If you have a Macquarie Cash Management Account (CMA) you may have recently started to receive texts from Macquarie, confirming payments made from your account by AustAsia.

Macquarie have now introduced these third-party transaction notifications as an added security measure. You will receive a notification when an Adviser, or other third party, processes a transaction on their CMA, unless you Opt-Out. This is new for most clients.

We act and will only ever act with your specific authorisation and/or standing instructions.

What you need to know

• These notifications are being phased in on CMAs;
• Clients with the Macquarie Mobile Banking app (mBanking) will receive a push notification to their device with the transaction details;
• Clients who haven’t downloaded the app will receive an SMS; and
• Clients can opt out of notifications by changing their notification preferences via the app or via the Client Portal – more details below.

How do I Opt Out of these notifications?

Option 1: Via mBanking App

If you don’t want to be notified of Adviser/ third party initiated transactions, you can opt out of receiving these by following these steps:

1. Log into the mBanking App (can be downloaded from the App Store or Google Play);
2. Click the ‘My Profile’ icon (this appears on the bottom right of the screen in mobile devices);
3. Click ‘Settings’;
4. Click the ‘Notification types enabled’ option; then
5. Toggle off the ‘Third Party Payments’ transaction type.

If you haven’t downloaded mBanking, you’ll receive an SMS notification (ie. text on your phone). If you don’t want to receive an SMS you can download the app, then opt out by following the steps above.

Option 2: Online via Client Portal

If you don’t use the mBanking App, you can use the Client Portal here to opt out by following these steps:

1. Click on ‘My Profile’ within your name in the top right of the screen;
2. Click on ‘Notifications’; then
3. Toggle off the ‘Third Party Payments’ transaction type.

If you have any questions or would like more information, please call the Investments Team on (08) 9227 6300 or email us at investments@austasiagroup.com as we handle Macquarie Account queries, not our Client Services Team.

Click here to download this article in PDF format.

The post New Macquarie Payment Notifications appeared first on AustAsia Group.

Now could be the best time for you to think about a career change, become self-employed or consider retiring if you are close to retirement. But regardless of what your next steps might be, it’s important that you:

• Understand the payments you may receive from your employer and what tax treatments apply
• Consider the financial issues likely to be relevant to your age and career goals, and
• Speak to a financial adviser to find out how you could manage your redundancy payments effectively.

Note: The information in this article assumes you’re departing due to a genuine redundancy. This will generally be the case if you are under age 65, your employer has determined that your position no longer exists and you are not replaced by another employee.

Types of payments

The types of payments you may receive in the event of a genuine redundancy include

• A genuine redundancy payment, which is tax-free up to a limit based on your full years of service with your employer.
• An Employment Termination Payment (ETP), which is a lump sum payment you may receive when your employment arrangement has come to an end. Examples include genuine redundancy payments exceeding the tax-free limit, unused sick leave, unused rostered days off, payments in lieu of notice and golden handshakes (also known as ‘ex-gratia’ payments).
• Other payments you receive from your employer including accrued annual leave, accrued long service leave, and your final pay.

Each of these payments are paid as cash, less any applicable taxes. The table in the Appendix summarises the tax treatment of these payments in the 2017/18 financial year in the event of genuine redundancy.

Financial issues to consider

When you take a redundancy, you will need to decide what you are going to do with the payments you are eligible to receive. Other financial issues you may need to consider will depend on whether you intend to find a new job or you plan to retire.

If you plan on finding a new job, some of the important questions you should address include

1. How will you meet your living expenses until you find another job?
2. Will you be eligible for the Newstart Allowance or other relevant social security benefits?
3. Will you need to move your superannuation to another fund?
4. Should you merge your superannuation into one account?
5. Should you use some of your superannuation to pay yourself a pension (if eligible )?
6. Will any insurance policies taken out on your life cease when you leave your employer?
7. What should you do with any leftover redundancy pay when you find another job?

Some key questions to consider if you’d like to retire upon leaving your employer are

1. Have you accumulated enough wealth within and outside superannuation to provide an income to meet your ongoing lifestyle needs?
2. Should you use some of your superannuation to pay yourself a pension (if eligible1)?
3. Will you be eligible for the Age Pension or other relevant social security benefits?
4. Do you need to review your estate plans?
5. Do you need to review your insurances?

