Tag Archives: JBS Team

Meeting a Condition of Release

It’s been more than 6 months since the Superannuation reforms came into force on the 1st of July 2017, and now with the Christmas break over and done with and most likely back to your day to day routine, now is as good a time as any to re-focus on your Superannuation.

 

One of the more prominent changes to Super that came into effect was the removal of the concessional tax treatment of Transition to Retirement Pensions (TTR Pension). Pre 1 July 2017 any money held within a TTR pension received a 0% tax rate on any income or realised capital gains, however post 1 July 2017 money held within the TTR pension is taxed at 15% (same as accumulation).

 

However, any funds that are held within an Account-Based Pension still receive the 0% tax rate (for balances up to $1.6 million). Unless you’ve met a condition of release, such as attaining age 65, you’re unable to commence an Account-Based Pension. The most common conditions of release are:

 

– Reaching preservation age (currently age 57 – depending on your date of birth) and retiring
– Reaching age 65

 

For superannuation purposes, a member’s retirement depends on their age and future employment intentions. A person cannot access Superannuation benefits under the retirement condition of release until they reach preservation age. At this stage, the definition of retirement depends on whether the person has reached age 60.

 

If you’re under age 60, then meeting a condition of release is a bit harder, effectively you generally have to completely cease employment and have the intention never to again work more than 10 hours per week. However, if you’re over age 60 (but under age 65), simply having a change of employment post age 60 means you may be able to satisfy a condition of release, opening up an opportunity to move your Super wealth into the tax-free pension environment.

 

For example, let’s say John (age 62) works full-time in a Supermarket, but for 6 weeks he was contracted to work on the Weekends as a Labourer. After 6 weeks John has stopped work as a Labourer, because of this John has now met a condition of release and can move his Superannuation savings into the tax-free environment. However, any later contributions made (employer and personal) and earnings will be preserved (i.e. can’t be accessed until a new condition of release is met).

 

Based on the above, if you’ve been operating a TTR Pension and potentially could meet a condition of release, you may be able to continue to receive the tax-free pension on your Superannuation benefits. Here at JBS we can help assess your options in relation to meeting a condition of release.

 

– Peter Folk –


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 –


2017 JBS Wrap Up

As 2017 draws to a close, we look back and reflect on the year which has seen the JBS Team grow and change both individually and as a group. Peter purchased his first house and got engaged, Glenn and Andy both welcomed baby girls. The SMSF team recruited a new team member Richard, Aakash graduated with an MBA and a Master of International Finance from Deakin University (with high distinction). Warren won Division 1 golf pennant and added a puppy to his family, Liam renovated his house and back patio and Pj booked a European trip which is now in planning phase for next year. Jen and Bren also made a huge lifestyle change and moved from the city to the sea. From a business perspective, JBS launched three educational series Join with Jen, Retire Right and Cash Coach so if you haven’t yet seen any of our videos, jump on our website and take a look. Keep an eye out for the launch of a new series in 2018.

 

As we reflect on the positive year our team has shared together, there will be people going into this holiday season who are less fortunate than ourselves. Throughout the year, JBS has supported Make A Wish Australia, and in the spirit of giving we have again decided to donate to this charity instead of sending Christmas cards to our valued colleagues, clients and team. You too can make a donation to Make A Wish who grant the wishes of children suffering from life threatening medical conditions.

 

Holiday Opening Hours

JBS Financial Strategists will be closing at 4pm on Thursday, 21st December and reopening on Wednesday, 3rd January, 2018. During the holiday closure the business will be supported via email or Jen’s mobile phone on 0418 990 988 for urgent issues.

 

We would like to thank you for your ongoing support and commitment throughout 2017.

 

From all the team at JBS, we would like to wish you, your family and your friends a wonderful holiday break, a safe & prosperous New Year and we look forward to seeing you in 2018.

 

Below is a little snippet from our recent Team Christmas Event – it was a fantastic day, what a great team we have!


Saving on a Tight Budget

With the holidays fast approaching, it’s time to start to consider how you will fund your holidays / shopping / all-round fun. After all, the summer months are a great time and you definitely want to show your loved ones how much you care, but breaking the bank isn’t an option.

 

Saving on a tight budget can be quite difficult. To ensure you reach your holiday saving goals it is important to start saving early on. Another key to success is to set a concrete and achievable goal for yourself, and decide how exactly you will achieve that goal.

 

Perhaps your goal is to purchase gifts for all of your children, or fund a nice holiday away. Whatever it is, firstly determine the total cost. Break the total down by how many weeks you have left to save, and figure out where you can trim your budget to set that amount aside each week.

