Tag Archives: Retire Right

Are you really ready to retire?

For most Australians, retirement planning is a financial exercise. If you have done the ‘right’ things, contributed to your superannuation and accessed quality advice on managing your nest egg, then you’ve taken the first steps towards a successful retirement.

However, it is far too easy to think of retirement as a financial number you achieve and an extended holiday. This approach is fraught with danger and misses a crucial part of preparing for your new circumstances.

You should consider several key areas as you create your retirement life. 

1. Understand what kind of life you want

Far too many pre-retirees make the mistake of thinking that the financial and retirement plans are the same things – that the life part will take care of itself.

This stage of your life deserves a more holistic look, and plan to understand what you want your life to look like. What changes do you anticipate as you navigate retirement? How will you get the most out of each and every day?

These are important questions as you contemplate your move into this next phase of your life.

2. Mental & physical aging

Healthy aging is a major part of your retirement plans and lifestyle.

While the aging process is normal and affects us all in different ways, there are some things that we can all do to ensure that we “put time on our side” by looking after ourselves.

Most people think that being healthy physically is the key to healthy aging. In retirement, healthy mental aging is just as important (some say even more so). Keeping yourself mentally active each and every day will ensure you nourish your mind to maintain your mental health. Engaging in the many options available to keep you physically active will support your overall well-being by maintaining your mind, body and soul.

3. A positive definition of ‘work.’

Even when you leave the traditional workplace, you will still have a need to share your workplace strengths and skills. If you have a positive attitude towards the workplace, then the desire to have a retirement free from any kind of work becomes irrelevant.

Work doesn’t have to be full-time, it doesn’t have to be something you don’t like to do, and it doesn’t even have to be for pay! Many retirees use volunteering as a way to replace the things they miss most about their previous work.

The grey army is recognised for its value in today’s society and often fills the workforce gaps due to a skills shortage.

4. Family & personal relationships

Our close personal relationships define us, give us a purpose for living and encourage us to create life goals.

In retirement, our friendships and close relationships may offer us the validation that we may have received in the workplace. Researchers have found that people in satisfying personal relationships have fewer illnesses and higher levels of good overall health, adding to your retirement enjoyment and years of your life!

5. An active social network

As you get older, your social support network becomes increasingly important.

Successful retirees generally have robust social networks that provide them with friendship, fulfilling activities and life structure. As part of your retirement plan, consider the important connections you have created and what you can do to continue growing your social network.

6. A balanced approach to leisure

We all enjoy leisure time, but things change when leisure becomes the central focus of our day-to-day life. By its very nature, leisure loses its lustre when it is the norm in our life rather than a diversion.

In retirement, leisure activities often replace workplace functions to meet our basic needs. Successful retirees balance their leisure over many different activities and take the opportunity to do new things and not get into a rut.

When assisting clients through the transition to retirement, we encourage clients not only to consider the financial aspect of retirement and what lifestyle areas to explore for a fulfilling retirement. You can have all the money in the world. However, your retirement may not reach the heights you had hoped for without a plan to achieve it.

Speak to the JBS Financial team to discuss your plan for the life you want to live in retirement.

Jenny Brown – CEO

It's not just about your will

It’s Not Just About Your Will

By Jenny Brown – CEO and Founder

When we look at Estate Planning, the first thing that pops to mind is our Wills. After all, these legal documents dictate what will happen to our assets when we die. While this is a good start, you will more than likely have assets that are not covered by your Will and will need to be dealt with in a separate manner.

Jointly Owned Assets

It's not just about your willThere are 2 ways to structure jointly held assets and both are treated differently for estate purposes. The first and more common way is what is known as ‘Joint Tenants’. In this scenario, if you were to die, the asset automatically goes to the other owner. For example, a husband and wife purchase a house as joint tenants, if the husband were to die, the wife would now own the entire house. It does not form part of his Will.

