It’s that time of year again, when the Federal Treasurer delivers his plan for the coming 12 months, and even though you can never usually please everyone, you can at least please someone!  This budget is proving otherwise!

Last night Wayne Swan handed down his fifth budget, and it has been met with criticism across the board, from individuals, to retirees, to small business, to big corporates.

We’ve reviewed the budget and pulled together a selection of what we think matters to you most.  We have focussed on the superannuation changes which the government has proposed, however are happy to discuss the other announcements with you if you like.

Have a read and if you wish to discuss any potential implications to you, please don’t hesitate to give us a call on (03) 8677 0688 or email strategies@jbsfinancial.com.au.

To your success,
Jenny and the JBS Team

Overview

Last night’s conservative budget promised to deliver a surplus of $1.5 billion in 2012-13, which will be the first surplus since Labour came to power in 2007.  It aims to save $33.6 billion by reducing spending across almost every Government department and portfolio.

The Budget aims to share the benefits of the resource boom by using the mining tax to fund cash payments and tax breaks to families and low income earners and provide a supplement for students, the unemployed and parents with young children.  However, Mr Swan also stated that, in order to deliver these benefits, several previously announced measures would be abandoned.

In an unexpected move, the Government decided to defer the $50,000 superannuation concessional cap for individuals age 50 and over with account balances under $500,000.  The concessional cap will be $25,000 for everyone in 2012-13 and 2013-14.  This will likely result in a reduction in concessional superannuation contributions and an increase in inadvertent concessional cap breaches.

Contributions tax for individuals with income greater than $300,000 will be increased.  Concessional contributions for these individuals will be taxed at 30% rather than 15%.

We will look at the following segments in our update:

Superannuation

Taxation

Social Security and Aged Care

What went missing

To read our full article, please click here.

Time and time again, we are seeing the private lives of high profile celebrities and corporate leaders being thrust in the spotlight for all of the wrong reasons.

Recently departed public figures from Whitney Houston, to Steve Jobs, to Richard Pratt, are leaving behind them an estate in a tangled mess, with room for all sorts of secrets and sordid affairs to be made public knowledge.  This occurs much to the family of the deceased’s embarrassment, having their otherwise private laundry aired in public, bringing with it great humiliation.

How is your legacy set up?  Have you considered your:

• Will;
• Power of Attorney;
• Testamentary Trusts; and
• Superannuation Beneficiaries?

Click here to read our article on the importance of estate planning, and contact JBS on (03) 8677 0688 or www.jbsfinancial.com.au  if you would like to (discreetly) discuss you succession planning

We are all waiting for that time to come when we can finally retire from work and begin enjoying our twilight years.  While the thought of retirement crosses our minds frequently from an early age, often not enough thought is put into planning for this event, and even less action is taken.

Unfortunately, often people give thought to their retirement too late, and don’t consider getting expert advice for a range of reasons. This could be due to time restraints, not finding the right adviser, or fear of the cost.

In this article we look at some alarming findings of a recent survey regarding retirement planning, which showed that almost 70% of the 1400 people surveyed did not have any financial retirement goals at all!  We explore why you should consider a financial planner including what key attributes to look for when making your choice.

Please click here to read the article, and to discuss it in more detail or review your current situation, please contact us at www.jbsfinancial.com.au or 03 8677 0688.

If you’re aged 55 or over, you may want to sacrifice some of your pre-tax salary into a super fund and use a transition to retirement pension to replace your reduced strategy.

What are the benefits?

By using this strategy you could:

• Take advantage of a tax effective income stream; and

• Boost your superannuation benefits without reducing your current income.

To read more about this strategy in detail please click here, and contact us on (03) 8677 0688 or check out our website for any further information.

The rules and regulations surrounding SMSF’s is a complex area, and SMSF Pensions is no exception.  Having the right documentation and abiding by the guidelines set down for accessing pensions will ensure your SMSF remains compliant and receives the tax exempt status.

Today we discuss the following seven common mistakes when it comes to documentation and accessing SMSF pensions:

1. Are you entitled to start a Pension;
2. Revaluation of assets backing the Pension;
3. Use a professional provided Penstion kit;
4. Minimum Pension payments;
5. Tax & Estate Planning – keeping records of tax free component amount / percentage;
6. Mixing contributions with Pensions; and
7. Actuarial Certificate.

Please click here to read the full article, and contact JBS to discuss your SMSF needs www.jbsfinancial.com.au.

With so much talk about insurance these days, it’s hard to know what type of cover you need, let alone the level of cover required.  Most people insure their car and their house, as it’s easy to think that these are your biggest assets, but aren’t they just your biggest purchase?

A lot of people even insure their life, but this still isn’t quite their biggest and most valuable asset.  Throughout your working life, your ability to earn an income has to be your most valuable asset?  You will earn more than what your car is worth (usually in a year!) and will easily earn more than what your house it worth.

Why then, do so many people still shun the idea of insuring your ability to earn an income?

