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Archives for May 2017

Finance for New Families

Being a mother is so many things, especially a new mum. It’s demanding, rewarding, relentless, remarkable and utterly exhausting, just to name a few. As the first few days, weeks and months roll through it is an all-consuming role that can feel overwhelming, claustrophobic and lonely all at once.  There really is no other comparable responsibility.

It is commonly said that no one can prepare you for motherhood (or parenthood), but the same can be said for the return-to-the-workforce post child. For some, a completely new level of emotion kicks into gear when the time comes to re-entering the workforce. This can be for a variety of reasons: fear, sadness of leaving the child, potential loss of confidence and skills due to time out of the workforce, uncertainty around employment expectations, just to name a few. Whilst these feelings are all valid – especially in environments that are particularly dynamic – I feel overwhelmingly, that the stimulating, interesting conversation (and a hot cuppa) outweighs any indecision.

Having returned to work following twelve months maternity leave last year in September, there are a few points relating to my financial future I thought I’d share:

Budget – and stick to it! Knowing where your money goes is crucial.

Save – as much as you can afford and start as early as possible.

Women are certainly faced with many life events that can impact income and long-term savings via superannuation. Obviously having a baby, parental leave, returning to work potentially on part-time hours all contribute; but also, getting married, divorced or losing a partner to illness can have a significant effect on longer-term objectives. Having the right insurance in place can assist in most of these situations to ease the burden financially and concentrate on recovery – and family.

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

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Returning to Work

I am a mother of three and had my youngest daughter at age forty. Ten months into my maternity leave I was offered a voluntary redundancy. I jumped at the chance to have a few more years raising my daughter and being a stay at home mum.

I then worked in a casual job cleaning 6 local motel rooms with my toddler as my right-hand girl.  Twelve months into that job I was ready to progress back into a more challenging role and to go off to work on my own.

I searched Seek and the local paper looking for that perfect role, not full time or weekends as this was my family time. Despite searching regularly I wasn’t confident enough to apply for any of the roles on offer. A close friend that I had previously worked with was five months into her first pregnancy, so I enquired into a relief role for 12 months. I thought this could be a good way to ease my way back into the workforce and give myself that confidence boost us stay at home mums need. I prepared my resume (which I had to Google, having been quite a few years between jobs), and forwarded this to my friend to pass on.

I had my interview and was offered the role then and there. Starting back at work was a challenge. Just using Word, Excel and a system that is all number coded alone took a while to sink in. I had six weeks extensive training and then I was left to my own devices. My first week working alone I would go home every day saying, “I don’t know if I can do this”. Eventually, I got my groove, my own routine and I felt more and more confident.

Many friends and family are still looking for that lucky break in finding employment. I was one of the lucky ones, I had my friend put in a good word and my employer take a chance. I am now a Portfolio Administrator at The Investment Collective.

 

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Federal Budget 2017 – What it means for you

Federal Budget 2017

This is "Federal Budget 2017" by ChallengerOnline on Vimeo, the home for high quality videos and the people who love them.

On Tuesday 9 May 2017, the Treasurer, Scott Morrison, released the Government’s 2017-18 Budget.

This year’s Budget won’t significantly impact retirees; however, there were plenty of changes announced that could affect you. For further information regarding these proposed changes, speak to your financial adviser who will look at your personal circumstances and assess how you will be affected.

It’s important to note that at this point in time, these proposed measures are not yet law and may be subject to change.

Superannuation

Additional super contributions for downsizers

From 1 July 2018, individuals aged 65 and over will be able to make an after-tax super contribution of up to $300,000 ($600,000 for couples combined) from the proceeds of the sale of their home. This measure will only apply following the sale of a principal home held for a minimum of 10 years.

This new measure will not attract any special Centrelink treatment but it will allow eligible individuals to make contributions above the super caps, without being subject to work or age test requirements.

First home super saver scheme

To reduce pressure on housing affordability the Government will allow voluntary superannuation contributions to be withdrawn for a first home deposit.

