Binding Nominations

Estate Planning is generally overlooked, but when you have a Self Managed Super Fund it is important to pay attention and make sure everything is in order.

The first step is to decide on a Binding or Non-Binding Nomination. 

A Binding Nomination provides the Trustee of the SMSF clear and legally binding instruction, on how you would like your Super benefits treated in the event of your death.

A Non-Binding Nomination on the other hand will only provide the Trustee a statement of your preferred treatment. As the name suggests, it is not legally binding on the trustee.

When you operate a SMSF you will be the trustee either directly or through a Trustee Company. When you pass, this role will be passed on to your Legal Personal Representative (LPR). Without clear or legally binding instructions they may not pass on your super entitlements, as you would prefer.

A good example would be if you have a SMSF with your second spouse and would like to leave some of your super to your children from your first marriage. The issue here is when you pass away the second spouse will now be the trustee of the fund and as such have the ability to direct where your super funds go. Without a Binding nomination the second spouse may decide to direct your super to themselves.

Your Super does not need to form part of your estate, it can be directed to a beneficiary straight from the fund.  When dealing with Super, just having a will in place is not enough. You also need to provide the Trustee of the fund clear instructions. 

A death benefit payment from your super fund to a dependent is tax-free but to a non-dependent is taxable. If you have dependents you may look to direct your super benefits to the dependents to reduce the overall tax on the estate.  Non-Dependents will be tax at the rate of 15% of the taxable taxed element and 30% on the taxable un-taxed element and tax-free components will be tax-free.

Binding Nominations usually only last for a period of 3 years before they need to be redone. This rule is in place to make sure that your wishes are up to date with your personal situation. There is more work involved in keeping the Binding nominations in place. It is also important to make sure that the Binding Nomination has the correct wording and process in place. It is best to consult a professional and obtain assistance in setting it up.

If your super is in Pension phase, then you also need to consider if you would like the Pension to be reversionary. When you commence your pension you are able to nominate a reversionary beneficiary, which simply put means that the pension (income stream) will revert/continue with the nominated person. A reversionary pension is binding on the trustee as long as the receiving beneficiary of the income stream is in accordance of the SIS Regulations.

Estate planning needs to be part of your regular financial planning issues. It is important that continue to update your estate plan in accordance to changes in your personal life as well as changes in legislation.

The goal is to achieve effective transfer of your assets to your nominated beneficiaries in the most tax effective manner. 

If you have a SMSF, you should ensure that at least once a year you review your estate plan.

I recommend that this be done at the same time as the financial report each year.

Superannuation Death Benefit Payments

By Jason Fittler

A death benefit from a super fund is a payment you receive because of the death of another person who was a member of that fund.

A death benefit is typically paid from a:

  • super fund 
  • retirement savings account provider 
  • approved deposit fund, or super annuity provider.

How is a death benefit payment taxed?

The tax on a death benefit depends on whether: 

  • you were a dependant of the deceased
  • the amount is paid as a lump sum or super income stream, or
  • if it was paid from an untaxed fund.

The death benefit may be made up of a: • taxable component, and • tax-free component.

Part of the taxable component will be made up of amounts that have been taxed in the super fund, known as the taxed element. The other parts of the taxable component are amounts that have not been taxed in the fund, known as the untaxed element.

You may have an untaxed element if the:

  • benefit comes from an untaxed super fund, or
  • fund pays the proceeds of a life insurance policy.

The super fund will advise you if the death benefit has an untaxed element.

The taxation of death benefits from superannuation will depend on whether the beneficiaries are considered to be dependants or non-dependants and whether the payment is taken as a lump sum or an income stream. If taken as an income stream, the age of both the deceased and the recipient must also be taken into consideration.

Special circumstances may apply to income streams received by a child of the deceased. For the concessional tax treatment to apply to the death benefit payment, the recipient must be considered a ‘death benefits dependant’ under tax law.

For tax purposes, a ‘death benefits dependant’ of the deceased would be:

  • the deceased’s spouse or former spouse; or
  • anyone that the deceased had an interdependency relationship just before he or she died; or
  • the deceased’s child aged less than 18 years; or
  • a person who was a financial dependant of the deceased just before he or she died.

