Archive for month: September, 2018

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Making a difference

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Being a Financial Planner at Tailored Lifetime Solutions is not just about Superannuation and Investments. It is about putting our clients’ needs first and making a real difference in their lives.

For us, our values of Security, Peace of Mind and Genuine Care ring true and can be found in many of our clients’ stories. We would like to share one such client story with you:

Jack and Dianne (not their real names) are aged in their early 60’s and late 50’s respectively. They came to see Warren concerned about their financial situation and how they would be able to afford to keep their home and live when both of them retire.

Jack has been out of work for several years due to ill health, and Dianne works 4 days a week. Their after-tax income was $4,525 per month, they had a $257,000 mortgage with repayments and ongoing medical bills totaling $2600 per month. As a result, they were saving very little for their retirement. The initial reason for making the appointment was to discuss how they could improve their cash flow and get some budgeting advice. They were considering downsizing their home to alleviate some of their financial pressure and Dianne was looking to increase her working hours to full-time.

Once Warren was able to obtain their full financial picture, it was found Jack had Total and Permanent Disablement cover inside his superannuation which he had not claimed on. After further investigation and assessment, it was suggested Jack put in an insurance claim which was successful. A financial plan was then put in place to assist Jack and Dianne to achieve their goals and reduce the amount of financial stress they were feeling.

The money from the insurance payout was enough to pay off their mortgage, with some left over for some much-needed renovations. Jack and Dianne then opted to have a road map conducted to give them long-term analysis of what they may expect for their financial future.

The completed road map showed Dianne could reduce her working hours to 3 days and still be in a better position than they previously were. Dianne is now taking long service leave and they have booked a cruise from Melbourne to PNG which has always been on their bucket list, all this previously seemed out of reach.

Jack and Dianne have gone from their lives revolving around working, paying their mortgage and Jack’s health, to being debt free, keeping and improving their home and having the security and peace of mind knowing they now have more options available when it comes to their lifestyle and the decisions they make.

If you know of someone that may benefit from our service, have them give us a call on (03) 9851 0300, we would love to be able to assist them also.

Are you entitled to a tax deduction on personal super contributions?

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Are you entitled to a tax deduction on personal super contributions?

Published 17 April 2018

Last financial year was the first time that employees were able to claim a tax deduction for their personal super contributions.

Personal super contributions made during the 2017-18 financial year can now be claimed as a tax deduction by most Australian workers.

This follows changes made by the government which came into effect on 1 July 2017.

Previously, only the self-employed, unemployed, retirees, or those who earned less than 10% of their income as an employee, could claim a tax deduction for a personal super contribution.

How tax deductible personal super contributions work and who it helps

Personal super contributions are made using after-tax dollars, such as when you transfer funds from your bank account into your super. This money could come from savings, an inheritance, or from the proceeds of the sale of an asset, for example.

From 1 July 2017, the “less than 10% rule” was abolished. As a result of this change, if you make a personal super contribution, you can now claim a personal tax deduction for the amount of the contribution in your tax return. This will result in a reduction in your taxable income and, therefore, in your personal income tax liability for the relevant year.

Because personal contributions to your super fund (which you claim a tax deduction for) will only be taxed at 15%, this produces broadly the same tax benefit offered by salary sacrificing from before-tax dollars into your super.

This change is of particular benefit to you if your employer doesn’t offer you the option to salary sacrifice, or if you receive a windfall (such as a bonus), or a one-off capital gain (such as through the sale of an investment), that you’d otherwise pay tax on at your full marginal rate.

The Association of Superannuation Funds of Australia (ASFA) estimates that the rule change means an additional 850,000 people will be able to claim a tax deduction for personal contributions made to their super1.

But while there can be a tax benefit to making a personal tax-deductible contribution to your super, it’s worth remembering that you’re then generally not able to access the money you put into your super until your retirement.

What do I need to do to benefit from a tax deduction on a personal super contribution?

