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Legislative changes to life insurance funded through super which will come into effect on 1 July 2019.

If the above change to legislation affects you, you may have received a letter, in the mail or by email, from your current insurance provider, or you may receive a letter from an inactive super fund provider. ( i.e. an older super account that was initially kept open because you wanted to keep the life insurance that was linked to it, or, it could be a super account that you have forgotten about and it has life insurance cover linked to it)

This letter will inform you that if your super fund is inactive i.e. it has not received any form of a contribution to the account in the last16 months, that any life insurances that are attached may be canceled.

This applies to insurances that are directly funded through your super, either as part of a Group Life insurance cover (i.e. Industry fund or large employer super fund that has direct life insurance) or, if the super fund is funding an external insurance provider i.e. your super fund may be MLC Wrap or Fundamentals, but your insurance is with AIA.

This change will mean that your super fund will not be able to pay future life insurance premiums when they are due whether it’s an internal debt request or a direct debit (via a super rollover) request occurs.

If you wish to retain your current life insurance, the simplest way to avert any issues is as soon as you receive such a letter an “opt-in” form will be included, please act on this immediately.

I strongly recommend that you complete this form, sign and submit back (note there may not be any information to complete as the information may have been pre-populated on your behalf.

Therefore, all you will need to do is sign and email back to the sender before the 1/7/2019. Otherwise, your life insurance covers will be canceled from the 1/7/2019 and you will be out of cover.

If you are uncertain about this, please do not hesitate to call or email me.


Kind regards,
John Blangiardo CFP Dip FP
Authorised Representative Apogee Financial Planning

2019, Election Result

Now that the election is over, we don’t have to concern ourselves with the proposed changes of an incoming Labor government i.e. franking credits, negative gearing, reduction in the tax-free component of Capital Gains Tax (CGT) and Family Trust tax.

Therefore, it’s business as usual!

As a result of the election result, and subject to what transpires over the next 2 to 4 weeks, I believe that Equity Markets continue the buoyancy of today’s market opening. This, of course, is subject to anything happening outside of Australia.

Similarly, the property market will most likely have a renewed confidence in future demand, simply because negative gearing will still be available and the current CGT concession of 50%, if the asset is held for 12 months or longer. Therefore, we may see a slight movement upwards in property values.

The pull backs that will affect this potential upward movement in property values, will be, any relaxation in lending, how well the economy is growing and, with that, the jobs market, which reflects public confidence in spending.

I believe that we are going to have a positive period for some time, unless something unexpected happens outside of Australia.

If you have any queries or wish to reassess your situation, please do not hesitate to call.

Current confusion surrounding proposed changes to Franking Credits if Labor wins Government

When you listen to both sides of politics, there seems to be a lot of confusion surrounding the franking credits issue.

The bottom line is this; self-funded retirees will be directly affected, especially those who have Self-Managed Super Funds (SMSF).

The reason for this is that they are predominantly investing in Direct Equities (I include ETFs in this) where pre-tax dividends are paid. These funds (and low income in general, inside and outside of super) have the ability to claim back the tax already paid on their behalf by the Company they have invested in as a refund as they are on the top marginal rate of zero, 15% Super accumulation funds and 19% for every dollar earned above the $18,200 tax free threshold and up to $37,000pa and then the tax rate increases. This type of tax refund is called a franking credit as the investor has received a credit for the tax already paid.

They are not a gift that the government has been giving to retirees and low income earners in the past, they are legitimate taxes paid, and anyone who is on a zero tax rate, and has paid tax at 30% via the dividend distributing investment company, is entitled to claim a refund for the difference between their marginal tax rate and the tax rate that has already been paid,  i.e. a company rate of $0.30 in the dollar.

Therefore, this is not a gift, it is a genuine tax that has been paid by individual investors, whether in super or outside of super, it is still a tax. An example of this is that, when an individual goes to their tax agent or accountant to complete their tax return, when the Accountant asks “what dividends have you received, and are they fully franked? For example, where you receive a dividend of $2 fully franked, it means that you have already paid tax at $0.30 in the dollar. In this simple example, you would have paid another 60c tax.

The accountant would state on the tax return that your assessable income is $2.60 then when he/she calculates the tax, they calculate the taxes that has to be paid, based on the marginal rate of tax of the individual or entity i.e. SMSF.

