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Sacrifice pre-tax salary into super

Contributing some of your pre-tax salary, wages or a bonus into super could help you to reduce your tax and invest more into super for your retirement.

How does the strategy work?

With this strategy, known as salary sacrifice, you need to arrange for your employer to contribute some of your pre‑tax salary, wages or bonus directly into your super fund.

The amount you contribute will generally be taxed at the concessional rate of 15%¹, not your marginal rate which could be up to 47%².

Depending on your circumstances, this strategy could reduce the tax you pay on your salary, wages or bonus by up to 32%.

Also, by paying less tax, you can make a larger after-tax investment for your retirement, as the case study on the opposite page illustrates.

What income can be salary sacrificed?

You can only sacrifice income that relates to future employment and entitlements that have not been accrued.

With salary and wages, the arrangement needs to be in place before you perform the work that entitles you to the salary or wages.

With a bonus, the arrangement needs to be made before the bonus entitlement is determined.

The arrangement, which should be documented and signed by you and your employer, should include details such as the amount to be sacrificed into super and the frequency of the contributions.

Other key considerations

  • Salary sacrifice contributions count towards the ‘concessional contribution’ cap (which is $25,000 in the 2017/18 financial year) and tax penalties apply if you exceed the cap.
  • You can’t access super until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au
  • Salary sacrificing may reduce other benefits such as leave loading, holiday pay and Superannuation Guarantee contributions.
  • Another way you may be able to grow your super tax-effectively is to make personal deductible contributions (see opposite page).
  • From 1 July 2018, if certain eligibility criteria are met, you may be able to carry forward unused concessional cap amounts. This may enable you to make concessional contributions in excess of the annual cap in a future year.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies.

Notes

1 Individuals with income above $250,000 in 2017/18 will pay an additional 15% tax on personal deductible and other concessional super contributions.

2 Includes Medicare levy

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

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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. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Aged Care – Check the fees you are paying

Most fees in residential aged care are regulated by government, but more and more care providers are charging for additional services – so check what you are paying for.

When moving into residential care three categories of fees apply:

  • Accommodation costs – to pay for your room and access to the amenities where you live.
  • Daily care fees (basic fee and means-tested fee) – a contribution towards your basic living expenses (eg food, electricity, care staff, cleaning services).
  • Additional services – extra things that may add to your lifestyle or convenience (eg Foxtel, newspapers, meal selection, happy hours, transport services).

More and more aged care providers are offering residents additional services for an extra daily fee. The range of services and the prices charged vary widely.

These fees are not published on the MyAgedCare website, so when deciding where you want to live, ask the provider for a schedule of available services and the prices for each one.

Check your resident agreement

When you are offered a place in residential care will be asked to sign a Resident Agreement. This should detail (amongst other things) the cost you have agreed for your room, the type of room and what additional service fees you have agreed to pay.

Read the details carefully to decide:

  • What services you are being provided and whether they are things you want.
  • The fee you need to pay for these services.
  • Whether you can opt-out and stop paying the fees if you no longer want to receive the services.

A recent court case

If the provider wants to charge you a fee for a service that you won’t receive the benefit of, this may not be allowed.

A recent court case found that aged care providers are not allowed to charge fees for asset replacement or the capital refurbishment of your room after you leave. These fees may apply in retirement villages, but not government-subsidised aged care services.

The judge ruled that these fees are not for the benefit of the paying resident but are for the benefit of the next resident. This means they are not allowed under the Aged Care Act.

Providers who have been charging these fees have stopped and may need to refund any fees previously paid for these purposes.

Next steps

Some simple rules may help you to understand your obligations and rights:

  • Always read your Resident Agreement carefully before signing.
  • If you are unsure about the fees specified, ask the service provider to explain the fees and help you understand what you are being asked to pay for.
  • Query fees for services you don’t think you need or want to see if they are optional and allowed under the Aged Care Act.
  • If you need advice, see your lawyer or ask us for help. We may be able to refer you to a lawyer who works with aged care contracts.
  • Complaints about fees can be referred to the Aged Care Complaints Commissioner.