The second ownership structure is what is known as ‘Tenants in Common’. In this scenario the 50% (or whatever % you own) is not automatically passed over to the other owners, it does form part of your Estate and will be distributed through your Will. For example, 2 business owners purchase a commercial building 50/50 as tenants in common. If one were to die, their 50% would go to their estate and as an example end up being owned by their partner. Now there may be an agreement in place where the surviving business owner then buys the other persons share from their partner, however the partner does now own the 50% rather unlike a ‘Joint Tenants’ situation where the surviving owner would automatically be allocated the other 50%.

Assets held by Private Companies or unit trusts

Sometimes a person has assets held by a company that he or she owns. The person may own all the shares in the company and might be the only director of the company, and in so doing is able to use and enjoy the assets. Whilst the person might own the company, it is the company that owns the assets. Thus for example the person cannot in their Will give away the company car because they don’t own the item. It is a common mistake by business proprietors that they forget that assets they use personally are not theirs but instead belong to the company.

The only asset that the Will maker has is the ownership of the shares in the company, not any specific assets of the company.

Units in a unit trust are similar to companies in that any units owned by you, not the assets owned by the trust, will pass to your estate to be distributed as per your Will.

Assets held in Family Trusts

Assets held in a Family Trust are governed by the determinations of the trustee of the trust and are not assets owned by the person who set up the trust and transferred assets to it. Such a person is unable in their Will to distribute the assets of what they might regard as “my trust”. Control of the trust post the death of the person might be capable of being governed by the Will, but the assets themselves are not the person’s to give away in the Will. In the event of the death of a trustee (where it is an individual trustee), the appointer will need to nominate a successor trustee.

Life insurance

When you set up a life insurance policy you may also nominate a beneficiary. Generally, the proceeds of a life policy are paid directly to the beneficiary, without any need to be included in a Will.

If you wish for your life insurance benefits to be controlled by the terms of your Will then you need to nominate your estate as the beneficiary of your policy. A lot of life insurance policies are owned by superannuation funds with the proceeds being paid into superannuation. This brings us to the next asset.


When dealing with superannuation assets you have the ability to nominate to the superannuation trustee to who the funds will be passed on. If no nomination is made then the superannuation trustee will distribute the funds according to their formula. It is therefore essential for you to make a nomination however most superannuation funds have two types of nominations available to you.

The first kind of nomination is a non-binding nomination. This is more of a suggestion to the superannuation fund of where you wish for your funds to be paid. The superannuation trustee is under no obligation to pay your super benefits as per your nomination and instead will try to contact all possible beneficiaries (spouses, kids, dependents etc) and for them to put forward their case on why they should receive any benefit.

The second kind of nomination is a binding nomination. This nomination instructs the superannuation trustee on where they need to pay the money. Note that this is an instruction and not a suggestion and the trustee is obligated to follow it. There are rules however on who can be nominated on a binding nomination as only ‘dependants’ (spouse, children, financial dependents) or your legal personal representative (your estate) can be nominated. Because of the absolute certainty of this nomination, a lot of binding nominations only last 3 years at which time they expire and will need to be renewed. There are some superannuation funds however that do offer non-lapsing binding nominations.

With both nomination types, once the trustee has made their decision it cannot be contested, unlike a Will. Therefore it is essential that it is set up correctly to ensure your funds are passed onto your preferred beneficiaries.

We often only think about our Wills when it comes to Estate Planning however when probably our 2 greatest assets, properties held jointly and our superannuation funds with any life insurance proceeds are not covered by our Wills we need to make sure the proper procedures are in place to ensure they are passed onto our preferred beneficiaries.

If you would like to talk to someone to ensure that your estate planning is adequate and in place to cover all of your assets, please reach out and discuss your situation with the JBS Financial team. 

SMSF Transfer Balance Cap Reporting

From 1 July 2017, superannuation fund members are subject to a $1.6 million transfer balance cap (TBC) which limits the tax exemption for assets funding superannuation pensions.


The TBC encompasses a significant amount of monitoring for an individual. This monitoring is to be facilitated by the Australian Taxation Office’s (ATO) event-based reporting framework.


