Enhancing retirement outcomes using downsizer contributions

Enhancing retirement outcomes using downsizer contributions


Legislation to make superannuation downsizer contributions (downsizer contributions)

has now passed enabling individuals who are 65 or over to contribute proceeds from the

sale of one eligible property to superannuation without needing to satisfy the work test.

The new rules provide more flexibility for retirees to fund their retirement using capital

released from their homes. From 1 July 2018, retirees can make downsizer contributions

and use the contributions to access superannuation retirement income products (subject

to their transfer balance caps).


Downsizer contributions are also exempt from the concessional and non-concessional

contribution rules and provide scope for retirees in different situations to enhance their

retirement outcomes.


This article will examine the rules around making downsizer contributions.



For a contribution to be a downsizer contribution, the following conditions will need to

be met:

  • At the time of the contribution, the individual is 65 or over (there is no upper age limit)
  • The contribution is in relation to the sale of an eligible property (see below) that the

individual or their spouse owned just prior to the sale, and where the contract of

sale was entered into on or after 1 July 2018 (there is no requirement to purchase

another property)

  • The total amount of downsizer contributions in respect of an eligible property does not

exceed the capital proceeds, or $300,000 per individual

  • The contribution is made within 90 days after the change in ownership of the property

(usually the settlement date) unless the Commissioner has allowed a longer period; and

  • The contribution is made using the approved form.

Cap on the amount of downsizer contributions

The amount of downsizer contributions is not governed by an individual’s concessional or

non-concessional caps (or their total super balance) and can be made in addition to these

contributions. However, the amount that can be contributed is capped at the lesser of:

  • $300,000 for each individual; and
  • the capital proceeds received (before any mortgage repayments).

For example, if a couple received $600,000 from the sale of an eligible property, they can

each contribute up to $300,000 as a downsizer contribution. If their property was sold

for $500,000 instead, the most they could contribute is $500,000 between them up to

$300,000 for each person (the combination does not matter) i.e. each could contribute

$250,000 or have one person contribute $300,000 and the other $200,000.

Importantly, downsizer contributions are not deductible and cannot be made in respect

of a second property regardless of how much was contributed for the first.

Although contributions can only be made in respect of one eligible property, multiple

contributions can be made for that property (to different superannuation funds for example)

if it is made within the above cap and timeframe (90 days).

Eligible property

For the property to be an eligible property, it must be located in Australia and cannot be a

caravan, houseboat or mobile home. In addition:

  • The property must have been owned by the individual, their spouse or their former spouse

for 10 continuous years just before the sale of the property. This means the 10-year period

is still met where ownership changes between spouses (e.g. relationship breakdown

or death of a spouse) during the period.


The 10-year period is calculated from theday the ownership commenced to the day it ceased (usually the settlement dates). There are certain events that do not ‘break’ the continuous 10-year period

including where:

–– a property was vacant because it was destroyed or knocked down and a new home

built; or

–– a substitute property was purchased and owned for less than 10 years because the

former property was compulsorily acquired. However, the former property had to have

been initially acquired at least 10 years prior to the sale of the substitute property.

Note that all conditions of section 118-47(1) of the Income Tax Assessment Act 1997

(ITAA97) need to be met in relation to the purchase of the substitute property, including

the requirement that the substitute property was purchased within a year after the end

of the financial year that the former property was compulsorily acquired.


  • The individual must satisfy all requirements (apart from the fact that their spouse

owned the property) to qualify for a full or a part main residence capital gains tax (CGT)

exemption for that property. The property does not need to be the individual’s main

residence for the entire 10-year period or at the time of sale. It also does not need to be

owned by both members of a couple for each of them to make downsizer contributions.

For properties acquired before 20 September 1985 (pre-CGT asset), this requirement is still

met if the individual would have qualified for a full or part main residence CGT exemption

had the property been a CGT asset (it was not an investment property for the entire time

it was owned).


