To make the most of your retirement, you not only need to plan your financial strategy with your financial adviser, you also need to put together a lifestyle strategy.

At retirement age you are likely to still have 30 years to live, so what are you going to do throughout these years? Retiring to a seaside town is a wonderful beginning, but it’s exactly that – just a beginning. Heading to the local golf club and getting to work on the garden might take up a total of one day a week.

Those who experience a truly satisfying retirement say it happened that way because they planned it to be so. Long before their retirement began, they figured out what the next stage of their life should include in terms of work, volunteering, education, social life and travel – and they made sure they had something planned for every single day. Once they had their ‘lifestyle’, rather than just their ‘life’, figured out, they then spoke with their financial adviser to ensure they’d be able to afford to do what they planned.

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Proposed changes include:

• Relief for unintentional breaches of contribution cap rules;
• Higher pre-tax contribution caps for those at age 50 ;
• Reduced minimum payments for account-based pensions;
• Government co-contribution income thresholds;
• Reporting of employer contributions on payslips;
• Lower income earners to receive a boost to their
  pay packet;
• Removal of Entrepreneurs Tax Offset;
• Dependent spouse tax offset to be phased out for
  those under 40;
• Disability support pension changes;

Click here to download the fact file [PDF] or if you have any questions then speak to Rebecca Newton on 08 6201 5755 and let Prestige Wealth Partners help you maximise your superannuation opportunities.

What are SMSF borrowing rules?

The borrowing rules offer excellent opportunities for SMSFs to maximise earnings by allowing the funds to gear (borrow to invest) into a range of asset classes such as shares, direct property and other allowable assets.

At the same time, the rules do not allow SMSFs to borrow without restriction. For the borrowing to be permitted, it must be established via an arrangement that meets certain conditions. This makes it extremely important that you obtain specialist financial planning advice on your personal circumstances.

What are the borrowing arrangements?

Under the borrowing rules, an SMSF is exempt from the general superannuation borrowing restriction providing the borrowing arrangement ensures:

• Borrowed monies are used to purchase a ‘single acquirable asset’ or: are applied to expenses incurred in borrowing, acquiring, maintaining or repairing the asset, but not to improving the asset are used to refinance a loan.
• The acquirable asset is held on trust so the SMSF trustee receives the beneficial interest in the asset.
• The SMSF trustee has the right to acquire the asset after making one or more payments after receiving the beneficial interest.
• Any rights the lender, or any other person, has under the arrangement are limited to the rights relating to the acquirable asset.
• The acquirable asset is not subject to a charge other than that provided in relation to the borrowing.
• The acquirable asset can only be replaced in accordance with the rules governing replacement assets.

What is a ‘single acquirable asset’?

A single acquirable asset is defined as one that is not money and which the trustee is permitted to acquire under the fund’s rules. The legislation also extends the definition to include a collection of assets that are identical, have the same market value and are seen and treated as a whole.

For example, an SMSF can borrow funds to purchase (and later sell) a parcel of shares of the same class in a single company.

Other examples of a single acquirable asset include:

• a collection of units in a unit trust which have the same fixed rights attached to them
• a property on a single title
• a collection of economically identical commodities.

Replacement asset limitations

While an SMSF can replace an asset which was acquired through a loan (borrowing), it is limited to doing so only in circumstances that involve:

• shares or units in the same company or trust of the same market value
• shares or units in a different company or trust acquired due to a takeover, merger, demerger or restructure
• shares acquired through an instalment receipt arrangement
• certain arrangements relating to stapled securities or the replacement of units in a trust.

A borrowing arrangement that does not include an allowable replacement asset is prohibited and would not meet the requirements of the borrowing exemption.

It is important to note that property cannot be replaced under a borrowing arrangement and that any improvements to the property (regardless of how they are funded) could result in the creation of a replacement asset where the improvement materially alters the character of the property.

What can SMSFs borrow to invest in?

Providing an SMSF complies with its trust deed and all the relevant superannuation rules, it can borrow to invest in a single direct property or a parcel of shares in a single company.

Direct property investments can include residential and commercial property, and under the rules an SMSF can lease the commercial property to a fund member for business use.

Allowing SMSFs to borrow funds to purchase shares broadens the gearing opportunities beyond geared managed funds. At the same time, trustees considering gearing must weigh up the risks and costs of each approach.

While gearing into direct share investments offers potential to increase returns, it could also increase losses if share prices fall. When it comes to cost, an internally geared managed fund may be simpler and cheaper to establish.

Tread carefully

Trustees considering gearing within their SMSF should proceed with caution. Implementing a borrowing arrangement is complex and unless proper care is taken, trustees could end up being penalised for failing the borrowing exception and/or failing to qualify for valuable Capital Gains Tax and stamp duty concessions.

Prestige Wealth Partners can help you

Speak to Rebecca Newton and let Prestige Wealth Partners help you maximise your superannuation opportunities.

For more information about self managed superannuation funds – and any other form of superannuation investment product – please download the Borrowing Rules Fact Sheet provided by Financial Wisdom or contact Rebecca Newton using the form below.

Is your business protected?

Whether your business is structured through a partnership, company or trust, few have effective mechanisms in place for the transfer of equity and/or control if one of the owners is lost to the business due to death, total and permanent disablement, or critical illness.

In many cases the loss of a business owner from one of these events results in the demise of an otherwise viable business simply because there was no succession plan and funding agreement in place.

