Do you hold some of your cash in a term deposit? Maybe you have term deposits in your self-managed super fund? Or do you plan on investing in one in order to earn a higher rate of interest than your standard savings account? Well, recent changes to banking legislation may affect you and how you save your money.

The key difference is that banks will now demand at least a 31 day notice period if you try to withdraw your money early from a term deposit. This means that if you want to quickly access the cash you have locked away, you cannot just pay a fee and lose part of your interest, but will have to wait at least a month as well.

These new requirements were introduced on 1 January 2015 in response to the new “Basel III Liquidity Reforms” which demand higher levels of liquid assets to be held by banks in order to provide protection against short term events that may prove a threat to the bank’s ability to pay its obligations, such as a bank run. The reforms expect banks to hold enough high quality liquid assets (such as cash) to cover total net cash outflows for up to 30 days and, in order to achieve this, the banks have applied these new restrictions on term deposits, ensuring that the money held as term deposits does not count as part of the total net cash outflows.

So what does this change for you?  In most cases this should, hopefully, not cause much concern. If you intend to hold your term deposit for the full term until maturity, this legislation will not cause anything to happen differently. If you believe, however, that you may be relying on accessing the funds in your term deposit before the term deposit matures, then you should consider alternative arrangements such as holding part of your funds in a savings account. While some banks have stated that they would relax this requirement in the case of financial hardship, this would be reliant on their assessment.

If you’re concerned about what this change may mean for your savings plans or your retirement savings then please contact the team at JBS to discuss your personal situation.

On the weekend of the Queen’s Birthday, I was lucky (or unlucky some might say) enough to spend the time repairing the fences around my family home. Kristyn and I had a few helping hands with my mum and dad coming down from Shepparton to help; my brother and sister in law were roped in too.

After much debate and discussion about design and strategy we began to dig the holes to lay the foundations. 17 holes in all were dug over 45 metres, all having to be evenly spread and of equal depth to ensure that everything lined up. The posts were finally cemented into position using a combination of a string line and the naked eye, mainly due to the windy conditions. This was a very slow process that seemed to take forever, but we needed to make sure that it was done correctly, otherwise any imperfections would only be magnified once it was complete. We worked together closely as a team, each performing our roles to ensure that we succeeded together.

Monday morning was the moment of truth and it was time to hang all the rails. Once again, there was a lot of work involved with ensuring that they were hung straight, with the plinth board along the bottom being used as our guide to ensure that the height of the fence was consistent. After 2 solid days of not really seeing any significant improvement, by lunch time of day three we could really see things coming together. Then it was time to nail the paillings. Dad was on measuring and I was on nailing. 480 paiings, 2 nails at 3 heights, meant that I essentially did 480 squats, but the job was finally done. We finished up on Monday afternoon and although my knees were a little sore, I’m pretty proud of our achievement. Clearing and building 45 meters of fencing over 3 days was a monumental achievement that couldn’t have been done without the support of my family. The effort really shows how much can be achieve in such a short period of time when you work together as a team.

The other thing that really stood out throughout this experience was that although building the foundations can often seem to take a long time and can often be the less exciting part of any process, it is critical to ensure that it is done correctly otherwise you will have to deal with imperfections for a very long time.

Based on figures from the Cancer Council, an estimated 128,000 of new cases of cancer will be diagnosed in Australia this year.

Just as alarming, 1 in 2 men, and 1 in 3 women will be diagnosed with cancer by age 85.  The most common forms of cancers in Australia include:

–  Prostate cancer
–  Breast cancer
–  Melanoma
–  Lung cancer

We all know someone who has suffered cancer of some form or critical illness.  Think back to the emotional stress and strain this placed on that individual and their respective family and friends.  It is a hard time for all.

What we want to highlight in this newsletter is the financial stress that can arise upon diagnoses of Cancer and other major illness.  Many of the advanced treatments for Cancer are not covered by the Government’s Pharmaceutical Benefit Scheme nor private health insurance, yet when it comes to our health, there is no doubt you would want the best treatment available.

Below is a list of some of the advanced drug treatments available and their cost:

–  Bevacizumab – Around $48,000 per year
–  Cetuzimab – Around $84,000 per year
–  Sunitinib – Around $68,950 per year
–  Erlotinib – Around $45,840 per year
–  Azacitidine – Around $84,000 per year
–  Gemcitabine – Around $10,000
–  Alemtuzumab – $26,400 for 12 weeks of treatment
–  Ozaliplatin – $700 every 2 weeks

Put yourself in the position where you are incurring the above cost.  It is most likely you would need to stop working at this point as well.  How would these advanced treatments be funded and how would it impact your financial situation, such as your ability to meet home loan repayments etc?