In order to benefit from the change, there are some steps you need to take – in order – so it’s worth considering your position ahead of the end of the financial year. If you’d like to benefit from a tax deduction on a personal super contribution, in the following order, you’ll need to:

  1. Make a personal contribution to your super. The amount you choose to contribute is up to you, however, you need to bear in mind your contribution caps (for more on this, see below). If you’re an AMP customer, you can do this online by logging into My AMP.
  2. Lodge a notice of intent to claim or vary a deduction for personal super contributions form with your super fund, which your super fund will acknowledge, in writing.

If you’re an AMP customer, you can do this online by logging into My AMP, selecting the superannuation account you intend to claim a tax deduction for, and then clicking View More > Claim a tax deduction.

  1. Following the end of the financial year and using the written acknowledgement from your super fund, which will confirm both your intention to claim a tax deduction and the amount you can claim, prepare and lodge your tax return.

What else do I need to know about personal tax deductible super contributions?

There are a few extra considerations to keep in mind. These include:

  • This incentive is available to anyone who is eligible to contribute to their super – although those aged 65 and over need to meet the work test to make a personal super contribution, and those under 18 can only claim a deduction for a personal super contribution if they also earned income as an employee or a business operator during the year.
  • If you’re claiming a tax deduction for a personal super contribution, the contribution will count towards your before-tax (concessional) contributions cap of $25,000. The super guarantee contributions your employer makes on your behalf, and any salary sacrifice contributions you may have made, also count towards this cap.
  • To ensure your ability to claim a tax deduction is not affected, you shouldn’t make any withdrawals or start drawing a pension from your super before your ‘notice of intention’ form has been lodged with your super fund.
  • Personal super contributions that you claim a tax deduction for will not be eligible for a super co-contribution.
  • If you earn more than $250,000 your concessional super contributions will be taxed at 30% (as opposed to 15%).

For more information

Speak to us to determine whether claiming a tax deduction on personal super contributions is the best strategy for your circumstances.

7 Mental Health Hacks To Naturally Lower Stress

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James Colquhoun JAMES COLQUHOUN  AUG 20, 2018  
Headaches? Tension in your back? Tight jaw? Not sleeping well? It sounds like something is playing on your mind. Take your pick of the below 7 health hacks to train your mind to find its happy place, no matter what life throws at you.

Get ready to rediscover some zen in your life!

1. Play Time Warp To Gain Perspective

The majority of what we worry about never actually comes to pass. And when it does, we usually find a way to cope regardless. So how do we access this wisdom and perspective when our minds are gripped with stress and spiraling out of control?

A simple Time Warp exercise can help you regain this calm perspective. Merely reflect back on an incident that happened, at least, one year ago, in which you felt extremely stressed. Today, how important does this event actually seem? Does it affect your daily life? Did you find a way to deal with it? Taking this jump back in time can help us remember how resilient we really are when faced with adversity – and realize that our worries are rarely the big deal that our minds make them out to be!

2. Reconceptualize your idea of stress

As strange as this sounds, try to give thanks for your stress. It is actually your body and mind alerting you to something that is out of balance in your life. When you feel stress building, give yourself a little pat on the back and thank your body for telling you that something’s wrong. By giving gratitude to your stress, it helps to remove the stress that is compounded by noticing your stress building. In other words, it takes the fear out of fear itself!

Remember also that stress doesn’t just arise from negative circumstances. Our bodies and mind can also feel stressed in large, positive events or times of change, such as weddings, promotions or exciting travel. A healthy amount of stress can also hone our concentration and propel us into taking action.

3. Imagine Your Parallel Universes

Worrying is a primitive mechanism of self-defense. By fearing negative outcomes, we pause and think twice before taking actions that may endanger us. However, with chronic stress in our safer modern environment, catastrophizing usually offers us more harm than good.

When you find yourself caught up in a mental tale of woe, take a piece of paper and write down your stressful situation. On one side of the paper, write down the very worst outcome that could possibly arise from this stressor (eg you lose your job, become homeless, etc). On the other half, write down the very best imaginable consequences, no matter how ridiculous!

Looking at your best-case and worst-case scenarios usually demonstrate how far-fetched each outcome is likely to be. In reality, most things in life wind up somewhere in the middle. You can take this another step further by planning out some proactive steps you can take right now to manifest that middle-ground!

