Smart End of Financial Year Strategies 2013-2014

The end of financial year is fast approaching so now is a good time to make smart decisions for your financial future.  You should speak to your financial planner about what strategies are appropriate for you, but here are a few examples to get you thinking and asking the right questions…

 Superannuation

  1. Maximise your contributions – if you have surplus income and have not already maximised the concessional contributions cap you may want to salary sacrifice to make the most of your contributions. Make sure you check what the cap is for your particular age group. This will reduce your taxable income and increase your retirement savings.
  2. Government co-contribution – if you earn less than $48,516 from employment income you may qualify for a government contribution of up to $500 if you make a personal after tax super contribution of up to $1,000. This will help you to increase your retirement savings.
  3. Boost your partner’s super – if you have a spouse who earns less than $13,800pa you could make an after tax super contribution on their behalf. You receive a tax offset of up to $540 and increase your spouse’s retirement savings.

 Insurance

  1. Buy insurance in super tax effectively – you can purchase life and total and permanent disability insurance inside of super. By doing this you can benefit from tax concessions and make the premiums more affordable.
  2. Pre-pay income protection premiums – if you hold your income protection insurance outside of super and are an employee or self-employed, you can pre-pay 12 months premiums to bring forward your tax deduction to pay less income tax in this financial year.

 Investing

  1. Pre-pay your investment loan interest – if you have or are considering starting a geared investment portfolio you could pre-pay 12 months interest on your investment loan. This will bring forward your tax deduction so you pay less income tax in this financial year.
  2. Plan carefully – if you are looking at buying or selling assets you should consider the tax implications whether it be gains or losses and plan carefully to minimise the impact.
  3. Make better use of your tax refund – if you receive a tax refund you may want to firstly pay off non-deductible debts, look at debt recycling or boosting your superannuation. This will enable you to save on interest costs and invest your refund tax effectively.

End of financial year planning is important – it will not only help you in the short term, it will significantly benefit you in the long term.  Smart planning can help you to:

  • Boost your retirement savings
  • Maximise your government entitlements, and
  • Minimise your tax liabilities.

You should sit down with your financial planner and look at what the best strategies are to help you.

By Elise Ryan, Associate Financial Planner

To read the full MLC Flyer ‘Smart End Of Financial Year strategies 2013/14′ click here.

 

Source: http://www.mlc.com.au/resources/eofy/Document/pdf/eofy2014_smart_eofy_strategies_overview.pdf

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue.  In some cases the information has been provided to us by third parties.  Whilst it is believed the information is accurate and reliable, this is not guaranteed in any way.

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances.  Please seek personal advice prior to acting on this information

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Are Australian banks overvalued?

I recently heard (and read) the opinions of some financial press commentators stating that banks are overvalued, with share prices for some reaching all time highs. “Too much exposure to the domestic property market,” they said, and “Slow credit growth, high Aussie dollar.” Each day seems to bring another attention grabbing headline.

There are a range of variables which affect short term movements in a company’s share price.  In my opinion, I believe that over the long term it is a company’s profitability which has the greatest effect. With that in mind, I looked at movements in the ‘big four’ banks profitability since 2007, which is the high point for the Australian Stock Market prior to the Global Financial Crisis.

The tables below compare the net profit [1], dividend [2], and share price [3] from late 2007 to late March 2014 and the percentage change over that period.

CBA Net Profit Dividend per share Share Price
2007 $4.47B $2.56 $61.50
2013 $7.677B $3.83 $76.56
% Change 71.5% 49.61% 24.5%
ANZ Net Profit Dividend per share Share Price
2007 $4.18B $1.36 $30.10
2013 $6.272B $1.64 $32.55
% Change 50% 20.6% 8.14%
NAB Net Profit Dividend per share Share Price
2007 $4.578B $1.82 $43
2013 $5.452B $1.90 $35.04
% Change 19% 4.4% (18.51%)
WESTPAC Net Profit Dividend per share Share Price
2007 $3.451B $1.31 $30.54
2013 $6.816B $1.74 * $34.22
% Change 97% 32.8% 12.05%

*Not including the special dividend of 20c per share

To me the most pleasing aspect of the results is the strong growth in profits and dividends since 2007, which far exceeds the increase (or in the case of NAB, decrease) in the share price.