A Trauma insurance policy can assist with the funding of more advanced treatments, improving your chances of better health.  A Trauma insurance policy can also remove the financial stress that may arise in the event of critical illness which allows you to focus on what’s important, your recovery.

The team at JBS are passionate about the role Trauma insurance plays in your overall strategy and would be happy to assist with any questions you have.

I have many hobbies which I follow on a regular basis such as sport cars, playing soccer and even guitars. There is one hobby which I have a great passion for but never really chased due to “sensible reasons” and that is kickboxing / martial arts.

Some may see martial arts as violent and unnecessary, and some see it as a way of getting fit. I see martial arts as a way to strengthen the mind and body. From learning simple Karate techniques and steps to actual contact inside the ring, I’ve always had a sense of passion for the sport. Even at times when we were pushed to the limit time after time, I feel martial arts have taught me discipline and more importantly to appreciate the safety we get in our everyday lives.

Now to why I never pursued this sport intently. I returned home one night from training to be met with the question from mum, “were you involved in a fight?” I’m not sure what gave it away, maybe it was the bruises on my face arms and legs, or perhaps the wraps which were still on wrists. “No Mum, it’s from training” I replied. My reply was instantly met with another question from mum “do you know why we ran from our home country?” Knowing well what mum was thinking, I assured her it was simply training and nothing more. Mum’s thoughts were however, is why would we escape from violence to get into more violence? My thoughts were different, I believed martial arts is more than just plain old violence, it teaches me discipline and respect.

It was since then that I stopped pursing this “violent and dangerous sport”. Not because mum’s words changed my mind on martial arts, but because I believe my parents have had their fair share of fear arising from violence and didn’t need me to contribute to it further. Plus keeping the folks happy is a good thing too I suppose, as I couldn’t afford expensive clothing and footwear back then. I still hit the old punching bag from time to time, but just to keep fit and mind sharp.

Superannuation, it’s a bit of mine field when it comes to knowing how to maximise your super contributions. But don’t worry, we’ll break it down for you:

Maximise concessional superannuation contributions

Concessional superannuation contributions for the 2014/15 financial year are limited to $30,000. However, if you were aged 49 or older on 1 July 2014, a transitional limit of $35,000 applies giving you the opportunity to maximise your concessional contributions before the end of the current financial year.

Claiming a tax deduction for personal superannuation contributions

If you’re intending to claim a tax deduction for personal superannuation contributions, a “Notice of Intention to Claim a Tax Deduction” (s.290-170 Notice) must be lodged with your superannuation fund before any one of the following events occurs, whichever is first:

–    lodgement of the income tax return for the financial year in which the tax deduction is being claimed
–    commencing a pension
–    withdrawing superannuation benefits
–    rolling over your superannuation to another superannuation fund

Maximise non-concessional contributions

Non-concessional contributions are personal contributions made from after-tax income. For the 2014/15 financial year, non-concessional contributions are limited to a maximum of $180,000. If aged 64 or under on 1 July 2014, you’re able to bring forward up to three years’ worth of contributions (up to $540,000) provided you haven’t done this previously.

Making large non-concessional contributions is a big decision and advice from a financial planner is recommended before any contribution is made.

Salary sacrificed contributions

Foregoing part of your salary in favour of having additional concessional contributions made to super by an employer may deliver tax advantages.

Existing salary sacrifice arrangements should be reviewed on a regular basis, at least annually. Reviewing a salary sacrifice arrangement before the end of the financial year and amending for the following financial year represents good planning.

Your superannuation contributions at 65

If you’re aged 65-74, your superannuation fund is only able to accept contributions if you have been gainfully employed or self-employed for a minimum period of 40 hours, worked  over not more than 30 consecutive days, in the financial year in which the contribution is being made.

If you’re approaching 65 and not working, consider making superannuation contributions before your 65th birthday.

Government co-contributions for low income earners

If you earn less than $49,488 a year and make a non-concessional contribution to superannuation you may be eligible to receive a Government contribution of up to an additional $500. The actual amount, and eligibility for the co-contribution, depends on a number of factors including the proportion of total income derived from employment, age and taxable income.