  • From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year, up to $30,000 in total, to superannuation for the purposes of this measure. Voluntary contributions can be made before or after tax and are subject to the relevant contribution caps.
  • From 1 July 2018 those voluntary contributions (along with deemed earnings) can be withdrawn for a first home deposit.
  • Withdrawals will be taxed up to an individual’s marginal rate, less a 30% offset. Withdrawals of after-tax contributions will not be taxed.

Social security

Pensioner Concession Card reinstatement

From 9 October 2017 the Government will reinstate the Pensioner Concession Card (PCC) for former pensioners who lost their Age Pension as a result of the 1 January 2017 Age Pension changes. Those affected will receive the PCC and retain the Commonwealth Seniors Health Card, to ensure they continue to receive the Energy Supplement. Where they received the Low Income Health Care Card, that card will be deactivated.

Energy Assistance Payment

From 26 June 2017, the Government will make a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017, and who reside in Australia. The payment is not taxable and will not be counted as income.

Qualifying payments include:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment Single
  • Veterans’ Service Pension, Veterans’ Income Support Supplement, Veterans’ disability payments
  • War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.

Revised residency requirements for pensions

The Government will revise the residency requirements for claimants of the Age Pension and the Disability Support Pension (DSP) from 1 July 2018. Generally, claimants will now need to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless certain conditions or an exemption applies.

Working age payments reforms

The Government will progressively consolidate seven working age payments and allowances into a new JobSeeker Payment or transition recipients to Age Pension.

The working age payments affected are:

  • Newstart Allowance
  • Sickness Allowance
  • Widow Allowance
  • Partner Allowance
  • Widow B Pension
  • Wife Pension
  • Bereavement Allowance.

 

If you are receiving one of these payments, speak with your financial adviser to find out how these changes may affect you.

Liquid assets waiting period increasing

From 20 September 2018, the period that a person must wait before being paid an allowance (for example Newstart), if they have ‘liquid’ assets will increase from 13 weeks to 26 weeks.

Family Tax Benefits

The Government will continue to keep the Family Tax Benefit (FTB) payment rate fixed until 1 July 2019. Indexation in line with the Consumer Price Index will resume from that date.

 

From 1 July 2018, all families with total income over $94,316 will have their Family Tax Benefit (FTB) Part A reduced by 30 cents for every dollar above $94,316.

Tax
0.5% increase in Medicare levy

From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5% of taxable income. The increase ensures the National Disability Insurance Scheme (NDIS) is fully funded.

Increase to Medicare levy low-income thresholds

The 2016-17 financial year Medicare levy low-income threshold will be increased as follows:

Family status 2016-17 2015-16
Single $21,655 $21,335
Single, eligible for seniors and pensioners tax offset (SAPTO) $34,244 $33,738
Couple $36,541 $36,001
Couple, eligible for SAPTO $47,670 $46,966
Additional threshold for each dependent child $3,356 $3,306

Reduced residential property deductions

From 1 July 2017, the Government will no longer allow deductions for travel expenses related to inspecting, maintaining or collecting rent for residential rental property. However, investors can continue to deduct those types of expenses incurred by third parties such as real estate agents and property management services.

In addition, from 1 July 2017, depreciation deductions on plant and equipment (for example dishwashers and fans) will be limited to outlays actually incurred on residential properties. For plant and equipment purchased after 9 May 2017, deductions are claimable over the effective life of the asset only by the investor who bought the items.

For investors with existing investments as at Budget night, grandfathering rules will apply, broadly allowing deductions to continue until either the investor no longer owns the asset or the asset reaches the end of its effective life.

Aged care

The Government will make a number of changes over the next two years impacting the operation of aged care, including extending the Commonwealth Home Support Program, Regional Assessment Services funding arrangements and palliative care services.

The programs contribute to essential home support services, such as meals, personal care, nursing, domestic assistance, home maintenance, and community transport to assist older people who would like to remain in their home for care.

Small business

Extending the immediate deductibility threshold for small businesses

The Government will extend the accelerated depreciation rules for small businesses by 12 months to 30 June 2018. This allows small businesses, with aggregate annual turnover of less than $10 million, to immediately deduct purchases of eligible assets up until 30 June 2018, provided the asset costs less than $20,000. Assets valued over $20,000 or more can be depreciated at 15% in the first income year and 30% each income year thereafter.