Event-based reporting is a significant shift in SMSF administration processes. Therefore, it is essential SMSF trustees understand the event-based reporting framework and get it right.


Why events-based reporting?


Event-based reporting is required for the ATO to track an individual’s transfer balance account across all their funds including public offer and defined benefit funds and administer the appropriate consequences if an individual exceeds their cap


An SMSF is only required to report if one of its members has an event that impacts their transfer balance account, such as the ones listed below.


From 1 July 2018, time frames for reporting are determined by the total superannuation balances of the SMSF’s members:

– where all members of the SMSF have a total superannuation balance of less than $1 million, the SMSF can report this information at the same time as when its annual return is due.

– SMSFs that have any members with a total superannuation balance of $1 million or more must report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs.


What needs to be reported?


An SMSF must report events that affect a member’s transfer balance account, including:

– Income streams a member was receiving on 30 June 2017 that continued to be paid to them on or after 1 July 2017 and are in retirement phase.

– New retirement phase income streams.

– Some limited recourse borrowing arrangement payments.

– Compliance with a commutation authority issued by the Commissioner.

– Commutations of retirement phase income streams.


All SMSFs that were paying a retirement phase income stream at 30 June 2017 needed to complete and lodge a TBAR on or before 1 July 2018 to report the balance of each pension individually, for each member as at 30 June 2017.


An SMSF is required to report earlier if a member has exceeded their transfer balance cap, regardless if it usually reports annually.


Closing an SMSF and Roll-over to an APRA fund


If you are going to roll over a super benefit into an APRA-regulated fund and start an income stream you are encouraged to report the communication as soon as it occurs.


As APRA-regulated funds have a monthly reporting regime, waiting to report the roll-over can result in a double-counting of the member’s income streams.


How JBS can help?


For ongoing Full Service clients of JBS we remove this administration burden for you and work with our accountants to ensure that the TBAR reporting is met. For those who use an external accountant or an annual lodgement service it is critical to ensure that you understand your reporting requirements.


As always JBS are here to help so if you have any queries, please feel free to contact us.

Unexpected Facts About Retirement

For the majority of us, leaving our office desks forever is something we can only imagine about as it’s so far away. For the luckier ones that are much closer to retirement, this can be a time of excitement and relaxation. Spending our days at the golf course or with our community groups, families and friends all day every day sounds like heaven on earth. The transition from full time work to full time play however may become unbearable.


Here are 5 facts about retirement that you should be looking at before retiring.


1 – Time – One of the first things our clients discover about retirement is that they have too much time on their hands with nothing to do. Playing a round of golf with mates, or enjoying a drink at the bar will only fill up a certain amount of time in the day and you can’t go doing the same routine day after day. Couples and singles alike will quickly become very unhappy once they run out of ideas on what to do with their time. Having ideas in your head on what to do in retirement is one thing; however actually doing them is another. Some experts are suggesting retirees have a day to day plan on what they want to do and even seek a therapist leading up to retirement. You will never be as busy as you were pre-retirement so it’s important to map out ongoing hobbies, part time work and social events before embarking on retirement.


2 – Retired husband syndrome – Many couples get very excited about retiring together, travelling the world together and spending intensive time together. If this is you then consider the fact that you and your other half may have been together for the past 30 years working full time. Aside from weekends and holidays, you never have to see each other for more than a couple of hours in the morning and night. Now all of a sudden you see each other 24 / 7 and may even start to discover that you can’t stand being together for a prolonged period of time. A great plan is ensuring each of you have your own hobbies, goals and friends. As my mother often said to my father “I married you for better or worse, but not for lunch”.


3 – Not having enough money to fund retirement – Once retired you might have the goal to travel, see the world and complete your bucket list, unfortunately you might not have the funds to do so. Travelling can become very costly. A single international trip can set you back a lot more than you’ve budgeted for. By the time your second trip comes around you may find that you don’t have enough funds anymore, so eating out may be out of the question and this year you won’t be able to travel overseas to see your grandchildren. By speaking with the team at JBS early on we can help prepare you and set realistic goals for your retirement, putting in allowances for those additional goals that you want to tick off your bucket list. This way at least you have a more clear expectation of what you can afford in retirement and prevent any nasty surprises once you’ve retired.


