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Extra help when a child is disabled

Do you have, or do any of your friends or family have, a disabled child? Is that parent self-employed? If so, please read on or send this article to your loved one. Self-employed people can often distribute income to members of their family. By spreading the same amount of income across more than one taxpayer, the total amount of tax paid is reduced. However, distributions can generally only be made…  Read more

Happy (belated) Birthday Low Interest Rates

A very unusual thing happened earlier during August this year. Our historically low interest rates enjoyed their second birthday. That’s right: the Reserve Bank of Australia (‘RBA’) has now left interest rates unchanged since August 2016. The smart money is betting that a third birthday is almost a certainty. Tuesday is not just a day for half-price movie tickets. On the first Tuesday of each month, the nightly news always…  Read more

What happens to your super when you don’t need it any more?

Organised your will? Yep. Organised a binding death benefit nomination for your super? What’s that? Your super benefits are not automatically subject to your will. That is because your super benefits are held in trust. That means you are not the legal owner of the benefits – the legal owner is the trustee of the fund.  This means that, when you die, the trustees may pay your remaining benefits to either your…  Read more

My Everything is Better than your Everything!

We all know them. People who buy homes because they like the furniture. In fact, the link between furnishings and house prices is so strong that there are professional businesses who rent furniture the people who are selling their house. Good furniture sells houses.   The idea of renting furniture is to encourage people to see themselves living in the house. This gives them a sense of ownership of that…  Read more

The pension is not a plan

In December 2017, the Organisation for Economic Co-Operation and Development (‘OECD’) released its biannual report into social security systems. The report, titled ‘Pensions at a Glance’ contains some worrying findings for us here in Australia. One particular statistic stands out like the proverbials: 26% of Australians aged over 65 live below the poverty line. Of all the OECD countries, only Latvia and Korea have a higher rate of poverty in…  Read more

Interest offset accounts

Interest offset accounts (IOAs) are useful devices. Interest offset accounts should be considered (and probably used) by virtually all clients in preference to paying a home loan off directly. One of the key reasons for this is that a home loan creates non-deductible debt. Non-deductible debt Non-deductible debt is debt on which you can’t claim a tax deduction for the interest. That means you have to pay tax on your…  Read more

Do women need different financial planning?

Women access financial planning less than men. Women also earn less than men, accumulate less than men and retire with less than men. Women live longer than men. Almost one third of female age pensioners live below the poverty line. It’s expected to get much worse. Single women who do not own a home suffer the most. They all live below the poverty line. How does this happen? Australia tends…  Read more

Credit Cards – what’s good about them?

Credit cards can be dangerous items, but there are also various useful ways in which credit cards make life easier for their owners. The following is a list of some of these ways. Convenience – especially when paying online or over the phone Credit cards allow payment to be made in various settings, including over the phone and online. Essentially, the credit card provider works as an intermediary, removing the…  Read more

Why is Capital Gains Tax the “Happy Tax”?

Topic: Investment, Reflection, Tax Planning What would you think if we told you that there is a special type of tax that people are always happy to pay? Would you think we had dropped the ball? You shouldn’t. Read on… Capital gains tax is a special type of tax that you only pay when you sell an asset for more than you bought it for. So, capital gains tax is a…  Read more

Long term thinking leads to serenity

It’s now almost serene. The chaos and instability has gone. It’s very predictable. Anyone (one does not have to be an expert) can safely say that it is probable, but not certain, that a balanced portfolio will return somewhere between 4 % and 8% a year in any given ten-year period. There are no negative ten-year periods. As we saw above, there were plenty of negative years, and even more…  Read more

Franking credits – why they are so important

For many years, company profits were taxed twice in Australia. The first time was in the hands of the company when they were derived. The second was in the hands of the shareholders when and if they were paid out as dividends. There was no ‘imputation’ of tax already paid by the company on those profits when they were paid out to the shareholders. This meant there were very high…  Read more

Dollar cost averaging – what is it?

One of the key risks in markets like the share market is timing risk. Prices at which equities are bought and sold change regularly, as any glance at the 52-week high and 52-week low columns in share tables will attest. Have a look at the share prices for Santos over the 12 months of 2015 (thanks, Google): As can be seen, the price of the same asset – in this case…  Read more

Having trouble saving? Here’s an easy way to do it

Need some help saving? Try not thinking about it. Many people make the mistake of spending first and saving last. The problem is that there is no limit on the number of things that we could spend our money on. Spending first and saving last becomes spending everything and saving nothing. Happily, there are a number of simple solutions. One of the simplest solutions is to establish an online saver…  Read more

$35 is $35!

We came across some intriguing research recently. People were presented with a hypothetical situation in which they could buy an item for $100 at a local store, or the same item for $65 at a store some distance away. Basically, the people could choose the inconvenience of travelling to save $35. Most people chose to travel to save the money. The same people were then presented with another scenario. They…  Read more

Splitting super contributions

You may have heard the term ‘contribution splitting.’ It is a term that is often used when a couple get divorced – and they split all of their assets, including their super. But ‘super splitting’ is also available to couples who remain together. A member of certain super funds is permitted to split some of their contributions between themselves and their spouse. They do this by transferring the contributions they…  Read more

Could you live on $2 a day?

When he first moved to the United States, budding entrepreneur Elon Musk set himself a challenge. The year was 1990 and he was 17 years old. He wanted to see if he could live on one dollar a day. His logic was that if he could live on such a small amount, then he could afford to dedicate his time to building businesses rather than earning money simply to get…  Read more

Parents as co-purchasers of property

These days, more and more young people require parental support to purchase a first home. There are different ways in which parents can give this kind of support. One way is to become a co-purchaser with their adult child. Becoming a copurchaser allows the parent to be more involved in the purchase of the property. This can provide a number of advantages, such as reducing the amount that needs to…  Read more

Grandparents and school fees

Many grandparents take great pride in contributing to their grandchildren’s school fees. Indeed, some estimates suggest that at least 60% of private school students have their fees at least partly paid by their grandparents. Whenever money is saved for a specific purpose, such as paying school fees, care needs to be taken not to make the mistake of ‘mental accounting.’ Also known as the ‘two-pocket theory,’ mental accounting describes people’s…  Read more

The Government is giving away free money!

There is such a thing as free money. From the government. But there are some strings attached! You may not be aware that the Federal Government runs a program called a ‘co-contribution scheme.’ The scheme rewards people for making non-concessional contributions to their super funds. Rewards are only available to people on relatively low incomes, who traditionally are discouraged from making extra contributions into super. That is, of course, the…  Read more

A parent’s job is never done

Life insurance. It is one of those things that we never want to think about. But we must. Life insurance provides us with money in the event that we can’t earn our own income due to illness, injury or death. Obviously, in that last case, the money goes to our loved ones – which is why we say that a parent’s job is never done, even if we are. In August 2017,…  Read more

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