Death benefit dependants have the choice of receiving a death benefit payment as a lump sum or an income stream.

For more information please contact us on 07 4771 4577. 

Estate Planning – How to Pass on the Knowledge

By Jason Fittler

If you’re like most people your estate plan consists of a Will prepared by a Solicitor who helped you with the purchase of your last house. Maybe you even got it for free. Perhaps the Public Trust did it for you  - This is the most expensive free Will you will ever get.

Most people do not put a lot of effort into their Will, we will have seminar coming up soon which will provide you with the tools to complete a comprehensive estate plan but more on that later.

Today I want to talk about the part of your estate people never consider - education of the beneficiaries. 

Wills focus on who gets the money but not on what they will do with it. It is important that the beneficiaries understand how best to use the funds to enhance their life and of those around them.

Do you ever just shake your head at the way your children waste money?

Do you worry about the level of debt they have or whether they can give your grandkids a good education?

In every family there is always someone who is hopeless with money. Yet no effort is made to help them improve this skill.

It is my experience that most people’s poor handling of money is due to a lack of education about finance and financial matters.

To improve this skill start reading, the best book to start with is “Easy Investing and Abundant Income” if you call into my office I will give you a copy for free.

Every parent should give a copy of this book to their child. This will be compulsory reading for my kids. From there, set yourself a target to read at least another 5 books on finance in the following 12 months. This is only one book every 2 months. Not a big ask.

Next is to get the kids interested in investments, the simplest way is to buy them direct shares,  this is because direct shares are much simpler to understand. They can associate Woolworths the shop to Woolworths the shares. The key here is not to just go out and buy the share for them but to provide them with the research on 5 shares, have them read the research and then let them pick which share to buy. 

Again our office is happy to provide you the research at no cost.

The above two tips are simple ways to start training the beneficiaries of your estate to be financially stable and ensure that your estate plan is more than a free off-the-shelf Will.

If you have any further queries please give me a call I am happy to discuss.  Call (07) 4771 4577.

Capital Gains Tax

By Jason Fittler

Capital Gains Tax is a tax charged on any capital gains arising from the sale of any asset acquired after the 19th of August, 1985.According to the Australian Tax Office:

... "Capital gains tax (CGT) events are the different types of transactions or events that may result in a capital gain or capital loss. Many CGT events involve a CGT asset while other CGT events relate directly to capital receipts (capital proceeds).

The most common CGT event happens when you dispose of an asset to someone else. For example, if you sell or give away an asset, including to a relative. Subdividing land does not result in a CGT event if you retain ownership of the subdivided blocks. Therefore, you do not make a capital gain or a capital loss at the time of the subdivision."

Calculating What You Owe
Capital gains tax is a fact of life (for now at least) and so a cost of investing that must be accounted for in your calculations. This does not mean, however, that it is not important to understand how you can lessen the impact of capital gains tax with a little forward planning.

At present, for assets acquired after 21 September 1999 and held for more than 12 months, capital gains tax is paid on half of the actual gain (that is, gain made less buying and selling costs), and as it is essentially tacked onto the top of your other income, the rate is your highest marginal rate. 

Capital gains tax (CGT) is included on your annual income tax return. It is not a separate tax, merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate.

Your net capital gain is:

your total capital gains for the year less your total capital losses for the year and any unapplied net capital losses from earlier years less any CGT discount and small business CGT concessions to which you are entitled.

You do not pay capital gains tax on your principal place of residence.

One big misconception with Capital Gains Tax is that it is paid at the top marginal tax rate. This is incorrect.

Any capital gain made is added to your other income to give you your taxable income and then taxed at your marginal rate which may not necessarily be the top tax rate. If the gain is in a super fund then the tax rate is 10%, capital gains inside companies are not subject to any discounting.

Another misconception is that in the event a loss is made, that loss can help reduce your taxable income as a negatively geared property would. This is also incorrect. A capital loss can only be offset against a capital gain.


