Pensions – Can I still work once I am past Pension Age?

Pensions – Can I still work once I am past Pension Age?

Pensions – Can I still work once I am past Pension Age?

The Australian Government can assist older Australians with many income support and services, and even if you get some form of Government support, you can still work once you are past pension age. To determine if you have reached pension age, it will depend on when you were born so see Age Pension (click to find out more, as the age depends on when you were born) if you don’t already have this help to support you.

From the Govt. website –

Women born before 1 January 1949 reach qualifying age at 64 and a half, and women born between 1 January 1949 and 30 June 1952 at age 65.

Qualifying age for men born before 1 July 1952 is age 65.

From 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 and a half years. The qualifying age will then rise by six months every two years, reaching 67 by 1 July 2023.”

To qualify you first have to satisfy age as well as residency requirements. As to how much you can receive will depend on your income and assets and other circumstances.

If you are a self-funded retiree such as have savings, an income stream from a commercial super fund or Self-Managed Super Fund (SMSF) or you are still working, you may be able to receive a part pension, once past pension age.

Note: If you have lived or worked outside of Australia and are claiming or receiving Age Pension here, the Government may ask you to apply for a pension from those other countries you have lived or worked in.

When working past pension age another payment is the Work Bonus which is an incentive for pensioners past age pension age to remain in the workforce  by increasing the amount you can earn before your pension is reduced. You do not need to apply for the Work Bonus. If you receive eligible employment income, we will automatically apply the Work Bonus to your income test. All pensioners over age-pension age (other than recipients of Parenting Payment Single) are eligible for the Work Bonus. A transitional rate of pension protects the entitlements of pensioners who received a payment reduction as a result of the Pension Reform changes that came into effect on 19 September 2009.

The transitional rate of pension is calculated using the old pension-income-test rules. The Work Bonus is not included in this transitional rate calculation.

The Work Bonus applies to income from employment, including:

  • Wages paid in Australia and outside Australia
  • Leave, where you remain an employee of the same employer and
  • Director’s fees

We will apply the Work Bonus to your assessable employment income before your pension is paid each fortnight.

The Work Bonus is not applied to income from:

  • Leave payments if you have terminated your employment
  • Self-employed income
  • Payments to you as a principal from sole traders or partnerships
  • Investments or
  • Superannuation income

If you qualify for Work Bonus, you may be entitled to other payments and benefits, such as:

And some other programmes that may apply to you –

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

And book for our next  FREE Seminar – Self Managed Super Fund Roadmap – All you need to know plus bonuses see HERE and our SMSF and Property Boost to Super (combined) Free Seminar HERE

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Basics about Super – Basics 6-10 about the Australian Super System

 

Basics about Super - Basics 6-10 about the Australian Super System

Basics 6-10 about the Australian Super System

Continuing our 2 part series, here is five more basics about the Australian Super system. (For the first 5 Basics 1-5 see HERE)

  1. Investment Choices - While the big major super funds allow you to choose how you want your money invested by the super fund (by choosing from your super fund’s investment options) you have much more choice in self-managed super (SMSF). Of course if you don’t make an investment choice, then your super money is invested in the default investment option. The default option is usually invested in a range of assets, often called the balanced investment option, although some super funds call it a growth option. Investments are spread across high and low risk assets to manage the risk that some of the investments may lose money.
  2. Member Statements - Your super fund must send you regular reports (at least annually) on the fund’s performance, and on your own personal super account performance. Your super fund must also disclose fees charged, and show you any other transactions on your super account (such as the deductions for insurance premiums and taxes).
  3. Preservation until you Retire - Your money is preserved in super, which means you generally can’t take your money (benefits) out of the super fund until you elect to retire at or after your preservation age (from age 55 to 60, depending on your date of birth), or when you satisfy another condition of release. For permission to withdraw your super you must, in the correct technical language, satisfy a “condition of release” which are very specific, such as resigned from your employment
  4. Co-contribution extra from the Government! - If you make a deposit of your own personal money (that is non-concessional (after-tax)) contributions to your super fund, depending on your income tax level/margin, the government may put some tax-free money into your super fund for you. This is known as the co-contribution and phases out on a sliding scale. See More at the ATO site.
  5. Contributions Caps – Max Contributions – There are maximum levels that can be contributed, that you can make each year to non-concessional caps (2014-2015 $180,000) and concessional caps ($, or you pay penalty/extra tax.

The general concessional (before tax) contributions cap for 2013-14 is $25,000.

