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Category: Provision Newsletter Articles

Salary sacrificing super

Date: Sep 20th, 2017

If you make voluntary super contributions through a salary sacrifice agreement you should be aware of how your contributions will affect your super balance. You can agree with your employer for your voluntary contribution to be in addition to your employer’s compulsory super contribution.

If you are deciding whether you should salary sacrifice some of your income into your super or you are already salary sacrificing, you may want to find more information or check your entitlements under the Fair Work Act 2009.

One example of a salary sacrifice arrangement is to have some of your salary or wages paid into your super fund instead of to you.

Salary sacrificed super contributions are classified as employer super contributions, rather than employee contributions. This reduces the amount of super guarantee contributions that your employer is required to make for you, unless the terms of the agreement between you and your employer specify that they continue to pay the minimum super guarantee amount. If you make super contributions through a salary sacrifice agreement, these contributions are taxed in the super fund at a maximum rate of 15%. Generally, this tax rate is less than your marginal tax rate.

The sacrificed component of your total salary package is not counted as assessable income for tax purposes. This means that it is not subject to pay as you go (PAYG) withholding tax.

If salary sacrificed super contributions are made to a complying super fund, the sacrificed amount is not considered a fringe benefit.

The Fair Work Commission regulates employment agreements and conditions. To check your conditions contact Fair Work CommissionExternal Link.

The Fair Work Ombudsman has information on deducting pay & overpaymentsExternal Link. You can contact the Fair Work Ombudsman on 13 13 94.

See also:

Salary sacrifice limitations

If there are no limitations specified in the terms of your employment, there is no limit to the amount you can salary sacrifice. However, you should also consider whether the:

  • additional salary you wish to sacrifice will cause you to exceed your concessional (before-tax) contributions cap and attract additional tax – this cap limits the amounts that can be contributed to your super fund and still receive the concessional tax rate of 15%

  • salary amount you sacrifice will attract Division 293 tax – this occurs when you have an income and concessional super contributions of more than

    • $300,000 in one year, before 1 July 2017

    • $250,000 in one year, from 1 July 2017.

For further assistance or information please contact us on |PHONE| 

Source:

Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Salary-sacrificing-super/

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by Australian Tax Office detailed above is separate and external to us and our Licensee. Neither we nor our Licensee take any responsibility for their action or any service they provide.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Can I afford to have fun in retirement?

Date: Sep 11th, 2017

If you’re in or approaching retirement, you may be prioritising things such as living costs, utility bills, health care and even helping the kids out with their future financial goals.

With many Australians looking at a retirement of 30 years or more, another thing to give some thought to is keeping some money aside for your own pastimes and recreation.

It’s important to think about, particularly as Australians are remaining active for a lot longer.1

What activities are on my to-do list?

The things you may want to do for fun in retirement could include a range of things, such as:

  • Sport—golf, cycling, yoga, pilates, dancing, water aerobics

  • Hobbies—fishing, sailing, photography, drawing, woodwork

  • Volunteering—hospitals, soup kitchens, animal shelters

  • Club associations—Rotary, Leagues, Surf Life Saving

  • Entertainment—cinemas, stage shows, concerts and events

  • Travel—road trips, caravanning, interstate breaks, overseas holidays

  • Dining out—restaurants, food fairs, beach barbecues, picnics

  • Friendly tournaments—bridge, chess, trivia.

How can I budget for the things I enjoy?

If you need a guide, each quarter the Association of Superannuation Funds of Australia (ASFA) benchmarks the annual budget needed to fund a comfortable and modest standard of living in retirement.

According to June 2017 figures, individuals and couples, around age 65, need an annual budget of $43,695 and $60,063 respectively to fund a comfortable lifestyle in the years post work—assuming they own their home outright and are in relatively good health.2

Broken down into a weekly budget, singles need on average $837.99 and couples around $1,151.90.3

How much am I likely to spend on recreation?