If you have questions or are considering downsizing, please contact your planner on 03 9851 0300


How your assets will be distributed if you don’t have a Will

How your assets will be distributed if you don’t have a Will


Most of us accept that a valid Will is essential to determine how your estate is dealt with when you die. Your Will can appoint a family member or trusted friend to administer your estate, nominate guardians for young children, determine who will benefit, and create trusts to protect assets and safeguard vulnerable beneficiaries.

Without a Will, the administration and finalisation of your estate could be left to somebody you would not wish to involve, and the distribution of your assets will be pre-determined by legislation – an unfortunate outcome for a family who is already grieving.


Changes to intestacy laws

The Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017 (Vic) has brought about various changes to estate and succession laws.

Of interest to those readers who keep putting off preparing a Will, are the reforms affecting how your estate will be distributed when you die without one. Whilst the laws aim to promote fairness for family members left behind by a person who dies without a Will, they are a timely reminder of the restrictive formula that applies when distributing an intestate estate.

Essentially, the legislation decides who gets what from your estate, unless a disgruntled family member contests the proposed distribution. In such cases, the application fuels conflict within the family, adds to the emotional turmoil and potentially depletes estate assets. Even more reason to get that Will prepared now!


Distribution of an intestate estate

Essentially, the reforms improve the position of a partner (spouse or de facto) of a deceased intestate person. The following summarises how statutory distribution will apply for partners of an intestate person who dies on or after 1 November 2017.


One partner and no children

The partner takes the whole of the estate – this is unchanged from the previous position.


One surviving partner and a child or children also of that partner

Previously where there was a child or children of the deceased and surviving partner, the partner would take the personal chattels, a legacy of $100,000, and one-third of the balance of the estate. The remaining two-thirds of the estate would be distributed equally between the surviving child or children. This was problematic in that it could leave the partner and remaining family with little financial security.

The statutory-imposed division of the estate would mean that, frequently the family home would need to be sold to provide the share allocated for the child or children of the relationship, even though they were the children of the deceased and his or her partner. Such circumstances would cause unnecessary upheaval and distress.

The laws now provide that when a person dies intestate leaving one partner and a child or children also of that partner, the partner will take the whole estate (unless there is more than one partner or a child or children of the deceased who is not also a child of the partner – see below).


One surviving partner and a child or children not of that partner

In this case a statutory legacy (currently $451,909) applies. If the estate is worth equal to or less than the statutory legacy, the partner will inherit the residuary estate. If, however, the estate value exceeds the statutory legacy, the distribution is:

 the partner receives the personal chattels, the statutory legacy amount (and any interest if applicable) and half of the balance of the residuary estate; and

 the children of the deceased share equally in the remaining half of the residuary estate.


Multiple partners – with or without children

If the deceased leaves multiple partners with or without children, the distribution of the estate is in accordance with complex and restrictive provisions and may also necessitate an application for a distribution order.


No partners – children

The estate is divided equally between a surviving child or children. If a child of the deceased has died, then that child’s share will be taken by his or her surviving child and if more than one, equally.


A word from Matt and Robyn Cronin

Many of you will be aware that Pat Cronin, the son of Matt and Robyn Cronin, was killed in April 2016 by a coward punch and since then Matt and his family have endured an arduous legal battle through the courts. Thankfully the process has come to a conclusion with the killer being sentenced in November. Here is a note from Matt and Robyn.

After waiting for almost 19 months following the death of Pat, we are thankful that the trial is finally over.

The sentence handed down to Pat’s killer was for 8 years with a minimum of 5 years and although it was in line with what the prosecution expected this hardly seems fair to us. In reality there was never going to be a sentence that was adequate as nothing was going to bring Pat back. Sadly, the laws that were introduced for Coward Punch attacks like Pat’s case let us all down with technicalities of the law proving to be unworkable – we have a personal crusade we wish to take up to ensure these laws are changed to provide greater protection and consequences.

Following the trial there has been wide media coverage of our story and just being able to finally talk publicly has helped us enormously as we set about the work we plan to do with the Pat Cronin Foundation. The foundation has allowed us to focus on making positive changes in an otherwise very negative situation.