I have no idea if the current share prices are overvalued, undervalued or about right, but I am prepared to accept what the market tells me regarding the price. In my opinion if these companies are able to continue to build their profits and dividends, the share price will surely follow.

Of course, as many readers will already know, our primary reason for investing is to secure a passive, growing, tax effective income stream. I think you would have to agree they are very successful.

By Craig McKenzie, Financial Planner

Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances.  Please seek personal advice prior to acting on this information. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. 

 


[1] Sourced from recently published annual or bi-annual results posted to CBA, ANZ, NAB and Westpac Bank websites

[2] Sourced from recently published annual or bi-annual results posted to CBA, ANZ, NAB and Westpac Bank websites

[3] Sourced from Yahoo!7 Finance

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Investor or Speculator?

Trends come and go in all walks of life, particularly in popular culture.  By all accounts music and fashion are on a cycle of repetition with nothing being truly original.

Trends also exist in investment culture and habits.  Over the decades we have seen a bias for particular sectors of the market, certain product types or even a specific asset class.  There have been some wild and wacky fads including the great ‘Dutch Tulip bulb market’ bubble of the early 1600’s.  These bubbles are emotion filled and excitement driven.

The focus of these trends has always been an asset’s capital value and it has been the impact of the speculators that has seen prices rise and fall dramatically.  This, however, ignores the other dimension of an asset – its income producing capacity.

If we are able to remove emotion from our decision making and think more like a true investor (who, according to the Macquarie Dictionary, is someone who uses capital to secure income) it then becomes easier to understand Warren Buffett’s statement relating to the share market, which is simply a ‘weighing machine of profits.’   The value of a share should always come back to the underlying profitability of the business, and by association, the income it provides the shareholder in the form of dividends.

An article from BBC News titled ‘$1 trillion of dividends’ sights a ‘trend through 2014 and beyond’ bringing focus back to dividends.  [1] According to the article, this marks a change from the ‘80’s & ‘90’s that simply looked at capital value (one could argue this focus also existed through the resource driven 2000’s here in Australia).

The question is why is this trend?  Dividends have always been there, providing a consistent, reliable, increasing and tax effective income stream for those who wanted to invest and not speculate (particularly franked Australian dividends since the 1980’s).  The article acknowledges this is not new news but the ‘elementary fact was often overlooked in the past’.

And isn’t this the nature of a fad or trend?  As emotion, excitement and momentum builds, reason, prior knowledge and experience appear to evaporate as people jump on the band wagon and firmly believe, “this time things are going to be different!”  You never know, you might even get rich quick!  Eventually the dust settles and it is the great businesses of the world, the truly productive enterprises, which run at a profit and come back to the fore.

So, how do we ensure we don’t get swept along in the emotion of each new and exciting idea?  It is through support and consistency.

We must keep returning to the long term data and keep reiterating the facts of the consistent and reliable truth:

“Successful investing is all about common sense….history confirms the winning strategy is to own all of the nation’s publicly held companies at very low cost.  By doing so you are guaranteed to capture almost the entire return they generate in the form of dividends and earnings growth.” [2]

When we look at the volumes listed in the BBC article ‘$1 trillion of dividends’ we think it would be great to have a part of that!  And wouldn’t it be great to own those 10 big companies which produce 9% of dividends?  Logic would dictate these big payers are some of the biggest companies, so how do we ensure we own them?

Look no further than Bogle’s wisdom above.

Speculators create bubbles, fads and trends based on a desire to chase short term gains.  The media loves a headline which reports big numbers.  Investors own high quality assets in order to receive a consistent, reliable, increasing and tax effective income stream.  Which one are you?

To learn more, register to attend Income Solutions free information evening on ‘Common Sense Investing

By Gareth Daniels, Financial Planner

 

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue.  In some cases the information has been provided to us by third parties.  Whilst it is believed the information is accurate and reliable, this is not guaranteed in any way.

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances.  Please seek personal advice prior to acting on this information.


[1] http://www.bbc.co.uk/news/business-26321338?print=true

[2] John C. Bogle ‘The Little Red book of Common Sense Investing’ 2007, by publishers John Wiley & Sons

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Planning for Women

I believe it is extremely important for women to become financially independent and take action to look after their financial future.

With the number of women employed in full-time and part-time positions increasing it is understandable why women are becoming more and more interested in managing their long term finances.

