Image Image Image Image Image Image Image Image Image

Blog | Find Wealth

Budget 2016 – Business benefits and Super changes again

May 4, 2016 | By | No Comments

It was an interesting budget to say the least.  The winners are low income earners and businesses whilst the losers are those who earn a lot of money or have a lot of assets in super and smokers.

This Budget contains a number of proposed measures that may impact your future and may require you to give further consideration to your financial planning needs.

Please remember that, at this time, these measures are proposals only and require the passage of legislation to become effective. These measures may change prior to them becoming law.

Tax – Business
Company tax cut

A reduction in the company tax rate from 30% to 25% will be phased in over 10 years. The tax rate for all companies will be 25% by 2026/27.  The reduction will apply incrementally based on aggregated turnover as shown in the table.

Company Tax rates

Franking credits will be distributable in line with the rate of tax paid by the company making the distribution.

The corporate tax rate for small businesses (annual turnover under $2 million) is currently 28.5% (since 1 July 2015) and they are entitled to frank dividends at a maximum 30% rate.

Small business tax discount increase and extension

The current tax discount for unincorporated small businesses (sole traders and partnerships) will be increased over 10 years from 5% to 16%.  The discount will apply to individuals with business income from an unincorporated business whose aggregated annual turnover is less than $5 million.

Small Business Tax rebate

Individual taxpayers will still calculate their business and personal income in the same way, and then

they get a discount on the tax payable on their business income. The current cap on the discount of $1,000 per individual in a financial year will be retained, and it will be delivered as a tax credit in their tax return.

Other tax concessions for small business

Small business $20,000 instant asset tax write-off extended

Small businesses (turnover less than $2 million) currently get an immediate tax deduction for every asset they buy for their business costing less than $20,000 up until 30 June 2017.

The instant asset write-off is extended to include businesses with a turnover of up to $10 million.
Small businesses with turnover less than $10 million will be able to immediately deduct assets costing less than $20,000 each, between 1 July 2016 and 30 June 2017.

The $20,000 threshold will revert back to $1,000 from 1 July 2017.

Any assets over $20,000 (which cannot be immediately deducted) can continue to be added together (pooled) and depreciated at the same rate. These assets are depreciated at 15% in the first financial year, and 30% per year thereafter. If the value of the pool is below $20,000 until the end of June 2017 it can be immediately deducted too.

Simpler Business Activity Statements (BAS)

Business activity statements (BAS) will be simplified for small businesses (with turnover of less than $10 million) from 1 July 2017.  A trial of the new simpler reporting arrangements will commence on 1 July 2016 and continue over the first two quarters of the 2016/17 financial year.

Other tax measures

  • A 40% tax on the profits of multinational corporations that are artificially diverted from Australia will be introduced from 1 July 2017.
  • GST will be extended to low value goods imported by consumers from 1 July 2017.
  • Tobacco excise and excise-equivalent customs duties will be subject to four annual increases of 12.5% from 1 September 2017.
  • The wine equalisation tax (WET) rebate cap will be reduced to $350,000 on 1 July 2017and to $290,000 on 1 July 2018.

Tax – Personal
 Change to income tax thresholds

The current $80,000 threshold above which each $1 earned is taxed at 37 cents will be increased to $87,000 from 1 July 2016.  The higher income cut-in means tax payable by middle income earners will be reduced from 37 cents to 32.5 cents for all income earned between $80,001 and the new threshold of $87,000.

This equates to a tax saving of around $315 a year (ignoring Medicare levy) for those on incomes between $80,000 and $180,000.

Personal Tax rates


* The above rates do not include the 2% Medicare levy or the 2% temporary budget repair levy (expires on 30 June 2017)

Increased Medicare low income thresholds

The Medicare levy low-income thresholds for singles, families and single seniors and pensioners will be increased from the 2015/16 financial year, to take account of movements in the Consumer Price Index (CPI) so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.

Screen Shot 2016-05-04 at 8.56.57 am

Medicare levy income threshold and rebate pause extended

The Government will continue the pause on indexation of the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate for a further three years from 1 July 2018.