However, from the 1 July 2013 if you are 59 years old or over on 30 June 2013, additional concessional contributions will be able to be made to your super, with the cap increasing from $25,000 to $35,000.

From 1 July 2014:

- The higher cap of $35,000 will also apply to people who are 50 years or over

- The general concessional contributions cap will rise to $30,000.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

And book for our next  FREE Seminar – Self Managed Super Fund Roadmap – All you need to know plus bonuses see HERE

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Masterclass SMSF – Penalties the ATO can exercise on SMSF Trustees

 

Masterclass SMSF – Penalties the ATO can exercise on SMSF Trustees

SMSF – Penalties the ATO can exercise on SMSF Trustees

Self-Managed super fund (SMSF) trustees must always keep in mind the  penalties the ATO can exercise on them.

The penalty system  has been in existence since the  Superannuation Industry (Supervision) Act (SIS Act) and Regulations came into existence in the 199o’s.  They consist of court-imposed civil AND Criminal penalties a s well as the ability of the ATO to administer enforceable undertakings from Trustees, disqualify trustees and or decree the SMSF as non-complying and freeze certain abilities. Court-imposed penalties has been successful in a number of cases since 2007 and peaking in 2010-2011.

Civil Penalties

The civil penalty provisions of the SIS Act  cover some but not all breaches of the operating standards. Civil penalties up to 2000 points ($340,000) can be imposed by the court for breaches such as on the:

  • Sole purpose test;
  • Lending and borrowing of the fund;
  • In-house asset rule;
  • Failure of trustees to report significant events.

Other penalties can include prison sentences.

Criminal Penalties

If a matter is investigated under civil penalty provisions, it is precluded from criminal proceedings. And a mater must be proven “Beyond reasonable doubt”. Criminal proceedings involve:

  • Dishonesty;
  • Deceit;
  • Reckless behaviour.

From 1 July 2014

Because of the pro-longed delay in court proceedings, new legislation has come into being to deal with many of the breaches seen as minor occurrences and to reduce the cost to all parties. The new options for the ATO include:

  • Rectification;
  • Education;
  • Administrative penalties.

Rectification involves the ATO directing the trustee where-as a similar process called enforeceable undertaking is where the trustee provides a corrective measure, and  if so, the ATO cannot make a rectification direction. Rectification usually results with failure to correct a breach and ensure it doesn’t re-occur.

Education often applies with first-time contravention where the trustee displays lack of knowledge of the rules. An ATO-approved course of study is usually required, and proof of completion, or a $850 fine is imposed.

Administrative penalties range from $850 – $10,800 such as for not providing information the ATO requests, or accounts not prepared or kept, or at the top end, lending and borrowing breaches.

For more see:

https://www.ato.gov.au/Super/Self-managed-super-funds/Setting-up-an-SMSF/Laws,-rules-and-consequences/

http://www.fsadvice.com.au/media/library/FS_Advice/FS_SMSF_Advice/FS_Advice_New_ATO_SMSF_penalties-Colley.pdf

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Come to a FREE seminar with bonuses, run every month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see 1 SMSF – FREE Seminars or our other seminars above – Navigate Shares and Property Boost (every few months) in the menu above or call us 0407 361 596

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NEWS – Are you aware of the Limited Recourse Borrowing Determination in April 2014 for Property etc in SMSF?

NEWS – Are you aware of the Limited Recourse Borrowing Determination in April 2014 for Property etc in SMSF?

Limited Recourse Borrowing Determination

In June the ATO announced confirmation of an April Determination 2014 Legislative instrument, drawing people’s attention to Limited Recourse Borrowing for Property etc in self-managed super funds (SMSF) particularly the in-house asset exception where a related party trust is involved.

From part of the SMSF News – Edition 30

Limited recourse borrowing arrangements

The Self-Managed Superannuation Funds (Limited Recourse Borrowing Arrangements – In-house Asset Exclusion) Determination 2014 Legislative instrument was registered on 10 April 2014.

The instrument addresses concerns raised by industry about the application of the in-house asset exemption provided by subsection 71(8) of the Superannuation Industry (Supervision) Act 1993 (SISA) to an investment in a related trust held by an SMSF as a required part of a limited recourse borrowing arrangement (LRBA).

