Keeping you in touch May 2014
John Walker
John Walker is an Authorised Representative of RI Advice Group Pty Ltd
“For better digestion I drink beer,
in the case of appetite loss I drink white wine,
in the case of low blood pressure I drink red
wine,
in the case of high blood pressure I drink
scotch, and when I have a cold I drink
schnapps.”
“When do you drink water?”
“I’ve never been that sick!”
Young Aussies
Families with kids
Higher income
earners
Pre-retirees
Retirees
Employers
Retirement savings focus
Health care contribution
Jobseeker reforms
Paid parental leave
Deregulation of tertiary
education
Changes to social security
benefits
Loss of the tax offset for
Changes to High
Education Loan Program dependent spouses
payback: sooner, and at
a higher rate $50,638
(max 6%)
Financial support for
TAFE students
Incentives to save for super still intact, if you
can afford it:
- Contribution caps still indexed
- Penalties for contribution breaches
reformed
2% temporary tax on
income >$180k for 3
years
Pensions
indexed to
lower rate of
inflation, not
wages
‘Restart’ program for older workers
Super income stream will now count
towards your Seniors Health Care
Card eligibility for new applicants
1.5% tax cut for
most businesses
Delayed SG
payment dates and
rates 9.5% 1 July
2014 3 years
Young Australians
Jobseeker reforms
Jobseekers younger than 30 will wait 6 months before receiving Newstart or Youth Allowance
Deregulation of tertiary education
Tertiary fees might increase (or decrease?)
Changes to HELP repayments
Payback now starts at $50,638k income, and the interest is likely to increase, but capped at 6%
Financial support for TAFE students
Students of Diplomas, Advanced Diplomas and Associate Degree courses will now be eligible for
direct financial support
First home saver accounts abolished
Families with kids
Removal of dependent spouse tax offset
Benefit loss of approximately $2,400 from July 2014.
Some relief for singles
Low income single parents will get an extra $750 per year for children aged between six and 12
years.
Don’t forget…
Kids under 16 are exempt from the $7 health payment after
their first 10 visits.
Increase of Superannuation Guarantee
From 1 July 2014, the SG rate will increase to 9.5% where
it will stay until 30 June 2018. The rate will then increase by
0.5% each year until it reaches 12% in 2022/23.
Higher income earners
Temporary budget repair levy
Any income you earn over $180,000, may be subject to 2% extra tax for the next 3 years.
Taxable income
Levy payable (pa)
$180,000
$0
$200,000
$400
$220,000
$800
$240,000
$1,200
$260,000
$1,600
$280,000
$2,000
$300,000
$2,400
Pre-retirees
No changes to super contribution caps
No Budget change to contributions caps… and they’re still indexed.
Relief if you breach the non-concessional contributions cap.
“Restart” program for older workers
$10,000 over two years to employers who hire a previously unemployed 50+ worker.
• Pro rata available for part time employment.
•
But on the other hand
Mature Aged Workers Tax Offset is abolished from 1 July 2014 for ALL tax
payers.
Increase of Age Pension Age
The Age Pension qualifying age will continue to rise by six months every
two years from the qualifying age of 67 (from 1 July 2033) gradually
reaching a qualifying age of 70 years by 1 July 2035.
Still to come
News about super preservation age.
Retirees
Pensions indexed to a lower rate
Pension payments are now indexed to inflation, not wage growth.
Deeming thresholds reduced
Reduced pension entitlements likely under the income test from 1 July 2017.
Commonwealth seniors health card (CSHC) eligibility
tightened
Your tax-free super income stream will now count towards your
CSHC eligibility.
Seniors supplement for CSHC holders, gone
Annual payments of $876.20 (singles) and $1,320.80 for couples
scrapped from 20th September 2014.
Means test exemption for downsizing family home
The ‘Housing Help for Seniors’ pilot announced in the 2013/14 Budget
will no longer take place
Employers
Company tax cuts
800,000 businesses will get a 1.5% cut to the Company Tax Rate.
Top 3,000 still on the hook
The top 3,000 will still pay a levy to help fund the paid parental leave scheme.
Super Guarantee increases delayed
Remaining at 9.5% until 2018.
And of course…
Repeal of the minerals resource rent tax and the carbon tax.
For everyone
Social security thresholds frozen against indexation
Social security thresholds will not increase for 3 years.
Austerity measures
We’ll all have to make choices about how we spend our household budget (health, fuel,
university fees).
For everyone
Some pressing questions
•
How will you bridge the gap between your preferred retirement age and Aged Pension age?
•
How will you make up for the compound effect of the delay in increase in Super Guarantee
payments?
•
Will there be indirect impacts on you because of changes impacting a family member?
•
Would you be willing to make lifestyle changes because of cuts to social security benefits?
•
What are the ‘non-negotiables’ in your family budget?
•
Are your current financial strategies still relevant and effective?
Residential Aged Care Services Update
Activity with UnitingCare to date
Presentations:




1 annual conference (Pitt Street)
A regional conference (Belrose)
Co-presented to U3A, with Tony Lowe
Retirement Village (Turramurra)
External Activity
 Presentations to CLA and Gadens Aged Care Seminars in 2009 and 2011
and RI Conference 2014
Accommodation
Pay the Bills
Accommodation
Government proposals – ongoing fees
Buy a home
Enter an Aged Care Residence
Pay 100 per cent or deposit
Pay 100 per cent (RAD) less
Or borrow from the bank
Borrow from the Facility DAP or
not
Water rates
Bank Residential Fee
Land rates
Means Tested Fee
Phone bills
Shopping bills
Insurance
Extra Services Fee
Aged Care – The Main Areas
More home
care
Fee
transparency
Increased care
contributions
– means tested
Fee Caps
Entry cost
refundable
One level of
residential care
Aged Care
Comparison of Changes to Fee Structures
•
Before 1 July 2014
From 1 July 2014
Basic daily care fee
Standard resident contribution
Daily income tested fee
Means tested fee (combined income and
asset test)
Accommodation charge
n/a
Accommodation bond
Refundable accommodation deposit or
refundable accommodation contribution
Accommodation bond via periodical
payment
Daily accommodation payment or daily
accommodation contribution
Retention amount
n/a
Extra services fee
Extra services fee
In addition, a resident may be required to pay any other amount agreed between them and the care provider
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Costs going up and income coming down
 From 1 July 2014 no pension supplement for Aged Care residents entering a facility
after 1 July.
INCOME DOWN
 From 1 July 2014 Home Care supplement – Income Tested.
COSTS UP
 From 1 January 2015, new Account Based Pensions will be deemed.
There will be no Centrelink free amounts
 Income Test change could reduce Age Pensions
 Change could increase Income Test component of Means Tested Fee
INCOME DOWN
COSTS UP
 From 1 July 2019 NMETO abolished. COSTS UP if client pays tax
COSTS UP
Investment Types
Solicitor
Accountant
Trusts
Means Testing
YOU and ME
Aged Care Fees
Age Pension / DVA
ACAT
Couples / Singles
New language (DAP, RAP etc.)
How can I help?
•
Discuss your options
•
Manage your financial affairs including your estate planning considerations
•
Fee reduction strategies
•
Keep or sell the family home
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Disclaimer
Important Notice
RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services License Number 238429 and
is licensed to provide financial product advice and deal in financial products such as: deposit and payment
products, derivatives, life products, managed investment schemes including investor directed portfolio services,
securities, superannuation, Retirement Savings Accounts.
The information presented in this seminar is of a general nature only and neither represents nor is intended to be
specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically
on the basis of the information contained herein but should obtain appropriate professional advice based on their
own circumstances.
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Thank you