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Provision Newsletter

This Small Country Is Leading the Way in Going Plastic Free

Posted On:May 15th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons

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As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons of plastic that end up in our oceans each year, the equivalent of dumping a garbage truck full of plastic in the water every minute, plus there’s all the waste in the landfill to consider!

It is truly a significant problem that we are all responsible for fixing.

Leading the way in the reduction of plastic consumption are the people of Vanuatu who are taking massive strides in reducing single-use plastic items. The original announcement of their progressive plan, to ban all plastic bags and bottles that cannot be reused, was made on the Vanuatu Independence Day, 30th July 2017. As of July 2018, they have already put much of this into effect, banning single-use plastic bags, drinking straws, and styrofoam food containers, all of which had been known to make their way into Vanuatu’s pristine ocean. Thankfully, that has already begun to clear.  So what will they tackle next?

Vanuatu has been working towards their target of a complete ban, forbidding single-use plastic bottles from being imported into and used in the country. This will be yet another step in their plan to ban. The Prime Minister has recently released a statement, including the many other single-use plastic items they plan to ban within the year. It’s inspiring to see such powerful and swift action made by this small Pacific island nation in order to save our planet.

The other countries and cities following suit with notable initiatives and alternatives for plastic are:

1. Kenya

Though extremely harsh, Kenya’s penalty for using, producing or selling a plastic bag is proving effective, with most people choosing a creative bag solution rather than face four years in jail or a $38,000 fine since the law was put in place in August 2017.

2. United Kingdom

From January 2018 the UK has been working towards setting the ‘global gold standard’ on eliminating plastic waste, working through their 25-year plan that started with eliminating plastic microbeads from rinse-off cosmetic products. They’ve continued their plan with taxing single-use plastic bags, banning plastic straws, stirrers, and cotton buds, and the Queen herself even put a complete ban on these products in the Royal Estate since February 2018.

3. Taiwan

Taiwan has begun implementing their wide-reaching ban on all single-use plastics, building on existing recycling programmes and charges for plastic bags, building up to their blanket ban by 2030 restricting single-use plastic bags, straws, utensils, and cups.

4. Zimbabwe

Since July 2017 anyone caught violating the ban on expanded polystyrene in Zimbabwe could face a fine of between $30 and $500.

5. Canada

Montreal and Victoria have banned single-use plastic bags with large fines in place for individuals and corporations caught violating the ban. Across the country, microbeads are completely banned following research that revealed there were 1.1 million microbeads per square kilometre infamous Lake Ontario. 

6, Malibu

It was voted that from June 1, 2018, Malibu would implement a ban on the sale, distribution, and use of single-use plastic straws, stirrers, and cutlery to keep this pollution from reaching the beaches and ocean.  

7. Seattle

September 2017 saw the ‘Strawless in Seattle’ campaign enacted, involving more than 100 restaurants, sports, airports, and aquariums banning straws. Now it’s a city-wide common practice to go without plastic straws.

8. Australia

The 2nd largest waste producer in the world, Australia has now phased out single-use plastic bags across most of the country with the support of major supermarket chains now only providing reusable bags for sale.

9. Hamburg

Non-recyclable plastic coffee pods have been banned in the German city of Hamburg since February 2016 as they found billions of the plastic coffee shells were dumped in landfill each year.

10. France

There’s been a total ban on plastic bags in France since 2015, and following an announcement in 2016, there will be a ban on plastic cups, plates, and cutlery coming into effect in 2020.

Source : FoodMatters May 2019

Reproduced with the permission of the Food Matters team. This article by Laurentine ten Bosch was originally published at https://www.foodmatters.com/article/vanuatu-become-first-country-world-ban-plastic-bottles

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 the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

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. 

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Forget willpower: Why habits are the key to achieving financial goals

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real

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What’s the value of $20 per month?

It’s not a trick question. Obviously, the simple answer is $20. But if you’re talking about a 21-year-old earning $50,000 who salary sacrifices $20 per month to her super, the value is $10,077, the extra amount she would have in her super at retirement age, according to the Australian Securities & Investment Commission retirement planner.

But the real value of that $20 is that it establishes the habit of saving. It’s that first step that makes the next one easier to take. The study of habit — how to break bad ones, build good ones and leverage them to achieve goals — is flourishing.

Much of what habit researchers are discovering runs counter to conventional wisdom about getting things done.

Many people believe they must set big goals and work tirelessly to achieve them. That can work, but may instead lead to failure. Big goals are rarely achieved quickly, and it’s easy to lose interest and commitment along the way.

The new science of habit advises the opposite strategy. As the Stanford University behaviorist BJ Fogg explains, “Only three things will change behavior in the long term.