The first intention of the Pat Cronin Foundation is to honour Pat and if you have seen the CCTV vision that has been released there is almost nothing that we need to do as Pat’s actions on the 16th of April 2016 clearly show the good nature and character that he truly was. Pat did nothing more than try to help his mates who were being attacked.

The second intention of the Pat Cronin Foundation is to End the Coward Punch and this will be achieved through our:

  • Education programs
  • Awareness programs, and
  • Research programs

If you would like to find out more about the Pat Cronin Foundation or if you would like to make a tax deductible donation or purchase some of our wonderful merchandise, please visit www.patcroninfoundation.org.au or our Facebook page https://www.facebook.com/patcroninfoundation/ – please like and share our page as this is our main form of communication.

We would like to thank everyone at Tailored Lifetime Solutions who have assisted you over the past 19 months and we would also like to thank everyone of you who has sent us so many kind messages of support and friendship – every message has helped us to get through this horrible ordeal. Finally we thank you all for remembering our beautiful son Pat.

Be Wise

Matt & Robyn


2017 in review

2017 in review

As we head towards the end of 2017, it’s worth taking a look at how investment markets have fared over the year.

It turns out we’ve enjoyed a pretty good 12 months – especially if you haven’t had a significant chunk of your wealth tied up in cash.
The last 12 months have been steady on a number of financial fronts. Even the official cash rate has remained unchanged for the entire year, and that’s been a plus for local businesses. Reflecting this, Australian shares have performed well.

Double digit gains on shares

As I write in mid-November, the ASX 200 Total Returns Index has dished up gains of 11.27% for the year to date. This in turn has impacted our super savings – especially “balanced” funds, which typically have a solid investment in equities. According to research group SuperRatings, long term (7-year) returns for super funds continue to sit at around 8.2% annually. That’s good news for our nest eggs. All asset classes move in cycles, and reflecting the economic recovery that’s taking place in many developed nations, international shares have been a strong performer this year.

The MSCI World Index (excluding Australia) notched up gains of 18.9% for the year to date. Past returns are no guide for the future, but returns like this are a compelling case to add global equities to your portfolio. An international share fund – either listed or unlisted, offers an easy way to do this. Contact my office for more details on investing in global shares.

Key property markets are cooling

Despite the robust gains on equities, residential property has once again attracted plenty of media attention.
According to CoreLogic, values in Sydney have begun to cool, with annual price gains of 7.7% as at the end of October. Values in Melbourne, where the market is still rising, have soared 11.0%. But the real scene stealer has been Hobart, where property values have climbed 12.7% over the past 12 months.

For property investors, the slowing pace of capital growth especially in Sydney, reflects tighter credit policies among lenders. The shift to lower risk loans and stricter borrowing limits is not necessarily a bad thing. Coupled with rate premiums for interest-only borrowers, this is forcing many people to consider whether a rental property really suits their long term goals.

Planes, trains and automobiles deliver strong gains

One asset class that can that be easy to overlook is infrastructure. Yet things like toll roads, railways, airports and utilities can be a steady performer for investors.

The ASX Infrastructure Index has achieved gains of 12.79% for the year to date. As with international shares, you could invest directly in individual infrastructure companies but an easier way to get a slice of the action is by investing in an infrastructure fund. This also has the advantage of spreading your money across a broader range of underlying assets.
With returns on cash still looking very ho-hum, it could be worth looking beyond savings accounts (where you’ll be lucky to earn 3% before-tax), and think about where you could put at least part of your money to work in 2018 to earn a stronger return.

Contact us to take a closer look at the range of investment opportunities that can help you achieve your goals for 2018 and beyond.

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Eight steps to improved cashflow… and lifestyle

Eight steps to improve cash flow… and lifestyle

Imagine feeling on top of your finances. Knowing you’re in a position to enjoy your life today, while also saving for tomorrow.
If that sounds good to you, you’re not alone. In a recent survey, 54% Of Australians aged 55-64 strongly agreed they’d like that too1.

Yet, many of us don’t feel like we’re in that position. Financial stress is actually so common that 24% of Australian employees are affected by it2. And it can have an impact on all areas of life – psychological health, morale and the ability to fulfil day-to-day responsibilities.