4 – Entitlement to social security – Depending on what year you were born, the Australian Pension Age is at least 65 but is gradually increasing to age 67. During retirement some retirees aren’t aware of what social security benefits they’re entitled to. Even if you are receiving funds from your Superannuation benefits, you may still be entitled to government age pension (subject to income and asset tests). We will help ensure you’re kept up to date regarding any social security payments you’re entitled to and consider how we can structure your wealth to maximise these for you.


5 – Losing your identity from not being at work – For those of us who are passionate about our profession, this becomes our identity. Anytime your friends or family think of Engineer, Accountant or Doctor, they think of you. So it’s no surprise that once you retire you may feel like you’ve lost your identity, which may lead to discontent and even depression. Without the daily interaction of your work colleagues, your mental and even physical health may start to deteriorate. Retirees who are not very active tend to decline rather quickly mentally and physically. Joining up to the local gym, taking up classes and just continuing to meet new people will have a longer lasting affect for you. After all, we all need something exciting to look forward to in the future.


If you are one of the lucky ones thinking about retirement, make sure you talk to the team at JBS so there are no nasty surprises. Remember good planning takes time.

Celebrate Your Financial Goals

At the start of every new year, many people set new goals for themselves however not everyone is successful. Many of us identify what we want to achieve, however we don’t think about and plan how to achieve it. It’s proven that people who develop action plans can experience less anxiety, increased confidence, improved concentration, greater satisfaction about achieving their goals and are more likely to succeed.


We can often also have goals wandering around in our mind that we end up forgetting so “ink it, don’t think it”. By writing down your dream or goal, you make a conscious commitment that this is what you want to achieve. Once you have made this commitment, put it in places that can easily be seen. Put it on your home screen of your phone, tablet or computer, your bathroom mirror, in your gym bag or on your kitchen fridge. These reminders and a positive mindset will help you stay motivated for achieving your goals.


One of the most exciting things that JBS are fortunate enough to do is celebrate with our clients who achieve their financial goals and are living out their dreams. Contact the team at JBS to book an appointment so we can help you achieve your financial goals.

Proud to be an Adviser

I often get asked why I love being a financial adviser – well the answer is simple, I get to help our clients every day of the year. Along with my awesome team we are able to make such a difference in the lives of our clients whether it be when we get to help them retire, hold their hands when something goes wrong in their lives or be at the end of the phone when the markets get the wobbles.


Being an adviser comes with a huge amount of responsibility, that we often take for  granted and it’s not until we are able to sit back and reflect on all the good that we do that we often realise just how much of a difference we can and do make in our client’s lives. Take today, let me tell you about three clients, their stories and how it all unfolded, firstly let me introduce you John* and Sue*, they are both 70 and fairly typical retiree clients. They have combined investible assets of $850,000 and are receiving overseas pension income of $17,000. Their living expenses are around $60,000 including some low-cost holidays and they don’t qualify for any Centrelink at this point.


Their worry is how long will their money last, can they keep taking annual holidays, travel more than once a year, or do they need to cut back, especially with the current volatility that we are experiencing in the market. Now this is not an uncommon question and whenever we catch up with our clients to discuss their strategies, this question if it’s not asked, it’s certainly on their minds.


By anticipating their needs through experience, we had already projected out what continuing to receive a total retirement income of $60,000 would do for their retirement plans. In addition, we had prepared 2 other projections at $70,000 and $80,000 to highlight just how long on conservative projections their funds would last. Now the portfolio that John and Sue have within their fund is nothing sexy, more a very stable mix of quality blue chip Australian Shares, some international and local ETF’s, term deposits and some bank hybrids. Diversified enough that volatility is reduced and a portfolio that reflects their risk profile along with two to three years of cash plus dividends and income to fund pensions and ensure that in a downturn they wouldn’t have to sell any of their growth assets.