Therefore, or 0c in a pension account, they calculate that, less the tax that has already been paid i.e. 30% tax paid.

If the tax paid, is greater than the tax that should have paid, the refund is paid, by the ATO, to the individual, or the SMSF, who has received these dividends, simply because they have paid more tax than they should have.

Hence, the misunderstanding that retirees don’t pay tax is incorrect, as, indirectly, they have.

What we don’t know is the following:

  1. If Labor does get in, (subject to the number of seats they win in both Houses, especially the Senate), the cross benches in the Senate may block this particular legislative change or there may be some form of “horse-trading” and therefore, we don’t know what could happen.


  1. The companies listed on the ASX that do pay fully franked dividends may change their policy on dividend payments, (if they can legally), or, perhaps restructure themselves, if they feel this is not to their, or the shareholders, detriment (share price may drop). If possible, they may change their dividend policy to either a combination, or, one of the following;


  1. Pay unfranked dividends which would mean that the tax must be paid at the recipient’s level i.e. a retiree, a SMSF or, someone on a low income when submitting their tax return, if they are on a zero-tax rate it would be a nil   Note: a SMSF would still need to submit a tax return. If this policy changed by companies distributing dividends was to occur.


Companies may reduce the level of dividends that are paid as fully franked and reinvest the difference back into the company. This, over time, could, and would create a potential increase in the gross value of the stocks. Therefore, the individual investor would receive that benefit, indirectly, in the form of a capital growth value of that individual stock.

Obviously, this would mean that if a retiree needs to fund their retirement there may be a need to sell down portions of these shares (subject to how this is managed) to provide their lifestyle income.

This is something that happened in the US when this type of change was introduced, more than 20 to 30 years ago. When this type of change occurred, in the USA, the dividends for a good number of companies were reduced by the companies, and the difference was reinvested back into the companies.

This created capital growth in the value of the shares and capital growth was more the norm from then on.  Note: this is not to say that all US companies reduced their dividends completely, as some didn’t.


  1. There are a reasonable number of companies already listed on the ASX that do not pay fully franked dividends i.e. they pay unfranked dividends; however, the rate may not be as high, but they will be there, and I dare say there a lot more that may possibly move into this sphere.


In conclusion, initially there may certainly be some concern and fear and there may be some sell down of major stocks that pay high fully franked dividends i.e. the major banks. Ultimately, I believe that one way or another, these things rebalance themselves, and if Labor is successful in changing the rules. There may also be changes that could counter such a change.

A further misunderstanding is the promotion that if self-funded retirees who have SMSF’s move their money to an Industry Fund or Retail Group fund (which operates the same way as industry fund) that they would benefit from the franking credits. The reality is that the “jury is still out” on this because we don’t know the nitty-gritty of how this change will be taxed. However, this assumption is based on the fact that, at the moment, with such group super schemes, that pay group tax on the earnings of the fund, less the franking credits.

Statistically, a lot of group funded schemes are still wealth accumulators and not retirees. At present, the individual accounts are not completely identified separately for tax purposes. This allows the group pool fund, the ability to reduce the tax liability of earnings from contributions, by offsetting the tax cost against the franking credits.

This means that potentially, with those particular funds (and this occurs now) is that the tax liability that the super fund pays is, and continues to be, less. The argument is that the tax saving is also reflected in the unit price and therefore, a retiree may benefit, at the detriment of the accumulation accounts, with regards to the unit price of their particular Managed Fund investments.

There is talk from technical research people, that retirees franking credits may be able to be sold to wealth accumulation accounts and in exchange, the unit price of the Managed Fund (belong to the retiree) may be increased by the value of the franking credit sold that is paid for by the accumulator’s accounts.

If this were to occur, could it mean that accumulation account holders are being disadvantaged? We really don’t know! As they say, “the devil is on the detail” and the above could all be speculation.

The ultimate outcome, I believe, may be that there will still be a greyness as group super fund account holders, especially retirees, may not know exactly what they will receive in any form of franking credit benefit (if any), it will all be lumped into one overall value and they may never really see the actual identified tax refund benefit at all in these group schemes, it may be just too difficult to process.

However, I believe the technology is probably available now, but it may be too cumbersome and not advantageous. Hence, there is no transparency and no one really knows whether they would be countering the loss of the franking credits by having a SMSF compared to moving their funds to a group super fund, such as an Industry fund, which is union based, or, a Retail group scheme fund which is non-union based fund that operates exactly the same way.