Value of advice

After reading this information, we recommend you contact us to assist you with

• Decide what to do with the payments you are eligible to receive from your employer
• Make the most of your super to help you become financially secure in retirement
• Ensure you and your family are financially protected in the event of death or disability, by having appropriate insurance cover, and
• Determine whether you are eligible for any Government income support payments.

We can also assist you with a range of other needs which may include

• Improving your cash flow
• Growing your investments
• Managing your debt, and
• Considering your estate planning needs.

Appendix – tax treatment of payments

• If under preservation age⁵
• If preservation age⁵ or over

¹ To be able to access your superannuation to commence an income stream you must have reached your preservation age⁵.
² This threshold is indexed on 1 July of each year.
³ Different tax treatment may apply to ETPs received when leaving an employer voluntarily or where redundancy is not considered as genuine.
⁴ Since 1 July 2012, if you receive an ETP that reasonably could be expected to be received as a result of a voluntary termination of employment and that payment causes your income to exceed $180,000 (the ‘whole of income’ cap), the part of the ETP that causes your income to exceed $180,000 will not be subject to a tax offset and will be taxed at 47% including the Medicare Levy.
⁵ For those born before 1 July 1960, the preservation age is 55. For those born on or after 1 July 1960, your preservation age will depend on your date of birth. For more information see the ATO website.
⁶ This is the ETP cap. This cap is current for 2017/18 and is an annual limit that applies to all ETPs received as a result of a genuine redundancy or other involuntary terminations of employment in a financial year (or related to that year).
⁷ Includes Medicare Levy.
⁸ In some cases, you’ll need to have worked for your employer for at least 10 years to qualify for long service leave. However, some employers have a statutory obligation to pay pro-rated long service leave if you are made redundant after five years of service.

Click here to download this article in PDF format.

The post Making the most of your redundancy appeared first on AustAsia Group.

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As a self-managed superannuation fund (SMSF) member, you must ensure that your fund satisfies the residency test to enjoy concessional tax treatment. Otherwise, you would get taxed at the highest marginal rate of 45%!

What Does SMSF Residency Advice Cover?

1. Compliance requirements
2. Tax implications
3. Tax planning strategies
4. SMSF investment decisions:

What are the Benefits of SMSF Residency Advice?

1. Compliance with SMSF regulations
2. Reduced tax liabilities
3. Informed investment decisions

Protect your retirement savings and avoid costly mistakes – seek SMSF Residency Advice from us today to ensure compliance with regulations, minimize tax liabilities, and make informed investment decisions for your self-managed superannuation fund.

The post Understanding the Importance of SMSF Residency appeared first on AustAsia Group.

Binding Death Benefit Nominations in a superannuation fund can provide useful direction to the Trustee of a fund after death, for distribution of benefits. However, there have been some common issues that we’ve encountered lately where people thought they had things right, but didn’t understand the way that super works legally. We summarise them as follows:

1. Issue: ‘Everything will be OK, my family will look after it.’

Many members of superannuation funds, and particularly Self-Managed Super Funds (“SMSFs”) make the incorrect assumption that just because everything was all ‘peace and harmony’ while they were alive, this will continue on their demise.

While most disputes are settled prior to getting to a court hearing, there are enough cases where the apparent intention of the deceased, made clear during their life, was never committed to writing. The result is that unintended family members may end up with superannuation to the detriment of others.

Make sure that your intention to pay super benefits to particular family members is put in writing, as a binding direction to the Trustee of the fund.

2. Issue: Not understanding who can make a claim or receive a superannuation death benefit.

Superannuation laws have strict rules around who can receive your death benefit. The laws limit your superannuation death benefit to your dependents, plus it can be paid to your estate via your Legal Personal Representative. Your dependents for super purposes include your spouse, children, anyone dependent on you for support and anyone with whom you have an interdependency relationship.

If your super is paid to your estate, then the tax rate for non-dependents (as defined by the tax law) is 16.5% on the super funds that they receive. So, it is important that dependency is shown in a number of instances to protect the superannuation from this potential tax.

Make sure you are clear about who should receive your superannuation after your death.

3. Issue: Not understanding the place of superannuation in your Last Will and Testament.

One very common misunderstanding is that your Last Will and Testament can decide how your superannuation will be distributed amongst your beneficiaries. This is incorrect, as the rules of your super fund initially determine how your super is to be distributed. Some funds don’t allow Binding Death Benefit Nominations at all, while others allow for more detailed Binding Death Benefit Nominations.