For the period of 1 July 2015 to 30 June 2021, the income* tiers will be paused at the 2014/15 threshold levels as follows.

Medicare Surcharge


The family thresholds increase by $1,500 for each dependent child after the first.

* Taxable income + reportable fringe benefits + total net investment losses + reportable super contributions less the taxed element of a super lump sum within the low-rate cap.


The Government will enshrine in law that the objective for superannuation is “to provide income in retirement to substitute or supplement the Age Pension.”

Contribution caps
The concessional contributions (CC) cap will be reduced to $25,000 from 1 July 2017 and a lifetime non-concessional contributions (NCC) cap of $500,000 will apply from 7.30pm on 3 May 2016 for all individuals under age 75.


NCCs already contributed on or after 1 July 2007 count towards the $500,000 lifetime NCC cap, however NCCs over the lifetime cap (before commencement) will not result in an excess.  NCCs in excess of the $500k cap after commencement can be refunded and if not refunded will incur penalty tax.

The lifetime NCC cap will include after-tax contributions made to defined benefit accounts and constitutionally protected funds.  Where a defined benefit member exceeds their lifetime cap, ongoing contributions can continue but the member must, on an annual basis,  remove an equivalent amount (including proxy earnings) from any accumulation account they hold (limited to the amount of NCCs made since 1 July 2007).  Contributions made to a defined benefit account will not be required to be removed.  Members who do not have NCCs available to be removed will be treated equitably under further government consultation.

Notional (estimated) and actual employer contributions will be included in the CC cap for members of unfunded defined benefit schemes and constitutionally protected funds, from 1 July 2017.  Members of these funds will have the opportunity to salary sacrifice. Existing grandfathering arrangements will continue for members of funded defined benefit schemes as at 12 May 2009.

Catch-up concessional contributions

Individuals with super balances under $500,000 will be able to bring forward previously unused concessional cap amounts from 1 July 2017.  For example, if an individual contributes $20,000 in the 2016/17 financial year, they will be able to make an additional $5,000 CC on top of the $25,000 CC cap in 2017/18.

The unused amounts can be carried forward on a rolling basis for a period of five (5) consecutive years. It must be emphasised, this will only apply to amounts accrued from 1 July 2017.

Tax deduction for super contributions extended

Individuals up to age 75 will be able to claim a tax deduction for their personal superannuation contributions up to the CC cap from 1 July 2017, regardless of their employment circumstances.

Individuals who may wish to increase superannuation contributions, yet not enter into a salary sacrifice arrangement, will be able to make a personal contribution to super up to the $25,000 cap (less SG contributions) enabling them to assess their cash flow needs throughout the year.
Clients no longer need to be wholly or substantially self-employed to get a tax deduction for personal super contributions.  For example, a full-time employee will be able to get a tax deduction for personal super contributions.

Super contributions tax – high income earners 

Individuals with adjusted taxable income (ATI) of $300,000 currently pay an additional 15% tax (total of 30%) on concessional super contributions.

The income threshold will be reduced to $250,000 from 1 July 2017.

How this works in practice:

  • If ATI is $240,000 and concessional contributions (CCs) of $25,000 are made; 30% contributions tax will apply on $15,000 of CCs and 15% will apply on the remaining $10,000 CCs.
  • If ATI is over $250,000 without CCs, all CCs will be taxed at 30%.

The $250k threshold will also apply to members of defined benefit schemes and constitutionally protected funds currently covered by the additional tax. Existing exemptions (such as State higher level office holders and Commonwealth judges) will be maintained.
Removal of work test

The work test (40 hours in 30 consecutive days) will be scrapped for individuals aged between 65 and 74 who wish to make super contributions.  Individuals age 65-74 will also be able to receive spouse contributions.