If you have any queries or concerns regarding this issue, please do not hesitate to call.

Will the Federal election results in May, have an effect on the stock market, property values and the economy in general?

The short answer to this is, yes, there will be an effect, either way. However, the extent will depend on how many seats Labor wins and whether they will have control of both Houses of Parliament.

At the moment, the polls indicate a big Labor win with a substantial majority.

Therefore, if we do end up with a Labor government, based on what we know about their tax policies at the moment, there are potentially 4 major changes that they intend to implement, which I believe, will certainly have an immediate short-term effect on our economy in general.

Labor has stated that they will change the following, and to date, have not backed down from these proposed changes. (this has been very well publicised in the media). The flow-on effects could be:

  1. Property values may drop a little more, as there could be more properties on the market from existing investors, plus, there may generally be less demand due to the uncertainty created.
  2. The number of property developments could reduce, this could then have an effect on jobs. (not necessarily immediately, but you may see the effects in 12 months’ time)
  3. If equity markets drop, it could result in less confidence in the broader economy by investors. This then could create less expenditure in the economy.

Franking Credits

Labor aims to change the current franking credit benefits received by all Australians directly, or indirectly, through their respective supers and/or outside of super. This change means that, in future, when an investor, or super fund invests in a dividend-paying stock listed on the ASX, and the investment company pays a fully, or partially franked dividend, to the investor or super fund, it means that the company has already paid tax to the ATO, at the company rate $0.30 in the dollar. What normally happens is that when the individual, or the Entity (where the investments are held), submits their tax return, there may be a tax refund payable to the owner of the investment if their top marginal tax rate is lower than the company tax rate.

The biggest potential effect will be for super accounts where someone is in retirement/pension mode, or has retired, and they are on a zero-tax rate. It seems that it will definitely affect those with SMSF’s. I am not sure if it will affect traditional super funds?

Therefore, under this situation, it would mean that a full tax refund should be paid by the ATO for these dividends to their super funds.

Please Note: The franking credit refunds are more transparent within SMSF’s. If it’s an accumulation account, in other words, a pre-retirement super fund account, the maximum tax rate is 15%. Therefore, if the company rate is 30% there would be a refund, or alternatively, it would help reduce the total tax liability of the super fund. This means that either the individual super fund will receive a tax refund, or, it will reduce their overall super tax liability to a lesser figure, or even to zero.

What Labor proposes is that, yes, you can still off-set the tax that has been paid, however, the off-set stops when the super fund, or the individual, reaches a stage where they no longer need to pay any tax. Consequently, any excess tax paid from a fully franked dividend paid to super/pension accounts on a zero-tax rate, or very low tax rate, would mean that they would not receive the excess as a refund.

Recently the Opposition Treasurer advised that there will be some sort of Means Test, with one example being if they qualify for the Centrelink Age Pension, they will get the full franking credit refund.

What effect does this have and who does it affect the most?

The greatest effect will be on self-funded retirees who rely on such a tax refund every year to help fund their lifestyle needs. As a result of such a potential change, I believe initially that there may be some concern and panic selling by retirees, of stocks that pay fully franked dividends.  A classic example of this could be bank stocks that pay very attractive fully franked dividends.

Others might reduce their Super/Pension balance, by putting money into their residential home to try to qualify for the Centrelink Age Pension, if it allows them to receive the full refund of the franking. This action would mean that you are still receiving less income.

Personally, my view is that, yes, there would be an effect, however, once everyone realises that these new rules are here to stay, they will still need to earn an income, higher than a Term Deposit rate, and they will eventually go back to the stock market! How long it will take to come back, no one really knows, or, whether a better alternative product or strategy can be put in place that will allow super funds to redeem some of the lost income.

Negative Gearing

Based on the proposed changes, and this is not yet 100% clear, it could mean that a Labor government  will either abolish the ability to claim a tax deduction on borrowed monies for investment properties completely, or provide an incentive for specific types of investment properties being bought in areas where the objective would be to provide  housing for lower income families, or individuals, which they hope will create a greater housing affordability environment.

