Thanks to the decisive victory of US President-elect Donald Trump, we’re now set to hear a whole lot more of his favourite word.

It’s something of a love affair. On the campaign trail in October, he said:

To me, the most beautiful word in the dictionary is tariff.

Previously, he’s matched such rhetoric with real policies. When he was last in office, Trump imposed a range of tariffs.

Now set to return to the White House, he wants tariffs of 10-20% on all imports to the US, and tariffs of 60% or more on those from China.

Most of us understand tariffs are some kind of barrier to trade between countries. But how exactly do they work? Who pays them – and what effects can they have on an economy?

What are tariffs?

An import tariff – sometimes called an import duty – is simply a tax on a good or service that is imported into a country. It’s collected by the government of the country importing the product.

How exactly does that work in practice?

Imagine Australia decided to impose a 10% tariff on all imported washing machines from South Korea.

If an Australian consumer or a business wanted to import a $1,200 washing machine from South Korea, they would have to pay the Australian government $120 when it entered the country.

So, everything else being equal, the final price an Australian consumer would end up paying for this washing machine is $1,320.

If a local industry or another country without the tariff could produce a competing good at a similar price, it would have a cost advantage.

Other trade barriers

Because tariffs make imports more expensive, economists refer to them as a trade barrier. They aren’t the only kind.

One other common non-tariff trade barrier is an import quota – a limit on how much of a particular good can be imported into a country.

Governments can also create other non-tariff barriers to trade.

These include administrative or regulatory requirements, such as customs forms, labelling requirements or safety standards that differ across countries.

What are the effects?

Tariffs can have two main effects.

First, they generate tax revenue for the government. This is a major reason why many countries have historically had tariff systems in place.

Borders and ports are natural places to record and regulate what flows into and out of a country. That makes them easy places to impose and enforce taxes.

Second, tariffs raise the cost of buying things produced in other countries. As such, they discourage this action and encourage alternatives, such as buying from domestic producers.

Protecting domestic workers and industries from foreign competition underlies the economic concept of “protectionism”.

The argument is that by making imports more expensive, tariffs will increase spending on domestically produced goods and services, leading to greater demand for domestic workers, and helping a country’s local industries grow.

Swapping producers isn’t always easy

Tariffs may increase the employment and wages of workers in import-competing industries. However, they can also impose costs, and create higher prices for consumers.

True, foreign producers trying to sell goods under a tariff may reduce their prices to remain competitive as exporters, but this only goes so far. At least some of the cost of any tariff imposed by a country will likely be passed on to consumers.

Simply switching to domestic manufacturers likely means paying more. After all, without tariffs, buyers were choosing foreign producers for a reason.

Because they make selling their products in the country less profitable, tariffs also cause some foreign producers to exit the market altogether, which reduces the variety of products available to consumers. Less foreign competition can also give domestic businesses the ability to charge even higher prices.

Lower productivity and risk of retaliation

At an economy-wide level, trade barriers such as tariffs can reduce overall productivity.

That’s because they encourage industries to shift away from producing things for which a country has a comparative advantage into areas where it is relatively inefficient.

They can also artificially keep smaller, less productive producers afloat, while shrinking the size of larger, more productive producers.

Foreign countries may also respond to the tariffs by retaliating and imposing tariffs of their own.

We saw this under Trump’s previous administration, which increased tariffs on about US$350 billion worth of Chinese products between 2018 and 2019.

Several analyses have examined the effects and found it was not foreign producers but domestic consumers – and especially businesses relying on imported goods – that paid the full price of the tariffs.

In addition, the tariffs introduced in 2018 and 2019 failed to increase US employment in the sectors they targeted, while the retaliatory tariffs they attracted reduced employment, mainly in agriculture.

Economists’ verdict

Tariffs can generate tax revenue and may increase employment and wages in some import-competing sectors. But they can also raise prices and may reduce employment and wages in exporting sectors.

Do the benefits outweigh the costs? Economists are nearly unanimous – and have been for centuries – that trade barriers have an overall negative effect on an economy.

However free trade does not benefit everyone, and tariffs are clearly enjoying a moment of political popularity. There are interesting times ahead.

Source: https://theconversation.com/what-are-tariffs-243356

Deciding when to retire is a big decision and even more difficult if you are concerned about your retirement income.

