It’s the time of year when nostalgia reigns as people take a retrospective glance on the year that was, but it’s also a pertinent time to take stock of the coming 12 months and reset financial goals accordingly.
There are several key financial areas that should be in order for 2019 and beyond.
Superannuation
From 1 July 2017, the concessional superannuation contributions cap was lowered to $25,000 for all taxpayers, so be sure to review any existing salary sacrifice arrangements to remain within the contributions cap for 2018-19.
Also, from this date, the requirement that you derive less than 10 percent of your income from employment sources to claim a tax deduction for personal in relation contributions has been abolished and regardless of your employment arrangement you may be able to claim a tax deduction. Those aged 65 to 74 will still need to meet the work test in order to be eligible to make a contribution and claim a tax deduction.
This is particularly useful for individuals whose employer does not allow salary sacrifice contributions. When considering additional contributions to superannuation remember to include any premiums you pay for stand-alone life insurance or TPD insurance policies held under superannuation into your calculations.
Downsizer contributions
From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.
Your downsizer contribution is not a non-concessional contribution and won’t count towards your contributions cap. The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million, and won’t affect your total super balance until your total super balance is re-calculated to include all your contributions, including your downsizer contributions, on 30 June at the end of the financial year.
Importantly, you can only make downsizing contributions for the sale of one home. These contributions are not tax deductible and will be considered for determining eligibility for the age pension.
Wills
Having a valid Will means that you will be able to ensure that you transfer the right assets to the appropriate people at the appropriate time. Without a valid Will, your best intentions may go unanswered. Dying without a Will means that your estate will be handled by a government appointed representative and distributed according to the laws of intestacy that apply in your state.
In drafting a Will, your solicitor will advise you if incorporating a testamentary trust will benefit the beneficiaries of your estate. Testamentary trusts can be valuable tax planning structures and are often used where potential beneficiaries are minors, spendthrifts, or have relationship or drug and alcohol issues.
Remember that assets which are held in a trust will not form part of the individual’s estate, so they cannot be dealt with in the Will. However, the trust deed should be reviewed to determine the process of appointing new trustees (or directors of the trustee company) on the death of a current trustee or director.
Income protection
Income protection should routinely to reviewed to ensure that it adequately reflects current circumstances. Likewise, if your policy was issued on an indemnity basis (perhaps if you were new in business at the time) check to see if the cover can now be altered to an agreed value policy. If you have group salary continuance through your superannuation fund, make sure the fund has your current salary correctly recorded.
George Wright is a partner of the wealth management team at HLB Mann Judd Adelaide
About the author
Join The Nest Egg community
We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
About the author
Join The Nest Egg community
We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
Hybrid blockchain: Best of both worlds for digital finance?
Back to basics: Why banks need to invest in data or risk falling behind
Gender discrimination still driving force behind pay gap
Women 69% richer post-GFC
CBA severs Colonial First State ties with $4.2bn sale
Global fintech investment drop not phasing out Australian interest
most viewed
Property
It’s time to invest in the ‘unloved sector’
Commodity
Gold shines in economic ‘perfect storm’
Investment insights
Hybrid blockchain: Best of both worlds for digital finance?
Personal cash loans
Short-term ‘predatory’ lending practice banned
Listen to
What the heck is with robots and tech - ETFs explained
More podcasts
Find super’s sweet spot
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.