, to discuss your own personal situation.