Your income serves as the foundation for your lifestyle and financial goals. All of your income and spending must be identified, quantified, and tracked.
Read our insights on the latest news, trends and changes related to Cash flow and budgeting.
There’s been a lot of noise lately about the federal budget and what it means for younger Australians trying to build wealth. The headlines talk about housing, superannuation, and making things fairer for the next generation.
But buried beneath all of that is a quieter problem, one that doesn’t make it into press releases.
If you’re a millennial who has managed to accumulate some investments — shares, an investment property, a business — realising a larger-than-expected capital gain in any given financial year can trigger a cascade of unexpected tax and benefit consequences that go well beyond your marginal income tax rate.
Here’s what you need to know.
When you sell an asset for more than you paid for it, you make a capital gain. Currently, if you’ve held the asset for more than 12 months, you’re eligible for the 50% CGT discount — meaning only half of the gain is added to your taxable income.
That remaining portion — the taxable half — is your assessable capital gain, and it’s treated just like ordinary income for most purposes. The budget changes summarised here mean that selling an asset after 1 July 2027 may mean the assessable amount rises going forward under a CPI-linked model.
This matters because your assessable capital gain doesn’t just affect your income tax. It flows into a range of other calculations that can affect your family’s finances in ways that are far from obvious.
Division 293 (Div 293) is an additional 15% tax on concessional super contributions for high-income earners. It kicks in when your income — as defined by the ATO for this purpose — exceeds $250,000.
That “income” definition includes your assessable capital gains.
So imagine you earn $180,000 in salary and you’ve made $25,000 in concessional super contributions this financial year (say, through salary sacrifice plus employer contributions). In a normal year, you’re well below the $250,000 threshold.
Now imagine you sell an investment and realise an $80,000 assessable capital gain.
Suddenly your combined income and super contributions for Div 293 purposes is $281,600 — $31,600 above the threshold. The ATO will levy an additional 15% tax on the lower of your concessional contributions or the amount above $250,000. In this case, that’s an extra $3,750 on top of what you expected to pay — though this amount can be paid from your super.
Additionally, Div 293 is not currently indexed, making it a form of silent bracket creep for higher earners.
Family Tax Benefit (FTB) is income-tested. Both Part A and Part B use your family’s adjusted taxable income (ATI) to calculate entitlements — and ATI includes assessable capital gains.
If you’ve been receiving FTB payments throughout the year based on an estimated income, and then you realise a capital gain that pushes your ATI above those thresholds, the result at tax time is a debt to Centrelink.
Here’s an example: a family with two children estimates their income at $110,000 and receives FTB Part A accordingly. They then sell shares mid-year, realising a $60,000 assessable capital gain — bringing their ATI to $170,000. When reconciliation happens, they may find they’ve received thousands of dollars in FTB they weren’t entitled to, and they’ll need to pay it back.
Many families don’t realise this until well after they’ve spent those payments.
The Child Care Subsidy (CCS) is calculated using your combined family income, and the rate you receive can change significantly across income bands.
At the time of writing, families earning under $85,279 can receive up to 90% subsidy. That rate then tapers as income rises, eventually reaching 0% for families over $535,279.
Because assessable capital gains flow into the income figure used to calculate CCS, a one-off gain in a single year can move a family into a meaningfully lower subsidy band — even if their regular income hasn’t changed at all.
For a family with one child in full-time childcare at, say, $150 per day, the difference between an 85% and a 50% subsidy rate represents roughly $16,000 per year in out-of-pocket costs. Even a partial-year impact can be painful.
Like FTB, CCS is reconciled annually. If your CCS payments were based on an estimated income that turned out to be too low because of a capital gain, you’ll receive a reduced subsidy going forward — or have to repay an overpayment.
If you’re expecting a capital gain this financial year — from an investment property, a share sale, a trust distribution, or any other source — it’s worth sitting down with a financial adviser before the end of June, not after.
The difference between a well-timed strategy and an unexpected tax debt can be significant. Understanding how your assessable income interacts with your super, your family payments, and your childcare subsidy is exactly the kind of planning that turns a good financial outcome into a great one.