The average age of Australia’s 4.2 million retirees is 56.9 years but many people leave it a little later to finish work with most intending to retire at just over 65 years.

If you’re not quite ready to retire, a ‘transition to retirement’ (TTR) strategy might work for you. It allows you to ease into retirement by:

• supplementing your income if you reduce your work hours, or
• boosting your super and save on tax while you keep working full time

The strategy allows you to access your super without having to fully retire and it is available to anyone 60 years or over who is still working.

Working less for similar income

The strategy involves moving part of your super balance into a special super fund account that provides an income stream. From this account you can withdraw funds of up to 10 per cent of your balance each year.

As you will still be earning an income and making concessional (before-tax) contributions to your super, this approach allows you to maintain income during the transition to full retirement while still increasing your super balance, as long as the contributions continue.

Note that, generally speaking, you can’t take your super benefits as a lump sum cash payment while you’re still working, you must take super benefits as regular payments. Although, there are some exceptions for special circumstances.

Take the example of Alisha. Alisha has just turned 60 and currently earns $50,000 a year before tax. She decides to ease into retirement by reducing her work to three days a week.

This means her income will drop to $30,000. Alisha transfers $155,000 of her super to a transition to retirement pension and withdraws $9,000 each year, tax-free. This replaces some of her lost pay.

Income received from your super fund under a TTR strategy is tax-free but note that it may affect any government benefits received by your or your partner.

Also, check on any life insurance cover you have under with your super fund in case a TTR strategy reduces or stops it.

Give your super a boost

For those planning to continue working full-time beyond age 60, a TTR strategy can be used to increase your income or to give your super a boost.

To make it work, you could consider increasing salary sacrifice contributions into your super then using a TTR income stream out of your super fund to replace the cash you’re missing from salary sacrificing.

In another example, Kyle is 60 and earns $100,000 a year. He intends to keep working full-time for at least another five years. Kyle transfers $200,000 from his super to an account-based pension so he can start a TTR strategy then salary sacrifices into his super.

This will reduce his income tax, but also his take-home pay. So, he tops up his income by withdrawing up to 10% of his TTR pension balance each year.

A TTR strategy tends to work better for those with a larger super balance, a higher marginal income tax rate and those who have not reached the cap on concessional contributions.

Nonetheless, it can still be useful for those with lower super balances and on lower incomes, but the benefits may not be as great.

Some things to think about

TTR won’t suit everyone. For example, be aware that you cannot withdraw more than 10 per cent of your super balance each year.

Also, if you start withdrawing your super early, you will have less money when you retire.

The rules for a TTR strategy can be complex, particularly if your employment situation changes or you have other complicated financial arrangements and investments. So, it’s important to seek professional advice to make sure it works for you and that you are making the most of its benefits.

If you would like to discuss your retirement income options, give us a call.

Stay up to date with what’s happened in the Australian economy and markets over the past month.

Headline inflation eased more than expected during the last three months of 2024 – opening the door for the RBA to cut the cash rate.

While the release of China-based DeepSeek’s new cut-price AI model sent shockwaves through markets late in the month, they quickly recovered ground.

Click here for our February update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Buying your first home is an exciting goal, but it can be challenging, and it makes sense to use all the help you can get to make your dream a reality. Fortunately, in 2025, there are more options than ever for buyers looking to secure their first home.

As of 2025, these support measures are set to evolve further, with new initiatives like the Help to Buy Scheme coming into play. Here’s a breakdown of the key government programs currently available, and the upcoming changes you should know about.

First Home Guarantee (FHBG)

The First Home Guarantee allows eligible buyers to purchase a home with a deposit as low as 5%  without needing to pay for Lenders Mortgage Insurance (LMI). This is a significant benefit because LMI can add thousands of dollars to your upfront costs, making homeownership more expensive than it needs to be.

Key features:

• Deposit as low as 5%
• No Lenders Mortgage Insurance (LMI)
• Available for both new and existing homes

Income and property price caps apply, so it’s important to check if you qualify.

This scheme is particularly helpful if you’re struggling to save the typical 20 per cent deposit often required by traditional lenders. If you’re a single buyer, you are eligible for this scheme, as well as couples or families.

Click here for more information

First Home Super Saver Scheme (FHSSS)

The First Home Super Saver Scheme allows you to use some of your super savings to help fund your first home. The government lets you withdraw up to $50,000 (for individuals, or $100,000 for couples) from your superannuation account for your first home deposit, all while taking advantage of the concessional tax treatment that applies to super contributions.