However, as the Labor government has tried to do this in the past, the opposite has occurred, as less people bought investment properties and the number of property developments dropped considerably. If the public reaction to this proposed change is the same, it will have a domino effect as it could create a smaller rental market, therefore, rents may go up, and secondly it could create less work activity as less homes would be built and then this will affect jobs and the domino effect then expands to the broader economy.

Until we know the exact nitty-gritties of this rule change, we really cannot tell the full effects. A positive for long term investors is that they could, in a small window of time, buy an investment property at a lower price (or shares for that matter) and benefit from the increased rental return with a view that they will see asset growth over the long term, be it more slowly.

Potential reduction of capital gains free component

When an investor with either direct equities, investment properties or any sort of investment asset is sold for a profit, and the asset has been held for 12 months or longer, currently, you only pay tax on half of the profit and that tax would be added to the individual’s assessable income of who had made the profit.  The other 50% is not taxed but only on the basis that such an asset is owned, either by an individual, or through a Family or Unit Trust where the distribution, is made to an individual, and not a company or a super fund.

What the proposed change will be, is that, instead of the tax-free component being half, it will be halved again, in other words 25% of the profit will be tax-free and the rest would be added to the individual’s assessable income.

Please note: if it’s an entity, such as an investment company, this tax-free benefit does not apply, as tax is paid at the company rate and in a super accumulation account, it is only a reduction from 15% to 10% tax.

30% tax on Trust Distribution Income

Currently, if you have a Family Trust, any distribution is taxed at the individual beneficiaries’ marginal tax rate. This change would mean that, no matter what the beneficiaries tax rate is, it would be taxed at 30%.

In conclusion, this newsletter is to be treated as “food for thought” with the potential changing environment and whether there is any need to act now or not.
I suggest that if you like to discuss in greater detail, please not hesitate to call or to make an appointment to see me to assess how it will affect your portfolio.
I also strongly recommend that you consult your Tax Accountant to assess the tax effects of any potential changes.

Market Volatility

It looks like this market volatility seems to be here to stay for a little longer, and if so, how do you deal with it? If you are concerned, please call me to discuss.

However, if you are a positive glass half full person, you would see this market as a great buying opportunity. It can be like being in a lolly shop! So many different choices of what to buy, but not sure what to buy first with the money you have!

The current market can appear to be like that if you have a positive attitude and you are investing for the long-term. Whether this is the absolute right time to buy or not, is the great unknown!

No one really knows where the bottom is. Therefore, it could be a good time to progressively buy into the market. If, on the other hand, you are worried you will not want to buy into this market and that’s also ok. In the end, you need to be comfortable.

To help give you a little more clarity, I’ve listed below the major causes of this uncertainty. In the short term, it will depend on the outcomes of all five listed points in this paper. However in the long term, as history has shown, although it is never guaranteed in the future, equity markets have historically recovered and moved progressively upwards in value . Therefore there is always a good chance that history will repeat its self and the markets will eventually recover and grow.

A great example of this was the recent global financial crisis which really started in November 2007 but did not hit its straps until late 2008, reaching that low point in March 2009. All markets, apart from our Australian market, recovered from their pre GFC highs and grew 100%, 200% even 300% from March 2009. Our market unfortunately has not fully reached the high pre GFC levels of the All Ordinaries of 6,720 points.

However, this does not mean that people missed out on opportunities. They were there if the correct stocks, ETF’s or managed funds were selected.  The market did grow and of course it grew sufficiently for anyone who invested additional capital from March 2009. If, on the other hand, you did not invest additional capital, your current equity exposure to the Australian domestic market may still be below pre GFC levels, with some of your pre- GFC investments.

Will it recover completely and move on from there? The short answer is yes. The unknown of course is that we don’t know how long that it will take to recover.

The next question to consider is, what is the alternative if you do not want to invest in the equity markets? The alternative could be a very conservative capital protected investments but ones that provides you with a very low rate of return such as Cash, Term Deposits, Government Bonds etc.

There are always trade-offs with everything when it comes to investing with equities, bonds, term deposits, cash or direct property or other forms of investments.

I believe the five points below are, at the moment, the main instigators of this uncertainty.  There may be others that we are not aware of. However, we should consider these for the moment.

The question that you need to answer for yourself is, whether it’s time to buy now or not? This will depend more than anything on whether you are fearfully of the equity markets and other investment markets in general and whether your investment attitude is for the long-term, medium or short-term?  Which category do you fall into? Or, are you trying to be a day trader and trying to second guess the equity markets, which can be very dangerous as emotions of fear and greed tend to take over logic?