Important disclaimer: This article is general in nature and does not constitute financial or tax advice. Please consult your adviser for advice specific to your circumstances here.
Yes, it is that exciting time of the year again. Treasurer Jim Chalmers has handed down the 2026-27 Federal Budget and as expected, this year’s announcement focused heavily on the Government’s tax reform agenda, with significant changes proposed for capital gains tax, negative gearing, and discretionary trusts.
For superannuation, the Budget proved to be a quiet night. Following the passage of the Division 296 tax measures and the soon-to-commence Payday Super reforms, the absence of further super changes provides welcome certainty and stability for the sector.
We have summarised the key measures most likely to affect you, your family, and your financial planning below. The full Budget details are available at budget.gov.au.
For our ongoing service package clients, your adviser will be in contact to provide guidance on the changes that may impact your strategy.
IMPORTANT: Please remember that unless specified, these measures are subject to becoming law, so confirm this before taking action.
From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held longer than 12 months. In addition, a 30% minimum tax rate will apply to net capital gains.
These changes will apply to all CGT assets including property and shares held by individuals, trusts, and partnerships. They will also apply to pre-1985 CGT assets, which under current rules are exempt from CGT. Indexation will use the Consumer Price Index (CPI), similar to the rules that applied between 1985 and 1999, with ATO tools and guidance to support the calculations.
Transitional rules
For eligible CGT assets:
For pre-1985 (pre-CGT) assets, gains accrued before 1 July 2027 will continue to be exempt. Taxpayers will need to determine the value of a CGT asset as at 1 July 2027 as part of their tax return in the year the asset is sold. The ATO will provide tools to assist with this, either through a valuation or a specified apportionment formula.
Exemption for new housing
To support new housing supply, investors in new build residential properties will be able to choose either the existing 50% CGT discount, or the new cost base indexation and minimum tax.
A new build is broadly a dwelling constructed on vacant land, or where an existing property is demolished and replaced with a greater number of dwellings. Knock-down rebuilds or substantial renovations that don’t increase supply will not qualify. Subsequent purchasers cannot access the 50% discount.
Income support payment recipients, including Age Pension recipients, will be exempt from the new 30% minimum tax.
Superannuation funds not impacted
Importantly, these changes do not apply to superannuation funds, including SMSFs, which will continue to be eligible for the existing 1/3 CGT discount on assets held longer than 12 months.
The Government will limit negative gearing for residential property to new builds. From 1 July 2027, losses from established residential properties will only be deductible against rental income or capital gains from residential properties. Excess losses can be carried forward and offset against residential property income in future years.
Transitional rules
For established residential properties:
Exemptions
New builds can continue to be negatively geared before and after 1 July 2027. Properties held in widely held trusts (such as most managed investment trusts) and superannuation funds (including SMSFs) are also excluded. These changes apply to individuals, partnerships, companies, and most trusts. Other asset classes — such as shares and commercial property — are not affected.
The Government will introduce a 30% minimum tax rate on the taxable income of discretionary trusts. The tax will be paid by the trustee, who controls distributions. Beneficiaries (other than corporate beneficiaries) will receive a non-refundable tax credit for the tax paid by the trustee when they declare their trust income. Trustees will be required to calculate, report, and pay the minimum tax, and to notify beneficiaries of their entitlements.
To prevent franking credits being used to undermine the minimum tax, trustees that receive franked dividends will be required to apply their franking credits to pay the minimum tax. Corporate beneficiaries will not receive non-refundable credits for tax paid by the trustee.
Exemptions
The minimum tax will not apply to:
Some types of income will also be excluded, including primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement.
Rollover relief will be available for three years from 1 July 2027 to assist small businesses and others who wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.
A new permanent $250 Working Australians Tax Offset (WATO) will apply to income from work, such as wages, salaries, and the business income of sole traders. The WATO will apply automatically after you lodge your tax return, working in a similar way to the existing Low Income Tax Offset (LITO).
It is a non-refundable offset, meaning it can reduce tax payable (excluding the Medicare levy) to nil, but cannot result in a refund. The WATO will lift the effective tax-free threshold for income from work by close to $1,800.