According to ASFA, singles and couples living a comfortable lifestyle in retirement would spend between $225.79 and $309.42 of their weekly budget respectively on leisure and recreation4.

This takes into account a broad range of recreational activities, including5:

  • Club memberships

  • Lunches and dinners out

  • Movies, plays, sports and day trips

  • Domestic and international holidays

  • Things like digital cameras, television and DVDs.

How can I make my money go further for the fun stuff?

  • Make use of your seniors card for transport concessions and other discounts

  • If going overseas isn’t in your budget, consider a stay-at-home vacation

  • Find two-for-one food and beverage deals via sites like TheHappiestHour

  • Pack a rug, food basket and esky, and head to the park for a picnic

  • Swap a visit to the day spa with a DIY manicure and candle-lit bubble bath

  • Have the troops over for a poker night and take turns hosting dinner parties

  • Find cheap accommodation on Airbnb or list your place to earn money while you’re away

  • Swap an interstate flight with a road trip. There are lots of routes across Australia.

For further information or assistance please contact us on |PHONE|

Source : AMP 4 September 2017 

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

 


http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015-Intergenerational-Report
2, 3, 4, 5 http://www.superannuation.asn.au/resources/retirement-standard

Ways to save money without spoiling your social life

Date: Sep 11th, 2017

If you can make your money go the distance, pay day can be a wonderful thing. However, if it means that 48 hours from now you’re likely to be scrounging for shrapnel wondering how you’re going to pay bills and eat for the next fortnight – you might want to rethink how you’re managing your cash.

The financial hangover from the clothes, taxi fares, eating out and luxury items you bought over the weekend might hit hardest on Monday, but the long-term effects could be even more damaging.

Research from comparison site RateCity1 shows 42% of Australians under the age of 24 have between $10,000 and $30,000 of personal debt, with 63% of Generation Y credit card holders unaware of the interest rate they’re paying even when the average rate is close to 17%.

So you can put an end to instant noodles for dinner five days a week, here’s a list of inexpensive ways to have fun.

Save on food and drinks

  • Eat at home but make it an event. Invite friends over and take turns hosting dinner parties 

  • Go where the specials are. Find two-for-one and other deals via sites like TheHappiestHour

  • Pack an esky and take your date to the park. You’ll save on food and get an A for effort

  • Make your coffee, buy a reusable drink bottle and pack your own lunch 

  • Try the cheaper supermarkets or check out simple recipes. Jamie Oliver has a great range of cheap meal ideas.

Save on entertainment and exercise

  • Have the troops over for a trivia or poker night, karaoke or a movie marathon

  • Swap a visit to the day spa with a DIY manicure and candle-lit bubble bath

  • Look for movie deals. Many cinemas do cheap Tuesdays, and your service providers may offer member discounts. You may even have a social club at work that has tickets at reduced rates

  • Go to the beach, go fishing or check out local events and concerts 

  • Join a local sports team or head to the park for a friendly game 

  • Don’t pay for both the gym and yoga. Choose a provider that does it all. 

Save on travel and short breaks

  • Research available travel passes, reduce taxi rides and get a bus, train, cycle or car share

  • A holiday in your own hood could open you up to possibilities you didn’t know existed or you could give camping or caravanning a go. The roasted marshmallows will be worth it

  • Find cost-effective accommodation on Airbnb or if you’re heading out of town, list your place to earn money while you’re on holidays

  • Swap an interstate flight with a road trip. There are lots of routes across Australia 

  • Know the travel hacks, like travelling out of season or using price comparison websites.

Save on fashion and footwear

  • Plan and space out indulgent purchases. Shop during sales and don’t forget to use those gift cards that are close to expiring

  • Organise a clothes swap with friends or do it online. You can refresh your wardrobe while clearing out those things you don’t want anymore

  • Fix the items you own and expand with accessories—watches, bracelets, belts, and scarves.

