08
Aug 2019

PROTECT YOUR SUPER - Small Balances - Deadline 31 October

PROTECT YOUR SUPER - Small Balances - Deadline 31 October

Written by Hudson Adviser Ivan Fletcher


The second wave of impact of the new Legislation (known as Protect Your Super)
is now under way with a; deadline of 31 October.

PHASE 1  - 30 June Deadline - Cancellation of Insurance on inactive Accounts

The Protecting Your Super (PYS) reforms took effect on 1 July and the first deadline (30 June) is now behind us – which impacted client who have insurance inside their Super.  If your account is inactive for 16 months, insurance had to be cancelled by the super fund unless your OPTED TO KEEP the insurances by responding to your super fund when they presented you with this information and an OPT IN option to act on.

Reminder – This legislation is ongoing, so if you still have insurance inside a super fund and it accumulates 16 consecutive months of inactivity (ie no contributions at all), then your insurances will still be cancelled.  Your Super fund is still required to warn you as you approach the deadline and if you do not respond insurance will be cancelled.

PHASE 2  - 31 October Deadline Transfer of inactive low balance accounts to the ATO 

This is directed specifically at low balances (under $6,000) that do not have insurance.

If the super fund has not received any contributions or rollovers for at least 16 months, the account may be transferred to the ATO.  The deadline for Super funds to achieve this is 31 October 2019.


What is an Inactive Low Balance Account
The Super account must meet ALL of the following criteria before they can be rolled to the ATO by your existing Super fund :

  • the account balance is below $6,000,
  • no insurance is held in the account,
  • the member has not met a prescribed condition of release, and
  • the account has been inactive for a continuous period of 16 months

However, an account is excluded from being an inactive low balance account if any of the following have occurred in the last 16 months:

  • contributes or rolls over an amount to the fund,
  • makes an investment switch,
  • changes insurance cover,
  • amends or makes a binding death benefit nomination,
  • declares to the ATO that they are not a member of an inactive low-account balance or the super fund is owed an amount in respect of the member.

Note Declaration Will be Required Every Year.

If an otherwise impacted member wishes to declare to the ATO that they do not have an inactive low balance account (and avoid their account being transferred to the ATO), they must make this declaration on an ongoing basis (ie at least every 16 months).


What Can you do to avoid transfer to the ATO ?

Your super fund will be contacting you (if they have not already) to provide you with an option to declare your account in NOT inactive and thus can stay put for at least another 16 months if you have no further activity as defined above. 


What Happens if You Super is transferred to the ATO ?

The ATO is likely to try and find an alternative Super fund in your name (via matching TFN and personal details) and roll your super to a larger account.

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07
Aug 2019

Brisbane Property Market (Finally) Awakens !

Brisbane Property Market (Finally) Awakens !

Written by Hudson Adviser Phillip McGann  

Recent price movements  from the Brisbane Residential Property market are promising; they provide the long hoped for green shoots for investors.

The July Australian Property Market Report from realestate.com.au has shown Brisbane to be the only capital city to report positive price growth in the June quarter. The median property price rose 0.1% - I agree not much- to $490K  whilst ALL the OTHER capitals fell back . 

The fundamentals in Qld are strong from population increase (mostly from interstate) to increased confidence in the mining sector and massive infrastructure spending from all levels of government. 

Australia wide factors fed into the local bounce as well including;

  • The Liberal government re-election has provide more confidence to the economy whilst at the same time removing the uncertainties that a change to negative gearing and CGT regime had brought to the market prior to May 18
  • Two rate cuts from the RBA have mostly started to flow through the economy
  • The APRA relaxation of lending requirements for the major banks has improved borrowing capacity across the board
  • Tax cuts of $1,080 on average have begun to hit bank accounts improving consumer sentiment and cash flow capacity

The longer term forecasts on the market fundamentals, likewise is positive.  In its recent quarterly report he respected BIS Oxford Economic team nominated Brisbane as there top capital city performer over the coming three years. 

They reviewed the fundamentals of the supply and demand in the city and opined;

“ The strongest price growth in the three years to June 2022 is forecast for Brisbane, where attractive affordability, a recovering economy and an emerging dwelling deficiency will underpin price growth” BIS Oxford Economics

There forecast was for an increase in the median dwelling price in Brisbane of 20% over the three years  to June  2022.

The market in Brisbane has not enjoyed the growth experienced by Sydney and Melbourne over the past ten years .  The larger capitals have experienced much large price rises over the past ten years but also have seen large price falls over the past 2 to 3 years as the over heated markets have come back to realistic levels.

As more and more residents of the expensive and congested NSW and VIC capitals look north to the relatively low prices on offer for property in Brisbane, many are voting with their feet and making the move. 

The improved economy is providing the jobs they need to sustain the lifestyle they seek

This migration is not a new phenomenon but rather a repeat of what has occurred in past residential property cycles.  As Sydney and Melbourne property prices have increased many residents have voted with there feet and moved to areas that provide them with a more affordable housing option as well as lifestyle and career opportunities

The improving economy in QLD provides the job opportunities that were not there three years ago and the infrastructure spending with increase these opportunities and expand the overall economy

For investors this fundamental shift provides opportunities as well. 