Retirement income balance cap of $1.6m

A $1.6 million cap will apply on the amount that can be transferred into the superannuation pension phase from 1 July 2017.  There will be no restriction on earnings on the cap amount.  Amounts in excess of the $1.6 million cap transferred (including earnings on the excess) will attract the same tax treatment as excess non-concessional contributions (excess unrefunded NCCs are currently taxed at 49%).

Accumulated super in excess of $1.6 million will be able to be retained in a member’s accumulation account (with earnings taxed at 15%).  Members already in pension phase with balances in excess of the $1.6 million cap will need to roll back the excess to accumulation by 1 July 2017.

Similar tax treatment will apply to members of defined benefit funds for pension amounts over $100,000 from 1 July 2017.

The Government will consult with industry on the implementation of this measure.

Transition to Retirement

The tax exemption on earning on assets supporting transition to retirement income streams will be removed from 1 July 2017.  The ability to treat certain superannuation income stream payments as lump sums for tax purposes will also be removed.

Low Income superannuation tax offset (LISTO)

The LISTO will provide a non-refundable tax offset to superannuation funds, based on concessional contributions tax paid up to a cap of $500, from 1 July 2017.  The LISTO will apply to concessional contributions made on behalf of low-income earners with adjusted taxable income up to $37,000.

The LISTO replaces the existing low-income super contribution (LISC) which will be abolished for concessional contributions made from 1 July 2017.

Low Income tax offset spouse threshold

The income threshold of a low income spouse for the purposes of the spouse contribution tax offset will increase from $10,800 to $37,000, from 1 July 2017.

To be entitled to the maximum tax offset of $540 from 1 July 2017, the eligible spouse contributions must be made on behalf of a spouse whose assessable income, reportable fringe benefits and reportable employer super contributions in a financial year is less than $37,000.


The anti-detriment payment (essentially a refund of contributions tax) will be removed from 1 July 2017.

Body Mass Index

July 27, 2015 | By | No Comments

The Body Mass Index (BMI) is a measurement that insurance companies refer to when assessing Insurance Applications.  Tony Schiavello from ClearView wrote an interesting article relating to BMI and I felt this might be of interest to some clients.  Here it is:

We all know when winter comes around we tend to exercise less, stay indoors more with the heater on and eating  & drinking a little more.  The cold weather can stop us from getting out there and being more active so no rocket science here but we tend to put on more weight during winter.

In our world of insurance we hear the term BMI (Body Mass Index) as it forms part of the underwriting process which is a way to determine if one is under or over weight which can have implications on one’s health.

I know you may be fully up to speed with BMI and what it all means but do your clients really understand why it’s used as a measure?

We thought it would be a good idea to revisit and provide you with and detailed overview of what BMI means as a predictor which we can lose sight of sometimes.

What is Body mass index (BMI)?
Body mass index (BMI) is one method used to estimate your total amount of body fat. It is calculated by dividing a person’s weight in kilograms by their height in metres squared (m2).

Differences in BMI between people of the same age and sex are usually due to body fat. However, there are exceptions to this rule, which means a BMI figure may not be accurate and could be overestimated or underestimated if people are or have the following:

·         Muscles – body builders and people who have a lot of muscle bulk will have a high BMI, but are not overweight.

·         Physical disabilities – people who have a physical disability and are unable to walk may have muscle wasting. Their BMI may be slightly lower, but this does not necessarily mean they are underweight

·         Height – BMI is not totally independent of height and it tends to overestimate obesity among shorter people and underestimate it among taller people. Therefore, BMI should not be used as a guide for adults who are very short (less than 150 cm) or very tall (more than 190 cm)

·         People of different ethnic groups – Asians and Indians, for example, have more body fat at any given BMI compared to people of European descent. Therefore, the cut-offs for overweight and obesity may need to be lower for these populations. This is because an increased risk of diabetes and cardiovascular disease begins at a BMI as low as 23 in Asian populations. Some populations have equivalent risks at a higher BMI, such as people of Torres Strait Islander and Maori origin.

What range should my BMI be?
As mentioned, BMI is an approximate measure of the best weight for health only and the healthy BMI range for adults is 18.5 to 24.9.