Option A. Have an epiphany
Option B. Change your environment (what surrounds you)
Option C. Take baby steps”

Using this way of thinking, economists have discovered that putting healthy choices such as carrots at eye level in school cafeterias will do more to get children to eat vegetables than a million lectures on the evils of junk food. By focusing on habits, instead of goals, you set up systems that dramatically increase your odds of achieving the goal.

How can you apply habit research to your financial life? Start by identifying money habits you want to change, then implement a system to get there by changing your environment and taking baby steps.

Here are few ideas to get started:

Let’s say you are spending too much on your credit cards. You can tackle this in a number of ways.

One principle of breaking habits is to make the activity harder. Someone trying to kick the sugar habit, for example, might start by keeping it out of the house, so that it’s an occasional treat that requires going somewhere to indulge in.

You could try leaving your credit cards at home, or spend only cash on purchases. Some researchers believe that because cash is such a tactile experience, the brain pays more attention to it, making people less likely to spend. But even a baby step, such as wrapping your credit cards in a piece of paper, may be enough to remind you to walk away from the purchase.

A more tech-oriented person might benefit from an app that regularly updates you on how much you are spending on sneaky expenses such as eating out. The key here is to figure out what works for you.

Scheduling activities also can work. If you want to save money on eating out, start with a goal so small that you will be able to achieve it no matter what. You could commit to taking your lunch once a week. Then, add the required items to your grocery list and schedule time in your calendar to pack it.

Automating a habit also pays big dividends. People have written books by deciding to write, say, 1,000 words every day at a certain time.

Many ways to automate the saving habit exist. One of the best is dollar-cost averaging, which involves investing the same amount of money into, say, shares or managed funds at regular intervals over a long period – whether market prices are up or down. This takes the emotion out of investing, minimising the risk that you will panic and sell when share prices fall. From a habit point of view, it keeps you on track even when motivation flags. That’s worth a lot.

Please contact us on |PHONE| if we can be of any assistance on this topic.

Source : Vanguard April 2019

By Robin Bowerman, Head of Corporate Affairs at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd.

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2019 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.
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.

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8 things you might need to get sorted when you fly the nest

Posted On:May 03rd, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you’re moving out of the family home for the first time, here’s what you need to think about.

So the time has come to think about moving out of the family home.

It’s a big step…take a second to imagine what it will feel like. Playing your music as loud as you want. House guests who can come and go as

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If you’re moving out of the family home for the first time, here’s what you need to think about.

So the time has come to think about moving out of the family home.

It’s a big step…take a second to imagine what it will feel like. Playing your music as loud as you want. House guests who can come and go as you please. Your very own remote control.

But hang on…there’s the washing to consider. And cooking dinner every night. And the bills to pay.

Moving out of home for the first time is exciting. But with freedom comes responsibility. You’re on the hook for a lot of stuff your parents might have been covering, from your nightly entertainment on the goggle box to simply paying for the water that comes out of the taps.

And as well as going solo with all the drudge work like cooking, washing and cleaning, the financial implications of independent living can come as a bit of a shock.

You might be surprised at the number of essentials your parents subsidised over the years. It’s not just keeping them sweet with $50 towards the weekly groceries. It’s everything from the electricity bill to home repairs to running a car.

Checklist when you’re moving out of your parents’ home

If you’re looking to fly the nest, here’s a quick checklist to help you get to grips with life in the big wide world.

1. You might need to land your first full-time job.

To secure an interview, it could be a good idea to review your resume (CV) to make sure it accurately reflects and presents your experience and potential. Check out this helpful guide to grabbing the reader’s attention in six seconds. And as always, be sensible with social media and don’t upload anything that is going to cruel your chances with future employers. Once you’re at the interview you’d be amazed at how much difference the simple things make.

  • Arrive with plenty of time to sit down and prepare for what you’re going to say.

  • Add some colour to what you plan to wear to stand out—but not too much so you’re over-dressing.

  • Prepare a few answers to the most important topics as interviewers often repeat the same question1.

2. You might need to find your first apartment.

If you’re looking to rent, make sure you read the small print of your contract so that you know your rights and obligations.

  • How much notice does your landlord need to give to turf you out?

  • And how much notice do you need to give if you want to move on?

  • Have you met your prospective housemates if you’re looking at a shared house?

  • What are your rights – will the landlord cover repairs and maintenance?

  • Can you move your pet cat in or redo the bedroom colour scheme?

  • What’s the process for paying the rent and what happens if you’re late?