More realistic entry prices for property as well as a still reasonable rental yield across Brisbane and lower overall  interest rates make for a compelling investment narrative.

If you would like to discuss your personal situation in light of this scenario with your Hudson Adviser please call 1800 80 4296

Sources:

Courier Mail July 11 2019

Bis Oxford Economics Residential Property prospects 2019 - 2022 

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07
Aug 2019

July 1st Marks TWO New Superannuation Possibilities

July 1st Marks TWO New Superannuation Possibilities

Written by Hudson Adviser Kris Wrenn 

As the new financial year began, two new possibilities opened up with respect to getting additional contributions into Super.

Catch up concessional contributions.

Technically this started last financial year, in the sense that the rules are done respectively and you need to know what concessional (pre-tax) contributions went into Super the financial year before. If you did NOT maximise the $25,000 limit for 2018/19, then whatever amount remained to you can be added to THIS financial years cap. If they go unutilised again you can actually carry them forward for 5 years before they “expire”.

Note they can only be used by those with a Super balance less than $500,000.

Below is the table used as way of example on the ATO website:

Description

2017/18

2018/19

2019/20

2020/21

2021/22

General contributions cap

$25,000

$25,000

$25,000

$25,000

$25,000

Total unused available cap accrued

N/A

$0

$22,000*

$44,000

$69,000

Maximum cap available

$25,000

$25,000

$47,000

$25,000**

$94,000***

Super balance 30 June prior year

N/A

$480,000

$490,000

$505,000

$490,000

Concessional contributions

nil

$3,000

$3,000

nil

nil

Unused concessional cap amount accrued in the relevant financial year

$0

$22,000

$22,000

$25,000

$25,000

Note * $22,000 has been accrued because only $3,000 was used in FY 18/19

Note ** Maximum cap available drops to only $25,000 because the Super balance has drifted over $500,000

Note *** Maximum cap jumps back up to $94,000 because the balance has drifted below $500,000 again and so the $69,000 unused from previous years becomes available again.

Potential strategy. Looking to sell an investment property carrying significant capital gains? A possible consideration is to think about accruing the above concessional contributions in order to utilise them all in the one financial year; the year you sell the property. Theoretically if you have made gains such that you will pay tax at the highest marginal tax rate, then a $125,000 deductible Super contribution could save you $42,500. i.e. (49% - 15% multiplied by $100,000).

The Work Test Exemption

The SECOND change to Super is available to a select minority but it is a positive change and may well apply to you. If you are eligible then it means that you do not have to satisfy “The work test”, i.e. working 40 hours in a consecutive 30 day period, in order to contribute to Super.

Again it is designed for those with relatively low balances and it cannot be used if your balance is in excess of $300,000.

It is applicable to anyone between ages 65 and 74 (obviously anyone under age 65 doesn’t need to satisfy the work test anyway).

YOU ARE ONLY ELIGIBLE IF YOU HAVE SATISFIED THE WORK TEST IN THE PREVIOUS FINANCIAL YEAR.

So essentially it is a 1 year extension of ones ability to add to Super after retirement.

In terms of the amount that can be added, all standard limits apply, i.e. $25,000 concessional, $100,000 non-concessional, and even the ability to use the bring-forward-rule.

Example 1: John was aged 64 when he retired in February this year and on the 10th July 2019 he turned 65. Previously, John would not be allowed to contribute anything further to Super from that date, having not satisfied the work test. Now however, he can contribute up to $325,000  -  $25,000 concessional and $300,000 non-concessional using the bring forward rule, having been age 64 when the financial year began.

Example 2: Larry is 69 and retired in March this year. With the new financial year having started, previously he could not contribute to Super. Now, given he satisfied the work test last financial year, he can contribute $100,000 non-concessional and $25,000 concessional. (He cannot use the bring forward rule because he was over age 65 on July 1st.


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07
Aug 2019

Do I Really Need an Off-Road Caravan?

Do I Really Need an Off-Road Caravan?

Written by guest author and Hudson member J.D. Chadwick

With the Caravan & Camping show season about to commence many of you will be thinking of getting into this great outdoor lifestyle, or perhaps wanting to upgrade your van. All hoping to find the perfect rig at the best price at the show.

Before you get to the point of temptation you will need to know what to look for in a caravan. What will suit your needs, not what the manufactures want you to buy.

Hopefully this article will help answer many of the questions about ‘what you think you need’ and ‘what you really need’.

The number 1 asked question I’m asked: “Do I really need an off-road caravan to travel around Australia?’

Obviously, there are many factors to consider but for most of us the short answer is NO!

Which may come as a shock to some readers. There will always be a few consumers who really need an off-road van, but generally these types of vans are not required for most travellers.

Off-Road Caravans have several disadvantages not considered by the uninitiated buyer.

Let me clarify.

Firstly; RV manufacturers nearly all offer an off-road version in their range. These are there due to demand, not necessity. Perception is half the problem.