A better cash flow could help

Your cashflow is the amount of money that’s coming in and going out of your bank account at any point in time. It’s not a measure of overall wealth, but whether there’s enough cash available to meet your expenses, with some left over. If your cashflow isn’t in check, you might find it difficult to pay your bills on time, or end up relying on credit.
Also, cashflow is almost always the starting point for building wealth.

So when it comes to finding ways to enjoy life and still grow your wealth, before you do anything else, it’s worth looking at how you’re spending your everyday money.

Eight steps to improved cashflow

Here’s what you can start doing today to help you feel on top of your finances.

Step one: Set some goals.

Work out what you’d like to achieve in life. It’s a good way to help shape how you spend your money in the long term. Also, research suggests that setting goals can help you become happier and more positive3 as well as eliminate some triggers of financial stress.

 Step two: Get a better understanding of your spending habits.

Take a step back and look at your money coming in and going out. This will help you become clear on where your sticking points are, like the common times you find yourself short.

Step three: Create a workable budget

Build a budget that fits your lifestyle and priorities. There are lots of budgeting tools online, or you could ask your adviser to help. Once you’ve crunched the numbers, you can then look at areas to make some savings.

Step four: Compare your providers

List your current providers for things like your home loan, bank accounts, credit cards, mobile phone, internet and utilities. Understand the costs, then look around for better deals. Comparing providers can often end up saving you money in the long run.

Step five: Review your insurances.

Now is the time to work out whether you have the right type and level of insurances, and how you can make savings. AMP’s insurance calculator can help you figure out how much cover you might need.

Step six: Get on top of your super

It’s important to think about super as soon as possible. Many Australians will be looking at a retirement of 30 years or more, and the Age Pension alone is unlikely to be enough4.

 Step seven. Embrace online services

This is where you can simplify the time it takes to look after your finances so you can get on with the rest of your life. There are a range things you can do:

  • Set up direct debits so your bills are paid on time
  • Switch to electronic communications (some providers actually charge for paper-based communications)
  • Download apps that can help you access your finances on the move
  • Check and update your details, so your providers don’t lose track of you
  • Set up a good online filing system, and make sure you back it up!

 Step eight. Talk to an expert

Asking friends and relatives for advice is great, but what works for one person may not work for someone else. Financial advisers are there to help you set up your money for growth in the long term, while also helping you meet the needs of today

Better cashflow, better lifestyle

By taking a fresh look at your cashflow, you’re likely to find new approaches to saving money and time.
With a clear picture of what’s happening with your money at any point in time, you’ll feel more confident about your finances overall. Able to enjoy life today, while still saving for tomorrow.

We’re here to help

Just give us a call today, and ask us how we can help you improve your cashflow, and build a plan to meet your financial goals.
If you like, we can also set up regular check-ins, to make sure you continue to head in the right direction.


  1. The Interpreters. AMP Segmentation and Goals research 2017. 1955 respondents.
  2. Financial wellness report. 2016. prepared by TNS for AMP Life Limited
  3. Positive psychology program, Goal setting can make you a happier person article, Oct 2015
  4. http://www.superannuation.asn.au/resources/retirement-standard

Avoid a nasty case of holiday debt lag

Avoid a nasty case of holiday debt lag

Enjoy a well-earned vacation without bringing home a mountain of high interest debt.

I do love a catchy new phrase, and this one made me laugh. “Debt lag” is a new one for me. It seems that as Chrissy approaches we plan a holiday, but don’t quite get around to saving for it. So some 2 million of us turn to our credit cards on vacation, and cop a nasty case of debt lag!
Among the holidaymakers who return home with a maxed out credit card, half clear the slate within three months. But the remainder can take anywhere from six months to more than a year to pay off their holiday debt.