Spouse contributions

Where you make a non-concessional contribution to superannuation for your spouse, you may be entitled to receive a tax offset of up to $540 if your spouse has an income of less than $10,800. The tax offset reduces if your spouse’s income is between $10,800 and $13,800. You will not receive a tax offset if your spouse’s income exceeds $13,800. The maximum offset available is 18% of the contribution made, subject to a maximum offset of $540.

Spouse contribution splitting

Superannuation laws allow for a person to split their concessional contributions with an eligible spouse to build up retirement savings for the other. Up to 85% of concessional contributions made in the 2013/14 financial year may be split with a spouse prior to 1 July 2015. Splitting superannuation contributions allows for couples to balance their superannuation savings between partners.

Life insurance held in super

On 1 July 2014, restrictions came into effect in relation to the types of insurance held through superannuation.

The new restrictions affect insurance policies that provide for the payment for an insured event that is aligned to a superannuation condition of release. In essence, the only new policies that can be taken out through superannuation after 1 July 2014 are those covering the following events:

–    death
–    terminal illness
–    total and permanent incapacity – any occupation
–    temporary incapacity

The new restrictions mean that you will no longer be able to take out a policy with your superannuation fund that covers trauma insurance, total and permanent disablement – any occupation and income protection insurance that provides ancillary (such as rehabilitation) benefits in addition to income replacement. Policies taken out prior to 1 July 2014 will not be affected by these new restrictions.

Are you turning 55 soon? Well congratulations! They say life starts at 55….or was that 40?? Either way, you get to have a party, and get lots of presents. But one present that you won’t be able to get is your superannuation.

For Australians to be able to access their superannuation, they must have met a condition of release. Generally speaking, a condition of release is usually around retirement or long term illness or injury. Part of the retirement condition of release is a requirement to have reached ‘Preservation Age’ which is set by the Government and is based on your birthday.

From 1 July 2015, Australians turning 55 will no longer be able to access their superannuation if retired, but rather will have to wait another 12 months to be able to do so. The preservation age will progressively increase in the coming years and you should be aware of them to know when your preservation age is.

What does this mean for you? Well, if you were planning on retiring early, you need to ensure that you have access to alternative funds or assets to provide an income to cover your expenses before you are legally allowed to access your superannuation funds. While retiring early may not be everyone’s plan, you should also take this into consideration as the preservation age is only increasing and you may find that when you get closer to retirement, you might want to look at your options and if you don’t have sufficient alternative options, you may have to continue to work until you can access your superannuation.

This shouldn’t be confused with the Age Pension age which is the age that you are entitled to receive Government benefits if you meet other qualifying conditions. The Financial Services Council has called for further increase to the preservation age to bring it in line with Age Pension age, as they are worried that some Australians will choose to retire early and utilise their superannuation for the years before Age Pension kicks in, and then rely on the Government to fund the remainder of your life.

If you’re worried about what the increasing preservation age will mean to your retirement, you should contact JBS for a chat.

Joe Hockey’s 2nd Federal Budget proposed some important changes, particular for families, retirees, and small business owners and looks to be aimed squarely at growing the economy.   There are always winners and losers and this year is no different.

Please view the video to watch a brief summary of the Budget proposals.

Budget Summary

The following provides a summary of the main proposals announced in the 2015 Budget:

–   The government has expressed their confidence in the importance of the superannuation system and announced there will be no changes
–   Pension assets test changes will benefit lower net worth retirees, however, higher net worth retirees may receive reduced entitlements
–   Many lower income young families will benefit from greater child care subsidies
–   Families choosing not to vaccinate their children will miss out on child care subsidies and family benefits
–   It will no longer be possible to claim both the full Government and employer provided parental leave payments
–   The company tax rate for eligible small businesses will be reduced by 1.5%
–   Unincorporated small businesses will receive a 5% tax discount to a maximum of $1,000
–   Small businesses will be able to fully deduct capital expenses of up to $20,000 per year

Please Note: The measures outlined in the Federal Budget are proposals only and may or may not be made law.

Click here to read the full breakdown

If you have any questions about these changes and what this could mean for you, please contact the JBS Team to discuss.

For those with a Self-Managed Super Fund (SMSF) you are required to prepare an Investment Strategy, when you initially set up your SMSF and you need to review it on a regular basis, with the industry standard being at least annually.  You may also consider reviewing your investment strategy when there are changes in circumstances, for example a member entering pension phase, or a member making a large contribution into their fund.  The main reason that an SMSF is required to have an investment strategy is to allow for the members personal circumstances to be regularly reviewed as well as, to account for any changes in the markets and economies.