3. You might need to furnish your pad.

Maybe your parents or other family members are keen to get rid of some old furniture. Alternatively, it’s amazing what you can find on eBay and Gumtree at knockdown prices. It doesn’t need to be in mint condition…you’re furnishing your first pad, not auditioning for The Block.

4. You might need to set up a broadband contract.

Until now you might have benefited from your parents’ telco setup. But now you might need to open your own home internet and telco account for the first time. While a landline might be a bit old school, super-fast broadband these days is seen as a necessity and doesn’t always come cheap. Try shopping around and seeing if you can bundle your broadband with your existing mobile phone plan. And it doesn’t stop at broadband. You might need to work out if Netflix, Stan or Foxtel is a necessity or a luxury you can live without…or share the costs with your housemates or partner.

5. You might need to own a car for the first time.

It’s great if you can commute to work by public transport but not everyone is near a train station, a bus stop or a bike path. The reality is that you may need to get around in your own car. If you’re buying a car, make sure the vehicle is roadworthy so you don’t have any nasty surprises. You can always negotiate on price or walk away so don’t feel rushed into buying a lemon. And running a car doesn’t come cheap. Rego, insurance, fuel, repairs, maintenance…it all needs to be paid for so make sure you factor it into your budget.

6. You might need to connect and pay for utilities.

It could depend on your rental contract but you may have to cover utilities like water, gas and electricity – all the boring stuff but kinda necessary for a functioning household. In your parents’ day, there was generally one option for utilities…it wasn’t the Soviet Union but it was close. These days there are plenty of plans out there so there’s no excuse for not shopping around for the best deal.

7. You might need to budget for groceries for the first time.

Even if you’ve been helping the olds with the weekly shopping, it could come as a shock to cover your entire grocery bill for the first time. Look out for specials at the supermarket and stock up on staples when they’re cheap. You might want to think about cutting down on takeaways and having friends round to eat in rather than eating out.

8. You might need to think about how much you spend, how much you save and even how much you invest.

Now you’ve moved out of the parents’ home, there’s probably even less excuse to blow your monthly savings on a round of cocktails at the local dive bar. But flying solo financially involves a bit more than just avoiding excess. It sounds basic, but if you can get a handle on the three areas—what’s coming in, what’s going out and what you can save—it’s the key to developing healthy money habits throughout your working life. 

Please contact us on on |PHONE| if we can be of assistance 

Source : April 2019 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

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My partner doesn’t have super, should I be worried?

Posted On:May 03rd, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Your superannuation savings should be a key part of your conversation about joint finances.

Picture the scene.

You’ve moved past the honeymoon period of a new relationship and you think this could finally be the one.

You’re starting to think about the medium-term future and setting up your lives together.

So you’re at your favourite restaurant discussing joint finances when your partner drops a

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Your superannuation savings should be a key part of your conversation about joint finances.

Picture the scene.

You’ve moved past the honeymoon period of a new relationship and you think this could finally be the one.

You’re starting to think about the medium-term future and setting up your lives together.

So you’re at your favourite restaurant discussing joint finances when your partner drops a bombshell by revealing they hardly have any superannuation saved up.

Time to smash up the breadsticks, pour your glass of wine over them and storm out never to return?

Probably not. Ditching the love of your life for a lack of super could be a slight over-reaction. After all, there could be a number of entirely legitimate reasons their super is a bit low.

  • They could have been out of the paid workforce studying or volunteering for an extended period.

  • They could have been self-employed for a while and not got around to topping up their super.

  • They could have missed payments from a previous employer through no fault of their own.

But while a lack of super is probably not a very good reason to break up, it could give an indication of your partner’s overall attitude towards money.

The last thing you want is for any super secrets to fester. So even if one or both of you haven’t given super much thought up until now, if you’re getting serious it should be an important part of your discussion on joint finances.

With employer and salary sacrificed contributions (up to set limits) typically taxed at 15%, investment earnings taxed at a maximum rate of 15% and tax-free withdrawals once you’re aged 60 or over, super can be an effective tax-friendly way to save and invest your money compared with most people’s marginal tax rate.

7 questions to ask your partner about superannuation

Here are some of the super-related questions you might want to ask yourselves as part of your conversation on joint finances.

1. Should you think about putting money into super to save for your first home together?

If you’re looking at setting up home together and you haven’t bought a property before, you could be eligible for the First Home Super Saver Scheme. You can contribute up to $30,000 each ($15,000 in any one financial year) into your tax-friendly super account and then withdraw it, along with a set earning amount, at a later date to pay for a deposit.