Save on bills and basics

  • Leave your debit and credit cards at home and take out an appropriate amount of cash

  • Understand interest rates – it seems basic but most of us don’t do the maths. For example, 17% of $20,000 means you’ll fork out an additional $3,400 per year

  • Make it an annual exercise to shop around for the best providers when it comes to utilities, credit cards and health care. Groups like Canstar can do the comparison work for you

  • Check out bundling services. Using the same provider for phone and internet could save you.

It’s important to have a realistic plan when it comes to your money, so make sure your budget has a bit of room for movement.

For further information and assistance please contact us on |PHONE|

1 http://www.ratecity.com.au/media-room/generation-debt-y-australians-are-credit-crazy

Source: AMP 4 September 2017 

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Going back to work after having a baby

Date: Sep 08th, 2017

Combining work commitments with family responsibilities can be something of a balancing act. We look at some of the expenses you might encounter as well as some of the financial benefits.

The cost of childcare

For most parents, the first thing that comes to mind when contemplating returning to work after having a child is finding suitable childcare.

Recently released statistics show that in 2014 and 2015, 47% of couples and 51% of single parents with children under the age of 5 used paid childcare, and of those, 85% of couples and 67% of single parents were using childcare for work-related purposes.1

So unless you’re blessed with family who are willing and able to care for your little one for nothing, returning to work means you’re probably adding a new outgoing to your family budget.

 The government offers two types of assistance to help families with the cost of childcare:

  • Child Care Benefit, where the fees charged by approved childcare providers are subsidised by the government. The number of hours of subsidised care you’re eligible for is dependent upon certain conditions, while the rate of your subsidy is dependent on your household income.

  • Child Care Rebate, which provides a rebate of up to 50% of your out-of-pocket child care expenses, up to an annual limit of $7,613 per child for eligible parents.2

But even with government assistance taken into account, childcare can be a considerable cost, and one that has risen significantly over recent years.

Statistics show that after any childcare benefit was deducted, the median amount spent per week per child was $162 for couple families and $114 for single parents in 2014 and 2015, which was an increase of 75% and 104%, respectively, on the amount spent in 2002 and 2003.3

The long-term view

If the cost of childcare will take up a large portion of your salary, returning to work might not seem to make good financial sense. But it’s important to take a long-term view of your family finances, as well as considering the more immediate costs. After all, your children won’t be in childcare forever!

By returning to work, you’re continuing to build your super, as well as maintaining your industry knowledge, contacts, and skills, which will help protect your ability to both earn an income in the short term and build your future earning capacity. This will help protect your family’s long-term financial security.

How to deal with less income

Whether you’re dealing with less income due to the cost of childcare, or because you’ve changed your working arrangements, and are returning in a part-time role, or in a job share, this will also impact upon your family’s finances. Here are some tips to help you adjust to the change, as well as some ideas to help keep your finances on track.

  • Ensure you have a budget, which sets out how your money will be spent, and look for any areas you can reduce your spending. If you’re an AMP customer, our new Money Managertool makes tracking your spending easy, while the AMP Bett3r Account makes it simple to separate your money and allocate it for bills, saving, or spending.

  • Combat the reduction in your employer super contributions by boosting your super with any windfalls you may receive, such as your tax return. Your spouse can also make contributions into your super, which could benefit you both financially.

What to do with additional income

If you’re returning to work when your children are at school this could mean a boost in your household income, and you may be lucky enough to have money left over after all your expenses are met. If so, there are a number of things you could do to help you get ahead financially such as:

  • Making additional repayments on your home loan

  • Making additional contributions to your super

  • Repaying an outstanding uni debt, or any other debts

  • Saving for future expenses, such as your child’s education.

Other considerations

Being a parent, there are some other important financial matters you should think about.

Ensure you have adequate insurance cover to help protect your loved ones should anything happen to you, make a will if you haven’t already got one, or update it to reflect your change in circumstances.

For further information or assistance please contact us on |PHONE|

Source: AMP 5 September 2017

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

 

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