Your fund may allow you to make a Binding Death Benefit Nomination which directs the Trustees of the fund as to who is to receive your superannuation.

This includes your dependents, and you can have your super paid to your Legal Personal Representative (usually the Executor of your estate), who is responsible to distribute the amount received as instructed in your Will. If you don’t have a Binding Death Benefit Nomination, then the rules of the fund may allow the Trustees the discretion to distribute your super benefit to your dependents, including to your estate, via your Legal Personal Representative.

Make sure you have a clear direction for the distribution of your superannuation otherwise payment decisions may be up to the Trustees of your fund after your death.

4. Issue: Incorrect Binding Death Benefit Nominations.

Many super funds have trust deeds which include standard Binding Death Benefit Nominations or, require that the nominations follow a set format. If they do, then make sure any nomination that you sign is consistent with that format.

Make sure you use a nomination that satisfies the trust deed or the distribution of your death benefit may be at the discretion of the fund Trustees.

5. Issue: Incorrectly completed Binding Death Benefit Nominations.

We often see Binding Death Benefit Nominations that are incomplete or are incorrect. The information that is required to be included in the nomination will depend on the particular form, but it will usually include

• the Member’s name;
• who the Member nominates to receive the death benefit;
• how much of the death benefit is to be paid to the dependent/s or Legal Personal Representative;
• any other instructions concerning payment of the death benefit;
• the Member’s signature and be dated; and
• the Witnesses’ name/s, signature/s and be dated.

It is common for Binding Death Benefit Nominations to have one or more of these items missing, which may render the nomination invalid or limit who may be eligible to receive the death benefit. If the nomination is considered invalid it may then be left to the fund Trustees’ discretion as to the distribution of the death benefit.

Make sure your Binding Death Benefit Nomination has been completed correctly or it may be up to the Trustees to decide how your death benefit will be distributed.

6. Issue: Not keeping the Binding Death Benefit Nomination up to date.

As things change during your life, you may wish to direct the payment of your superannuation to someone other than who you originally nominated. This may occur if you have children, change relationships or someone becomes dependent upon you for support.

Each time your family or relationship circumstances change, review your Binding Death Benefit Nomination to check whether any changes are required.

7. Issue: Failure to finalise a marriage breakdown.

Superannuation splitting is usually included as part of a marriage or relationship settlement. However, any Binding Death Benefit Nomination that is in place at the time of the settlement may still be valid and it is possible for benefits to be paid to your ex-partner.

As part of the settlement, be sure to review your Binding Death Benefit Nomination and make any amendments necessary to take into account your changed circumstances.

8. Issue: SMSFs – Not addressing the legal competency of fund Members.

Whether a Trustee of an SMSF is competent to act in the interests of a deceased Member is something that should be under consideration at all times. If the Trustee is unable to act in that capacity, then who would take over the running of the fund?

To cater for this situation the trust deed of the fund or Constitution of the corporate Trustee should provide an alternative if the primary Trustee or director of the corporate Trustee become legally incompetent due to disability. Another option could be for the Trustee to grant an Enduring Power of Attorney to another person who could take over, should they personally become unable to act.

Being prepared when a Trustee is unable to act by using an Enduring Power of Attorney may allow an SMSF to continue in difficult times.

9. Issue: Not taking the specific make-up of an SMSF into consideration.

SMSFs operate in a unique way and may hold investments which can be retained in the fund or transferred to the Beneficiary as part of the payment of a death benefit. It is possible for a Binding Death Benefit Nomination to direct particular assets to one or more Beneficiaries.

Consideration needs to be taken of the fund’s assets in satisfaction of the payment of a death benefit. This may involve taxation issues, including income tax and stamp duty, in relation to the transfer.

10. Issue: Taking Estate Planning considerations into account.

Estate planning has become more important since the commencement of the Transfer Balance Cap from 1 July 2017. The cap restricts the amount that can be used to start an income stream(s) in a superannuation fund, including Death Benefit Pensions.

If a person becomes entitled to a Reversionary or Death Benefit Pension there is potential that their Transfer Balance Cap of $1.6million has been exceeded. This may require the transfer of part of the death benefit out of the fund as a lump sum. Depending on the wishes of the deceased it may be paid to a dependent or to their estate and have different tax consequences.

As part of deciding what is to happen with your death benefit, the Estate Planning issues should be taken into account.