 

Some of the best areas to cut your budget include:

 

No more buying coffee or eating out — You’ll be surprised how much you can save by doing this.

 

Foxtel – Replace TV-watching with reading, cooking, games with your family, or other fun-yet-free activities. Take advantage of the warmer weather outside (when it decides to arrive).

 

High Interest Bank Account – Put any savings / loose change etc into a high interest bank account and save regularly. Having a separate bank account makes it more difficult to touch until you really need it (like for holidays).

 

And just as important, find ways to motivate yourself to keep saving.

 

It’s easy to become discouraged when your savings aren’t growing as fast as you would like, so it’s important to find ways to motivate yourself to keep saving.

 

I personally like to think about what it is exactly I am saving for and what I am achieving every time I deposit some money into the savings account. For example, if we are saving for a trip to Thailand and our travel budget is $100 a day, then every time I save $100 I know that’s one day of our holiday I have just paid for. Simple, but very effective.

 

Saving money and being thrifty isn’t fun but remember the end product will be! When you are lazing on the beach at your desired location, visiting Disneyland, or camping at your favourite spot, there is no doubt that you will be glad you saved every cent!

 

Make a commitment now to plan ahead, and it is very likely those savings will lead to a fun-filled time over summer.


Ins & Outs of Aged Care

It’s hard to be passionate about Aged Care and in fact a lot of the time it’s very overwhelming and daunting, and can be a very emotional time for the family when they have to move a loved one into care.

 

Often one of the biggest questions is how do we fund it!? Especially when it comes to paying the Refundable Accommodation Deposit (RAD), with most people then stressing over what to do with the family home? Add onto that the fact it can be something that could be time critical, and selling a home isn’t something that can be done overnight.

 

The good thing is that this isn’t the only option you have. Although most Aged Care providers will probably try to make you pay a RAD, you actually don’t have to straight away. In actual fact you have 28 days from the date you enter Aged Care to make a decision on whether or not you have to pay a full or partial RAD, or if you want, you could even pay a Daily Accommodation Payment (DAP) or a combination of both.

 

If you elect to pay a DAP at a later time you can then decide to pay a RAD, but it doesn’t happen the other way around, so if you select RAD as your payment, unfortunately you’re stuck on this option. If selling the family home is the only viable financial option, by selecting a DAP you have the flexibility to not rush to sell the home and can instead pay the DAP up until the home is sold and when you can afford to pay the RAD.

 

However, the DAP isn’t necessarily cheap either, it’s normally worked out based on what RAD you are required to pay to secure a room. For instance, if the RAD is $450,000 and the current Maximum Permissible Interest Rate (MPIR) is 5.73%, then your DAP is $70.64 per day ($450,000 x 5.73%) / 365. If you pay a part RAD then you’re also required to pay a part DAP, and an option you have is to have the DAP deducted from the RAD to help ease cash flow.

 

Now you can see why it’s hard to be passionate about Aged Care, you have RAD’s, DAP’s, MPIR’s, and a whole lot of other acronyms that are hard to get excited about, and we haven’t even gone into all the fees yet, yikes!

 

Here at JBS we are passionate about helping our clients through every stage of their life including assisting their loved ones make decisions around Aged Care. When the time comes, rather than stressing about what to do, pick up the phone and talk to JBS. We can help assess what the best option is for you or your loved one and help you put in place a strategy to help fund Aged Care, and where possible help to reduce the impact of the fees.

 

– Peter Folk –



Cash Flow Management

There’s something about starting a new year that brings with it a tonne of motivation. That fresh start where you can re-set, clean-up, and where energy levels are high and excitement at its peak. Where our passion for giving those dreams of ours a really good shot is reignited and our visions of living bigger and better are at the forefront of our thinking.

 

However, we get to March and the motivation starts to taper off and by April most goals have been abandoned or forgotten about. Research shows, in the end only about 8% of people stick with their good intentions.

 

So what do this 8% do differently? Are they just more willing to invest wholeheartedly to work towards their goals? Maybe, but experts say it has more to do with how they set themselves up for success. Specifically, they use January to re-set themselves and clean up any messes from the previous year, then invest the time and effort into effective goal planning.

 

So with the new year having now kicked off, here’s a list of the best results-driven tactics to ensure you are part of that 8% and make 2017 your best year yet:
Get Super Clear

Vague or generalised goals such as ‘save more’ won’t serve you. They need to be specific and well defined so that they can be measured.

 

–  What?

–  When?

–  And How?