From the 2026-27 income tax year, eligible Australian tax residents earning income from work will be able to claim an instant tax deduction of up to $1,000 for work-related expenses, without needing to itemise their claims or keep receipts.
If your work-related expenses exceed $1,000, you can continue to claim them in the usual way under existing rules (with appropriate records). Charitable donations, union and professional association fees, and other non-work-related deductions can still be claimed separately on top of the instant deduction.
The previously legislated tax cuts will take effect as planned:
This provides a tax cut of up to $268 in 2026-27, and up to $536 from 2027-28.
The Government is adjusting the FBT treatment of electric cars. From 1 April 2029, a permanent 25% FBT discount will apply to all electric cars valued up to the fuel-efficient luxury car tax threshold (currently $91,387).
Transitional arrangements include: electric cars valued up to $75,000 provided before 1 April 2029 continue to receive the existing 100% FBT exemption; and electric cars above $75,000 (up to the luxury car threshold) provided between 1 April 2027 and 1 April 2029 will receive the 25% discount. Eligible vehicles will retain the discount rate that was in place when the arrangement commenced.
There were no new superannuation tax changes announced in this Budget. Three significant super reforms — already legislated — commence on 1 July 2026:
Payday Super
From 1 July 2026, employers will generally be required to pay Super Guarantee (SG) contributions at the same time as salary and wages, instead of quarterly. This is intended to make it easier for you to monitor your SG entitlements and reduce the incidence of unpaid super. The new rules also include changes to the earnings base for calculating SG and the SG charge, and changes to how the Maximum Contributions Base is applied.
Division 296
From 1 July 2026, an additional 15% tax will apply to the portion of earnings attributable to a Total Super Balance (TSB) above $3 million, with a further 10% (totalling 25% extra) on the portion attributable to a TSB over $10 million.
The tax is assessed to individuals (not the super fund), with impacted individuals having the choice to pay the tax personally or to elect for it to be released and paid from their super. To support the calculations, super funds will be required to calculate each member’s share of taxable earnings for Division 296 and report it to the ATO. First assessments will be issued after 30 June 2027 based on the 2026-27 income year. The rules will only tax realised capital gains accrued from 1 July 2026 onward.
Paid Parental Leave Super Expansion
Following the introduction of super on Commonwealth-funded Paid Parental Leave from 1 July 2025, Paid Parental Leave itself expands to six months from 1 July 2026. Eligible parents will receive super contributions over this longer period, helping reduce the long-term impact of career breaks on retirement savings.
The Government will permanently extend the $20,000 instant asset write-off for small businesses with turnover under $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. Provisions preventing small businesses from re-entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.
For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover under $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. Loss carry-back applies to revenue losses only and is limited by a company’s franking account balance.
From 1 July 2028, start-up companies with aggregated annual turnover under $10 million that generate a tax loss in their first two years of operation will be able to use the loss to generate a refundable tax offset, limited to the value of fringe benefits tax and withholding tax on Australian employee wages in the loss year.
The Government will amend eligibility for the Pension Supplement for recipients absent from Australia. The full rate of Pension Supplement will be extended from 6 weeks to 12 weeks for those temporarily absent from Australia, and will cease for those residing permanently overseas or temporarily absent for longer than 12 weeks. Under current rules, the Pension Supplement reduces to the basic amount after the first 6 weeks of a temporary absence.
Additional funding of $2.2 billion over five years has been allocated to improve service delivery, including funding for frontline staffing, enhanced safety at Services Australia centres, the Services Australia Cyber Security Uplift program, and improvements to the myGov platform.
The Budget includes several measures aimed at strengthening the aged care system.
Residential aged care supply
An additional 5,000 residential aged care beds per year will be funded, principally for those with limited financial means, supported through building subsidies and an increase to the Accommodation Supplement. Additional funding has also been provided for dementia care supports, including expansion of the Hospital to Aged Care Dementia Support program.