It doesn’t matter whether you have an SMSF or belong to one of the larger industry or retail super funds, the distribution of your death benefit should be made by the fund Trustees in accordance with your wishes. Any directions or instructions provided to the Trustee must be clear and as required by the fund’s trust deed. Otherwise, payment of your death benefit may be left up to the Trustee’s discretion and may end up in the hands of someone you never intended.

For any assistance in relation to your estate, your superannuation or your overall financial position, please don’t hesitate to contact us. We’re here to help.

The post What happens to your superannuation when you die? appeared first on AustAsia Group.

Early planning can take away a lot of the stress and uncertainty that can arise when considering aged care at home or a residential aged care facility.

Know what your options are

The first option that probably comes to mind is a residential aged care facility. These facilities provide accommodation and care depending on your personal needs. Care can range from personal care, such as help with showering and dressing, together with occasional nursing care to continuous nursing care for those with a greater degree of frailty.

What you may not realise, however, is that there are also Home Care Packages that provide access to services that can help you to stay at home for as long as possible. Support services may include cleaning, meal preparation and transport for shopping or appointments.

Start planning early

There are a number of reasons why you should plan ahead and well before the need for aged care is imminent. For example

• In many cases, the need to move into residential care can be sudden due to a serious illness or injury (eg a stroke, heart attack, or fall), or another unexpected event
• It’s not uncommon to find there are significant waitlists for residential care, particularly at the more popular facilities, and
• Regardless of whether home or residential aged care is required, if you wait until the last minute to speak to a financial adviser, you may not be able to minimise the fees you may have to pay and/or maximise the social security benefits you may receive.

Five steps to consider before entering an aged care home

These are five steps that may help you make a smoother transition for Aged Care for yourself or a relative.

1. Get your eligibility assessed

Before you can enter an aged care facility and receive Government support, your health situation must be assessed by the Aged Care Assessment Team (ACAT).¹ The assessors are generally health professionals such as doctors, nurses and social workers who specialise in aged care.

This is a free service that can be done at home or in a health centre or hospital. The purpose is to determine whether you are eligible to move into residential care, or can access a range of care services that would enable you to stay in your home longer.

More information about ACAT assessments can be found on the Australian Government’s My Aged Care website.

2. Find a suitable facility

Ideally you should plan to visit a range of facilities in your chosen area as soon as possible and, you may prefer to do this with family members. Becoming familiar with the alternatives can enable you and your family to have meaningful conversations regarding your options and make more informed lifestyle and financial decisions.

Importantly, we can assist you to:

• Determine whether care in your preferred facility is affordable, and
• Potentially start restructuring your assets to improve your financial position.

Once ACAT has determined whether you are eligible for residential aged care and the care services you may need, it’s a good idea to visit a few facilities. The My Aged Care website has a ‘Find a Service’ tool that enables you to locate and contact aged care homes in your preferred area.²

Each facility is different, so visiting a few will help you to decide which one is the most suitable for you. Not all aged care homes will be able to meet your care needs. Also, some provide higher standards of accommodation and broader food choices, which generally come at a higher cost. These are called ‘extra services’ facilities.

3. Work out the cost

A range of fees may be payable when accessing care services. One of the key payments when moving into residential care is the accommodation payment. This payment:

• Is subject to certain limits.
• Can be paid as a lump sum, in regular instalments, or a combination of a lump sum and regular instalments, and is published on the facilities website and at myagedcare.gov.au for potential residents to consider.

The published amount will vary between facilities and, as a general rule, it will be higher for newer places because of the money recently outlaid on building or improving the accomodation. Federal Government provides some funding for residential aged care facilities, those who can afford it are expected to contribute to the cost of their care. The four different fees you may be asked to pay include

• An accommodation payment – for your accommodation in the aged care facility, which may be paid as either a lump sum, regular instalments or a combination of lump sum and instalments;
• A basic daily fee – which will usually be payable by all residents and is a contribution towards daily living costs, such as nursing, personal care and meals combination of a lump sum and regular instalments;
• A means-tested care fee – which is an additional contribution towards the cost of care that you may need to pay depending on the assessment of your income and assets, and
• An extra services fee – which may be payable if you choose a higher standard of accommodation or additional services and it varies from place to place.