When determining a capital gain or loss it is important to keep all documentation relating to the purchase or sale of the asset and all expenses associated with the purchase or sale as these may form part of your cost base reducing any capital gain.

The two important points to note in calculating a capital gain are as follows:

1. The date of acquisition and sale is that on the purchase and sale contract not the date of settlement.

2. In order to be eligible for the 50% discount method you must own the asset for a full year excluding the purchase and sale dates and it must not be in a company name, it must belong to either an individual, a complying superannuation entity or a trust.

Sale of Property
Where property is concerned, you will incur capital gains tax when:
•    a property you own is lost or destroyed (the destruction may be voluntary or involuntary)
•    you give a property away
•    you stop being an Australian resident
•    you enter into a conservation covenant, or
•    you sell a property for more than you paid.

Rules if You Inherit a Property
If you inherited a property before 20 September 1985 and later sell it, you can disregard any capital gain or capital loss on that property. However, if you made any ‘major capital improvements’ to the property after 20 September 1985 and it wasn’t your main residence, you have to calculate the capital gain on that part of the property when you sell it.

If you inherit a property from a person who dies after 20 September 1985 but who acquired the property before 20 September 1985, you will get a full exemption if settlement of the contract to sell the property happens within two years of the person’s death.

If the property was purchased by the deceased on or after 20 September 1985, you must consider the use of the property at the time of their death. You are entitled to a full exemption if you became the owner of the property after 20 August 1996, it was the deceased’s main residence just before they died, it was not being used by them to produce income at that time, and either;

• settlement of the contract to sell the property happened within two years of their death, or
• it was your main residence (or the main residence of the deceased's spouse or an individual who had a right to occupy it under the will) and it was not used to produce income from their time of death until settlement of the contract to sell the property.

If you became the owner before 20 August 1996, you will only get a full exemption if it was the deceased's main residence (and was not being used to produce income) during all the period they owned it and, from the time of their death until you sold it, it was your main residence (or the main residence of the deceased's spouse or an individual who had a right to occupy it under the will). If all of these conditions are not met you may be eligible for a part exemption.

Small Business Roll Over Relief
To qualify for the small business CGT concessions, you must satisfy several conditions that are common to all the concessions. These are called the ‘basic conditions’.

Each concession also has further requirements that you must satisfy for the concession to apply (except for the small business 50% active asset reduction which applies if the basic conditions are satisfied).
The major basic conditions are in the form of three tests that must be satisfied:

  • the maximum net asset value test which sets a $5 million limit on the net value of assets that you and certain related entities can own
  • the active asset test, and
  • if the CGT asset is a share in a company or interest in a trust:

        o the controlling individual test, and

        o the individual claiming the concession must be a CGT concession stakeholder in the company or trust.

Once you have met these conditions you are able to reduce your capital gains tax to nil, note however to do this you will need to roll some of the money into Superannuation.

If selling your small business you should seek advice on the above issue before you sign a contract. There are also provisions to roll the capital gain into another business within a 2 year period.

Taking Profits
Capital Gains Tax is a part of doing business and making money, you should also consider your Capital Gains Tax position prior to selling an asset which has a capital gain, however, I do advise caution that you do not make it an over riding factor in deciding to take the gain or not.

The main influence on taking profits on any asset should be the future income and growth of that asset compared to alternative assets. A good way to measure this is to compare the return on the asset to that of cash or what we consider the risk free rate.

You have an investment property which is positively geared and worth $350,000. You are receiving $350 pw or $18,200 per annum, costs associated with the property are rates, insurance, repairs and agent fees total $4,200. Net return is $14,000 or 4%pa.

Compare this with the term deposit rate of 6%, for this investment to be worth holding it need to pay more than the cash rate. As such your property will need to at least have annual growth of 5% (2% to equal the cash rates and 3% to cover inflation) to be worth holding. Given the high risk level of property verse cash you should really be looking for an 8% return.

If the asset is not going to produce at least a 7% pa net return in the next 5-10 years you are better off in cash or another higher return asset. 

For more information on Capital Gains Tax give us a call on 07 4771 4577.