Prior to this legislative instrument the in-house asset exemption did not apply to exclude an SMSF’s investment in the related trust from being an in-house asset of the SMSF at particular times, including:

  • At the beginning of an LRBA where a borrowing referred to in paragraph 71(8)(b) has not yet begun, such a borrowing has not yet begun and the related trust does not yet hold the acquirable asset; and
  • Where the asset continues to be held in the related trust after the borrowing referred to in paragraph 71(8)(b) has been repaid.

To provide certainty for SMSF trustees, a legislative instrument has been registered. It provides an exception to the definition of an ‘in-house asset’ in the circumstances described above.

The instrument is taken to have commenced on 24 September 2007. This aligns with the date of effect of the introduction of provisions in the SISA that allow trustees of regulated super funds to enter into LRBAs. This ensures SMSFs that entered into LRBAs prior to the making of this instrument are not disadvantaged as compared with SMSFs that enter into LRBAs after the making of this instrument.

The legislative instrument and explanatory statement are published on the Com law websiteExternal Link. You can also access them below.

Find out more

Download the Legislative InstrumentExternal Link

Download the Explanatory Statement

Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know, with bonus TIPS and CHECKLISTS  to determine if SMSF is for you and what steps are needed to set up, as well as how to get your SMSF set up at low cost. It also gives you ALL the Aust Tax Office publications about SMSF (NAT XXXX). Get you’re copy now – click “Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!

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MASTERCLASS Investing – Good Companies have Steady Growth in Earnings per Share

 

MASTERCLASS Investing – Good Companies have Steady Growth in Earnings per Share
Investing – Good Companies have Steady Growth in Earnings per Share

Earnings are another name for profit and are often expressed as Earnings Per Share (EPS) in reports on companies.

EPS is calculated by dividing Net Profit/Income/Earnings by Average Number Shares on offer.

Note - Data sources can use the weighted average number of shares over the reporting period, or just the number of shares at the end of the period. This explains differences between reported amounts form different sources.

For the investor, what is particularly important is steady and growing EPS over several years.

“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.”

“Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will be the portfolio’s market value.”

Both quotes are from Warren Buffet, and earnings was another topic that Professor John Price taught at out share-investing club Mar 20 2011.

Let’s look at some examples, such as Telstra -

2011 EPS 26.1 share price $2.92 (30 Jun)

2012 EPS 27.4 share $3.69

2013 EPS 30.6 share $4.77

2014 EPS 32 – 33 forecast and target $5.30 consensus average

Source (example) http://www.4-traders.com/TELSTRA-CORPORATION-LTD-6491518/consensus/

However there was a period in the early 2000s when their EPS GROWTH was 0.95 that is, decreasing!

Dower EDI had EPS 23c, over 10 years ago, then it grew to 59c, which is 2.57 times more, and the share price was $1.64, 10 years ago, then in 2010 price was $3.82, which is 2.33 times more, a similar growth of price to EPS.

UGL, over a 10 year period, had 6.77 times growth in EPS, and 6.98 times growth in share price.

Want to learn the core issues of share investing? Our workshop Navigate to Successful Share Investing gives a 2.5 hour practical session to learn to easily understand Company Financial Statements, how to find healthy companies, what tools and ratios to use, work on examples, and also includes how to get better investment outcomes. Other Bonuses as well. Check the next one see Share WORKSHOP or call 0407 361 596

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Basics about Super – Five basics to know about the super system

Basics about Super - Five basics to know about the super system

Five basics to know about the super system

  1. Superannuation Guarantee (SG) – All Employers must pay at least the value of 9.5% (from 1 July 2014) of your wages/salary (not FROM your pay, but it’s another expense of the employer) to your member account in a super fund (including a self-managed super fund). This is a compulsory legal requirement under Superannuation Guarantee (SG) laws, for any employee earning over $450 per month and over 18 years old. These are known as Concessional SG Contributions (the employer gets a tax concession/deduction to claim as a business expense). (Formerly Deductible Contributions).
  2. Choice of Fund – All employees have Choice of fund – except for employment agreements and some industrial awards, you can choose the super fund you want your employer to pay super into. If you don’t choose your super fund, your employer chooses for you.
  3. Salary Sacrifice – Is where you instruct your employer to deduct some money BEFORE TAX from your pay and contribute that to your super fund with the 9.5% SG they need to pay. This is also a Concessional Contribution by the employer.
  4. Save Tax on Concessional Contributions – Your employer’s compulsory SG contributions and any before-tax contributions that you choose to make are both taxed at a maximum rate of 15 per cent on entry to the super fund. Compare earning $37,000 a year, who pays 19% tax above $18,000 – any $ earned over this will pay 32.5% for the 2014/2015 year) on earnings $37,001-$80,000. Put direct into super, instead of taking it home, will only result in paying 15% tax. See more detail of the rates at Individual income tax rates.
  5. Tax Rate on Investment Earnings. Earnings on your super fund’s investments are also taxed at no more than 15 per cent. And capital gains is 10% in SMSF situation.