In 2008 the Australian Government completed a report on the findings of Financial Literacy – Australians understanding money [1], examining the findings for women in greater detail.

When it comes to finances, typically women are highly confident in their day-to-day money management ability and very good at making the household money stretch to assist with their children’s expenses, but not as good at taking action towards their own long term financial security.

What concerns me most in the Australians understanding money survey, is women are not as confident as men in their ability to plan for their long term financial future, and reported low levels of ability with ensuring enough money for retirement.

To ensure sufficient funds in retirement, I believe it is crucially important for women to understand, participate in and be confident in investing.  The reasons I feel this is important are:

  • Women on average live longer than men, therefore women may be left to look after their investments later in life;
  • Women tend to have breaks in their careers due to family commitments.  Planning for these periods in life is important as well as planning for returning to the workforce;
  • To achieve long term ambitions, it is important for women to understand how to make their money work hard for them; and
  • Divorce and relationship breakdowns – according to the Australia Bureau of Statistics (A.B.S) the number of divorces granted in 2007 was 47,963 [2].   In these circumstances, both men and women need to individually look after their short and long term finances to ensure they remain on track to achieving their goals.

From the report 78% of the women surveyed are interested in learning more about planning for their long term financial future, and 72% are interested in learning more about ensuring they have enough money for retirement.

I want to assist women in becoming more empowered in securing their financial future.  With women being interested in gaining more knowledge around long term financial planning and learning how to secure their financial future, I thought now would be a great time to launch focus sessions on Planning for Women.

If you are interested in attending a Planning for Women session, or know someone who should attend, please register here and we look forward to meeting you.

By Jess Hall, Financial Planner

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances.  Please seek personal advice prior to acting on this information.

 

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Gen Y – your future starts now!

When talking to my Gen Y friends about the importance of building their super early, the first thing they say is retirement is so far off for them. The second thing they say is they would rather use their money for the shiny new car they have always wanted, or a holiday they have been dreaming about – anything they could enjoy here and now. At first I could definitely relate to this; like my friends I’m young, fit and focused on my career. Retiring hasn’t even crossed my mind, let alone planning for it.The truth is, our superannuation plays a significant role in determining the lifestyle we enjoy when we decide to retire. It is one of the biggest, if not THE biggest investment we will ever have. An even scarier truth is, with our ageing population, outliving our hard earned retirement savings is a harsh reality. Gone are the days where retirees could depend on the age pension for a comfortable lifestyle.

One thing I’ve come to understand is it is never too early to think about your super. In fact, the sooner you start planning, the bigger the impact it will have (and the better equipped you will be) when you finally decide to hang up your boots. it is possible to prepare for the future without sacrificing your lifestyle today. I’ll use the following example of ‘John and Sharon.’

‘John and Sharon’ are both 25 years old.  They each have an annual salary of $50,000 and $10,000 in their super balances. By continuing to work and have employer contributions paid into their super, John and Sharon would expect to have a balance of $407,573 in todays dollars at age 65.

Now, if ‘John’ is proactive about his retirement planning, and decides to salary sacrifice $100 each week ($5,200 per year in today’s dollar terms) for the next 10 years, at age 65 he will have a superannuation balance of $536,183. This is an increase of $128,610 for his retirement, and all it cost John was $52,000 over the 10 year journey.

‘Sharon’ on the other hand, focuses on her career and realises at age 50 she may not have enough money in super to fund her retirement. She then takes out a similar strategy to John and invests $100 per week (in today’s dollar terms) for the next 10 years. By age 65 ‘Sharon’ will expect to see her super balance at $497,455. ‘Sharon’ is now in a better position than if she was to do nothing, but waiting until age 50 before taking action, ‘Sharon’ misses out on over $38,000 she could have enjoyed during retirement.

It’s no secret ‘John’ is closer to achieving his retirement goals thanks to a little forward planning, and the power of compounding interest. The earlier you invest and the longer the time frame, the more you allow for compounding to work for you.

The most exciting thing is ‘John’ doesn’t have to stop salary sacrificing after 10 years. If he continues to invest $100 each week of his pre-taxed income, he could build his super to over $838,800. If he continues to focus on himself and his career and drives great income, he may increase the amount he salary sacrifices each week. The potential is limitless!