Improving access to home care
The Government will fully fund personal care services such as showering, dressing, and incontinence aids for all Support at Home recipients. Faster access to Support at Home places has also been announced, alongside improvements to assessments, hardship applications, and the end-of-life pathway.
Better care for older Australians
Additional funding has been provided for strengthened regulatory, governance, and quality arrangements, sector viability, and workforce supports.
The Government will remove the age-based uplift of the Private Health Insurance Rebate from 1 April 2027. Under current rules, older policyholders receive a higher rebate percentage than younger policyholders on the same income. For example, single people with income below $101,000 currently receive rebates of 24.188% (under 65), 28.139% (age 65-69), and 32.158% (age 70+).
From 1 April 2027, older policyholders will no longer receive this higher rebate. Savings will be reinvested in the aged care sector.
The Government will provide funding to extend the operation of the Consumer Data Right (CDR) and explore enabling taxpayers to share certain ATO-held data through it. The CDR currently allows individuals to share their banking and energy data with new providers to access better offers. Extending this to ATO data could potentially allow you to authorise the sharing of your tax-related data with your financial adviser, something the advice industry has long advocated for.
The Government will provide $17.8 million over four years to strengthen governance, supervision, and enforcement of managed investment schemes. Funding will support ASIC’s data capabilities in supervising the sector, strengthen governance requirements (in partnership with the Office of the Australian Auditing and Assurance Standards Board and Treasury), and consult on new data collection powers. ASIC will partially meet the cost through cost recovery.
The Government will provide $86.3 million over four years to deliver Phase 2 of the Counter Fraud Strategy, modernising the prevention and detection of fraud in the tax and super systems. This will enhance the ATO’s ability to detect and prevent fraud in real time, and expand live monitoring of fraudulent account access—including for high-risk superannuation changes.
The ATO will also be given new powers to pause the recovery of tax debts for taxpayers who are victims of fraud by tax intermediaries, and to waive those debts in appropriate circumstances. Existing garnishee powers will be expanded to include jointly held assets where such arrangements are being used to frustrate recovery actions.
If you have any questions or would like further clarification on any of the measures outlined in the 2026-27 Federal Budget, please feel free to book a chat with your adviser.
With so much going on in our lives and constant news from around the world, it has become especially apparent the value of having a trusted partner/adviser in the area of overall financial management. Given the amount of noise and sheer number of changes, it has been an information overload and there is a real risk now that the wrong decision – or no active decision – can have a lasting affect on your financial trajectory.
It made me think of a blog post written a number of years ago now about Decision fatigue, which I have reposted below with some tweaks given what we are currently facing.
“Which brand of Olive Oil should I buy out of the 15 types on the shelf”
“Should I buy organic carrots at $7 or non-organic at $4”
“What will I have for lunch today”
“The market is down/up/sideways, what should I do”
“Should I pay off my mortgage or put money into super”
A couple of years ago I read an interesting book which spoke about the concept of decision fatigue, and how the brain gets tired after making a series of decisions. Decisions use the same willpower that you use to say no to things like cupcakes and other temptations, and by making decisions you are incrementally using up your mental energy for the day. The more tired this ability is, the more risk of making a poor decision. What was interesting is that the brain can’t distinguish between important/non-important decisions. For example, choosing which carrots to purchase can use the same energy as what you should do with your finances.
Given the plethora of choices we are all faced with on a day to day basis (albeit a few less choices right now), it got me thinking about a phenomenon I see with clients all too often when it comes to matters related to their money – too much choice, therefore I do nothing.
As an example, a group of Stanford researchers created a sampling booth within a supermarket, with one afternoon having 24 jams, the following week 6 jams. They found that more people liked the idea of having a lot of choices, more customers approached the 24 Jam booth than the 6 jam one. However, those visiting the 24 jam booth tried 1-2 Jams, and only 3% purchased. Those at the 6 jam booth also tried 1-2 jams, and 30% of people purchased. From this, researchers concluded that those with copious choice shut down and did nothing, and called this choice overload.
So when I speak to clients who have at least started the process of making decisions about their money, from budgeting to investing to debt management to insurance etc, there is sometimes fatigue with the array of choices and information, and also the fear of then making the wrong decision which stops them from taking action.