Vacations see card spending climb by $2,000

Taking a credit card on vacation can make a lot of sense. It’s a lot more secure than carrying wads of foreign currency, and it provides a handy back-up if you run low on the folding stuff. And let’s face it, that’s easily done. Vacations tend to encourage a sense of bonhomie, which can see us splurge on things we wouldn’t even think about buying at home. (A colleague of mine is still questioning the pineapple-shaped slippers she picked up in Hawaii.)
There’s no problem with a bit of overspending – if you can afford it. After all, holidays are meant to be enjoyed. But Australians rack up an average of $2,000 on their credit cards while on vacation, and unless you can pay off the balance immediately the outstanding interest charges won’t just take the shine of a trip’s happy memories, they could leave you cash-strapped well into 2018.

Plan, pay ahead and avoid tourist rip-offs

The key to avoid blowing your vacation budget is to plan how much you’ll spend and how you’ll pay for it all. Most holidaymakers set a travel budget but only around one in two stick to it. Doing plenty of online research can give you an idea of the sorts of costs you’re facing, and from here it’s easier to set daily spending limits. Where possible, aim to book and pay for accommodation, tours and even entry to attractions before you leave home so you’re not facing inflated tourist prices.

Bypass the gripe costs

Surprisingly, the most cited rip-offs mentioned by Australian travellers are not dodgy souvenirs that fall apart before you reach the airport. Rather, credit card and ATM fees plus mobile phone roaming charges are among the biggest gripes. Yet these are easy to control.
Read the fine print of your credit card and/or travel card to understand any fees you may be slugged with. This is an area where I can lend a hand as these documents can be hard to fathom. When it comes to phone charges, either purchase an add-on pack with your local Telco – it’s likely to be far less costly than pay-as-you-go roaming, or ditch your local SIM altogether. Picking up a prepaid SIM at your destination can be a low cost way to stay connected while you’re away.
For tailored advice drafting a holiday budget, please contact us or if you need support managing debt at any time, don’t hesitate to get in touch – the end of the year is always a good time to get on top of money matters.



© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

The disconnect between cards and cash

The disconnect between cards and cash

With the festive season upon us, Australians are gearing up for the annual peak spending period, and the growth of digital payment options could be widening the gap between what we regard as our spending limit and the balance of our bank account.

Credit cards make spending (and overspending) very easy, and a new breed of “digital wallets” like Afterpay, zipPay and PayItLater are replacing traditional lay-by. The convenience of credit cards and digital wallets comes with a downside. Research shows a clear link between the way we pay for purchases and how much we spend.

An experiment by the Massachusetts Institute of Technology for instance, involved students bidding on tickets to a basketball game. Some were told they could only pay with cash, while other students were advised they would use a credit card to pay. Among the students using a card the average bid was $60 – more than double the $28 average among students paying with cash.


The pain of payment

There is a reason for this difference. It’s what psychologists call the “the pain of payment”. When we take a note out of our wallet, we feel a sense of loss. By contrast, when we use digital forms of payment we have no real sense of parting with hard currency. And that makes it easier to overspend.
On one hand, digital wallets don’t charge interest in the way credit cards do. But they do charge late payment fees. Afterpay for instance charges a $10 late payment fee with a further $7 fee if you still haven’t paid up within seven days.
On the face of it, these fees are low but they act in much the same way as card interest – being a charge on an outstanding balance. If you only owe a small sum, the fees can be the equivalent of a very high interest rate.

Keep it real – keep an eye on spending

With Australians expected to spend billions of dollars at the check-out this holiday season (last year we collectively parted with around $48 billion), it pays to be mindful that no matter how you pay for purchases, at some point the money comes out of your hip pocket.
That makes it critical to keep track of how much you’re spending, and ensure you have enough to meet regular bills – both now and in the New Year, when statements for Christmas purchases start to arrive.

The plus of putting off festive shopping

By the way, if you haven’t yet given a thought to festive shopping, don’t feel too guilty. A study by comparison site Finder found those who start buying gifts in October spend an average of $716 on presents compared to $343 among the chain draggers who leave gift buying until closer to Christmas Day.

Maybe allowing too much time to buy can encourage us to spend more, not less. For expert advice, managing your cash flow over the holiday season, or at any time of year, please contact us.

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Online source: Produced by AMP Life Limited and published 23 October 2017

Print source: By AMP Life Limited, originally published on 23 October 2017

At last, Spring has arrived.