It is never too early to start thinking about the future, and there are many steps you can take today to set you on the path to financial freedom. For instance, knowing where your super is held and how it is invested is a great place to start.

Speak to an Income Solutions Financial Adviser today and develop a retirement plan that’s right for you.

By Kevin Tran, Associate Financial Planner

 

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue.  In some cases the information has been provided to us by third parties.  Whilst it is believed the information is accurate and reliable, this is not guaranteed in any way.

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances.  Please seek personal advice prior to acting on this information.

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Lifestyle Assets…or Lifestyle?

We have now been settled into our Wealth Creation Centre at 19 Rooney Street, Richmond for just over a year.  Upon reflection of the past 12 months, it set me thinking about a common theme I’ve noticed, particularly since the move to Richmond. The number of people, particularly those approaching retirement age, who are ‘asset rich and cash poor (click here to read Blog by David Ramsay) has both intrigued and interested me.

With surrounding suburbs including Toorak (median house price of $2.65 million1), South Yarra, Windsor, Malvern and Hawthorn, it is no wonder so many people have worked hard to pay off their homes.  However, as these people approach retirement, it is common to see small superannuation balances and few income-producing assets.

This made me question what I would do if faced with the same dilemma.  Would I retire in my lovely home with a small income or the Age Pension? Or would I do the ‘unthinkable’ and sell up and rent?

Let’s explore these two options…

‘Richard and Jenny’ are in their late 50s, have worked hard all their life, and recently paid off their mortgage.  They now own their $2.65 million home outright.  Having strong incomes throughout their working life and funded private school fees, home extensions, and renovations whilst maintaining a ‘comfortable’ lifestyle, they have accumulated combined super balances of $300,000 plus a share portfolio of $200,000.

They would like to retire at age 60 and live on $100,000 per annum to enjoy their ideal lifestyle.

If ‘Richard and Jenny’ remain in their home and draw $100,000 per annum for expenses, their money will only last about 6 years* by which time they will qualify for full Age Pension (a combined income of approximately $32,400 pa). With maintenance costs, rates and upkeep, this leaves little room for holidays, eating out and helping their grandchildren with school fees.

Now, let’s assume ‘Richard and Jenny’ are open-minded and, whilst wanting to remain in a similar home, are open to renting their accommodation. If they sell their home for $2.65 million, invest the proceeds in a diversified portfolio of productive enterprise, and rent a house in the same street for $900 per week (median rental cost in Toorak2), they save approximately $5,000 per annum with rates and maintenance costs now covered by their Landlord.  This reduces their living costs to $95,000 per annum.

Annual income from their investments is approximately $134,950 per annum, which includes a small amount of tax back each year. This would cover rental costs of $46,800 per annum and go a long way toward funding their $95,000 per annum lifestyle expenses (a shortfall of only $6,850 per annum). ‘Richard and Jenny’ are able to top up their income by accessing superannuation funds, and their total wealth would grow over the long-term (albeit fluctuating with the market in the short-term).

The important point I make is, with sufficient passive-income to meet your expenses, you can achieve financial freedom to live the life you want to live, with confidence the income will be there each year.

Being a tenant does have its drawbacks though.  It can be particularly difficult for those with pets; there are restrictions on modifications you can make; and a risk your lease is not renewed.  However, if faced with the choice between lifestyle assets or living the lifestyle of your choice, it is definitely an option worth considering.

It’s also important to remember the value of the investment can be volatile, fluctuating over time. It’s worth noting around one in every three years the value of the investment will end the year lower than it began (whilst it’s not quite as predictable as this, it shows it is not possible to time your way in and out). It’s possible the dividends produced will also fluctuate, as they represent the profits of companies, something that dropped by around 25% during the Global Financial Crisis. For these reasons, the importance of engaging a Financial Adviser is emphasised, particularly given this is something most people find uncomfortable, perhaps even scary.

This dilemma was something recently explored by Scott Pape, ‘The Barefoot Investor.’3

*Based on the following Assumptions:

Investment Type

Income pa

Franked

Growth pa

Superannuation

4.10%

17.35%

2.97%

Share Portfolio

4.50%

100%

4.00%

Rental cost of $900 per week based on median rental costs in Toorak. Assumed rental increase of 3.0% per annum.