 

Specific goals such as ‘pay off credit cards by March’ are easier to measure. By then mapping out the action steps required it is then easier to achieve the goal than not.

 

But there’s also the why? Connecting emotion with your goals will help you remember why they were important in the first place and will reignite your passion for reaching them when things get difficult.

 

Write it Down

Study after study has shown that those who write down their goals accomplish significantly more than those who don’t. Why? Putting pen to paper forces you to clarify what you want, it motivates you to take action and it makes it easier for you to see your progress and celebrate your successes.

 

Get Support & Accountability

We’ve all heard the importance of being around the right people, especially when chasing our goals.  When you’re in pursuit of a dream, there are many elements that can resist your path and block your forward motion.  Surrounding yourself with people that are genuinely cheering for you will help you disengage from this resistance and keep you moving forward.

 

That’s where JBS fits in. We believe (and know!) that the biggest influence of you achieving your financial and lifestyle goals is firstly to have clarity on what your goals are, then aligning your cash flow to help you achieve those goals. Fortunately for you we have a program designed to help you achieve this.

 

The JBS Cash Coach program is tailored to you, your needs, your goals, and the actions you need to take to achieve those goals.  We take the time to understand you, then design solutions to help you achieve your goals. We help you create a spending and savings plan that is aligned to your goals, and keep you accountable and motivated on a monthly basis to maximise the probability of achieving your goals so you can have the lifestyle you are entitled too in 2017 and into the future.

 

The early part of 2017 is the perfect time de-clutter your life of the excess build up from last year, clean up, clear your head, set motivating goals, and get moving towards those goals.

 

The JBS Cash Coach program will help you get the most out of 2017 but only if you take action. Make time and join the best support network around (aka JBS Cash Coach).


Age Pension Changes

Australians are becoming healthier and living longer than ever before, and the Australian population is ageing.  Each year an increasing number of people retire and many rely either in full or partly on the Age Pension to help fund their retirement.  The Australian Government has made some changes to the Assets Test under the Age Pension which came into effect from 1st of January 2017. The aim of the changes is to make the system more sustainable for the future.

 

Essentially if you’re assessed under the Assets test, that is you receive a lower Age Pension under the Assets test than under the Incomes test, then you may be affected by these changes. These changes are summarised below:

The tapering rates for the Age Pension are also changing, under the current rules, your payment is reduced by $1.50 per fortnight for every $1,000 of assets over the lower asset test threshold. Under the new rules, the reduction is now $3 per fortnight for every $1,000 in assets over the lower threshold.

 

With these changes, those with lower assets will benefit from a higher lower assets test threshold, but those with higher assets may receive a reduced amount of Age Pension or none at all.

 

If you are to lose your Age Pension from the 1st of January 2017 you will be automatically eligible for a Low Income Health Care Card, and most likely eligible for a Commonwealth Seniors Health Care Card.

 

Given the changes to the Age Pension Assets test, now may be a good time to reset your current strategies and look at ways that may help maximise your Age Pension entitlements. There are a few little things you can do to help maximise your Age Pension:
–  Re-value assets – Especially in the case of Home Contents and Vehicles, for Centrelink purposes you only need to record the “Fire Sale” value not the insured value.

–  Gifting of assets – You can gift assets up to an allowable limit of $10,000 and $30,000 over a rolling 5 year period.

–  Superannuation – Money held in the superannuation (accumulation phase) for someone under age 65 is exempt from the Age Pension Assets test. This can be particularly helpful when an individual in a couple is below Age Pension age.

 

Although the above tips may help to maximise your Age Pension there are traps to each one which need to be considered. JBS are pre-retirement and retirement specialists and may be able to help you maximise your Age Pension.  If you or a friend need help with the changes to the Age Pension feel free to give JBS a call.

 


That’s a Wrap

Wow can you believe that 2016 is nearly over? What an exciting year for JBS – transferring to our own licence to allow greater control and flexibility within the business and also gaining some fantasic new additions to the JBS clan.

 

JBS Financial Strategists will be closing at 4pm on Thursday, 22 December and reopening on Wednesday, 4th January, 2017. During the holiday closure the business will be supported via email on strategies@jbsfinancial.com.au or Jen’s mobile phone on 0418 990 988 for urgent issues.

 

We would like to thank you for your ongoing support and commitment throughout 2016.

 

From all the team at JBS, we would like to wish you, your family and your friends a wonderful holiday break, a safe & prosperous New Year and we look forward to seeing you in 2017.

 

We hope you get a laugh from our video – we had plenty making it!!

jbs-xmas


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.

 

Example:

pension-table

 

* 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.