Apart from the coast, Australia is 80% Outback. This conjures up a perception that once you leave the cities things get very rough and tough and you are going to need a van that will tackle these conditions.

The reality is, we are like any other first world country have good roads, regional towns have everything you need, and our National Parks are some of the best on the planet. You can access most of this great country in a car – ask any visiting overseas backpacker!

So, what do you really need in a Caravan?

Questions you need to ask yourself. (be brutally honest and put aside dreaming for a moment)

  • Will I be wanting to drive for long hours on rough corrugated tracks?  E.g. Tanami Desert, Birdsville Track, Great Central Road, Gibb River Road to name but a few?

  • Do you like far away places with very little of interest other than the challenge of getting there?

  • Are you willing to take a brand new $90,000+ dollar van down very rough unsealed roads with the potential to do damage to car and van?

  • Do you have enough money to pay for the extra fuel consumption?

  • What type of tow vehicle do you own?

  • Are you going to have to buy a new 4x4 to match the off-road caravan? A very expensive exercise especially if you won’t be using it to its max.

  • Do you have a high garage or car port to store a tall off-road van?

  • Is climbing into a van OK. Would you prefer a small step up?

I’ve seen so many off-road vans on the road looking far more immaculate than ours, having never been down more than an access road. Some being towed behind totally unsuitable vehicles for a rough track.

So, I ask myself, what is the point of owning one if you are never going to use it for its intended purpose.

Most retirees will head off around Australia travelling along the well-worn tourist routes visiting the ‘must see’ sights and have a fantastic time without owning an off-road RV.

The last thing you need is a great big rig behind you that is sucking the dollars out of your wallet faster than the house contents in a tornado.

To be Off-Road capable vans have to have a much higher ground clearance which in turn subjects them to greater wind resistance than a lower on-road van.

Headwinds are our nemesis and they will always blow hardest from the direction you wish to travel to!

When it comes to visiting coastal cattle stations (mainly in WA) and popular freedom camps that have gravel access roads you will not miss out because you don’t own an off-road van.

For short distances on gravel, even very corrugated roads, you simply let your tyres down and take it easy and you will get there with no problems or damage.

There are not many places we haven’t been in our decade of discovery - and we do not own an off-road van.

Yes, there will always be a few instances where you wish you had a van capable of taking you down some of the unsealed roads to those unique places.

The Gulf country Savannah Way comes to mind. And we would have loved to have done the Gibb River Road and the Cape York Highway but at what cost?

The latest Off-Road Caravans can handle these tracks easily, they have superb suspension (which is what you are paying for). However; is your car up to it? Are you up to it?

Corrugated roads, especially bad ones, can impose a lot of stress and strain on a non-upgraded 4x4 vehicle, not to mention the driver and passenger taking a pounding hour after hour. I’ve met many a traveller whose off-road caravan has done the job, but their car failed miserably. Road side rescues are expensive in remote areas. 

Eva has massaged many a weary traveller who has just come off an outback track or corrugated highway. Their caravan showing no signs of wear but their bodies needing some serious TLC.

A normal Australian built caravan will take you to 90% of the best places in OZ, no problem.

They are lighter, cheaper, lower (less wind resistance) and easier to tow. Can be towed behind smaller SUV’s and larger road cars (E.g. Commodore). Be sure to match your rig to the tow vehicle whatever you end up buying. They are also easier to store at home.

Generally, there is no difference inside. All vans are alike. It’s the souped up under carriage that is makes it an off-road van.

Remember; If you don’t have an Off-Road set up you can easily take a guided tour to the more remote areas. No risk to your vehicle or RV, guaranteed to see all the best spots and it will save you money in the long run.

Take a leash to the caravan show…

Ladies…it’s the men who are the problem.

They are the ones who get excited when they first see the off-road vans on offer. The beefed up, butch image has a tendency for Hubby’s common sense and rational thinking to leave his body. At this point clip on the leash and gently lead him away.

In conclusion; I am all for off-road vans for those who genuinely wish to get off the beaten track (myself included) but they are not really needed by the majority of travellers. If you really want to go bush, then a camper trailer may be a better option.

Buy wisely.  Then invest what you save with Hudsons.

Chad

RV Guru

PS: This article is an extract from Chad’s monthly RV Newsletter ‘Aussie Life On Wheels’ which, thanks to Hudson Financial Planners, you can grab a copy FREE of charge by clicking this link: www.AussieLifeOnWheels.com/free-issue.html

An entertaining read and a useful tool for all Caravan & Motorhome owners and would be owners. It’s free!

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07
Aug 2019

Share Market Update July 2019 - All Time High

Share Market Update July 2019 - All Time High

Yes we finally saw the All Ords reach an all-time high after 11 years and 9 months of waiting. For the month of June we experienced nearly a 3% increase to finish at 6,896 on 31st July. The rise follows two consecutive rate drops by the RBA, and also comments from the Governor that the board were prepared to drop them further if need be.

In the US they have fared modestly with a 1% rise across July, with their inflation and unemployment at reasonable levels.

The $AUS has fallen against the $US from 70c to 67.8c across July.

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