Our reward was to then experience the delight that they wouldn’t run out of money until they were hitting 100 years of age and that was on the projection for higher drawings. Turning a conversation around from how long will my money last, to what places we’d love to travel to and what would we love to tick off our bucket list just makes our day.


To keep reading this article click here


– Jenny Brown –


*The names of clients have been changed to protect their privacy.

Structures Matter

We often ask ourselves what we should be investing in. Should we invest in shares? What shares should we buy? Is now a good time to be buying shares? Should I instead look at putting my money into a more defensive asset like a term deposit? Or even look at an investment property.


While all these questions are good, the first question we need to ask ourselves is who should own the investment, in other words what structure should we use?


When purchasing an investment we have a number of options available to us when it comes to ownership. Do we own the asset personally, jointly, within superannuation or another trust structure or even within a company of our own.


The majority of investments that we can choose can be owned by any of these entities. There are some exceptions however this article will not go into specifics. For the most part though, one of the main differences between the different ownership options is the tax treatment.


When you own an asset as an individual, the earnings are attributed to you personally and hence you will need to pay tax at your marginal rate. You will also be eligible for a 50% capital gains discount when you hold assets for longer than 12 months. As you will be paying tax at your marginal rates, owning assets as an individual can be beneficial for someone with a low income and hence low marginal rate but detrimental for someone who is already on a high income and high marginal tax rate.


The tax rules around jointly owned assets are very similar to that of an individual with one main difference. The earnings and hence tax is split between each of the owners. A husband and wife for example can split the earnings 50/50 between the two of them. This comes in handy when both partners are on high incomes for example although other options may be preferable.


A common misconception is that superannuation is an asset in itself. This is not the case, it is simply a structure that owns the investments. The main benefit of superannuation funds is that the tax on the income is charged at 15% and capital gains (if the asset is held for longer than 12 months) are taxed at 10%. Current legislation also states that when the superannuation fund is turned into a pension account the tax on the earnings within that pension account attracts 0% tax. This is clearly the best way to hold assets from a tax perspective however the obvious downside is that you aren’t allowed to access the money/investment until you meet a condition of release. The government has also put a cap on the amount of money that you are able to contribute into superannuation each year and also the amount of money that you can transfer into a pension account. These restrictions have been discussed in detail in previous articles so I will not go into them here.


There are lots of different types of trusts (superannuation being one of them) however here we will cover unit trusts and discretionary trusts in particular.


In the majority of circumstances the trusts themselves do not pay any tax and instead the tax is paid by the beneficiaries as all income is distributed through to the beneficiaries. For a unit trust, the distributions are paid according to the amount of units owned. For example, if a unit trust has 10 units, and person A owns 7 of those units, then person A will receive 70% of the distribution and hence will be required to pay tax on the amount. As the income flows through to an individual in this example, they will receive a 50% capital gains discount for the unit trust holding the asset longer than 12 months. A unit trust may be applicable for someone running a business with other people who are not part of their family with distributions to be allocated according to the % ownership.


A discretionary trust while similar to a unit trust has one distinct advantage. The earnings can be distributed to any beneficiary on a discretionary basis. That is, you can choose how much of the distribution gets paid to each individual beneficiary and this can vary from year to year. You can therefore allocate more income to those on lower tax rates and less or even no income to those on higher tax rates. This is often used for family owned businesses where money is often allocated to children, non-working spouses or even retired parents in order to keep the tax low and is where the name “Family Trust” originated from. This is the most flexible of structures to hold investments in although you need to remember that all earnings need to be distributed to the unit holders and there are costs associated with the setting up and running of the trust.


Companies are similar to Unit Trusts in that the amount of income that is distributed to shareholders is determined by the share of the company that they own. If you own 70% of the company you get 70% of the distributions. However there are some big differences.


The first one is that the company pays tax (ranging from 27.5% – 30% depending on the size of the company). This means that as dividends are distributed to the company owners they receive what is known as franking credits to offset the tax already paid by the company.


