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.

I know that when I wasn’t in the office a couple of weeks ago, you were all wondering where I was….well I was cruising it up with the family. We’d heard about the kids clubs at the resorts in Fiji and had thought maybe a family holiday there might be nice but then a friend suggested a cruise. I’ve never cruised before other than the Spirit of Tasmania which looks like a dingy in comparison to the beast we sailed on.

Anyway, we had seven days to make our way to New Caledonia and Vanuatu and back. The kids had the kids club which they loved because of the endless play station games, maze play area, crafts and even an ice-cream party. We also had a bit of fun getting into the swing of cruise living by taking on the trivia challenges and hubbie even went on a flying fox that goes from one end of the ship to the other.

When we did make it off the boat it was magical. We did a tour on our first stop that went around the island and just seeing life so simple made me relaxed. Lots of green trees and coast line that is everywhere on a small island. We also went to an aquarium and we saw this cool fish/shell/crab backwards thingy that moves sideways with just the slightest of movement. Google is the greatest thing ever …. it’s called a nautiloids.

The second stop was in Lifou which is effectively just a beach. We swam in the turquoise waters, with coral and exotic fish underneath. With the toddler goggles we had with us, I squeezed my head into them and went out for a dip. I saw some beautiful fish, just like in the movies and I even found myself admiring two small black and white sea snakes. And now that I’m writing about them for this blog piece I thought I’d google it to see if I could find a picture and the first sentence I read about these lovely creatures I was swimming with is….”the highly venomous black and white banded sea snakes are often found along Fiji’s shores or in lagoons.” Glad I didn’t know that when I was in the water.

When in Vanuatu we had a guided tour in a bus with no air conditioning when I would’ve said was approaching 40c and the humidity was right up there (felt like I was back in Vegas again). We went to look outs to see the beautiful coastline and greenness of the island, we went past the new hospital, the French and English sides, saw Kava bars, met a tribal chief, and ate local fruit. It was a lovely day and then I ditched the hubby and kids so they could enjoy the air conditioning of the ship while I strolled along the portside market to get some souvenirs.

We then sailed home back on a cloud of relaxation (except for the few times both kids had meltdowns). I love that I didn’t need to have my bag with me, a simple little card was it. Which is a hot tip for new cruisers, take a lanyard (that neck thingy with the clip on the end) as you’ll need it to put your card on to pay for your drinks. I can highly recommend cruising even if you have kids although hold off until age 3 when your kids can attend the kids club.

While we had a fantastic holiday, I now feel saddened for those living in Vanuatu after the destruction that Cyclone Pam brought. Homes, schools, hospitals and other buildings were damaged and destroyed across the capital, Port Vila, where over 2,800 people remain in evacuation centres. If you have ever travelled there, or even if you haven’t yet, I ask that you donate to an organisation that is fund raising to assist those in Vanuatu. I want to ensure that everyone there is safe and comfortable and can start to rebuild this lovely, tranquil place back to what it was so we can all enjoy it.

If you are looking for a charity, I have donated to the Red Cross appeal

Personal insurance policies may have a large effect on our cash flow. One factor which dictates how much you pay is whether your insurance premiums are structured on a stepped or level premium. If you’ve ever held any form of personal insurance then you may have come across these terms, however have you ever wondered what the differences is between the two? When your personal insurance policy is initially set up, you have the option to choose whether to have the premiums set on a stepped or level structure.

 
Having your premiums on a stepped structure would generally mean you pay lower premiums initially compared to a level structure.  Stepped premiums increase annually with the added risk of a potential claim.  The downside however is that over time your stepped premiums will increase each year as you get older. This method may not be desirable to some as the premiums may become too expensive to sustain over time.  In certain circumstance, stepped premiums are more favourable.

 
For example a 25 year old male may not be able to afford insurance premiums on a level structure, however in several years’ time he may be earning a larger income and thus be able to afford level premiums. So in the meantime he can put in place his personal insurance policy on stepped premiums to ensure he’s covered and once can he can afford to pay level premiums, he can change the premium structure.

 
Or you may have to take out an additional loan for a short period of time (say 5 years) and you can then ensure you have sufficient insurance to cover this debt for just the 5 years and cancel the policy once the debt is repaid.

 
A level premium is the second option you have and it calculates the risk over the life of the policy (assuming it is held to the expiry of the policy – age 65 and above depending on your policy) and spreads the cost of this risk.  Although initially more expensive to set up, insurance policies on a level structure will not increase over time (excluding any CPI increase).  A disadvantage to having level premiums is it may have a larger impact on your cash flow initially, however over time the savings will catch up.

 
The following table is an example of a 35 year old male with $500,000 of death insurance.

*Please note premiums are shown in months. The above table is only an example, for personalised quotes please contact your adviser.

 
As shown above, stepped premiums are initially cheaper, however over time becomes much more expensive.  In the above example the insured person from age 35 to 60, will have paid $14,002 more under stepped premiums compare to a level structure.