2. Should you think about contribution splitting with your partner?

If you’re looking at boosting super for a spouse with a low super balance, a pretty easy way to get started is contribution splitting. If you’re living together in a de facto or married relationship, this stategy enables the spouse with a higher super balance to effectively transfer amounts of concessional contributions (inclusing super guarantee payments) that they have received into the account of the spouse with a low super balance on an annual basis. And better still it won’t impact either partner’s cash flow.

3. Should you think about making contributions to your partner’s super and claiming a tax offset?

If you’re living together—whether married or de facto—you can potentially benefit from the spouse contributions tax offset. This is where the higher-earning partner contributes towards the lower-earning partner’s super using after-tax dollars and claim a tax offset of up to $540. Of course, you’ll probably want to be in a serious long-term relationship before you consider this, but it’s potentially a way of reducing your tax bill and boosting your partner’s super at the same time.

4. Should you think about taking advantage of government co-contributions?

If one of you is a low-to-middle income earner and they make an after-tax contribution to their super fund, they might be eligible for a government co-contribution of up to $500.

5. Should you think about contributing more into your super?

If you’re thinking long term, super can be an effective tax-friendly vehicle to save for retirement. The current limit on concessional contributions is $25,000 a year (including super guarantee payments from your employer) so unless you’re a very high earner there could be more leeway to top up your super and save on tax each year.

And there’s also now an opportunity to claim a tax deduction for personal contributions made to super (regardless of whether you’re employed or self-employed). These contributions would be concessional contributions, taxed at 15% on entry, and would enable the person contributing to claim a tax deduction up to the balance of their remaining $25,000 concessional contribution cap.

Plus you can also put up to $100,000 a year (or $300,000 over a three-year period under bring-forward rules) in non-concessional contributions.

6. Should you think about changing your investment options within super?

Your super savings are likely to become your biggest pot of money outside the family home. So it’s important to get up to speed with how your money is being invested. Depending on your super fund, you can usually choose between a basic set of options ranging from conservative (less risky assets like cash and bonds that have less potential for growth) all the way through to high growth (more risky assets like shares and property that have more potential for growth).

Your appetite for risk can change as you get older and your life changes so it’s important to revisit your options regularly to make sure they still match your circumstances. Some super funds offer a MySuper lifecycle investment strategy that automatically adjusts your investment options from more growth assets when you’re younger to more defensive assets when you’re older.

7. Should you think about making sure your partner receives your super benefits?

It’s important to make sure the right people receive your super if you die. So if you want to include your partner you’ll need to make the necessary arrangements with your super fund, nominate your beneficiaries and ensure your will is up to date.

For further assistance on this topic please contact us on |PHONE|.

Source : AMP May 2019 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person

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Spouse super contributions – when adding to your partner’s super pays

Posted On:Apr 22nd, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If your other half is a stay-at-home parent, working part-time or out of work, find out how adding to their super could benefit you both financially.

If your spouse (husband, wife, de facto or same-sex partner) is a low-income earner or not working at the moment, chances are they’re accumulating little or no super at all to fund their retirement.

The good

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If your other half is a stay-at-home parent, working part-time or out of work, find out how adding to their super could benefit you both financially.

If your spouse (husband, wife, de facto or same-sex partner) is a low-income earner or not working at the moment, chances are they’re accumulating little or no super at all to fund their retirement.

The good news is, if you’d like to help them by putting money into their super, you might be eligible for a tax offset, while potentially creating additional future planning opportunities for both of you.

If you want to know more, we explain how the spouse contributions tax offset works, in addition to what contributions splitting is (and how it differs).

The spouse contributions tax offset

How do you know if you’re eligible?

To be entitled to the spouse contributions tax offset:

  • You must make a contribution to your spouse’s super. This is a contribution made using after-tax dollars, which you haven’t claimed as a tax deduction

  • You must be married or in a de facto relationship (this includes same-sex couples)

  • You must both be Australian residents

  • The receiving spouse has to be under the age of 65, or if they’re between 65 and 69 they must meet work test requirements, meaning they were gainfully employed during the financial year for at least 40 hours over a period of no more than 30 consecutive days

  • The receiving spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset.

What are the actual benefits?

If eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return.

To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less.

If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible, but can still make contributions on their behalf.

Are there limits to what can be contributed?

You can’t contribute more than your partner’s non-concessional contributions cap, which is $100,000 per year for everyone. However, if your partner is under 65, they may be able to contribute up to three financial years of this cap in the one year (under bring-forward rules) which would allow a maximum contribution of up to $300,000.

Another thing to be aware of is that non-concessional contributions can’t be made once someone’s super balance reaches $1.6 million or above as at 30 June of the previous financial year. So, you won’t be able to make a spouse contribution if your partner’s balance reaches that amount.