If you have a BMI of:

·         Under 18.5 – you are considered underweight and possibly malnourished

·         18.5 to 24.9 – you are within a healthy weight range for young and middle-aged adults

·         25.0 to 29.9 – you are considered overweight

·         Over 30 – you are considered obese.

For older Australians over the age of 70 years, general health status may be more important than being mildly overweight. Some researchers have suggested that a BMI range of 22-26 is desirable for older Australians.

Can being overweight or underweight can affect your health?
The link between being overweight or obese and the chance of becoming ill is not definite. Research is ongoing, although statistically, there is a greater chance of developing various diseases if you are overweight. For example, the risk of death rises slightly (by 20 to 30 per cent) as BMI rises from 25 to 27. As BMI rises above 27, the risk of death rises more steeply (by 60 per cent).

Risks of being overweight (high BMI) and physically inactive:
There can be risks for being overweight & inactive also (with a BMI over 25) and physically inactive, this could lead to or develop:

·         cardiovascular (heart and blood circulation) disease

·         gallbladder disease

·         high blood pressure (hypertension)

·         type 2 diabetes

·         osteoarthritis

·         certain types of cancer, such as colon and breast cancer

·         depression and other mental health disorders.

Body fat distribution and health risk:
A person’s waist circumference can also be a better predictor of health risk than BMI. Having fat around the abdomen or a ‘pot belly’, regardless of one’s body size, means that they are more likely to develop certain obesity-related health conditions.  Fat predominantly deposited around the hips and buttocks doesn’t appear to have the same health risk. Men, in particular, often deposit weight in the waist region and therefore have an increased risk of obesity-related disease.  Studies have shown that the distribution of body fat is linked to an increased prevalence of diabetes, hypertension, high cholesterol and cardiovascular disease.

Generally, the association between health risks and body fat distribution are:

·         least risk – slim (evenly distributed body fat)

·         moderate risk – overweight with no pot belly

·         moderate to high risk – slim with pot belly

·         high risk – overweight with excess belly fat.

Waist circumference and health risks:
Waist circumference can be used to indicate health risk for chronic diseases.

For men:

·         94 cm or more – increased risk

·         102 cm or more – substantially increased risk.

For women:

·         80 cm or more – increased risk

·         88 cm or more – substantially increased risk.

**source – BH

You may of heard this before; but being physically active, avoiding smoking and eating unsaturated fat instead of saturated fat have been shown to decrease the risk of developing abdominal obesity.

As always, we hope you find this information useful and remember, educating is creating so please share with your team or referral partners.

Tony Schiavello
State Manager – Vic / Tas
ClearView Wealth Limited

Super – Wrap vs Master Trust

July 23, 2015 | By | No Comments

A lot of clients and beginning advisers have trouble understanding the difference between a Superannuation fund that is set up with a Master Trust structure compared to a Superannuation fund set up with a Wrap structure.

ClearView has produced a flyer that explains the difference between both.  It is really important to understand how your Superannuation fund is structured as this will have an impact on the tax you pay, and the investment returns & income you earn from those superannuation funds.

Wrap vs Mastertrust flyer - 1Wrap vs Mastertrust flyer

Insurance Industry is changing

July 18, 2015 | By | No Comments

A lot of advisers who operate in the insurance space are concerned about the up and coming changes that will be implemented in this space in 2018.

Soon insurance companies will not be able to pay the high upfront commissions to financial advisers which were upwards of 130% on the first years premiums that clients were being charged. The upfront commissions will reduce to 60% in 2018.  There will also be a claw-back for up to 3 years if the adviser moves the client to a new product provider of if the client decides to make the move themselves.  These changes will most likely mean some of the older ‘insurance only advisers’ who are approaching retirement may consider leaving the industry a littler earlier.  I think we will see some advisers leave over this issue.

Unfortunately, I don’t think the savings will be passed on to the clients who will still have to pay the same premium amount that had in the past. It won’t be the advisers who will win in this situation.  It will be the insurance companies.

