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Keeping you in touch – May 2014<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Keeping you in touch – May 2014<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Keeping you in touch – May 2014<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Keeping you in touch – May 2014<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
My Name Financial
Keeping you in touch – May 2014<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
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Agenda
• Federal Budget 2014/15 overview
• Impacts on:
– Young Australians
– Families with kids
– Higher income earners
– Pre-retirees
– Retirees
– Employers
– Others
• Residential Aged Care Services update
• EOFY Strategies
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Young Aussies Families with kidsHigher income
earnersPre-retirees Retirees Employers
Jobseeker reforms Paid parental leave Incentives to save for super still intact, if you can afford it:
- Contribution caps still indexed- Penalties for contribution breaches
reformed
Retirement savings focus
Health care contribution
Deregulation of tertiary education
Changes to HELP payback: sooner, and at a higher rate (max 6%)
Financial support for TAFE students
Changes to social security benefits
Loss of the tax offset for dependent spouses
2% temporary tax on income >$180k for 3 years
‘Restart’ program for older workers
Pensions indexed to lower rate of inflation, not wages
Super income stream will now count towards your Seniors Health Care Card eligibility
1.5% tax cut for most businesses
Delayed SG payment dates and rates
Jobseeker reformsJobseekers younger than 30 will wait 6 months before receiving Newstart or Youth Allowance
Deregulation of tertiary educationTertiary fees might increase (or decrease?)
Changes to HELP repaymentsPayback now starts at $50,638k income, and the interest is likely to increase, but capped at 6% Financial support for TAFE studentsStudents of Diplomas, Advanced Diplomas and Associate Degree courses will now be eligible for direct financial support
First home saver accounts abolished
Young Australians
Removal of dependent spouse tax offsetBenefit loss of approximately $2,400 from July 2014.
Some relief for singlesLow income single parents will get an extra $750 per year for children aged between six and 12 years.
Don’t forget…Kids under 16 are exempt from the $7 health payment after their first 10 visits.
Increase of Superannuation GuaranteeFrom 1 July 2014, the SG rate will increase to 9.5% where it will stay until 30 June 2018. The rate will then increase by 0.5% each year until it reaches 12% in 2022/23.
Families with kids
Temporary budget repair levyAny income you earn over $180,000, may be subject to 2% extra tax for the next 3 years.
Taxable income Levy payable (pa)
$180,000 $0
$200,000 $400
$220,000 $800
$240,000 $1,200
$260,000 $1,600
$280,000 $2,000
$300,000 $2,400
Higher income earners
No changes to super contribution caps No Budget change to contributions caps… and they’re still indexed.Relief if you breach the non-concessional contributions cap.
“Restart” program for older workers•$10,000 over two years to employers who hire a previously unemployed 50+ worker.•Pro rata available for part time employment.
But on the other handMature Aged Workers Tax Offset is abolished from 1 July 2014 for ALL taxpayers.
Increase of Age Pension AgeThe Age Pension qualifying age will continue to rise by six months every two years from the qualifying age of 67 (from 1 July 2033) gradually reaching a qualifying age of 70 years by 1 July 2035.
Still to comeNews about super preservation age.
Pre-retirees
Pensions indexed to a lower ratePension payments are now indexed to inflation, not wage growth.
Deeming thresholds reducedReduced pension entitlements likely under the income test from 1 July 2017.
Commonwealth seniors health card (CSHC) eligibility tightenedYour tax-free super income stream will now count towards your CSHC eligibility.
Seniors supplement for CSHC holders, goneAnnual payments of $876.20 (singles) and $1,320.80 for couples scrapped from 20th September 2014.
Means test exemption for downsizing family homeThe ‘Housing Help for Seniors’ pilot announced in the 2013/14 Budget will no longer take place
Retirees
Company tax cuts800,000 businesses will get a 1.5% cut to the Company Tax Rate.
Top 3,000 still on the hookThe top 3,000 will still pay a levy to help fund the paid parental leave scheme.
Super Guarantee increases delayedRemaining at 9.5% until 2018.
And of course…Repeal of the minerals resource rent tax and the carbon tax.
Employers
$7 Co-paymentChanges to Medicare means that you might pay $7 each time you visit a GP who bulk bills. But concession cardholders and children under 16 will only pay $7 for the first 10 visits each year.
Aged Pension age increaseAged Pension entitlement age increased to 70 by 1 July 2035.No impact if you were born before 1 July 1958.
Increase of Superannuation GuaranteeFrom 1 July 2014, the SG rate will increase to 9.5% where it will stay until 30 June 2018. The rate will then increase by 0.5% each year until it reaches 12% in 2022/23.
Don’t forget…Kids under 16 are exempt from the $7 health payment after their first 10 visits.
For everyone
Social security thresholds frozen against indexationSocial security thresholds will not increase for 3 years.
Austerity measuresWe’ll all have to make choices about how we spend our household budget (health, fuel, university fees).
For everyone
Some pressing questions
• How will you bridge the gap between your preferred retirement age and Aged Pension age?
• How will you make up for the compound effect of the delay in increase in Super Guarantee
payments?
• Will there be indirect impacts on you because of changes impacting a family member?
• Would you be willing to make lifestyle changes because of cuts to social security benefits?
• What are the ‘non-negotiables’ in your family budget?
• Are your current financial strategies still relevant and effective?
For everyone
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Residential Aged Care Services Update
• New rules will be applicable from 1 July 2014
• Should you be facing imminent decisions regarding Aged Care please contact us for an appointment
Note
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Key elements have changed
• Single type of ACAT approval now required for permanent residential aged care
• Residential aged care now a single category
- Distinction of low level care (hostel) and high level care (nursing home) removed
• New Means Tested fee that combines income and assets test
- Full pensioners do not pay means tested fee
- Annual and lifetime caps on means tested care fees
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Key elements have changed … continued
• Standard Resident Contribution
- paid by all residents from 1 July 2014
- covers basic daily care
•Accommodation costs
Residents may choose to pay accommodation costs as;
- Fully refundable lump sum
- Periodic daily accommodation payment and contribution
- Or a combination of these
•Pensioner supplement not payable for those entering care after 1 July 2014
•Grandfathering
Those entering prior to 1 July 2014 (resident by 30 June 2014) will continue under existing arrangements unless;
- cease to be provided care for more than 28 days (carer’s leave exempt)
- move to another service and elect (in writing) to apply new rules
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Aged Care
Comparison of Changes to Fee Structures
Before 1 July 2014 From 1 July 2014
Basic daily care fee Standard resident contribution
Daily income tested fee Means tested fee (combined income and asset test)
Accommodation charge n/a
Accommodation bond Refundable accommodation deposit or refundable accommodation contribution
Accommodation bond via periodical payment
Daily accommodation payment or daily accommodation contribution
Retention amount n/a
Extra services fee Extra services fee
• In addition, a resident may be required to pay any other amount agreed between them and the care provider
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What stays the same
• Home Care Packages are still available to support people living in their own home longer
• Need to consider the total financial position and impact of moving to Permanent Residential Care, not just the fees
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How can I help?
• Discuss your options
• Manage your financial affairs including your estate planning considerations
• Fee reduction strategies
• Keep or sell the family home
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End of Financial Year Strategies
1. Government superannuation co-contribution
2. Spouse contribution
3. Personal deductable contributions to super
4. Contributions splitting
5. Salary sacrifice
6. Insurance through super
Actions to take before 30 June 2014
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Disclaimer
Important Notice
RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services License Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts.
The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.