How to Have a Rich and Rewarding Retirement

By Jason Fittler

Making money is about discipline, most people do not have the courage to stick to their convictions and achieve the result they want.

Rather than talk theory I have decided to use my family as a real life scenario.

My wife and I would like to have an income of $100,000 pa in retirement. To do this I will need $1.2 million when I retire. If I want to leave something to my kids I will need $5,000,000.

I have 20 years to save $1.2 million.

Here is the plan.
1. I will split my return between income and capital growth. This will make sure I am moving ahead in time of low capital growth. (Like now)
2. I will have most of this in Super, as at present this is the most tax effective environment.
3. I am comfortable taking some risk and understand that from time to time my capital will go backwards.
4. I am time poor so I do not want any investments, which will require effort from me. So property is out.
5. I want professional advice so I will factor in there fees into the overall return.
6. I will take a long term view.

To achieve this result in 20 years we will need to salary sacrifice $26,000 into super each year and achieve a return of 8% pa.

Over the past 20 years the All Ords Accumulation index achieved a return of 21.5% pa as such this is where I will invest.

By taking on this challenge, our take home pay will decrease by $1,500 per month. This is a small price to pay to have a rich retirement, the alternative is to do nothing and live on a pension of $23,750 for us both.

When investing, time is on your side. If you are young, these figures play in your favour.
For a 20 year old you will need to invest $4600 pa or $390 per month.
For a 30 year old you will need to invest $10,500 pa or $890 per month.

Would like a rich and rewarding retirement? 

Give us a call on 07 4771 4577 and let us help you put a plan into action.

ELB’s...The Secret to Wealth

How to have $1,000,000 at retirement.

By Jason Fittler

I often hear people tell me what they would do if they won the lotto or somehow received a large amount of money. They talk about how much easier life would be if they just had more money or got lucky. I call these people the “Have When’s”. These people all have two common problems. The objective is too large, they are unable to see how they would be able to obtain great wealth and they are not prepared to do what is necessary to achieve their goal.

“There is no victory without sacrifice”

Like everyone one else, my goals seem insurmountable, until I discovered ELB’s. Extraordinary Little Bits, ELB’s break down a large task into small manageable bits.

Let’s say you would like to have $1,000,000 in retirement, you are currently 40 years old and have around $100,000 in your super fund and a mortgage of $250,000. How can you be debt free and have a $1,000,000 to retire on?

The magic of ELB’s

To pay out your home loan over 20 years at an interest rate of 7% you will need to pay $24,000 per annum off the loan. To save $900,000 inside of your super earning 8% you need to save $23,000 per annum. In short you need to save $47,000 per annum. In Queensland the average annual salary is $61,500 after $12,500 goes to the tax man you will be left with $49,000. The task still looks insurmountable?

Let’s break it down; you have a couple of decisions to make. No one said it would be easy.

1.    Get a higher paying job.
2.    Both husband and wife work.
3.    Back grade your house.

For now I will go with example two, both husband and wife are working.

Step one salary sacrifice into super, as detailed above you will need $23,000 going into super for the year or $11,500 each. On $61,500 salary your employer will have to pay $5500 so both husband and wife, each need to salary sacrifice $6000. This will reduce your take home pay to $45,000 per annum. Or a household take home income of $90,000 per annum. Step one is complete, stick to the above plan and you will have your $1,000,000 in retirement. Keep in mind that $1,000,000 will provide you a super pension of approx $90,000 for 25 years.

Step two, pay out the house. As detailed above you have a $90,000 take home income. To pay the loan out you need to put 26% of this towards your home loan. Leaving you $66,000 per annum to live off, anyone who thinks that this would be a problem needs to trim some fat. As such step two is done and the above objective has been achieved.

ELB's breaks down a big problem into small manageable parts. By focusing on these smaller goals we can achieve our dreams.

The catch is you will need to make some hard decisions, this is where most fail. Will you?