Foreign investors and property

From 7.30pm on Tuesday 9 May 2017 there will be a number of changes affecting property investments by foreign residents. These include an additional charge if the property is left vacant for more than six months in a year, the removal of the main residence capital gains tax exemption (for properties purchases after Budget night) and from 1 July 2017, a 12.5% capital gains tax withholding regime for property transactions of $750,000 or above.

To find out more about these proposed changes and how they may affect you, speak to your financial adviser. Contact The Investment Collective today.

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Superannuation for Mothers Out of Work

Women face unique challenges when it comes to retirement savings. Time out of the workforce to care for children is likely to affect your income and your ability to accumulate superannuation.

Here are some simple strategies that make it possible for women to overcome these hurdles.

Government Co-Contribution

  • If you earn less than $36,021 during the 2016-17 financial year and contribute $1,000 of your own money to super, the government will put $500 in your fund shortly after you submit your tax return – a sweet 50% guaranteed return!
  • In addition, if you earn less than $37,000 you will have your super contributions tax refunded to your fund to a maximum value of $500.

Spousal Contribution

  • This is a fantastic and under-used strategy particularly for women working part-time which will provide your spouse with a handy tax break. It works like this… If you are earning less than $10,800 a year, get your partner to make a $3,000 contribution into your super and receive a $540 tax rebate.
    • Note: the spouse income threshold will rise to $37,000 from 1 July 2017 making this strategy more accessible and attractive.

Spouse Contribution Splitting

  • Another underutilised strategy but a great one for rebalancing super accounts and topping up a low super balance. It is a simple process, allowing up to 85% of your spouse’s contributions made to their super fund being transferred into your account.

If you are not sure how to apply these strategies to your situation, it may be worth consulting an adviser to ensure your super keeps rolling in during periods of absence from the workforce.

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

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Motherhood and Money

The birth of a child is one of the toughest occasions in anyone’s life, but also one of the most rewarding.  I will never forget the moment I realised that I was now responsible for the wellbeing of another human being who could not survive without my help, and that this responsibility remained through the rain, hail or shine regardless of my own state of health or mind on any given day.

The responsibility for having a child doesn’t end with the nurturing, but also extends to financing the child’s needs for many years after their birth.  This can be a very costly exercise, but like everything else, mothers take it in their stride and adjust their own financial and other needs to cater for the needs of the child.

The one thing that doesn’t cost anything in raising a child is the amount of love that you have available – it is limitless!  My children have brought me so much joy over the years and the rough patches are forgotten.  Also forgotten are the things we ‘did without’ in order to give our family a good education.  They simply don’t matter.

I am reflecting on motherhood as we near the annual celebration of Mother’s Day.  It now has an added significance for me because my daughter is also a mother, making me a grandmother.

Being a grandmother brings a whole new dimension to life.  Those little people make my heart sing!  The pride I feel as I see my daughter and her other young mother friends thoughtfully guiding their youngsters through childhood is immense.

I see these young mothers coping with exactly the same issues that I faced, and the financial struggle is just the same for them as it was for me.

The difference for me as a grandmother is that I don’t have to cope with sleepless nights, the school run, seemingly bottomless stomachs, the washing and so on. I can enjoy the laughter and the fun and games, and then I just go home and leave ‘em to it.

Having a budget in place will help you manage the expenses during your children’s early days and through their education years.  The costs are significant and having a plan for managing expenses will mean that you keep on top of the costs in an organised way.

There are many tools available, such as those on ASIC’s MoneySmart website that will assist you in establishing your budget. There are also apps that allow you to track expenses so you can see where your money is being spent.  Every one of these tools will assist in making ends meet and I suggest that you take advantage of these.  My budget lets me help my kids financially every once in a while because I know what they are experiencing.

 

Please note, this article is for general advice purposes only. It has not taken into account your personal circumstances or financial goals. If you wish to access more personalised advice tailored to your circumstances and financial objectives, please contact our friendly staff today.

 

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