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

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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. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Top-up your super with help from the Government

If your income is under a certain threshold, then making personal after-tax super contributions could enable you to qualify for a Government co-contribution and take advantage of the low tax rate payable in super on investment earnings.

How does the strategy work?

If you earn¹ less than $51,813 pa (of which at least 10% is from eligible employment or carrying on a business) and you make personal after-tax super contributions, the Government may also contribute into your super account.

This additional super contribution, which is known as a co-contribution, could make a significant difference to the value of your retirement savings over time.

To qualify for a co-contribution, you will need to meet a range of conditions, but as a general rule:

  • The maximum co-contribution of $500 is available if you contribute $1,000 and earn $36,813 or less.
  • A reduced amount may be received if you contribute less than $1,000 and/or earn between $36,814 and $51,812.
  • You will not be eligible for a co-contribution if you earn $51,813 or more.

The Australian Taxation Office (ATO) will determine whether you qualify based on the data received from your super fund (usually by 31 October each year for the preceding financial year) and the information contained in your tax return.

As a result, there can be a time lag between when you make your personal after-tax super contribution and when the Government pays the co-contribution.

If you’re eligible for the co-contribution, you can nominate which fund you would like to receive the payment.

Alternatively, if you don’t make a nomination and you have more than one account, the ATO will pay the money into one of your funds based on set criteria.

Note: Some funds or superannuation interests may not be able to receive co-contributions. This includes unfunded public sector schemes, defined benefit interests, traditional policies (such as endowment or whole of life) and insurance only superannuation interests.

Other key considerations

  • You can’t access super until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au
  • You may want to consider other ways to contribute to super, such as salary sacrifice or personal deductible contributions.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies.

Notes

1 . Includes assessable income, reportable fringe benefits and reportable employer super contributions, less business deductions. Other conditions apply.

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

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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. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Boost your spouse’s super and reduce your tax

Making an after-tax contribution into your spouse’s super could benefit you both – by increasing your spouse’s super and potentially reducing your tax.

How does the strategy work?

If you make an after-tax contribution into your spouse’s super account and they earn less than $40,000 pa, you may be eligible for a tax offset of up to $540.

This strategy could be a great way to grow your super as a couple. Not only could you boost your spouse’s super, the tax offset could help reduce your income tax.

To qualify for the full offset of $540 in 2017/18, you need to contribute $3,000 or more into your spouse’s super and your spouse must earn¹ $37,000 pa or less.

A lower tax offset may be available if you contribute less than $3,000 or your spouse earns more than $37,000 pa but less than $40,000 pa.

Can you make spouse contributions?

To be able to make a spouse contribution, you must be either legally married or in a de facto relationship.

You and your spouse/partner must be Australian residents at the time the contribution is made.

Other key considerations

  • To use this strategy, the spouse who receives the contribution must:
    • be under age 65, or if between 65 and 69 they meet a ‘work test’
    • have a ‘total super balance’ of less than $1.6 million on 30 June of the previous financial year, and
    • not exceed their ‘non-concessional contribution cap’, which in 2017/18 is generally $100,000, or up to $300,000 in certain circumstances
  • Super can’t be accessed until you meet a ‘condition of release’. For more information, please visit the ATO website at ato.gov.au

Other strategy ideas

There are other strategies you may consider if you want to boost your spouse’s super. These include:

Co-contributions

Your spouse may want to make an after-tax contribution into their own super account. By doing this, the Government may add up to $500 to their super. It’s called a ‘co-contribution’.

To be eligible for the full co-contribution in 2017/18, your spouse needs to contribute $1,000 or more into their super and earn¹ $36,813 or less.

They may receive a lower amount if they contribute less than $1,000 and/or earn between $36,814 and $51,812.

Contribution splitting

Another option is to use a strategy known as ‘contribution splitting’.

This is where you arrange with your super fund to split up to 85% of your previous financial year’s concessional contributions into your spouse’s super account.

Concessional contributions include superannuation guarantee, salary sacrifice and personal deductible contributions, as well as certain other amounts.