So how can this be combatted? In terms of the book, which was talking about productivity, reducing the amount of inconsequential choices you make in your life can preserve this mental energy. I.e. I am going to do a work item at this set time everyday.
Outsourcing to someone else to navigate the choice and either present you with a final decision or a narrow set of decisions can also assist. For example, many people I know who are juggling the working/schooling will being in isolation have turned to prepared meal delivery. This takes a whole raft of decision making elements out of the equation so you can focus on what is really important right now. And if you are in a position where you still have this choice in discretionary spend – keeps the often small business alive during this economic hibernation.
We as financial planners should be your outsourced decision making, in that you tell us what you want to achieve, we come back after navigating all of the choices for you to recommend what we think is the best decision for you to achieve this outcome. You can then spend your mental energy elsewhere!
It is that time of the year again, and Treasurer Jim Chalmers delivered the Government’s 2025-2026 Federal Budget.
As expected, Labor’s fourth Budget centred on easing cost-of-living pressures with the welcomed surprise of proposed tax cuts. Super remained mostly untouched—no updates on Division 296 tax measures or residency rules for small super funds.
We have summarised the key points which impact financial planning strategies below, and you can view the full Government Budget details here.
For our ongoing service package clients, your adviser will be in contact to provide guidance on changes that may impact your strategy.
IMPORTANT: Please remember that these measures are subject to becoming law, so confirm this before taking action.
The Government has proposed tax cuts in the form of a tax rate reduction to be introduced over two years, delivering a savings boost for Australian taxpayers. This will be achieved by reducing the 16% tax rate that applies to taxable income earned between $18,201 and $45,000.
The Government will reduce the current 16% income tax rate as follows:
As outlined in the table below, there has been no proposed change(s) to either the personal income tax thresholds, nor to any of the other personal income tax rates.
The outcome is a tax saving of $268 in 2026-2027 and $536 per year from 2027-2028 for taxpayers earning over $45,000.
The Government will increase the Medicare levy low-income thresholds by 4.7% for singles, families, seniors and pensioners from 1 July 2024 to provide cost-of-living relief.
The increase to these thresholds aims to ensure that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
The Government will allocate $50 million over three years from 1 July 2026 to extend the Tax Integrity Program.
This will enable the ATO to continue its engagement program to ensure timely payment of tax and superannuation liabilities by medium and large businesses and wealthy groups. This measure is estimated to increase receipts by $31 million in unpaid superannuation to be disbursed to employees.
The Government has announced the extension of energy bill relief for eligible Australian households and small businesses until 31 December 2025. This measure, which provides $150 in relief paid as $75 over two quarters, aims to alleviate the cost-of-living pressures.
From 1 January 2026, it’s proposed the Pharmaceutical Benefits Scheme (PBS) general patient co-payment will be reduced from $31.60 to $25.00, with concession card holders continuing to pay $7.70 for PBS-listed medicines.
Outstanding Higher Education Loan Program (HELP) and other student debts are proposed to be reduced by 20 per cent from 1 June 2025.
In addition, from 1 July 2025, the Government has proposed to increase the amount that people can earn before they are required to start paying back their loans from $54,435 in 2024–25 to $67,000 in 2025–26.
On top of this, compulsory repayments will be lower for people earning under around $180,000 and above the current minimum threshold.
The Government proposed to increase funding for the Help to Buy program by $800 million, so more first time home buyers can purchase a property.
Income caps will increase from $90,000 to $100,000 for singles and from $120,000 to $160,000 for joint applications.
In addition, the property price cap will be increased (these vary depending on location).
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2025-2026 Federal Budget, please feel free to book a chat with your adviser.
Treasurer Jim Chalmers delivered the Labor Government’s 2024-2025 Federal Budget and we have summarised what we feel are the key points which impact financial planning strategies.
For our ongoing service package clients, your adviser will be in contact to provide guidance on changes which may impact your strategy.
IMPORTANT: Please remember that these measures are subject to becoming law, so be sure to confirm this before taking any action.