The second difference is that unlike a trust, earnings can be kept inside the company structure rather than being paid out to the company owners. This can help build the assets inside the company where the tax rate is only 27.5% compared to the individual where that tax rate may be up to 45%.


The main disadvantage when it comes to companies is that they are regulated by ASIC. Unlike other ownership options, there is some compliance that needs to be adhered to when running a company and hence more fees may be payable and more work is required.


Structuring the investments in the right way to ensure the minimum tax payable is extremely important but tax is only one factor that needs to be taken into account. If you want to know more, not just about investments but about setting up the correct structure for your goals and needs please contact our offices today.

Protecting Your Earning Capacity

In previous articles, we have written about the importance of ensuring that your biggest asset – your earnings capacity is protected.


A question we often get however is how do I know if what I have is ok?


There are many Income Protection policies on offer with many options but one of the biggest differences you need to understand what happens in the event of a claim with an Agreed Value Policy compared with an Indemnity Policy. The wrong option can have catastrophic consequences to your financial position when you need the cover the most.


In order to make the right choice, you must first understand the differences between these two options.


An Agreed Value Policy is signed off at the start, i.e. what level of income they’re willing to cover. It provides you with certainty at the time of insurance application, the amount that you have been insured for will be paid, if you need it.


Whereas with an Indemnity Policy, the benefit amount is estimated at the start but not financially assessed until the time of claim.


In both instances, you generally are able to insure up to 75% of your income, but the difference in the event of claim can be significant.


So which one is advantageous for you?


Indemnity Value Policies are usually cheaper when compared to Agreed Value. However, there is no certainty on the monthly benefits received upon the claim. Although Agreed Value income protection might be a little more expensive, it holds more value as it provides you with certainty on the benefit amount you will receive.


Indemnity value covers are suitable for people with a steady income over the years. However, it is quite common for things to change which may lead to the decline (sometimes only short term) of your income.


Possible reasons for a decline in income (which would impact on an indemnity claim but not an agreed value claim):


– You may be in a stable employment now but have you ever dreamt about starting your own business? Clearly, the goal would be to return to a similar or high income but this move can often lead to a short-term income drop and provide an exposure.

– You may wish to change your career entirely. This could involve further study and again a reduced income for a period of time.

– Your current industry or expertise may be subject to disruption which could affect your earning capacity or require further study.

– You may wish to reduce your working hours or start a family.

– You may have your hand forced and need to give up your career or dramatically alter your hours if a family member becomes very ill.


Unfortunately, one of the most tragic situations we have seen was with a middle-aged man who overtime had his work hours, job performance and income gradually get affected as a result of a debilitating mental health illness. The illness caused him to have to reduce his hours and responsibility and even take periods of unpaid leave. Rather than going on a claim in the initial stages, he struggled through perhaps in denial. The gradual decline in health eventually resulted in a claim; however, the claim was reduced as his pre-disablement income was actually lower than what it was when he took the policy out. Had he taken out an Agreed Value Policy, he would have been entitled to a higher level of income which would have provided much more financial support to him and his family and would have allowed him to focus on his recovery.


For anyone who has default Income Protection cover through work or a Superannuation provider, it is critical to understand these differences as often default insurance is on an Indemnity Policy basis.


It is also important to understand that the older we get the more “uninsurable we become” so locking in a good policy now while you are young and healthy can make a significant difference when you need the policy the most.


At JBS we help people assess their need for cover every day. We provide clients with piece of mind which allows them to get on with their lives in comfort knowing that they are covered. Please contact us so that we can provide you with the same level of comfort.

Downsizer Contributions

From the 1st of July 2018, if you are at least 65 years old and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your Superannuation fund of up to $300,000 from the proceeds of selling your home. Normally after age 65 you would need to meet a work test in order to contribute into Super, the great thing about this is that you don’t need to meet the work test to be eligible.


The contribution will not be counted as a Non-Concessional Contribution and will not count towards any contributions caps. The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million, however if your balance is above $1.6 million you are still restricted to having $1.6 million in the pension phase.