How it works:

• You can make voluntary contributions to your super, and once they’re saved in your fund, you can apply to withdraw the amount to use toward your first home.
• You will need to be purchasing a home to live in and the property must be located within Australia.
• The maximum contribution that can be withdrawn is $15,000 per financial year, up to a total of $50,000 across multiple years.

Click here for more information

First Home Owner Grant (FHOG)

While not a scheme aimed at helping with deposits directly, the First Home Owner Grant (FHOG) is a one-off payment designed to assist first-time homebuyers with the costs associated with purchasing a new home. The amount varies by state and territory, generally ranging from $10,000 to $20,000. The FHOG is available to those purchasing newly built homes or homes that have never been sold before and there are property price caps and income thresholds to consider.

Click here for more information

Stamp duty concessions and exemptions

Stamp duty is one of the largest costs associated with purchasing a property, and it can often be a hurdle for first-time buyers. Many states offer stamp duty concessions or exemptions for first home buyers. Each state and territory has its own rules, so check the specific conditions in your area to see how much you might be able to save.

Shared equity schemes and the upcoming Help to Buy

Some states and territories have shared equity schemes, which are a great option if you’re struggling to come up with a large deposit. These programs allow you to co-own a property with the government or a private entity, making it easier to get into the market with a lower deposit.

In a new initiative by the Labor government, the ‘Help to Buy’ scheme, passed by the Australian Parliament in November 2024, will allow eligible lower-income first home buyers to co-purchase a property with the government using a deposit of as little as 2 per cent. The scheme’s exact start date is still to be determined.

Buying your first home can be easier with the right support and there are many ways to make your homeownership dreams come true. The key is to understand what’s available, determine your eligibility, and take full advantage of the assistance on offer.

It’s worth talking to us to make sure you’re making the most of all the opportunities out there. With a little research and planning, you could be stepping into your very first home sooner than you think!

Thinking about buying your first home? Exciting times are ahead! However, it’s essential to understand how your financial behaviour can influence your chances of securing a home loan.

Lenders scrutinise various aspects of your financial life to identify the risk involved in lending to you, and certain habits you may not even think are problematic can raise red flags.

Let’s look at what behaviours lenders are watching so you can maximise your chances of getting the best possible loan.

Your spending

While treating yourself occasionally is important, excessive spending on luxury items can be a concern for lenders. If your bank statements show regular large purchases, dining out frequently, or indulging in expensive hobbies that aren’t consistent with your income, lenders may perceive you as a higher risk. They want to see that you can manage your finances responsibly, so it’s wise to keep an eye on your discretionary spending as you prepare to apply for a loan.

Your savings

Building a solid savings buffer is crucial for homebuyers, especially when it comes to making a deposit. If you frequently dip into your savings for everyday expenses or impulsive purchases, this could raise eyebrows with lenders.

Lenders also look for a pattern of regular saving and sustained growth over time so if you’ve received a large bonus at work, a financial gift or inheritance, bear in mind that it may not necessarily be viewed favourably by a potential lender unless you can also demonstrate your capacity to save – and to meet the loan repayments.

Your credit score

Lenders will review your credit file to see your history of credit usage and repayment behaviour so take the time to review your credit report and correct any inaccuracies. You are entitled to one free credit report per year.

Your credit card use plays a big role in determining your credit score. If you carry high balances close to your credit limits, this can be viewed negatively by lenders. Aim to keep your credit use below 30 per cent and try to pay down any outstanding balances. Not only does this improve your credit score, it also demonstrates to lenders that you are responsible with your credit.

Having several store credit cards can hurt your credit score. While these cards may offer tempting discounts, they often come with high-interest rates and lenders view multiple credit accounts as a potential risk factor, suggesting you may struggle to manage your finances effectively. If you have store cards, consider consolidating them or paying them off to improve your financial profile.

Your debt management

Being proactive about managing debt can help you present a stronger application. Red flags for lenders include the obvious ones like court judgements, bankruptcies, and defaults. But more innocent things such as multiple credit enquiries (often just shopping around or chasing sign on bonuses for credit cards) or credit with some types of lenders, can lead to questions or even a decline.