Starting 1 July 2024 Stage 3 tax cuts will deliver savings of $4,529 per annum for those in the highest tax bracket. The average taxpayer will save $1,888 a year.
The Stage 3 tax cuts will make the following changes from 2024/25:
The table below shows the changes to tax brackets. Note, these amounts do not include Medicare levy.
The table below compares the amount of tax payable in 2023/24 to the amount payable under the new tax rates from 2024/25. The last column shows the amount of tax saved.
The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2023 to provide cost-of-living relief. The increase to the thresholds ensures that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.
This measure has already been provisioned for by the Government and will apply retrospectively from 1 July 2023.
The Government has announced that it will pay super on the Government funded Paid Parental Leave for babies born or adopted on or after 1 July 2025.
Eligible parents will receive an additional 12% of their Government-funded Paid Parental Leave as a contribution to their superannuation fund.
Starting from July 1, 2026, employers must pay superannuation at the same time they pay salary and wages to employees. Currently, employers are required to pay their employees’ superannuation guarantee contributions on a quarterly basis.
Energy bill relief will be extended to every Australian household, with $300 automatically credited to their electricity bills next financial year. This is not means tested.
HELP/HECS debt will now be indexed either to the Consumer Price Index (CPI) or the Wage Price Index (WPI), whichever is lower, and that change will be backdated to 1 June 2023.
This means that about 3 million Australians with student loans are set to receive an average $1,200 reduction in their HELP, HECS, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June last year.
The reduction aims to offset steep increases in student debt last year when student loans were indexed to inflation at the rate of 7.1%, but wage growth remained low. The 2023 indexation rate based on WPI would only have been 3.2 per cent.
The Government has announced a one-year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders.
This change means that no pensioner or concession card holder will pay more than $7.70 (plus any applicable manufacturer premiums) for up to five years.
The current freeze on deeming rates, which are used to determine the amount of income a person is deemed to earn from their financial investments, will be extended for another year. This means that the deeming rate will stay at 0.25% for the lower rate and 2.25% for the higher rate.
This will ensure income support recipients, such as age pension recipients, will not see a reduction to their payments due to an increase in the deeming rates over the next year. It also means there will be no negative impact for Commonwealth Seniors Health Card holders and means-tested aged care recipients.
Commonwealth Rent Assistance maximum rates will be increased by 10% from September 2024, with the aim of helping address rental affordability in the housing market.
The Government has announced that from 20 September 2024, it will extend eligibility for the existing higher rate of JobSeeker Payment to single recipients with a partial capacity to work of between zero and 14 hours per week.
The higher JobSeeker Payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been on payment for nine continuous months or more. This measure extends the higher payment rate to those with a partial capacity to work.
The higher JobSeeker Payment rate is currently $833.20 per fortnight (compared to the standard rate for single recipients without dependant children of $771.50 per fortnight).
From 20 March 2025, the existing 25 hour per week participation limit for Carer Payment recipients will be amended to 100 hours over four weeks. The participation limit will no longer capture study, volunteering activities and travel time and will only apply to employment.
The Government has also announced that Carer Payment recipients who exceed the participation limit or their allowable temporary cessation of care days, will have their payments suspended for up to six months instead of cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current seven day minimum.
The Government has now announced a new start date of 1 July 2025 for the new Aged Care Act, however no details have yet been provided as to how fees and charges for aged care residents and home care recipients will work under the new Aged Care Act.
Also, the Government has announced it will provide funding over five years from 2023–24 to deliver a range of key aged care reforms and to continue to implement the recommendations from the Royal Commission into Aged Care Quality and Safety. These measures are proposed to include:
The Government has announced it will extend the $20,000 small business instant asset write-off by a further 12 months until 30 June 2025.
Under these rules, small businesses with aggregated annual turnover of less than $10 million will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. The Government also confirmed the $20,000 asset threshold will continue to apply on a per asset basis, allowing small businesses to instantly write off multiple assets.
Similar to households, the Government announced it will provide direct energy bill relief for small businesses.
The government will provide additional energy bill relief of $325 to eligible small business in 2024-25. Rebates will automatically be applied to electricity bills and will be rolled out in quarterly instalments.