 

By Steven Nickelson, Certified Financial Planner

Please note: Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. Past performance is not a reliable guide to future returns.  

Please note that our financial advisers and Income Solutions, as Authorised Representatives of GWM Adviser Services Limited, can only give strategic advice in relation to property and are not authorised to provide specific advice on direct property. Any property advice should be directed to a real estate agent or property adviser.

Footnotes:

Source: http://www.propertyobserver.com.au/data/suburb/toorak-vic

source:  http://www.propertyobserver.com.au/data/suburb/toorak-vic

3 Scott Pape’s article can be found at http://barefootinvestor.com/rent-instead/

 

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Property v Shares – a fair comparison?

I recently read with interest an article in the AFR Weekend Financial Review for which specific research data was provided by RP Data and Rismark (specialists in research on real estate).  It was titled:  Real estate trumps ‘more exciting’ shares. (3 August 2013)

In the article the discussion compares the risk return of property and shares, more specifically domestic real estate as an investment option versus the All Ordinaries Index.

The article references ‘the property index’ which, it states, compares returns on property as capital growth plus rental yields, less ongoing holding expenses and amortised buying and selling costs; ‘a realistic estimate of costs of 2.5%.’

It is far from clear if these estimates allow for the ongoing maintenance expenses of running domestic real estate.  As a point of consideration, in the 2012 financial year Bunning’s Warehouse had sales revenues of $7.2bn.  I think it fair to assume a large percentage of this was spent on the upkeep of domestic properties.  Also, this figure does not account for money spent in Mitre 10 or in the stores of other competitors, nor the human cost of the time involved; it is purely the raw materials.  It would be interesting to understand how the researchers derived 2.5% as a reasonable estimate of costs.

Further to this, it is not evident if the estimated rental yields allow for the taxation of rental income The All Ords’ measure includes dividends but there is no mention of what, if any, consideration was given to franking credits.

When comparing asset classes, creating an ‘apples for apples’ scenario is ideal, but sadly is not always possible.  The concern I have with the comparison of domestic real estate as an investment vehicle versus an index like the All Ord’s is the reliability and depth of the data available.  For example, the actual costs of domestic real estate would need to include management fees and charges, maintenance and repair costs, rates and other taxes (including that on rental income), insurance, periods of no occupancy and TIME.

My undergrad degree was in Modern History.  In first year we were taught the basics of analysing any piece of primary data; when was it produced, who produced, why was it produced and who was the intended audience.  When you consider these aspects you start to accept, or question, information in a different light.

It is my belief the only fair comparison of property to a listed index is to consider listed property trusts.  The vigorous requirements of an ASX listing means there is a detailed accounting of every dollar earned, every dollar spent (and where) plus additional factual data such as periods of no tenancy for properties.

It is not my contention that the data is wrong (although it may be); it is not my contention that the data is incomplete (although it is possible); it is so important to have genuine transparency with regard to the research data used to promote a particular view point (or even vested interest).

A letter relating to the points made here was sent to RP Data but is yet to yield a response.

By Gareth Daniels, Financial Planner

 Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

 

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Cost effective insurance options

When you take out insurance, there are generally two ways you can pay your premium:

  •  A stepped premium which is calculated each year in line with your age.
  •  A level premium which is calculated each year based on your age when the cover commenced.

Level premiums are higher than stepped premiums at the start.  However over time, as stepped premiums increase, level premiums can end up cheaper – often at the stage in life when you need the cover most.

When deciding which option to choose, remember you could need insurance to cover your debts and income for 30 years or longer.

The Facts

Most claims occur in later years, but many policies lapse at this time due to higher stepped premiums.  Selecting level premiums can make the cover more affordable in the later years and enables you to keep the cover going at a time when you need it most.

Combining stepped and level premiums

Just as you can opt for a combination of fixed and variable rate home loans, you may want to take out part of your insurance using stepped premiums and use level premiums for the rest. This way, the premium in the earlier years will be lower than if you opt entirely for level premiums.

Over time, you can then reduce your stepped premium cover as you build up more assets and potentially need less insurance. As a result, you could end up paying level premiums on most (if not all) of your insurance in the later years, and benefit from the lower premium costs associated with level premiums at that time.

 

Tips and traps:

The earlier you ‘lock-in’ the level premium, the greater the potential long-term savings. This is because level premiums are generally lower if your take out the insurance at a younger age. However, as you approach age 65, the difference between the two premium structures diminishes for new policies.