The investment strategy is a way to prompt you as trustees to review your investment portfolio and ensure that it is still current given any changes that may have occurred in your personal circumstances or the markets and economies.  It also helps you review your objectives, strategies and asset allocation to ensure that they’re still current and may even prompt you to make changes where needed.

When drafting an investment strategy there are a few key considerations that you should consider.

Liquidity Needs:

Each member’s personal circumstances and life-stages are an important factor with regards to the SMSF investment strategy.  If each member is 15 years out of retirement, then you may consider investing for growth and riding out any volatility.  However, if one or more members is approaching retirement or is in retirement, then you may need to use a more cautious approach to ensure that you can afford ongoing pension payments, but you may need to adopt some level of risk to help your super benefits last in retirement.

Risk Tolerance:

Each member may or may not have different tolerances to risk.  Some may like or feel comfortable taking on additional risk in the hope of achieving greater returns, however others may feel more comfortable only taking on a small amount of risk and may feel better preserving their capital by investing in mainly cash and fixed interest.  Either way, when reviewing your investment strategy and portfolio for your SMSF, you need to take into account each members risk tolerance.

Asset allocation:

The asset allocation of your SMSF portfolio needs to also be reviewed, especially alongside your risk tolerance, as you don’t want to be too overweight or too underweight in an asset class.  However in some circumstances you may be comfortable with being over or underweight in an asset class.  You may also review your asset allocation based on what’s happening in the markets or economies.  For example, with the cash rate at all time lows, you may wish to seek returns and income from other asset classes, e.g. investing more in shares or international equity.

Insurance Needs of the Members:

As trustees of your SMSF it is now a requirement that you must consider insurance as part of your Investment Strategy.  It is not a requirement for each member to actually hold insurance but it needs to be clearly outlined that insurance has been considered for each member.

Here at JBS we can help you prepare your Investment Strategy and can even help review your current Investment Strategy.

JBS Financial Strategists is excited to announce the launch of JBS Robson. JBS Robson can provide a whole range of new of services including taxation, accounting, auditing and business solutions. Why would you need to go anywhere else – with JBS Robson working alongside JBS Financial Strategists in the South Melbourne office, we are now your complete ‘one stop shop’ for all your financial requirements.

Michael Robson has over 20 years experience in the finance industry, specialising in construction for the past 7 years. Michael can assist with Business and Individual Income Tax, Goods and Services Tax, Fringe Benefit Tax (FBT) along with many other services.

Below is a short video on services that JBS Robson can assist with:

Want to know more about JBS Robson? Jump on our brand new website, like our Facebook page, follow us on Google + and connect with Michael Robson our Accountant on LinkedIn.

If you have any questions about these new services available please speak to the team at JBS.

On 20^th March 2015, the age pension for a single person increased by $5.90 per fortnight increasing the total payment to $860.20 per fortnight. The rate for each member of a couple increased by $4.40 per fortnight to a combined rate of $1,296.80 per fortnight for a couple.

The Seniors Supplement which is paid as part of the Commonwealth Seniors Health Card, increased by $7.80 per annum to $1,262 per annum, for a single person and by $5.20 per annum each for members of a couple, increasing their combined annual payment to $1,898.

In the 2014 Budget, the Government proposed stopping the payment of the Seniors Supplement for Commonwealth Seniors Health Card holders. The amending legislation is still before the Senate.

Deeming rates, which apply for the purposes of calculating income derived from financial investments were reduced from 20^th March. The new deeming rates are 1.75% up to the threshold, and 3.25% for financial investments over the threshold. The threshold for a single person is $48,000, and $79,600 for a couple, combined.

The Department of Human Services made another important comment in relation to grandfathering of account based pensions for income testing purposes.

Where a person was in receipt of Government income support, such as an age pension before 1 January 2015 and they also had an account based pension in place before that date, the account based pension would continue to be assessed under the former (and often more favourable) income test rules. If the account based pension ceases for any reason, or the income support benefit ceases (even temporarily) the account based pension will then be subject to deeming.

The Department has reiterated that grandfathering will be lost where the benefit recipient receives no benefit payment of a “whole pay period”. This means people who have grandfathered account based pensions will need to exercise caution if planning on taking on casual work, even if only for a short period. If a fortnight’s income from casual work results in the loss of the age pension for just one fortnightly pay period, then the grandfathering of the account based pension is lost.

If you have any questions about these changes and how they could affect a Government benefit you are receiving, please contact the team at JBS.