While Buy Now, Pay Later (BNPL) services have gained popularity, it’s important to understand that the Australian Prudential Regulation Authority (APRA) now requires BNPL debt as well as HECs-HELP debt to be included in your debt-to-income ratio calculations so it can be wise to avoid BNPL schemes and consider paying down your education debt if possible.

Your income patterns

For those who are self-employed or have commission-based jobs, irregular income can be a significant factor when applying for a home loan. Lenders prefer consistent and stable earnings. If your income varies, work on documenting your earnings over time and consider providing additional financial information to support your application. Having at least two years of tax returns and financial statements can greatly improve your credibility.

The unknowns

Finally, lenders don’t like unknowns. They can scrutinise PayPal transactions and dislike those with vague descriptions which can be associated with gambling or other high risk financial activities.

Frequent cash withdrawals can also make it difficult to trace your spending, raising concerns about what you might be hiding and your ability to manage a home loan. To mitigate this, try to keep your transactions transparent and within a documented spending plan.

Navigating the path to homeownership can be daunting, but understanding and addressing these financial red flags can help. If you’re feeling uncertain about your situation, we can help you present the best possible application to lenders and maximise your chances of securing a home loan with the most favourable terms.

As we move into a brand-new year, many people set their resolutions, and if buying your dream home is what you have set your sights on, with the right strategies and the right mindset you can turn that dream into reality.

Big goals like home ownership call for more than just having the right strategies in place (hello budgeting and getting your financial ducks in a row!) –  they also call for the right mental attitude. Even the best strategies can fall by the wayside if your head is not in the right space.

One way to get motivated and stay true to your goal is to imagine your desired outcome as if it’s already happening. This technique is widely used by athletes, performers, and individuals in various fields to enhance their performance and reach their objectives.

The link between ‘seeing’ success and experiencing success

Harvard physiologist Edmund Jacobson was the first person to discover the link between visualising success and making it happen. Jacobson found that if you imagine yourself lifting an object, you trigger corresponding electrical activity in the muscles involved in the action. So even just by simply thinking about lifting a weight, the muscles that are responsible are activated.

His studies have since been replicated to find correlations between mental rehearsal and success. Everything from shooting that hole in one on the golf course to being the winning bidder for your dream home, can be enhanced through the process of visualisation.

The benefits in visualising the ideal home

Visualisation works because it engages both the conscious and subconscious mind. When you visualise the home you want to buy – right down to the view from the windows as you walk in the door and your furniture in the lounge room – your brain begins to recognise it as a reality, which can increase your motivation and determination, as you put in place the financial systems to help you get a deposit together.

Visualisation can also help you to focus on the specific attributes you want in your new house and the lifestyle you aspire to have and can be useful to sort out the ‘nice to haves’ from the essentials.

Ready to get started?

Set clear goals

As a starting point it’s important to establish clear, specific goals for your home purchase. Ask yourself:

• What type of home do I want? (e.g., single-family, condo, townhouse)
• In which neighbourhood or city do I want to live?
• What is my budget?
• What are my must-haves? (e.g., number of bedrooms, outdoor space, proximity to schools)

Writing these goals down will give you a tangible reference point and help you stay focused.

Create a vision board

A vision board is a powerful tool in the visualisation process and can be a source of great inspiration when your motivation is waning. Gather material that represents your dream home and the lifestyle you wish to achieve. You can use physical materials like magazines and a poster board, create a digital version using platforms like Pinterest or simply pop a brochure on the fridge of a property that represents the ideal for you. However you create your visual inspiration it will serve to keep that vision of the home that’s out there for you firmly in your mind.

Take action

Visualisation is a powerful tool, but it must be combined with action to yield results. Use the clarity gained through your visualisation practice to develop a concrete action plan. This could include:

• Assessing your finances
• Determining your budget and how much you’ll need for a deposit
• Getting pre-approved for a mortgage
• Researching neighbourhoods and attending open houses

Set achievable milestones, and regularly check your progress. Celebrate small victories along the way, as they can provide motivation to keep you moving forward.

Stay open to possibilities

While visualisation helps you focus on your specific goals, it’s also important to remain open to new opportunities. The housing market can be unpredictable, and you may encounter options that you hadn’t considered. Trust your instincts and be willing to adapt your vision if necessary.

Remember, visualisation is not about dreaming; it’s about transforming your goals into reality and with the right mindset you’ll be on the right track to achieve your home purchase goals.