How contributions splitting differs

Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year.

Concessional super contributions can include employer and or salary-sacrifice contributions, as well as contributions you may have claimed as a personal tax deduction.

What rules apply?

To be eligible for contributions splitting, your partner must be less than their preservation age, or between their preservation age and 65 (and not retired).

If you’re not sure what your partner’s preservation is, check the table below.

Date of birth

Preservation age

Before 1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

From 1 July 1964

60

Are there limits to what can be contributed?

Amounts that you split from your super into your partner’s super will count toward your concessional contributions cap, which is $25,000 per year.

Do all super funds allow for this type of arrangement?

You’ll need to talk to your super fund to find out whether it offers contributions splitting, and it’s also worth asking whether there are any fees..

What else you and your partner should know

  • If either of you exceed the super contribution caps, additional tax and penalties may apply.

  • The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand any potential risks

  • The government sets rules about when you can access your super. Generally, you can access it when you’ve reached your preservation age (which will be between the ages of 55 and 60 depending on when you were born) and you retire.

  • While you can’t personally make further non-concessional contributions into your super once you have a total super balance of $1.6 million or above (as at 30 June of the previous financial year), it’s still possible to make contributions to your partner’s super (noting the caps).

Where to go for more information

Your circumstances will play a big part in what you both decide to do. And, as the rules around spouse contributions and contributions splitting can be complex, it’s a good idea to contact us on |PHONE| to ensure the approach you and your partner take is the right one.

Source: AMP 16 April 2019

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

 

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Making downsizer contributions into super – what you need to know

Posted On:Apr 22nd, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Older Aussies can put up to $300,000 into their super using the money from the sale of their main residence, regardless of caps and restrictions that otherwise apply.

If you’re aged 65 or over and are looking to boost your retirement savings, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale

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Older Aussies can put up to $300,000 into their super using the money from the sale of their main residence, regardless of caps and restrictions that otherwise apply.

If you’re aged 65 or over and are looking to boost your retirement savings, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale of your main residence.

Take a look at the potential advantages, rules and other things you’ll want to be aware of.

Benefits if you make a downsizer contribution

Downsizer contributions provide a way to top up your super balance

Older Aussies, who haven’t had the chance to save enough funds for retirement, may find that tax-free downsizer contributions provide a good opportunity to top up what they’ve saved to date.

No work test or age limits apply to downsizer contributions

Usually, people aged 65 to 74 need to satisfy a work test (where you have to work 40 hours over a period of no more than 30 consecutive days) to make voluntary super contributions, while people aged 75 and over are generally ineligible to make any voluntary contributions to their super.

Annual contributions caps also do not apply

Annual concessional and non-concessional contributions caps, which are $25,000 and $100,000 a year respectively (bearing in mind there may be instances where you can also carry forward any unused amounts from previous years), don’t apply to downsizer contributions.

In fact, downsizer contributions can be made in addition to any concessional and non-concessional super contributions you may be eligible to make.

Downsizer contributions aren’t subject to the $1.6m total super balance restriction

While you can’t make non-concessional contributions into your super at all if your total super balance is $1.6 million or above as at 30 June of the previous financial year, this rule doesn’t apply to downsizer contributions.

There’s no requirement to buy a new home

If you sell your main residence and make a downsizer contribution into your super, you’re not required to buy a new home with money you might make on the sale.

Both members of a couple can take advantage

For couples, both spouses can make the most of the downsizer contribution opportunity, which means up to $600,000 per couple can be contributed toward super.

Rules and other considerations to be aware of

  1. You must be aged 65 or older to make a downsizer contribution

  2. The property that’s sold needs to have been your (or your spouse’s) main place of residence at some point in time, and you need to have owned the home for at least 10 years

  3. The sold property must be in Australia and excludes caravans, mobile homes and houseboats

  4. A downsizer contribution must be made within 90 days of receiving the sale proceeds

  5. downsizer contribution form must be submitted to your super fund before, or at the time of making your contribution

  6. You can’t have previously made a downsizer contribution to super

  7. You can only transfer a maximum of $1.6 million in super savings (not including subsequent earnings) into a tax-free pension account

  8. Downsizing your home may impact Age Pension eligibility. There is no special Centrelink means test exemption for making downsizer contributions

  9. The costs involved in selling a property and buying another one (if that’s also on the agenda) can be considerable, so you’ll need to take into account any additional property-related costs

  10. Downsizer contributions are not tax deductible.

Where to go for more information

Depending on your situation, other rules may apply, so do your research and contact us on |PHONE| about any possible implications.

 

Source: AMP 17 April 2019


Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

 

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