The contribution is only able to be made once on the sale of one home, therefore if you sell a second home you can’t make the contribution again. There is also no requirement that you have to purchase another home or actually downsize your home as the name may suggest. In order to be eligible you must tick all of the following criteria:

– You are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)

– The amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1st of July 2018

– Your home was owned by you or your spouse for 10 years or more prior to the sale. The ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale

– Your home is in Australia and is not a caravan, houseboat or other mobile home

– The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT asset (acquired before 20th of September 1985)

– You have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution

– You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement

– You have not previously made a downsizer contribution to your super from the sale of another home.


It is important to note that if your home was owned by just the one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, provided they meet all of the other requirements.


The maximum contribution you can make under the downsizer rules is $300,000, or $300,000 each if a member of a couple. However, the contribution can’t be greater than the total proceeds of the sale of your home. For example if you and your partner sell your home for $400,000 you’re only eligible to make contributions of $200,000 each, or it can be split in another way such as $300,000 and $100,000.


You must also make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement. In some circumstances the ATO may at their discretion extend this 90 day period, but you will need to apply for it. It is also possible to make the contributions in multiple batches, but the total amount can’t exceed $300,000, and all contributions must be made within the 90 day period.


If you’re thinking of downsizing your home and wish to explore your options in relation to making downsizer contributions, please don’t hesitate to contact JBS and we can assess your options and eligibility. It is a really great opportunity to help build your wealth in a tax effective manner.

Considerations for Default Super Insurance Cover

Many of you would have automatic Insurance through your default Super Fund that you would have been signed up through your employer. But what you may not realise is some of the caveats in these policies.


1. Renewability of Cover:
Some super funds have the ability to cancel your cover when certain events occur. If you were to claim on this policy the insurer can simply decide to not cover you any longer. This puts you at potential risk of not being covered for a significant portion of your life. A retail insurance policy may guarantee your cover as long as your premium is being paid, giving you peace of mind if something was to happen to you.


2. Claims while off work
If you have default income protection cover within your Super Fund it is prudent you check the terms and conditions. Some insurance policies held in Super Fund may have a clause in their Income Protection policies that if you are unemployed for any reason, you will not be covered. For example this could be due to taking a long holiday or going on maternity leave.


3. Stepped vs. Level premiums
A stepped premium will increase each year as you get older, eventually becoming expensive. On a Level premium, you essentially lock in the premium at the age in which you take out the policy, and only indexes slightly each year. Although stepped premiums can be more beneficial in some circumstances, when holding cover for a long period of time level premiums are generally more affordable. Most super funds do not offer cover on level premiums, or if they do the cover usually decreases as you age.


4. Cover whilst overseas
Default cover within your Super Fund may not allow you to remain overseas for any length of time to receive treatment whilst on a claim. In order to meet their definition, you must either be in Australia to claim or return to Australia for treatment. Retail insurance policies may allow you to remain overseas to allow you to receive treatment and stay on claim.


5. Differing definitions of disability
Cover within Super Funds generally will only classify you as fully disabled once you can no longer conduct your occupation at all and needs to remain the case to continue the claim. This is fairly restrictive for members who may want to get back to work in some capacity. For example, there may be a member can work 1 day per week. A retail insurance policy may have a three tier definition of total disability


– Initially, you cannot perform one important duty of your regular occupation

– 10 hour definition – allows members to work up to 10 hours per week whilst on full claim.

– Loss of income definition – allows member to earn up to 20% of pre-disability income without losing any claim benefits.


We note however that these definitions can vary slightly between insurers but are generally very similar.


As always – check the details or give us a call
When comparing insurance within various superannuation plans, we often find that not only are the definitions widely different, but that often if you haven’t reviewed your cover for a while you might find that the premiums have increased significantly and as the insurance is coming from a default superannuation fund, you may be unaware of these changes.


If you would like a review of your current insurance policies and to get a better understanding of what you are and aren’t covered for, feel free to contact JBS.


– Peter Folk –



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