Click here to read our article on the importance of income protection, and please contact JBS should you have any questions about Income Protection Insurance and how it applies to your personal situation.

Snapshot

Gary Smith, 56, runs his own taxi business.  He is married to Jane, a nurse aged 46, and they have one daughter, Jessy who has just finished high school.  Gary has a keen interest in his personal finance situation, and has actively managed his own Self Managed Super Fund since 1995 (through an adviser).  He also has a few investment properties across Australia and some managed funds overseas.  Prior to the Global Financial Crisis (GFC), the SMSF fared well, and Gary and was looking forward to retiring at age 60.  Gary decided that he wanted to reduce the risk in his SMSF, and requested that his adviser sell out of his high-level risk stocks.  The adviser insisted that this was not the right option, and the stocks were not sold.  Within a week, the GFC hit, and Gary & Jane lost almost 40% of their SMSF.  As a result, they severed ties with their adviser and began sourcing a new adviser who they could trust to have their best interested in mind.  The Smiths were introduced to JBS by an associate at a local sporting club, and then did extensive background checks before meeting with them.

The Smith’s goals were to maintain their current lifestyle with Gary retiring at age 60 and spending six months a year overseas.  Jane would remain in Australia while Gary traveled, and he had funds overseas to sustain his lifestyle while there.

They needed:

•    Reassurance that superannuation was important for retirement and can be tax effective;

•    Information (and possible implementation if appropriate) on a Transition To Retirement (TTR) strategy

•    Information and options around having direct property in their SMSF which is a delicate area;

•    Regular consolidated reports for their SMSF & Family Trust so they were up to date; and

•    Most importantly, to trust their adviser and the products and services they provided.

To read the detailed strategy for Gary and Jane, please click here.

Sally Shorter* is a busy lady.  Single, no kids, and middle-aged with mid-tier job at a top law firm, Sally is extremely time poor.  When she received a substantial inheritance, she spent two years with ‘organise retirement and financial planning’ on her to-do list.  To her financial detriment the money was just sitting in the bank as Sally was overwhelmed by what to do with such a sizable amount.  She knew of Self Managed Super Funds, but was hesitant to set one up due to their complex nature and keeping up to date with the ever-changing legal compliance and administration.  Even though Sally was financially savvy to a degree, she didn’t have the expert knowledge, the confidence, or the time to invest in managing her money.

Sally’s life goals were to maintain current lifestyle, reduce her working days to 4/wk, ideally retire at age 60, and to have $100k/pa retirement income, plus an additional $40k/pa for travel.

Sally realised more attention needed to be given to her finances / investments with the aim of growing, managing and preserving her wealth for retirement, and she didn’t have the time to commit to it.

JBS’ strategy was to:

•    Ensure correct structures were in place (Self-Managed Super Fund and Family (discretionary) Trust) to maximise her potential;

•    Manage the SMSF inline with government regulations on her behalf, in turn significantly reducing the amount of paperwork Sally has to complete herself, as well as the accounting fees.

•    Regularly provide consolidated reports for her SMSF & Family Trust so she was up to date;

•    Regularly provide direct share updates and recommendations in-line with her risk profile to ensure she was able to buy and sell whenever necessary; and

•    Regularly provide current information on share buy backs, corporate actions etc. – saving her time and hassle of administering it herself.
Within 12 months she has achieved a portfolio income stream of dividends, franking credits and other interest of over 5% which is reinvested where possible or added to the SMSF cash account

To read a detailed strategy for Sally, please click here

Are you keeping your finances healthy by doing the right thing at the right time? Taking the best action at the optimum time can be crucial to your financial future.
Today we look at the following key three segments and what each group should be focussing on:

• Accumulators (aged 25 – 45);
• Builders Pre Retirees (aged 45 – 65); and
• Retirees (Aged 65 +).

Click here to read the whole article and if you would like to evaluate how you are travelling, please check out our website and contact JBS to arrange an obligation-free meeting at our cost!

With the ability to take control of your retirement savings, Self Managed Super Funds continue to grow in popularity.  However as a Trustee it comes with responsibilities for you to ensure your fund meets the strict regulatory and compliance obligations.  Failure to do so could result in significant penalties, including the potential loss of the fund’s complying status.

Today we look at the following six things NOT to do with your SMSF.

1. Do not set up a fund to illegally access your super;

2. Do not provide financial assistance to yourself or a family member from your SMSF;

3. Do not use borrowed funds to make property improvements;

4. Do not mix up your personal or business assets with your SMSF;

5. Do not contribute into your fund if you are 65 or older and have not met the ‘work test’; and

6. Do not have your SMSF audited by the same Tax Agent who prepares your SMSF Financials and Tax Return.

Click here to read the full article, and don’t forget that Managing an SMSF can be a complex task to ensure you meet all regulatory and compliance requirements.  JBS Financial Strategists are specialists in SMSF, and we take the complex task from you to allow you to enjoy the full benefits of running your own SMSF.  For further information or a health check of your fund contact JBS.