10 Handy hints to conquer Spring 

At last spring’s arrived, and gardeners are rejoicing. So here are some top tips for spring activities in the garden:

  1. Prune spring bloomers immediately after their show is over. Then, after every pruning job, feed the plant. Dynamic Lifter pellets are good for most shrubs. Look for the specific DL Advanced variants to suit fruit, tomatoes, lawns, roses and, now, camellias and azaleas.
  2. Roses are at their best in spring. Enjoy the flowers, but don’t forget to begin protecting new leaves with a systemic fungicide.
  3. Once the soil is warm, sow summer vegies such as beans, sweet corn, pumpkins, zucchinis, cucumbers and melons. Plant potatoes and – in warm areas – sweet potatoes.
  4. Feed the lawn to encourage new growth. Dynamic Lifter for lawns will supply organic (chicken manure) pellets that have been boosted with added nutrients.
  5. Remove weeds from the lawn. Then follow up with a feed. After the weeds have died, thicken the lawn by over sowing with lawn seed.
  6. Spring’s the ideal season for laying new turf. Before you begin, blend some Dynamic Lifter Turf Starter into the soil. This clever product combines organic pellets and water crystals to gently feed the new grass and, at the same time, hold moisture.
  7. Start a new herb patch. This is the season to plant basil and dill.
  8. Geraniums (pelargoniums) give months of summer colour but watch for fungal leaf spots.
  9. Watch for weeds springing up in warm weather. On paths and driveways, apply Once-A-Year Pathweeder to keep the surface weed free for up to twelve months.
  10. Divide clump-forming plants and spread to new parts of the garden. Crowded orchids, too, can be split up (pictured), then fed with Dynamic Lifter pellets.


Reduce your bills with these household items

Reduce your bills with these household items

See what things you might have at home that could deliver you cost savings later on.

We all enjoy the odd bargain and inexpensive label that delivers quality at a fraction of the price; however, sometimes shelling out a bit more up front can mean greater cost savings down the track.

Check out these six things that could provide you with financial benefits over the long term.

1. Energy efficient products

Energy efficient appliances—fridges, washing machines, microwaves and air conditioners, can literally save you hundreds of dollars each year in running costs, with such appliances accounting for up to 33% of people’s home energy use, Australian Government figures show1.

The energy rating label is mandatory for a range of equipment so you can easily assess the energy consumption on the appliances you’re looking at.

Likewise, energy-efficient light bulbs often use about 25% to 80% less energy than traditional incandescent light bulbs and generally last three to 25 times longer2.

2. Water-efficient appliances

The Australian Government estimates by 2021 Australians could save more than $1 billion on their water and energy bills3 by using more water-efficient appliances and fixtures, specifically water-efficient showerheads, washing machines and toilets.

In addition, rain water tanks, which can be just as useful in urban areas as they are in rural zones, can generate cost savings. Tanks range from around $700 to $20004 and rebates may apply.

3. Solar power systems

Solar power systems, which generate free electricity, are becoming increasingly popular, with about 1.63 million roof top systems installed across the country as at 1 January 20175.

While there are upfront costs involved, solar power systems are becoming more affordable. Plus, they require little maintenance and generally last 20 years or more. Rebates here may also apply.

Marcus Dorreen, Director of Retail at energy services company Evergen (co-owned by CSIRO), says pre and post-retirees are showing increasing interest in solar batteries, with 50% of inquiries coming from people over age 55, with owners of solar battery systems reporting electricity-cost savings of up to 80%.

4. Programmable thermostats

On average, 40% of energy used in homes across Australia is for heating and cooling6.

By using thermostats and timers to make sure you’re only heating a room as much as you need (and as required) can save you considerable money, depending on your usage.

5. Vegetable and herb gardens

Data from The Australia Institute shows 52% of all Australian households are growing some of their own food, with a further 13% intending to do so7.

Of the top five reasons to grow food at home, saving money was the second most popular response at 62%. Statistics indicate however that it’s not until people are saving more than $250 a year (which only 16% of people are), that real cost savings are achieved.