The 5 effects on the equity markets in this current climate

  • When will the US /China Tariff issues be resolved? Whilst this seems like it will take quite a while, I suspect there will be some positives when the two presidents meet later this year.


  • The US markets fear of more rate rises (imposed by the Federal Reserve) than what the market already believes (begrudgingly) will be imposed next calendar year. This will probably be the greatest concern of the equity markets in the US, which will also have a trickledown effect on the wider global markets.


  • The US Federal Reserve decision on their cash rate will also have effect on their treasury bonds, corporate bonds etc, which in turn has an effect business debts and profits with a subsequent flow on to the equities markets, as investors will tend to rotate money out of equities for the certainty of US government bonds. This in its self will also have an effect on the wider global markets.


  • Europe, also has a few concerns – Brexit, will it be resolved and, if so, when and what will be the effect of it? The Italian Governments expenditure budget negotiations with the European Commission (Brussels). The Italians want to spend more, and Brussels is saying No. It is expected that this will be resolved over the next 4-12 weeks. Germany’s recent regional election result showed that Chancellor Angela Merkel, most likely would not be re-elected at the next election, prompting her to make a decision not to stand at the next election in 2021. Whilst this is far enough away from 2018, it still adds to the uncertainty surrounding European unity.


  • The Australian economy, (this obviously will have a greater direct effect on our markets) Whilst it’s progressing in an ok manner , even with the current government’s behaviour, (which I think will improve), what will be the ramifications of a future federal labour government regarding their policy on Corporate Tax cuts? Also the removal of franking credits in super funds, which will have a bigger effect for retirees with super/pension accounts, whether they be retail funds or SMSF’s. And also, the removal of negative gearing beyond the specific asset that the borrowings were made against. These potential changes can have a negative effect on the Australian economy, which in turn will affect our equity market.


Therefore, whilst the future may look bleak, the positive at the moment is that equity prices are dropping, and whilst we don’t know when the bottom will be reached both here and overseas equity values are appealing. The outcomes of these 5 points may not eventuate completely, therefore, the end effect may not be as bad.

These are still the times to consider buying, if there is a long-term investment time horizon.


Warren Buffet said once:

“Be greedy when others are fearful and be selfish when others are greedy”

Offset accounts: A better way to manage your mortgage

If you want to repay your mortgage quickly and still have easy access to your additional repayments, an offset account may be worth using.

What’s an offset account?

An offset account is a transaction account that is linked to your home loan and the money you deposit in it offsets the loan balance before interest is calculated. For example, if you owe $400,000 on your home loan and have accumulated $50,000 in an offset account, interest will be calculated on $350,000.

Benefits over regular savings accounts

If you hold your surplus cash in an offset account you can save interest at home loan rates, and no tax is payable on the interest savings. This is effectively like ‘earning’ the home loan interest rate tax-free.

Alternatively, you could hold your surplus cash in a regular savings account but the interest rate you earn is usually much lower than what you pay on your home loan. Plus, every dollar in interest you earn is taxable at your marginal rate, which could be up to 47%1.

Benefits over direct loan repayments

When you make additional repayments directly into the loan you can achieve similar benefits to having an offset account. However, limits often apply to the frequency and amount of withdrawals you can make and withdrawal fees are usually charged. With offset accounts, you typically have ready access to the money via an ATM, cheque book and internet, and withdrawal fees are generally not charged.

The best of both worlds

You may even want to have your salary paid directly into an offset account and withdraw money as needed to meet your living expenses. This can enable you to make the interest savings available with direct loan repayments and have easy access to your money.

Other things to consider

  • If you’d prefer not to have easy access to your additional loan repayments, you may want to make repayments directly into the loan where you are less likely to spend the money impulsively.
  • If you would like to credit your salary into an offset account, you should check that your payroll provider is able to do this.
  • Some lenders allow you to establish multiple offset accounts to help you better manage your cash flow.
  • Some lenders pay an interest rate on the balance of the offset account that is less than the home loan rate. These are known as ‘partial’ offset accounts and are not as effective in saving you interest as an offset account which offsets 100% of the home loan interest rate.
  • Offset accounts can usually only be linked to loans with variable interest rates, not fixed rate loans.
  • To maximise your interest savings, you may want to pay for the majority of your living expenses on a credit card and repay the card in-full before the end of the interest-free period. This enables you to use the credit card provider’s money to fund your living expenses, while applying your own funds to reduce your average daily loan balance.
  • If you want to invest some of the money held in an offset account, you should consider paying the money directly into your home loan and establishing a separate loan to fund the investments. By taking out a new loan for investment purposes, the interest would usually be tax deductible.