4. Make The Most Of Some Mind Tricks

Mindfulness. This new buzzword has taken the natural health sphere by storm, and for good reason! Originally an ancient Buddhist practice, mindfulness has powerful modern applications for anxiety and stress. By becoming present in each moment, we can experience our lives fully without expectations or fears of how it should be. Start by paying intentional attention to what you are doing right NOW, with curiosity and non-judgment.

Break The Circuit. The brain is like a highway and forms well-worn roads of worry that are easy to go down when we feel stressed. When you feel your train of thoughts spiraling down a particularly negative road, mentally and firmly say ‘STOP’ to yourself. Break the circuit immediately after with a distraction that you can absorb yourself in; listen to a favorite song, google your dream holiday or talk a walk around the block – anything that resets your brain in a new direction.

Relax Progressively. Progressive muscle relaxation is a physical tool to release tension in your body and mind simultaneously. Find a peaceful, quiet space and close your eyes. Scrunch up your toes as hard as you can with a deep breath in, then release this tension with a long breath out. Progressively work your way up your body, releasing tension as you do so.

5. Pump Some Positive Tunes

Music can alter our brain waves and bring on some good vibes very quickly! It can also reduce your heart rate, regulate blood pressure and lower the levels of stress hormones in the blood. Baroque and classical music are especially relaxing, however, any tune that you enjoy is likely to have a positive effect on your levels of stress.

6. Journal Your Worries ‘Write’ Away

Writing can be a powerful way to ‘debrief’ from your daily worries and connect deeply with yourself. Physically committing your concerns to paper can also be a mental tool to feel like your thoughts are being cleared from your headspace and taken off your shoulders.

Some people like to write uninhibited about whatever comes to mind, whilst others prefer a more structured account of their day. You may even like to simply keep a journal listing things that you are grateful for. Whatever you feel more drawn towards is likely to help you clear your mind and access solutions and clarity around the things that are weighing you down.

7. Hold Your Breath… And Let It Out

When we feel stressed, our bodies tend to breathe shallowly or gulp in more air than we expel. Therefore, if we practice long, slow and deep breathing, it is virtually impossible to feel stressed as this is in complete opposition to a physiological state of stress. Two of my favorite ways to de-stress and revitalize is deep breathing and kundalini yoga sequence!

If you have any de-stressing hacks, we would love if you shared them with us.

Have you considered debt recycling?

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Why would you consider this strategy?

Your family home loan is not considered good debt because it doesn’t generate an income and the interest repayments are not tax-deductible. Debt recycling is a way to recycle the non-deductible debt from your family home into tax-deductible debt.

You may even use any earnings from this ‘debt recycling’ strategy to pay off the debt on your family home loan.

Debt recycling can potentially help you build your long-term wealth, but it can be a high-risk strategy because you’re using your home to invest. If your investment performs poorly or interest rates increase, you could face significant financial stress or even put your family home at risk. As this is the case you need to be comfortable with the amount of debt you recycle.

This strategy isn’t suitable for everyone. You need to have an appetite for risk and be comfortable with using the equity in your home to invest.

Here is a scenario showing how debt recycling might work:

  1. Use equity in your property as security for an investment-purpose loan – this means your home will be used as security and may be put at risk.
  2. Use the borrowed money to invest in an income-producing asset such as a managed fund, an investment property or shares.
  3. Use the income generated, plus any tax advantages of a geared investment, to pay off non-deductible debt in your home loan.
  4. Increase your investment-purpose loan by the same amount that you have paid off your non-deductible loan, and reinvest that increased amount.
  5. Repeat this process each year until your investment-purpose loan entirely replaces your non-deductible loan.

For a debt recycling strategy to work you need:

  • A regular income that is generated independently of this debt recycling strategy. This income can deliver a surplus cash flow to cover the interest payments on your investment loan.
  • A long-term investment focus.
  • A willingness to increase your debt and hold an investment loan.
  • Tolerance for risk and short-term fluctuations in investment value.
  • To consider Income protection insurance, which may provide replacement income in case you’re sick or injured and unable to work.

Seek financial advice

It’s important to understand all the risks involved when it comes to debt recycling. Make sure you contact us at Tailored Lifetime Solutions to discuss if this strategy is suitable for you. We have added a chat box to the bottom of this page

Important information

This information is provided by AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.