4. Seek Advice

Moving into residential aged care can be a financially challenging time. However, obtaining financial advice can help reduce a lot of the stress by helping you to

• Determine which fees may be payable;
• Implement strategies that could reduce your care costs and/or increase social security entitlements; and
• Ascertain whether care at your preferred facility(s) is affordable for you.

There are a range of strategies that can be used to reduce aged care fees. However, caution needs to be exercised to ensure you have enough money to afford the care you’d want. We can help you to address this complex issue.

Where to Next?

In our role as accountants, financial advisers and lawyers, we can also help you to ensure your estate planning affairs are addressed. Issues that may need to be considered include the

• Selling, renting, retaining or transferring ownership of your family home;
• Nominating a person to maintain and/or rent your home on your behalf;
• Reviewing your enduring power of attorney;
• Reviewing your Will (including the benefits of including provisions in your Will that establish a Testamentary Trust upon your death); and
• Reviewing your superannuation death benefit nominations.

5. Apply for an aged care home

Once you’ve decided the type of care you want and can afford, and your estate planning affairs have been taken care of, it’s time to apply with an aged care home. To do this, you will need to complete an application form with the relevant aged care home of your choice.

You may find that a place in your preferred aged care facility is not available. In case that happens, it may be a good idea to lodge an application with a few places and ask to go on the ‘waitlist’. You can apply to as many places as you’d like and the facility will let you know if your application has been accepted.

If you are offered a place, you must be given a copy of the Accommodation Agreement before you move in. This agreement sets out the key terms and conditions and it should be reviewed by a legal professional. You must sign the agreement and decide how you will make the accommodation payment within 28 days of entering the facility.

The Department of Human Services (DHS) may also ask you to complete and lodge a ‘Request for Combined Assets and Income Assessment’. DHS will then use the information to determine what, if any, means-tested care fees you may need to pay.

Next steps

To find out more information or to discuss any potential steps for you or those that you are caring for, please contact us and we will assist you.

Click here to download this article in PDF format.

¹ An Aged Care Assessment Team is referred to as an Aged Care Assessment Service (ACAS) in Victoria. In this article a reference to ACAT, includes a reference to the Victorian ACAS.
² https://www.myagedcare.gov.au/find-a-provider/

The post Aged Care Planning and Assistance appeared first on AustAsia Group.

Insurance companies calculate their premiums by analysing the statistical data of the people who have made claims for insurance. This data has shown that as people get older, they tend to be more likely to make a claim. This means that as you get older, you become more risky to insure. As such, premiums increase to reflect the higher level of risk the insurer takes. These increases in stepped premiums will generally be exponential (as seen in the diagram below) until the insurance expires. However, several other factors will affect premiums and how much you pay for cover. These are discussed further below.

Amount of Cover

As expected, the more you are insured for, the greater your premiums will be. This is why it is important to ensure you have the right level of cover and review your needs when your financial circumstances change.

Stepped or Level Premiums

1. Stepped Premiums – Insurance costs increase each year in accordance with your age; or
2. Level Premiums – Insurance premiums are constant year to year, although most companies reserve the right to increase level premium rates, so it is not guaranteed that premiums will remain the same each year.

The post Life Insurance; Why Are My Premiums Increasing? appeared first on AustAsia Group.

Isn’t it interesting how most of us don’t think twice about insuring our possessions, but when it comes to ourselves, we hesitate? The irony is this: if something happened to you – an accident which stopped you working, for example – you’d lose all those possessions anyway. Not to mention the strain you and your family would undergo trying to afford medical expenses, mortgage repayments and simple things like grocery bills.

Personal Insurance is one of the best ways to ensure against problems like those listed above; it’s one of the best ways to protect your loved ones. Yet, as a nation, we are seriously underinsured. Consider these statistics

• 6 out of 10 Australians with dependent children do not have sufficient Life Insurance cover to look after their loved ones for more than one year if they were to die.¹
• 96% of Australian families lack enough Life Insurance to protect their families for 10 years or more.²
• Only 4% of Australian families are adequately insured.³
• Australians are underinsured to the tune of $1,370 billion.⁴

However, we know Personal Insurance can seem confusing and complicated. That’s why we’ve created this simplified guide.

Life Insurance

Life Insurance is also known as ‘Term Life Insurance’, ‘Life Cover’ or ‘Death Cover’. It provides peace of mind by ensuring your loved ones are looked after in the unfortunate event of your death. In that situation, a lump sum or the equivalent amount in instalments would be paid to the policy owner, nominated beneficiaries or to your estate.