To find out more, contact John Blangiardo on 03 9646 7588


  1. Includes the Medicare Levy.

Important information and disclaimer

This publication has been prepared by First Option Financial Management Pty. Ltd. ABN 30006841149 has not taken into account any particular persons objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.

First Option Financial Management Pty. Ltd. is an Authorised Representative of Apogee Financial Planning Limited ABN 28056426932, a member of the National Group of Companies  

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

Information in this publication is accurate as at the date of writing, October 2017. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors give any warranty of accuracy, not accept any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

Keys to de stressing your Mortgage

July 2018

“Don’t sail out farther than you can row back.” This Danish saying is sound advice for anyone thinking of borrowing to buy a home.
According to a paper1 for the Centre of Policy Development and University of Canberra, Australians have a tendency to be over-confident in our ability to repay loans. We also underestimate the likelihood of things potentially going wrong in our lives.
Have you ever heard yourself or someone else say “I’ll be able to repay my loan, provided I keep my job, don’t get sick and I’m not hit with any large unexpected bills”? Chances are you probably have. But things can and often do go wrong.

Causes of mortgage stress

A study2 was completed for the Royal Melbourne Institute of Technology (RMIT), which looked at the specific triggers that have resulted in Australian households being unable to meet their mortgage repayments. Survey respondents were asked the initial causes and, if they changed, what the final causes were. They were also able to identify more than one cause. The graph below shows the results.


How to reduce mortgage stress

Like most things in life, it’s difficult to make borrowing a stress-free exercise, but there are a few things you might consider that may help to reduce the angst.

1. Build up a buffer
It’s a good idea to hold (or build up) a cash reserve in a mortgage offset account to provide a buffer that can be drawn upon to meet your loan repayments if you become ill or are off work for other reasons.

2. Take out personal insurances
It’s important to ensure your income (which is what services your debts) is not compromised due to certain events beyond your control. One way to do this is to ensure you have adequate personal insurances. Key examples include:

  • Income Protection Insurance which can replace up to 75% of your income if you are unable to work due to illness or injury. This can ensure you are able to continue meeting the majority of your living expenses, not just your loan repayments.
  • Critical Illness Insurance which can help you service or pay off your loan and meet a range of expenses in the event you suffer a specified illness, such as cancer or a heart attack.
  • Total and Permanent Disability Insurance which can help you service or pay off your loan and provide an ongoing income if you become totally and permanently disabled.
  • Life Insurance which can be used to service or pay off your loan and provide your family with an ongoing income if you pass away.

3. Take out mortgage protection insurance
Many lenders offer insurance when you take out a home loan that covers the mortgage (often up to a specified amount and for a particular period of time) if you die, become disabled or your employment ends involuntarily.

4. Fix the interest rate
Fixing the interest rate on your home loan can provide protection against rising interest rates. The downside is there are often restrictions on making additional payments into a fixed rate loan, which would limit your capacity to build up a buffer. Many people find a combination of fixed and variable rate loans works best, as additional repayments can be made into the variable rate portion of the debt.

5. Don’t add fuel to the fire
Over 40% of the people who completed the RMIT survey responded to the initial difficulty in meeting mortgage repayments by using credit cards more often than they normally would. Using debt to service debt is very likely to compound the problem.

6. Review your situation
At the first sign of a problem, it’s essential to seek advice, as there may be a range of potentially viable options to explore. Better still, you may want to seek advice before you decide how much to borrow.

How can we help?

We can help you assess your budget and cashflow situation and determine your affordability level. We can also determine your insurance needs and advise you on a range of other financial matters.

  1. Source: Understanding human behaviour in financial decision making: Some insights from behavioural economics. Paper to accompany presentation to No Interest Loans Scheme Conference “Dignity in a Downturn” June 2009. Ian McAuley, Centre for Policy Development and University of Canberra.
  2. Source: Mortgage default in Australia: nature, causes and social and economic Impacts. Authored by Mike Berry, Tony Dalton and Anitra Nelson for the Australian Housing and Urban Research Institute, RMIT Research Centre, March 2010.