6. Beverage supplies

If you’re in the habit of buying a $4 bottle of water, coffee or smoothie every day, then your take-away drink of choice is costing you over $1,400 over a 12-month period.

Investing in a reusable drinking bottle, blender or espresso machine could save you hundreds of dollars per year.

More information

There are big and small investments you can make around the home today that will pay for themselves and help save hundreds, or even thousands of dollars, over the months and years ahead.

An added benefit is that many of these investments can lessen our impact on the environment at the same time!

1 http://www.yourhome.gov.au/energy/appliances
2 http://energy.gov/energysaver/how-energy-efficient-light-bulbs-compare-traditional-incandescents
3 http://yourenergysavings.gov.au/water/water-home-garden/water-efficient-appliances-fixtures
4 https://www.choice.com.au/home-improvement/water/saving-water/buying-guides/rainwater-tanks
5 http://yourenergysavings.gov.au/energy/solar-wind-hydro-power/solar-power
6 http://yourenergysavings.gov.au/energy/heating-cooling/understand-heating-cooling
7 http://www.tai.org.au/content/grow-your-own

What to do when you come into money

What to do when you come into money

Whether you’re faced with an inheritance, redundancy package or winning lottery ticket, it’s wise to consider your financial situation and future goals.

For most of us, a financial windfall isn’t something that comes around very often. And while the extra cash is welcome, money matters may be the last thing on your mind if you’re also dealing with the emotions of losing a loved one or being made redundant.

But it’s important to be prepared, so that if you do come into a large lump sum of money unexpectedly, you know what to do with it.

Sort out the tax

The first thing to do is work out if there are any tax implications.  A financial adviser can help you work through these and make the most of your money.

  • Inheritance—You may have to pay tax on your inheritance depending on where the money comes from. For example, you may need to pay tax on any super death benefit you receive, unless you’re a tax dependant of the deceased (eg a spouse, child aged under 18, a financial dependant or someone who the deceased had an interdependency with).
  • Redundancy payment—If your role is made redundant, the payments you receive on termination of your employment will generally be taxed concessionally (unless you’re aged over 65). Speak to your employer to confirm how your redundancy will be calculated.
  • Work bonus—You’ll need to decide in advance whether you want any bonus paid into your bank account and taxed at your usual marginal rate or salary sacrificed into your super and taxed at the concessional rate of 15%1. But make sure that you don’t go over your total yearly concessional cap for super of $25,000 —this includes your regular employer payments and any salary sacrifice payments you may be making. Certain conditions must also be met for you to be eligible to salary sacrifice your bonus – please speak to your financial adviser first.
  • Prize or gift—If you’re lucky enough to win lotto or another one-off prize see a financial adviser to discuss the best way to invest it. If you’re receiving a social security benefit, these amounts can impact your entitlements.

So now you’ve got your money, what to do with it?

While it’s tempting to rush down to the travel agent and book that Pacific cruise, you might like to consider other ways of spending your new-found wealth.

  • Pay off your home loan—If you’re like many Australians, you may have substantial debt in the form of a home loan. So you could use your windfall to pay it off.
  • Pay off your other debt—If you owe money on your credit card or have other loans with high interest rates, now could be a good time to pay them off. Check out how to pay off your debt effectively.
  • Boost your super— From 1 July 2017, you can make up to $100,000 a year (or $300,000 over three years if you’re under age 65) in after tax-contributions. After-tax contributions don’t attract the concessional tax rate but once in super, earnings are only taxed at 15% and withdrawals are tax-free once you’ve reached age 60 (and can access your super). You can also consider pre-tax super contributions.
  • Invest in property, managed funds, direct shares or term deposits – but check what’s right for your personal circumstances.

Want to know more?

Remember, what you do with your money can affect how any earnings or capital gain you make are taxed. So it’s important to plan properly to avoid any unwelcome surprises down the track. And don’t forget to make sure your will and other estate planning matters are up to date, so that your money goes to the people you want it to if anything happens to you.

Speak to us to help you make tax-effective decisions about how to use the money to your advantage.

1 Or 30% if you earn more than $250,000 per annum.

Important information

© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.