Why you need it

Life Insurance becomes necessary when you have dependants who rely on you financially, or if you have debts which need to be repaid upon your death. Immediate expenses to take into account include

• Medical or hospital costs
• Funeral costs
• Mortgage and/or other debts
• Ongoing income for your dependents.

Is it necessary?

Only you can decide what is right for you, however, please consider the following

• 90% of Australian adults have at least one modifiable risk factor for heart, stroke and vascular disease.⁵
• Stroke is Australia’s second biggest killer. Nearly 500,000 Australians will suffer at least one stroke over the next 10 years.⁶
• 1.1 million Australians are disabled long term by heart, stroke and vascular disease.⁵

Total and Permanent Disability Insurance (TPD)

Total and Permanent Disability Insurance (TPD) can be added to your Life Insurance policy. It provides a lump sum payment or equivalent instalments in the event that you become permanently disabled, as defined in the policy. Generally, a permanent disability means you can’t work in your current occupation or a job you have trained in, studied for, or previously worked in. It’s important to read the fine print because various definitions apply to TPD Insurance. Your financial adviser is the best person to help you decide which option is best for you.

Why you need TPD Insurance

TPD Insurance helps to eliminate debt, pay for treatment and maintain your lifestyle while you focus on adjusting to what may be a very different lifestyle. It’s especially relevant for people with dependants – particularly if only one spouse earns an income – and for people with mortgages and other significant debts which they couldn’t pay with savings alone.

The facts

• For each road death, there are about 13 serious road injuries – many with long-term impacts.⁷
• Only 4% of 30-something Australians with children have adequate Insurance cover.¹
• 1.1 million Australians are disabled long term by heart, stroke and vascular disease.⁵

Trauma Insurance

Similarly, Trauma Insurance can be added to your Life Insurance policy. This Insurance provides a lump sum benefit or equivalent instalments if you’re diagnosed with a specific illness or injury covered by the policy (such as cancer, stroke, heart disease, blindness, severe burns, loss of speech or deafness). The benefit amount, chosen by you, can be used to reduce debts, pay for medical expenses and maintain your lifestyle while you recover.

Why you need Trauma Insurance

As with TPD Insurance, Trauma Insurance is especially relevant for people with dependants, particularly if only one spouse earns an income. Consider the consequences if that person became seriously ill and was unable to work. How would their family cover mortgage repayments and everyday expenses, not to mention medical costs for treatment and rehabilitation? Trauma Insurance protects you against this scenario. It may even allow you to make permanent lifestyle changes like returning to work part-time.

The facts

• One in three Australian males and one in four females can expect to be diagnosed with cancer before age 75.⁸
• Death rates are falling for many of our leading health concerns, such as cancer, heart disease, strokes, injury, and asthma. This means more and more people are having to live with ongoing illness and/or disability.⁹
• On average, households (in NSW) can expect to incur approximately $47,200 in financial costs after a member of that household is diagnosed with cancer.¹⁰

Income Protection Insurance

As the name suggests, Income Protection Insurance is the best way to protect your current income if you are unable to work due to illness or injury. Income Protection Insurance pays up to 75% of your gross annual income, in monthly payments, to cover your living expenses. Income Protection Insurance has waiting and benefit periods that can be designed to suit your specific needs and the premiums are generally Tax Deductible.

Why you need Income Protection Insurance?

While we readily consider insuring our possessions like the house and car, we often neglect to consider the need to protect our ability to earn the income that is essential to meet our daily living expenses.

You should consider Income Protection Insurance if you have

• Debts, such as a mortgage, credit cards or personal loans. If you were unable to work due to sickness or injury and your income stopped, how could you continue meeting your repayments?
• The need for a regular income to pay ongoing family expenses such as food, household bills, rates, school fees or running a motor vehicle.

The facts

• There are more than 2 million working age Australians with a disability.¹¹
• In 2014–15, almost 110,000 Australians were seriously injured at work.¹²
• 690,000 Australians were injured at work in 2005-06, with 43% receiving no form of financial assistance.¹³

Business Insurance

Business Insurance, which offers includes Key Person Insurance, is designed to cover and protect key elements within a business. No matter what the size of the organisation, Business Insurance is important in the event of an unforeseen adverse situation as it helps to keep the business operating while decisions and changes are made.