The good news, and I am always trying to find the good news in everything that is going on with financial planning, is that the changes will reduce the risk of financial advisers submitting false insurance policies by paying the first years premiums and then receiving a higher upfront commissions.  This has happened in the past because the opportunity was there to begin with.

It will also stop the ‘churning’ of policies.  Churning is where an adviser will encourage a client to roll into a new product so they can benefit from another initial commission.  Sometimes the client, if they now how the system works, would request their policy to be churned over as long as the adviser passed on some of the initial premiums back to the client in the way of a rebate – a win win situation for the client and adviser.  Whilst the industry does not tolerate this practice anymore it has still been occurring.  Why is so bad if the client agrees to it?  Well, what happens when a client needs to make a Trauma claim and they just moved their insurance to a new company?  The client will have to wait 3 months before making a claim due to the exclusions that apply.  If a trauma event occurs with in the 3 month exclusion period then the client will not be able to make a claim.  If they had held their insurance with the previous company then this would have all been avoided and the client would get paid the benefit amount they were insured for.  With the introduction of the 3 year claw-back and reduction of upfront commissions we will hopefully see this eradicated all together.

The other benefit of these changes is that clients will start to hear more about a FEE-For-SERVICE model when it comes to adviser’s being remunerated when it comes to providing insurance advice.  Currently, 99% of advisers elect to receive commissions from the insurance companies so that clients don’t have to pay a fee.  This is not wrong in itself as many clients find it difficult to part with $1750 or more to have insurances put in place.  However, if there are no commissions, and the client can afford to pay the adviser a fee, then the premiums can be reduced by up to 54%.  Over a 20 year period this can lead to significant savings of upwards of $500,000 for the client.  It all comes down to education.  Clients have been provided a “FREE” service when it comes to insurance…well, that is what they believe but as we know nothing is for FREE.  The clients just have been paying more premiums each year.  Once the clients become educated I believe there will be more clients opting to pay a FEE to the adviser.  It will just take time.

Don’t worry about China

July 14, 2015 | By | No Comments

You might have heard some bad news coming out of China that will have an impact on investments around the world.  If you know the difference between ‘A’ class shares and ‘H’ class shares then you know, at this point, there is little to be concerned about.

The article written by the ClearView/Matrix investment team helps explain it all.  Click HERE to access the article.

Australian Super

July 8, 2015 | By | No Comments

WRFG has been chosen amongst its peers to look after Australian Superannuation Clients.

Out of all the financial advice businesses in the ClearView network, WRFG was chosen amongst it’s peers to be one of only four advice businesses to be selected on the Australian Superannuation Industry Fund panel to provide advice.

“We have been chosen because Australian Super is looking for financial planning businesses that run on a true ‘Fee-For-Service’ model.  Our aim is to charge a fee for all advice including insurance advice.  This is in the best interest of our clients as it will save them a lot of money in the long run.

For instance, one of our clients wanted Income Protection.  If they went to another advisory firm they would most likely be placed on Stepped premiums with commissions built in.  You see, initially, stepped premiums are cheaper to begin with but wait a few years and then you realise it was not so cheap after all.  Those clients on stepped premiums could pay upwards of $100,000 or more in premiums over a 35 year period and that is based on just one policy.  Imaging if the client wanted Life, IP, Trauma and TPD and was placed on Stepped premiums with commissions built in.  They would potentially be paying upwards of $500,000 plus in additional premiums when they did not have too.

At WRFG, we remove the commissions which results in massive savings for our clients.  It does not mean you lose out when it comes to choice of products.  In fact, we make sure our clients have as good or better products in place even with the savings.  It is not hard to do it but you have to make a sacrifice.  We might miss out on large upfront commissions from the insurance companies but at the end of the day our duty of care is to our clients and not the insurance companies”, says Warren Strybosch, owner of WRFG.

WRFG is leading the industry in its fee-for-service model within the insurance space.  No wonder they keep getting referred new business.

Why not call WRFG today and compare what you are paying and make a decision to save some money.