Level premiums can make budgeting easier, because you know in advance exactly what your insurance is going to cost.

The maximum age you can start a policy with level premiums is generally lower than for stepped premiums. 

 

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US company creates income stream during market downturn

A long term client sent this article from the Wall Street Journal, published on the 9th October 2013. The article reinforces Income Solutions’ simple message – owning great businesses and collecting the dividends that payout – year after year, enabling you to have a passive income so you and your family can live out your life’s aspirations.

Please see article here

Caterpillar is a U.S. company.  The U.S. economy (if you believe some the doomsday prophets) is going to hell!  Just take a look at these headlines taken over a twelve day period from CNBC.com in September:

• “Mark Faber’s 3 Reasons a Plunge is Coming”

• “Stockman: U.S. is Heading for a Crisis”

• “Cramer: 7 Reasons to Raise Cash Now”

• “Brace for Correction: Technical Analyst”

• “Stocks Have a Window to Knock the Market Down: Todd Harrison”

• “Why Incomes Could Fall for the Next Thirty Years”

• “See: Investors Flee Stocks, Bonds: Now What?”

• “Stocks Aren’t Great Bargains Anymore: Dr. Doom”

• “China’s Credit Levels Echo U.S. Crisis”

• “No Country is Safe from Emerging Market Meltdown”

• “S&P 500 Still Has an Appointment Below 1600: Saut”

• “Stocks Heading for October Crash: ‘Take Some Chips off the Table,’ Merk Says”

• “Traders Struggle with Perfectly Terrible Jobs Number”

• “Krugman Overboard: Says Economic Policy a ‘Horrifying Failure’ ”

• “Watch: This Could Ruin the Dow’s Rally”

• “Investors Becoming Less Bullish and ‘a Little More Afraid’ ”

• “G-20 Faces Growth Threats as Syria Adds to QE Exit Risks”

Caterpillar has paid a dividend every year since it was formed and has been paying a quarterly dividend since 1933 – over 80 years of dividends which equate to a humans average life expectancy!  2 Billion dollars in share buyback and 15 per cent increase in dividends is hardly the move of a struggling company.

I hope there are many families who have been long term shareholders of this company, living the lives in which they have wished for, funded by the dividends – and leaving a meaningful legacy to who they love.

I implore you to continue to build your careers or business, to live within your means and build surplus cash follow through buying stakes in the world’s great businesses.   Never let the doomsday prophets stop you from achieving an income stream that will allow you and your families to live the life you wish for.

By David Ramsay – Founder / Principal Financial Planner

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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Paid Parental Leave and Dad and Partner Pay

What is paid parental leave?

The Australian Government’s Paid Parental Leave scheme is an initiative in which the government will  pay a new parent (the primary caregiver), minimum wage (currently $622.10 per week) for a period of 18 weeks when they have their child. The Parental Leave income is fully taxable.  The primary caregiver must not work during the 18 weeks of leave as they are paid to be home to care for their new child.

To qualify for the scheme, the new parent must meet a work test and income test.   The work test will need to prove that the new parent has worked for at least 10 of the last 13 months, or at least 330 hours in the 10 month period prior to their leave. The income test states that the primary caregiver must have an adjusted taxable income of $150,000 or less in the financial year prior to the date of claim.

Dad and Partner Pay

Dad and Partner is paid to the secondary  caregiver of the new child. The Australian Government will pay the secondary caregiver  two weeks of minimum wage (currently $622.10 per week) to assist the new parent in caring for their partner and new child in their initial two weeks in settling in.

To qualify for Dad and Partner Pay, the secondary caregiver must be the biological father of the child, the partner of the birth mother or the partner of an adoptive parent.

Claims can be lodged up to three months in advance with Centrelink.  Lodgement can be done online.

To qualify for the scheme, the new parent must meet a work test and income test.   The work test will need to prove that the new parent has worked for at least 10 of the last 13 months, or at least 330 hours in the 10 month period prior to their leave. The income test states that the secondary caregiver must have an adjusted taxable income of $150,000 or less in the financial year prior to the date of claim.

For more information and information on how to claim Parental Leave pay go to the Human Services website http://www.humanservices.gov.au/customer/services/centrelink/parental-leave-pay

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