 
Stepped and Level premiums are only one factor to consider when reviewing your insurance needs tailored to your needs. So if you’re interested to know more, please contact JBS for further details and advice.

A couple of week’s back I had the privilege of dining at Heston Blumenthal’s “The Fat Duck” in Melbourne. What an experience! I am lucky enough to have dined at the restaurant before in its original UK location, while travelling through Europe with my brother a few years back. It was hands down the best dining experience of my life. So to say my expectations for round 2 were lofty, would be the understatement of the century.

While being seated at our table the restaurant manager George asked my friend Michael how his flight from Sydney was. We all looked at each other confused as we had not discussed this at any point with the restaurant and had absolutely no idea how they would know he flew down for the meal. We enquired about the question and George clarified that they often do some random research on their diners and had seen that Michael runs a marketing company in Sydney. Our jaws had already hit the floor before we had seen a dish.

What followed was an epic meal, in size, length, quality and enjoyment. He has re-engineered his classics and come up with some spectacular new dishes to suit its home for the next 6 months. In my opinion, even better than the original in the UK. I have included a couple of snaps from a few of the 16 courses.

Savory Lollies – Waldorf Rocket, Salmon Twister and Chicken Feast

Snail porridge with joselito ham and shaved fennel

Salmon Poached in Liquorice Gel – Endive, Vanilla Mayonnaise and Golden Trout Roe

The “Not” so full English breakfast – nitro scrambled eggs, candied bacon & French brioche

We sat down at 8:30 and were the last to leave at quarter to 2 in the morning. Some may gawk at the price tag of $525 per head, but you are really paying for the memory and experience. It is a true performance rather than a meal. He is the Rolling Stones of the kitchen, experimenting with the most odd and mind boggling flavours and ingredients.

These things come down to value. I feel like the team at The Fat Duck ticked every service box possible and I walked out of the restaurant with a huge smile on my face. I would do it 1000 times over. Have fun and pay for things that make you happy.

Adam Mckenzie

During times of share market volatility it’s easy to get caught up in headlines aimed to scare us from investing.

An article in the Age on 9th March 2015 had the headline ‘$24 Billion wiped off the ASX’,  can be a little daunting when expressed this way.  It went on to discuss how the share market fell 1.3% that day.  What it failed to mention was the share market was up over 10% in the previous 2 months, which equated to many more ‘Billions’ added to people’s wealth.

Investing into share markets or other growth assets (such as property) is not a short-term prospect.  You need to take a long-term view of at least 5 – 7 years.  Focusing on just the year ahead, or the daily movements of share markets, you can easily get caught up in the hype and make irrational decisions.  However, when we look at share markets over a longer term, we can start to see the benefits.

Constructed correctly, a share portfolio can bring rewards when a longer time frame is assessed.  The following graph outlines the annual returns from the Australian share market (including dividends) over the last 20 years.

As outlined in the graph, there have been 3 negative years and 17 positive years since 1995.  Over the last 20 years, 85% of years were positive, yet it is those negative years that get the most attention.

The average return has been +9.64% per year or 192% (since 1995).  That includes a period where markets were heavily negative during the Global Financial Crisis.

It is important that you receive adequate advice when constructing share portfolios, as your time frame, investment risk profile, your goals, and the underlying investments need to be analysed.  Investing is an area JBS are passionate about as we see the benefits it can provide our clients.

This passion leads us to produce a weekly newsletter on how share markets are performing.  If you are interested in shares and want to increase your knowledge we ask you to subscribe to our weekly Monday Markets newsletter here.

For those who know me well, they know I’m a big kid at heart. I own a lot of movies and quite a few of them are kids movies (I still enjoy watching the old Disney classics). Well what some may or may not know is I’m a huge fan of Lego, and I know I’m not the only one!

Back in January of this year, I was lucky enough that my girlfriend did her research and found out about the Brickvention expo. I believe it was the first time that they ran this expo in Australia and it was must attend for any big Lego fans like myself, and judging by the size of the crowd, I’m definitely not unique in my love for Lego. I was seriously like a big kid in a candy shop.

They had many different and awesomely built displays, there was even a huge Lego replica of the Golden Gate bridge, which I had only just seen the real thing for the first time a few months before hand. It was out of this world, if only I had a big enough room in my house to dedicate it to building Lego. My girlfriend can also be a big kid, so she jumped at the chance of having a photo with the Lego Tigger!

They had random Lego displays to show off what people could make themselves, to displays of various landmarks around the world, like the Sydney Opera House and Big Ben in London. And of course they had displays for Lord of the Rings and Star Wars. The best displays for me were the ones that involved the big boats, the trains and planes, especially when they were zooming around their Lego world.

Now of course when you go to one of these events you need to buy yourself a little souvenir. Unfortunately the R2D2 Lego pack was a bit pricey, so I settled for the train. As a kid I loved playing with my train set, so this one was a no brainer. I’m still in the process of building it, but I’ll get there one day and will hopefully get the tracks and room to play with it too.

I may be a big kid, but I’m happy to admit it!