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Come to a FREE seminar with bonuses every month – Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see 1 SMSF – FREE Seminars or call us 0407 361 596

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Masterclass SMSF – What’s involved in a self-managed super fund? What are they?

 

Masterclass SMSF - What’s involved in a self-managed super fund? What are they?

SMSF – What’s involved in a self-managed super fund? What are they?

Self-Managed Super Funds (SMSF or DIY Super) are the biggest sector of superannuation savings in Australia See ATO (use this link if it drops off the words https://www.ato.gov.au/Media-centre/Media-releases/SMSF-industry-continues-to-grow/). So what is involved in a self-managed super fund, and what are they?

Superannuation is a long term savings arrangement which is preparation for having money to live on in retirement, and is part of the government’s plan to ensure adequate retirement income. Employers, self-employed, employees and family members (on behalf of others) can make contributions to a super fund.

Contributions can be paid to either -

  • Independent large super funds such as retail, industry, bank and financial institutions (Regulated by APRA – Australian Prudential Regulatory Authority)
  • Retirement Savings Accounts (RSA) banks, institutions (rare)
  • Your own self-managed super fund (SMSF) where you manage it.

Under Australian superannuation law, you have the ability to choose to contribute your superannuation contributions (and in many cases, direct your employer to pay employer contributions) to a superannuation fund of your choice. All super funds are trusts, as your money is held in trust until you are eligible by law to access it to fund retirement.

Note – The Australian Tax Office regulates SMSFs and has several publications, all about super and SMSF.

What is a Self-Managed Superannuation Fund (SMSF)

An SMSF works like all other super funds, which all have trustees, but the responsibility of managing it rests solely on you as the trustee, as well as being the member/beneficiary. Like all superannuation funds, SMSFs invest contributions and provide a benefit to members on retirement.

Generally, a superannuation fund is an SMSF if:

  • It has maximum of four or less members;
  • Each member of the fund is a trustee (or a director of the corporate trustee if used instead);
  • Each trustee or director of a corporate trustee is a member of the fund;
  • No member of the fund is an employee of another member of the fund, unless they are related parties;
  • No trustee of the fund receives any remuneration for their services as trustee; and
  • The fund has a trust deed document (the rules) that meet the requirements of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

How Does an SMSF Differ from Other Superannuation Funds

The difference between a self-managed superannuation fund and other types of superannuation funds is that members are also trustees, or directors of a corporate trustee. This means they control the investments of the fund, the payment of pensions, income streams or benefits and are ultimately responsible for the ongoing compliance (abiding by the laws) of the fund.

What Different Types of SMSFs are there?

There are two main types of SMSFs, based on structure, that is, whether there will be a corporate (special super company) or individual trustees. Another difference is the number of trustees, single member or multiple, up to four trustees/members.

Corporate Trustee:

  • Four or less members;
  • Each member also a director of the company who is the trustee itself;
  • No member an employee of another member unless related;
  • Corporate trustee, nor any director is paid for services related to the fund.

Individual Trustee:

  • Four or less members;
  • Each member is a trustee;
  • No member an employee of another member unless related;
  • No trustee is paid for services related to the fund.

 

Single Member Funds come in two forms:

  • With corporate trustee, member must be sole director of the corporate trustee, or one of two directors either related or not an employee of each other;
  • Two individual trustees, one a member and the other either related or any other person who does not employ them.

 

To learn more about this and the following topics at one of our seminars –

  1. What’s involved in an SMSF and does it suit you?
  2. I want my business to be my super – can I do this and how?
  3. Should I borrow to buy property for my SMSF?
  4. Can stock market shares be included in the investment mix?

see Seminar page http://wp.me/P1sLJd-f

Get our FREE Expert Guide – Self-Managed Super and You – It has all the info you need to know, with bonus TIPS and CHECKLISTS  to determine if SMSF is for you and what steps are needed to set up, as well as how to get your SMSF set up FREE. It also gives you ALL the Aust Tax Office publications about SMSF (NAT XXXX). Get your copy now – click “Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!

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