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2024-25 Federal Budget, please feel free to book a chat with your adviser.
The Labor tax package passed through the upper house on Tuesday night with bipartisan support. The quick passage of the bill means the cuts will start applying to people’s incomes from July 1.
The stage 3 tax cuts will make the following changes to tax rates and thresholds in 2024/25 compared to the current financial year (2023/24):
The table below compares the resident tax rates in 2023/24 to the proposed tax rates from 2024/25 onwards:
As a guide, the below table shows the tax savings a resident taxpayer will receive from 2024/25 under the stage 3 tax cuts, based on different levels of taxable income in comparison to the current tax rates.
The reduction in the lowest marginal tax rate will also impact the effective tax-free threshold, which is the level of taxable income you can receive before income tax becomes payable. The good news is that these thresholds will increase.
The below table compares the effective tax-free income thresholds between the current year and from 1 July 2024.
Link to the Government fact sheet here.
If you want to discuss what this means for your personal strategy or any of the details above, please book a chat with one of our financial planners.
Just like any other parenting choice, the topic of pocket money is one that chocks up the online forums, and everyone has an opinion.
Our kids are now at the age where pocket money has entered the chat, and the extra pressure to get it right as we are both financial advisers always weighs heavy! I thought it would be worth sharing my thinking about this, and maybe you can take some ideas away for your own family.
It is essential to first form your family philosophy—the actual mechanics can be very simple, but as we know, the emotional and psychological underpinnings of money are far from it. Some questions to think of as a family:
On the topic of kids starting an income producing business, I would put it outside the realm of “pocket money”, but it is also worth discussing.
I know personally, I would like my kids to learn they need to put in work to be able to earn money, but I also don’t want them asking for each basic household task, ‘Will I get money for this?’ (This actually happened, and it horrified me).
I love the bucket strategy of spend, save, invest, donate – as this mindset can carry them right through to adulthood and spawns many subsequent lessons along the way. I will also try to mimic the different real life implications of saving, investing and donating—the earnings and tax deductions—that the dopamine hit of extra money or helping people can be just as strong as the instant gratification of spending immediately.
Another concept I love is getting older kids involved in your household budget to help look for savings that they can get a piece of/benefit out of. I have heard a great story about a teen shopping around the internet and utilities and creating a family meal plan that saved enough for them in bills and groceries to take a family holiday. Great lessons in budgeting, but also saving money on commodity-style items to direct to things that bring you joy.
Would love to hear any tips from readers as to things you felt work with your kids or grandkids or something maybe your parents did that sticks with you, and please email them through to rhiannon@pekada.com.au!
I recently turned 30. It’s a strange age. Some of your friends have settled down and have children, whilst others are backpacking around southeast Asia. Some are looking to purchase an investment property, whilst others are hosting big parties in their shared house of ten. Regardless of which stage you are at, the thirties are an excellent chance to take some of that ‘grown-up medicine’ and to look to start to get our finances in order; here are some places to start.
1. Set some goals:
Money is just the vehicle towards helping you live your best life. Everyone will have different goals, so your financial plan should be different. If you’re the type of person who wants to live overseas, then buying a house because you feel like you should and others are telling you to may not be the best option. Once we have goals, it’s easier to know what we must do to achieve them. Otherwise, we can continue on a road to nowhere.
2. Review what you currently have:
Personal finances are usually left or pushed into the too-hard basket. You may not be as passionate about it as I am and, therefore, lack the motivation to think about it (completely normal). Simple things like reviewing what you currently have can pay big dividends.
Review your superannuation and make sure that your fund is appropriate. Check about how your fund has been performing compared to others. Please have a look at your investment options within your super and make sure that it’s appropriate for you. Think about whether or not you would like to be invested in an ethical and environmentally friendly manner and see if your current investments align with that.
You should also review what insurance you have. If you have young children or some debt with a partner, such as a home loan, then life cover could be critical. If you’re working and rely on your income to live, then you need income protection. Insurances aren’t sexy, and not many people like paying for them, but if something goes wrong and you don’t have them, it can create financial pain that can be hard to recover from.