A business succession plan, incorporating insurance funding protects your investment and ensures the survival of your business should one of the business owners or key person die, become totally and permanently disabled or suffer a critical illness.

Who is a Key Person?

Most businesses have one or more key persons whose skill, knowledge, experience and leadership ensures the success of the business.  A key person in any business may generally be defined as one whose death, disablement or early retirement may have an adverse economic effect on the business.

It is important to identify these key people and to analyse and quantify the adverse affect that is likely to be suffered by the business in the event of death, disablement or illness.

There are three basic protection needs that typically apply to businesses:

Asset Protection

Not the physical assets but the key person or persons.

This protection provides your business with enough cash to preserve its asset base so it can repay debts, free up cashflow and maintain its credit standing if a business owner or loan guarantor dies or becomes disabled.  It can also release personal guarantees secured by the business owner’s assets (such as the family home).

Revenue Protection

A drop in revenue is often inevitable when a key person is no longer there. 

This protection provides your business with cash to compensate for the loss of revenue and costs of replacing a key employee or business owner should they die or become disabled.

Ownership Protection

The death of a business owner can result in the demise of an otherwise successful business simply because of a lack of business succession planning.  While business owners are alive they may negotiate a buy-out amongst themselves, for example on an owner’s retirement.  But what if one of them dies? 

Ownership protection can provide the continuing owners, or their nominees, with sufficient cash for the transfer of the outgoing owner’s equity to the continuing owners, should a business owner die, become disabled, or suffer a critical illness.

Speak to Rebecca Newton on 6201 5755 and let Prestige Wealth Partners help you protect your business future.

General Advice Disclaimer This article has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial adviser before making any investment decisions.

Before you do, there are many factors to consider, including your eligibility, the costs involved and the effect on your finances and lifestyle.

Get some answers about the financial options for residential aged care from Rebecca Newton and Prestige Wealth Partners.

Important questions about residential aged care

• What is residential aged care?
• What care and services are provided?
• How much does it cost?
• How do I enter an age care facility?
• What are the assessments?
• How are assets assessed for aged care?
• What affect will age care fees have on my pension?
• Are there any tax offsets available?
• How can financial advice help?

Rebecca Newton and Prestige Wealth Partners can help!

For some answers to the questions above – download the Residential Aged Care Fact Sheet provided by Financial Wisdom – or contact Rebecca Newton using the form below.

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Prestige Wealth Partners can help you navigate the maze of Social Security programs and entitlements.

How much do you know about Social Security in Australia?

• What is Centrelink?
• What is the Age Pension?
• What is the Service Pension?
• What is Newstart Allowance?
• How does the income test work?
• How does the asset test work?
• What is Family Tax Benefit? Part A and Part B?
• What concession cards are available?

Speak to Rebecca Newton and let Prestige Wealth Partners remove the confusion about Social Security in Australia.

For more information – please download the Introduction to Social Security Fact Sheet provided by Financial Wisdom or contact Rebecca Newton using the form below.

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It’s important to understand more about SMSFs to determine if this option is right for you.

What is an SMSF?

SMSFs are sometimes referred to as ‘do it yourself’ super funds. Like other super funds, SMSFs invest contributions from members, provide benefits to those members on retirement and provide death benefits to beneficiaries in the event of the member’s death.

The principal difference between SMSFs and other types of superannuation funds is that the members of an SMSF are also the trustees, or directors of a corporate trustee. Amongst other things this means they are required to prepare and implement an investment strategy for their fund and manage the payment of benefits.

SMSFs also provide wider investment choice than other super funds, with options such as direct property, managed investments and direct shares included.

The members of an SMSF must appoint approved auditors, and may also choose to involve tax agents, accountants and financial planners. However, the ultimate legal responsibility for the fund’s ongoing compliance rests with the individual trustees.

What are the advantages of SMSFs?

SMSFs offer a range of benefits, including:

• increased control over your retirement funds and how they are invested;
• wider investment choice than public offer funds;
• the scope to use 100% of the fund’s assets to acquire business’s real property and lease it back to the business;
• your SMSF can move with you from job to job;
• may provide a range of options for estate planning and benefit payments.

What are the drawbacks?

• Each trustee bears a high degree of responsibility to ensure that their trustee duties are performed and exercised in the best interests of fund members;
• There is a risk of tax penalties if the fund becomes non-complying;
• Running an SMSF can be demanding and time consuming;
• SMSFs incur a range of extra costs, eg auditing of accounts, tax and regulatory return administration and supervisory levies.

Prestige Wealth Partners can:

• Determine if a self-managed superannuation fund (SMSF) is an appropriate investment structure for you.
• Establish your self managed superannuation fund and arrange for a trust deed to be prepared and a Tax File Number and ABN are registered for the SMSF.
• Prepare and review your fund’s investment strategy taking into account your risk profile, income tax minimisation and estate planning preferences and possibilities.
• Assist you transferring your benefits from your existing superannuation funds or overseas pension accounts into your self managed superannuation fund.
• Help you minimise tax and maximise your superannuation contributions
• Arrange pensions and lump sum payments from your SMSF.
• Keep you informed of changes to relevant legislation and its impact on your self managed fund.
• Refer you to an experienced SMSF with discounted rates

Speak to Rebecca Newton and let Prestige Wealth Partners help you maximise your superannuation opportunities.

For more information about self managed superannuation funds – and any other form of superannuation investment product – please download the Introduction to SMSF Fact Sheet provided by Financial Wisdom or contact Rebecca Newton using the form below.

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