Let’s take the ELB’s one step further with the above example. Paying out a $250,000 loan over 20 years at 7% will cost you $215,179 in interest. By increasing your payments to 30% of household take home pay or $30,000 per annum you will pay the house off in 12 years and save $100,000 in interest. If you then continue to pay the $30,000 per annum into savings at 8% you would have an extra $300,000 in retirement. Again ELB’s at work.

If you employ ELB’s into your life there is one golden rule. Never go to bed without taking at least one small step towards the end goal for that day.

Good luck.

Like help with your ELB's? Give us a call (07) 4771 4577.

Timeless Principles: Seven Cures for a Lean Purse

By Matthew Smith

The gathering of wealth is but one facet of life that many individuals have sought to achieve from the time of antiquity and which still continues today. Individuals seek to accumulate wealth for a variety of reasons; one of which would be considered the most wise and noble is to provide a secure income for your family.

A problem that is prevalent in the vast majority of households in our modern society is that niggling 'want' for a more secure and comfortable lifestyle for our family. This 'want' boils down into a need for ever-lasting financial security.

Most individuals see the best way to solve this problem is by seeking increases in their salary or wages. This misconception, along with another, is that high income earners are definitely wealthy - these are both common fallacies among the vast majority. An increase in household income is fantastic but it will not ultimately solve your problem.

The doctor or lawyer may have a large home and drive a much fancier car than the school teacher or carpenter, but, the same problem arises with higher income earners as it does with lower income earners. The higher income earners generally become higher consumers…it is likely that the more you earn the more you will spend.

The vast majority of households don’t yet understand that the income they earn does not belong to them. It belongs to the grocer, petrol station and butcher and so forth.

To provide a solution to this problem is easier than you may think. To gain financial security you must learn and embrace the rules that govern money. These rules are timeless principles and are adapted from the novel 'The Richest Man in Babylon', which also gave cause for this piece to be written.

Timeless Principles: Seven Cures for a Lean Purse

Cure 1 - Pay yourself no less than 10% of your income
This is where the bulk of your wealth will be created from. Paying yourself no less than 10% of income and saving it for investment will reap untold rewards. By living on 90% of your current income you will not notice a difference in lifestyle. Never stop paying yourself no less than 10% of your income first.

Cure 2 - Control your expenses
By controlling your expenses you are able to identify your needs from wants and take charge of your outgoings.

Cure 3 - Make your investments work for you
Once your investment starts producing income let it multiply by re-investing the income and watch your investments compound over time.

Cure 4 - Consult wise men so you do not lose your savings
You do not seek out the advice of a taxi driver to complete your income tax return; you seek the knowledge and advice of an accountant. You are wise to seek the counsel of individuals who are knowledgeable in handling money.

Cure 5 - Own your own home
By owning your own home you have the cheapest form of housing available. Apart from insurance and taxes, it is far cheaper than renting a home.

Cure 6 - Ensure an income for your retirement and that of your family
You will not be able to work forever. You should focus on working and saving hard to provide a passive income for your retirement. The earlier you start the greater the compounding effect will be.

Cure 7 - Increase your ability to earn
By increasing your knowledge you will be better equipped to make wiser decisions in regards to your investments. Never pass on an opportunity to expand your knowledge. Educate your children on these rules from a young age so that the next generation may out perform the previous.

Those who are wealthy and are financially secure simply know and understand these rules that govern money, and more importantly…obey them.

Want to know more... please give me a call on (07) 4771 4577

Self Managed Super Funds:- Are they for you?

By Jason Fittler

Below are the benefits of having a self managed super fund.

1. Lower costs.
2. More control over your investments.
3. You can gear up your investments through specialised products.
4. They are nimble, you can buy and sell and take advantage of market opportunities when they are available.

Self Managed Super Funds are becoming more popular in the current market environment as people are taking control of their future. This trend will continue to grow over the next decade.

We are in a stock picker market, to do well in this market you will need more control over what you are invested in, to do this you need a Self Managed Super Fund.

If you would like to squeeze more out of your super then give us a call and we can see if this is for you.

Give us a call 07 4771 4577.

Superannuation, Is It Worth It?

By Jason Fittler

Super funds are currently preparing their end of 2009 tax reports. You are not going to be happy with the results.