3. Build an emergency fund:
Life is unpredictable, and unexpected expenses can arise at any time. Aim to build an emergency fund with three to six months’ living expenses. This financial cushion will provide peace of mind and help you avoid dipping into your savings or investments during tough times.
4. Look towards the future:
Investing is a powerful tool for building wealth over time. It can be slow to start with, but compound interest is the eighth wonder of the world; the earlier you start, the more rewards you reap. Putting some surplus cash towards investments that have growth potential can help you fund some future goals you may have as well. There are options for all different starting balances, so you don’t need to wait and put it off any longer.
5. Stop paying the lazy tax:
Only some people love to have a strict budget in place, and if that’s you, there are things we can do to get our cash flow under control. Reviewing your expenses is essential; a lot of little savings can add up, especially when everything is getting more expensive.
Have a particular look at your subscriptions, whether they be streaming services or gym memberships and make sure you’re using them and getting value out of them. If not, look at ending them or looking at alternatives.
The lazy tax can also apply to your banking. We often choose a bank early on in life and stick to it. Review your interest rate and ensure that what you are getting stacks up. This can also apply to your home loan if you have one. It can pay to do some research, as there are often no rewards for loyalty in this area.
7. Estate Planning:
It’s never too early to think about estate planning, especially if you have dependents. Setting up a will now can last until your situation changes and doesn’t need to be too difficult or costly. It will mean that your wishes will be carried out if something happens to you.
8. Reach out if you’re unsure:
For some people, discussing personal finances is like speaking another language, but seeking guidance from a good adviser can help simplify the situation. A good adviser should also be able to educate you along the way. Using your money in the best way possible is important, so don’t let it fall by the wayside just because you’re unsure where to start.
As always, we are here to help. If you have any questions, feel free to email me at zac@pekada.com.au
Most of us don’t like being asked how much money we make.
We’ve gotten really good, however, at building a material world around us that implies great wealth, even if the reality is something else entirely.
With our cars, our houses, and the clothes we wear, we are constantly signaling what we want the world to think about the very question we hate to answer.
And while we often treat these material things as a sign of our success, in reality, they’re usually just a front. In fact, most of us would be better off (financially speaking) buying a less expensive car and putting the leftover money into mutual funds.
Ironically, if we all just walked around with a big sign around our necks saying how much we make, we wouldn’t have to do all this posturing and pretending. Our relationship with money would change considerably if our financial decisions were transparent to the world.
For instance, what if the home in which we live could no longer hide that we’ve saved nothing for retirement?
Maybe then we would find it easier to focus on the financial choices that help us instead of hurt us.
Whether you or a loved one is considering a move into a retirement village, it can be a lot of information to process. Below, I run through some of the main things to know and consider when transitioning to a retirement village, including:
Retirement villages are communities that generally provide accommodation, facilities and services to people over 55 and retired from full-time employment. Accommodation varies from independent living in self-contained units to assisted living in serviced units.
There are a variety of occupancy and ownership structures. Still, it is important to know that the most common form of occupancy and ownership structures are:
Leasehold and loan and licence arrangement (84%):
Strata title (11%)
Company title and unit trust (3%).
Other structures
What you have to pay and when varies based on the structure and agreement you choose, so always be sure to fully understand these before making a decision.
It can be confusing with different names/labels for all of the costs, but in a nutshell, they can be categorised as:
Entry price/contribution
Ongoing cost/fees
Departure/exit fees
This table sets out the homeownership status, asset test assessment and eligibility for rent assistance which is determined by whether the amount paid as an entry contribution exceeds the extra-allowable amount
To determine whether a resident is considered a homeowner for Centrelink purposes, the entry contribution (EC) is compared with the Extra Allowable Amount (EAA). The EAA is the difference between the homeowner and non-homeowner lower assets test thresholds (currently $242,000).
If you want to discuss your planning strategy to transition to a retirement village, then please get in touch and book a chat with one of our advisers.
Note: The information in this article is current as at 2 October 2023 unless otherwise specified.