You must meet other eligibility criteria to qualify for the Government co-contribution or contribution splitting. We can help you determine whether either of these strategies suit your needs and circumstances.

Seek advice

Please give us a call and we will help you determine if you could benefit from these strategies

Notes

1 – Includes assessable income, reportable fringe benefits and reportable employer super

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrity@iplan.com.au

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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. These articles are not owned by Integrity One Planning Services. Please consult your adviser before making decisions using this information.

Affordable ways to travel in 2018

Most of us are now back to work after our summer break. But that doesn’t mean we can’t already start planning for our next holiday. Travel doesn’t have to always involve breaking the bank, but it does mean concessions will have to be made.

Avoid the busiest travel times and places

This requires you to be flexible with the dates you can travel. Everyone wants to travel to Europe in June/July so try going in the off season. This can avoid potentially expensive flights that are common during the popular travel times.

You should also look deeper into the lesser known destinations, by doing this you can experience the different culture of your destination as well as reducing travel costs and avoiding the large crowds.

Spend less on accommodation

Yes booking a 5 star hotel will be nicer. However if you don’t plan on spending much time at the hotel is it really worth the expensive cost? Keeping costs low on accommodation may not be as luxurious, but you can save that money to be able to travel for longer and see more places.

Stay in Australia

The best trips don’t always involve going overseas. There are so many amazing places to visit all over Australia such as the Great Ocean Road, the Sydney Harbour and Uluru. You can also road trip to destinations in Australia and save money on flights.

Visit family and friends

If you have family or friends who live at a place that you want to travel, including visiting them as part of your trip. This can also mean free accommodation for the duration of your stay as well as a free tour guide.

Get cheap flight notifications

Sign up to receive notifications from different airlines when they have cheap flights. That way if you have a specific destination you wish to travel to you can be the first to know when flights are cheap to go there.

Use discounts, coupons and reward points

This can be for flights, accommodation, dining or sight-seeing. Search the internet and brochures for any discount you can take advantage of.

Be wary of cheap flights to expensive destinations

Airlines may offer cheap flights to London or Tokyo and although the cost of the flight may be a bargain, the costs of staying in these places are still expensive. If you have your heart set on visiting an expensive travel destination then still take advantage of the cheap flight. However, don’t get sucked into travelling somewhere just because of cheap flights.

Hopefully these tips help you save money for your next travel adventure.

Article Source: Maya Kachroo-Levine, Forbes.com

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent

Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of 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. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

Easy way to save $1,500 in a year

Too often we all have plans to save great amounts of money and often struggle to stick to our savings plan. However this is a very simple and easy to stick to savings plan that does not involve large deposits.  A small deposit every day can save you almost $1,500 per year.

This money can be used on an end of year holiday, expensive household furniture or even pay for your Christmas shopping.

  • On Sunday you put aside $1
  • On Monday you put aside $2
  • On Tuesday you put aside $3
  • On Wednesday you put aside $4
  • On Thursday you put aside $5
  • On Friday you put aside $6
  • On Saturday you put aside $7

If you stick to this savings method you can save $28 a week and you end up saving $1,456 at the end of the year.

Another way to complete the challenge and save $28 a week is too simply to put aside $4 every day, the cost of a cup of coffee.

To save a little extra you can round up the savings from $28 to $30 a week. This can save you $1,560 in a year. Another option is to put aside $5 a day instead of $4 and you can save $1825 a year.

These are all easy saving strategies that only require a small amount to be put aside every day and don’t involve any large transactions. You can transfer these amounts into a savings account or put money in a jar, it’s completely up to you. Good luck!

Article Source: Becky Pemberton, news.com.au

Please contact Integrity One if we can assist you with any of your financial needs.

Phone: (03) 9723 0522

Suite 2, 1 Railway Crescent

Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of 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. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.

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Integrity One Planning Services Pty Ltd (ABN 59 125 846 933) is a Corporate Representative (315000) of Integrity Financial Planners Pty Ltd (AFSL No. 225051).