Key Person Insurance, which may form a part of a Buy/Sell Agreement, provides funds to enable business owners/partners to buy out the financial interest of an ill, injured or deceased business owner/partner. It can also

• Replace lost business income
• Replace potential lost profits
• Repay a business debt
• Maintain cash flow to cover the cost of replacing and training new key person/s

Business Expenses Insurance

Business Expenses Insurance is available to certain self-employed persons who wish to cover their fixed business expenses should they be unable to work because of illness or injury. Business expenses that can typically be covered include essential fixed costs such as

• Rent
• Loan repayments
• Equipment leasing costs
• Utility expenses

Should you be interested in discussing any of the above further, or want to know how we can assist you, please don’t hesitate to contact us. We’re here to help.

Click here to download this article in PDF format.

Sources

¹ ‘Life and risk sales up’ IFSA April 2007
² ‘Analysis of insurance needs’ Rice Walker Actuaries May 2005
³ ‘Australian mothers – undervalued and underinsured’ IFSA October 2005
⁴ ‘Fast Facts; A nation exposed’ IFSA August 2005
⁵ ‘Heart, stroke and vascular disease, Australian facts 2004’ Australian Institute of Health and Welfare 2004
⁶ ‘Walk in our shoes; Stroke survivors and carers report on support after stroke’ National Stroke Foundation 2007
⁷ ‘National Road Safety Action Plan 2007/08’ Australian Transport Council 2007
⁸ ‘Cancer in Australia; an overview 2006’ Australian Institute of Health and Welfare 2007
⁹ ‘Australian’s health 2008’ Australian Institute of Health and Welfare 2008
¹⁰ ‘Cost of Cancer in NSW’ Access Economics Report for the Cancer Council NSW April 2007
¹¹ ‘Disability Facts and Statistics’ Diversity@work 2008
¹² https://www.safeworkaustralia.gov.au/statistics-and-research/statistics/disease-and-injuries/disease-and-injury-statistics
¹³ ‘Australian social trends 2007’ Australian Bureau of Statistics August 2007

The post Life Insurance; Protecting Your Most Valuable Asset — You appeared first on AustAsia Group.

Dividends to shareholders are paid out of profits. Companies have already paid tax on these profits at the company tax rate, which is currently 30%.

These dividends are described as being ‘franked.’ Franked dividends have a franking credit (tax credit) attached to them, which represents the amount of tax the company has already paid. Franking credits are also known as imputation credits.

As the company has already paid tax on the dividends that you end up with, you are entitled to receive a credit for any tax the company has paid. If your tax rate is less than the company’s tax rate, the Australian Tax Office (ATO) will refund you the difference.

Please see the table below for the different tax rates and the box further below for a written explanation of this table:

So, you can see how valuable franking credits are to a super fund, that pays 15% tax in accumulation phase & 0% in pension phase (under $1.6m).

The lower your tax rate, the more franking credits work for you, one of the main reasons that so many voters rejected Labor’s proposed changes to the franking credits.

Further explanation of the above table.

1. A tax rate of 0%, if a super fund is in pension phase (for the super balance of less than $1.6m) – Tax due on the dividend is $0 ($1,000*0%). Because the company has already paid $300 in tax, a refund of $300 is received ($300 tax paid by the company less tax that would have paid $0 ($300-$0=$300). So, John keeps the $700 he received and also gets a further $300 as a tax refund.
2. A tax rate of 15%, he would have paid $150 tax on the dividend ($1,000*15%). Because the company has already paid $300 in tax, a refund of $150 is received ($300 tax paid by the company less tax that would have paid $0 ($300-$150=$150). So, John keeps the $700 he received and also gets a further $150 as a tax refund.
3. A tax rate of 30%, he would have paid $300 tax on the dividend ($1,000*30%). Because the company has already paid $300 in tax, John will not receive a refund nor have more tax to pay ($300 tax paid by the company less tax he would have paid at 30%, or $300). So, John keeps the $700 he received and has no further tax to pay.
4. A tax rate of 45%, he would have paid $450 tax on the dividend ($1,000*45%). Because the company has already paid $300 in tax, John will have to pay an extra $150 in tax. So John must pay a further $150 in tax on this dividend.

For more information, please click the ATO website for more details on dividend imputation.

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If you would like to know further on how you can benefit from franking credits, please don’t hesitate to contact us. We’re here to help.

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