The market fell from 5100 points to 3900 points or 23.5% over this period, some sectors such as the property sector fell 46% over the same period.

Many people will only now find out, how they have been effected by the fall in the market. This will in a lot of cases lead to a feeling that super is not worthy investment. It will also lead to people drawing the wrong conclusions about super and making rash decisions which will cost them a lot more over time.

Tips and Traps

1. Super is the best environment to have money invested in at present. It has a low tax rate and provides you with tax free income in retirement. You would have lost just as much if the money was invested outside of super, it is not the vehicle but the investments which have dropped.

2. Salary Sacrificing into super is still the best way to reduce the amount of tax you pay.

3. All super funds lost money, industry super did not out perform. To understand how your super fund performed you need to understand what they are invested in. See note below on industry super funds.

4. Do not complain about fees to advisers, now is when you really need their advice. Go it alone now and prepare to be poor. It is easy to complain to your adviser, but the drop in the market happened to everyone. What is important is what you do now, a good adviser will make back your money through restructuring your portfolio.

5. Do not cash out of the market, those who cash out over the past 6 months have missed a 35% gain and a chance to make back their losses.

6. Restructure your portfolio, get rid of the dogs and buy into the investments which will recover first. Holding a dead stocks is like is like putting lipstick on a pig, at the end of the day it is still a pig.

Listed Assets Vs Unlisted Assets

I hear people tell me all the time that their super fund out performed another, but to truly know this for sure you need to take a look at the assets held by the fund. Break the assets down into listed assets (those listed on the stock exchange) and unlisted assets (those not listed on the stock exchange).

Listed assets are priced daily, as such it is very easy to value these assets on a daily bases. Unlisted assets are normally only valued when they are sold or every 3-5 years, as such it is not easy to know at any one point in time to know what that asset is worth. Now here is the trick.

If a super fund holds a unlisted assets and they believe that it has gone up in value, they are likely to have that asset revalued as at the end of the financial year so that they can report that gain in the end of year financial statements. This will increase the over all return of the super fund.

However, if the unlisted asset is thought to have gone down in value they may not have it revalued as such they do not report the loss. Producing a better result then what has occurred. The other issue is that a valuation is only subjective as such may not reflect the true value of the asset. So before you simple compare the return of one super fund to another make sure that you take a look at how the return has been calculated. Compare apples with apples before you make any rash decisions.

For most people in a Industry super fund you have no other option. As such you really can not withdraw your funds out and place them with a retail fund. This is called sticky money. This sticky money also improves the performance of the industry fund, as regardless of the result you can not take your money anyway.

On the other hand if you are in a retail fund which has not performed you can switch to another fund straight away, the withdrawal of funds from a fund will also effect the performance of the fund as it forces the fund manager to sell assets at time which might not be best.

Sticky money is another factor in the industry fund myth.


Keep putting money into super regardless of the 2009 result, your super will look after you when you retire.

How is Your Life Structured?

Discretionary Trusts & Self Managed Super Funds

By Jason Fittler

If you have over $100,000 invested, you should start to think about discretionary trusts.

Discretionary trusts will protect your investments from bankruptcy and relationship breakdowns. They provide a easy mechanism for estate planning and keep your tax rate at 30%.

Are you self-employed? Then you should have a Self Managed Super Fund.

If you are self-employed you are already a person who likes to control their own destine, so you should also take control of your retirement. The first step is to set up a Self Managed Super Fund, this way you can decide how to invest your super. It also allows you to do better tax planning prior to the end of the financial year.

Above are two examples of how structuring your financial life will protect your assets, save you tax and give you more control. Lets face it, many things in life are beyond your control, it is therefore important to make sure that you do pay attention to the ones which are within your control.

To make sure you have the right structure… get the right advice before you start investing or set up a self managed super fund. Education first… action second.

Mark Twain once said, “ I can show anyone how to get want they want, the problem is I can not find anyone who knows what they want.”

If you want to be wealthy, let us show you how. Call (07) 4771 4577.