Important information and disclaimer

This document has been published by First Option Financial Management Pty. Ltd. ABN 30006841149 has not taken into account any particular persons objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.
First Option Financial Management Pty. Ltd. is an Authorised Representative of Apogee Financial Planning Limited ABN 28056426932, a member of the National Group of Companies

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

While it is believed the information in this publication is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors gives any warranty of accuracy or accepts any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

End of Financial year options

End of financial year actions that may be required in your particular individual case

Super contributions, both tax-deductible and non-deductible contributions are known as concessional (CC) and non-concessional contributions (NCC) respectively.

Now is the time of year to review your super situation and assess the following:

Do you have excess funds to contribute to super from your after-tax personal savings as a non-concessional contribution to build up your super balance?

The maximum NCC that you can contribute is $100,000pa, or, you can make an NCC contribution for three years in advance of $300,000. If you do this, you are then not able to make any further non-concessional contributions until the three financial years have finished.

Note: one advantage of making such an advance contribution at this time of the year, is counted as the first year of that 3-year period. Therefore, the next financial year that you can make a further non-concessional contribution would be 2019/2020, providing you are under 65 years of age and have not exceeded the new $1.6m limit per person.

If you are 65 years of age or older, in order to make such a contribution to super you need to satisfy what is called the “work test’ i.e. that you have worked 40 hours a 30-day consecutive period in the financial year.

The other contribution is known as a concessional contribution (CC) i.e. a tax-deductible contribution. If you are an employee a concessional contribution includes your employer’s 9.5%SGC super contribution. You can top this up with a salary sacrifice contribution. i.e. gross funds from your salary before tax that would be contributed to super, after instructing your employer. Both these contributions -the 9.5% SGC employer contribution and the salary sacrifice cannot exceed $25,000pa in total.

The alternative is that there was a legislative change effective this financial year, where you may have assessable income from passive sources or you may not be fully employed and only work part-time, therefore the previous 10% rule no longer applies. i.e. you can make a concessional contribution from personal earnings in combination with the employer SGC contribution, or salary sacrifice to the total of $25,000pa.

This is generally more applicable to self-employed people who are structured differently and may not pay themselves a salary but may receive a distribution from their Family Trust as part of the profit to you.

There may be people who work part-time and also receive passive income and are under the old 10% rule, and they may have been prohibited from making such tax-deductible contributions now they can

If you would like further clarification of these options, I encourage you to call our office to discuss by phone or make an appointment to catch up to discuss.

NAB is reshaping its wealth management strategy

NAB is reshaping its wealth management strategy – what does this mean for your investments?

Today, NAB announced a reshaping of its wealth management strategy. NAB intends to exit the advice, platform, superannuation and asset management businesses that currently operate under MLC and other brands. This announcement is the outcome of a detailed nine-month review.

NAB is targeting separation of the businesses by the end of the 2019 calendar year, subject to market conditions and required approvals.

What does this announcement mean for you?

It is planned that the Apogee Financial Planning group will be part of the independently owned wealth management business upon separation.

There will be no impact on our relationship with you, or on your investments, as a result of this announcement. If, part of your suite of investments, super or non-super, is under MLC investments, they will be included in the newly independent wealth business and there will be no change to them or their investment processes. They will continue to focus on strong investment outcomes and leading investment solutions.

An exciting future as an independent wealth management business

The business will comprise well-established and recognised brands across advice, super, retail investments and asset management, and has a strong foundation for future growth. It is well positioned to continue delivering on your wealth management needs.

It is important to note that this divestment process could effectively be in place by the end of 2019. This re-establishment of an Independent Licensee Group, which provides a wealth management service as well, will have to provide further flexibility with other platform providers more so than what Is currently on the Approved List.

I believe such a change will not have any direct effect on our service to you other than provide better service. Obviously, we will have greater information as the time draws closer and advise you accordingly.

As always, our aim is to ensure that you are not disadvantaged in any way due to this change.

Any questions?

If you would like any further information, please do not hesitate to contact me.

Yours sincerely,
John Blangiardo CFP Dip FP
Authorised Representative Apogee Financial Planning