Financial Protection in Uncertain Times

By Jason Fittler

With the considerable movements in the Australian and global sharemarkets in 2008, it is understandable that you may be concerned about the effects of market volatility on your wealth and assets. Whilst market volatility may be out of your control, protecting your assets in personal adversity is well within your control.

ABN AMRO Morgans is well known for its investment advice, but we are also able to provide easy to understand, straight forward, cost effective advice that can assist you to achieve the following:

•    Accumulate Wealth whilst protecting what you have
•    Get maximum value from your superannuation through insurance benefits
•    Protect yourself and your assets
•    Plan your estate so that your family and loved ones are looked after

The type of protection available ranges from:
•    Life cover
•    Total and permanent disablement cover
•    Trauma cover
•    Income protection

You can't predict the future in these uncertain times, but you can protect it!

No matter what stage of life you are at, wealth protection should be a major consideration in your financial plan. We can help you obtain the right cover and structure for your personal circumstances, so that you are protected against the unexpected. We can also structure your insurance in tax and cash flow effective ways.

It’s critical that your insurance is reviewed regularly in line with your unique needs. This will ensure you have the right protection and stay in control of your future.

Insurance – How much should you have?

Insurance is a very important part of growing your wealth. It is what saves you when things go wrong. Ever had a car accident, did you plan to have an accident. What would have happened if the car was not insured? Glad you had the insurance, happy to renew the insurance the following year.

What if you had been personally injured in the accident, your car would be repaired, would you be? How would you make house payments, car payments, buy food pay for medical expenses. I guess you could always sell the car once it was repaired.

Insurance is the safety rope which stops use from falling back into poverty and hard times. Could you image taking your kids out of their school because you could not afford fees. Try explaining to them that although you insured the car you did not insure their lifestyle.

It’s time to start looking at Life, Total and Permanent Disability (TPD), Trauma and Income Protection. But how much do you need? Let’s take a look.

Income Protection – most policies will pay you 75% of your current income. You need at least a policy which covers you for 2 years and has a 30 day waiting period. Most super funds will do this.

Trauma – At least $100,000 worth and you should have your children covered as well, they can be covered on your policy.

Life and TPD insurance – To work out how much you should have, multiply your gross income by 16… add to this the amount of your home loan, personal loans and credit cards… this is the amount of Life and TPD insurance you should have. It may look high however Life and TPD is general cheap for the cover you receive.

Before you do anything, contact us first so we can explain the benefits and pit falls of the different type of insurances. Plus we’ll make sure you get the best value for money.

Call us at ABN AMRO Morgans Townsville, 07 4771 4577 we are always ready to listen, explain and help.

Until next week.

5 Ways to Reduce Your Tax Bill

"Keep in mind all of these must be done prior to the 30/06/2008 so do not wait till the last minute, make a plan to do it this next week."
It’s that time of year again when we need to start looking at how our investments have performed, over the year and start looking at ways to reduce our tax bill. Below is a list in order of preference of what you should be doing.

1. Superannuation contributions
, if you are self employed and have the cash pay up to your age based limit. If you are an employee hopefully you have been salary sacrificing if not start now or see if your employer can make a lump sum.

2. Sell off any investments which have capital losses to off set any capital gain you have incurred.

3. Prepay interest on your investment loans to get the deduction this year.

4. Protected equity loans - these provide you with a deduction for this year. Be quick it will take a couple of weeks to set these up.

5. Tax effective investments such as tree investments - it is the last resort but can provide a great tax deduction.

Keep in mind all of these must be done prior to the 30/06/2008 so do not wait till the last minute, make a plan to do it this next week.

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Estate Planning… Do It Now!

Or your hard earned money could end up in the hands of an ex-spouse, bankruptcy court, or the Tax Office.

How could this happen you ask?

Let us imagine for a moment… You spend all of your life working hard and putting aside money for retirement. Thanks to your smart financial planning, you live well in retirement.  You even have enough left over to leave to your children. You enjoy the feeling of knowing that your kids and their kids will benefit from your hard work.

You have had a will done by your solicitor and even had it updated before you retire.  You believe when you pass, your affairs will be in order and your estate will go to your children. But, will it?