Is Worker’s Compensation Enough?
No matter what kind of job you have, there is always a possibility of falling sick or getting injured, regardless of the type of work you do. That’s why every Australian workplace has a health and safety obligation to provide a safe work premise, assess risk and have workers’ compensation insurance. What is worker’s compensation? Worker’s compensation is a form of insurance payment paid to employees if they are injured at work or become sick due to their employment. Payments may cover: The injury or illness must be work-related to receive worker’s compensation benefits. Protection at work A report released by Safe Work Australia in 2023 showed: Whilst worker’s compensation offers some level of protection, it still only protects you for injuries or illnesses that occur at work or as a direct result of work – and then any claim made must meet eligibility requirements. Entitlements and eligibility for payments vary from state to state in Australia. If you suffer from an injury or illness that does not qualify for a workers’ compensation payment, there’s a real possibility that you could be left without income to support yourself and pay for the costs of the medical condition. (An important side note – If you’re self-employed, a sole trader or an independent contractor, you may not be covered under any worker’s compensation scheme, in which case you will need to organise your own protection.) The best way to cover the gap While worker’s compensation is beneficial, it may not provide enough financial support for you and your family, even if you have a successful claim. Considering that the vast majority of Australians suffer from injuries and illnesses not related to work, relying on worker’s compensation alone may leave you short on financial protection. So, how can you ensure you have the best safety to protect yourself when you can’t work? Income Protection Income Protection goes to work when you can’t and can cover you for well beyond what worker’s compensation may provide. Although worker’s compensation might provide some coverage for injuries and illnesses sustained at work, including Income Protection in your personal protection plan can give you peace of mind knowing that you’re covered in various situations, both at and outside of work. This way, your ability to earn an income will be secured. If you want to explore your options for Income Protection, get in touch with your financial adviser today.
Charting a course to financial recovery
Charting a Course to Financial Recovery Australian Bureau of Statistics, (ABS) figures indicate that between 2017-2018 and 2019-2020 total average household debt rose from $190,000 to $204,000. That’s an increase of over 7% in two years! The reasons why would make for an interesting study, however a more pressing question might be what can we do about it? Combine high levels of debt with rising interest rates and a cost-of-living crisis, and it’s no surprise that Australian households are reaching out to Debt Management (DM) companies to help regain control of their finances. DM companies are private organisations that can assist by: consolidating and simplifying multiple debts, helping to develop a sensible repayment plan, negotiating with creditors to: alleviate pressure on householders, and satisfy creditors’ immediate payment concerns. Sometimes, DM companies repay your debts – to a specified limit – and you repay them under a single loan arrangement. Terms and payment amounts can be negotiated, offering a beacon of hope and a sense that you’re taking back control. If this sounds like the perfect solution, remember that for every pro, there’s usually a con. For example: Engaging a DM company may affect your credit score. Though you’re making regular repayments, closing or restructuring accounts may be recorded unfavourably on your overall credit history. Fees and charges apply. DM companies are not charities. Costs may include setup and monthly fees, usually calculated on the total debt being managed. Fees are added to the overall debt which magnifies the financial difficulty. Generally structured and inflexible, DM plans require adherence to a strict payment schedule. This can be stressful if income fluctuates or unexpected financial situations arise. While weighing the pros and cons of a DM service, here are a few do-it-yourself strategies for consideration. Budgeting Creating a budget is a 3-step process. List your income and expenses, (debts, rent/mortgage, food, medical, utilities, entertainment, eating out, etc.). For debts, include: amounts owed minimum monthly payments due dates Categorise spending into a) Needs (can’t live without) and b) Wants (nice to haves). Now look for ways to reduce spending; be honest, do you really need two coffees each day? The government’s Moneysmart website lists easy ways of cutting back everyday spending. Allocate saved money to debts. Identify which one/s to pay first, e.g., prioritising those attracting higher interest, like credit cards. Negotiating Rather than customers defaulting, most banks and utilities companies prefer to negotiate repayment terms, sometimes even offering assistance programs. The key is to reach out before it’s too late. Be upfront about your situation and willing to arrive at a mutually beneficial arrangement. Remember, nobody wins when debts are not paid. Government assistance The Australian government provides a range of financial assistance packages and interest-free loans depending on circumstances. These include crisis payments for unexpected situations, and income support payments for cost of living expenses. Of course there are conditions, but further information, including application criteria, is available from the MyGov website. Financial counselling Financial counsellors help you understand your financial position and assist you to navigate your way out of difficulty. Some local communities offer free, or low-cost, financial literacy programs, aimed at providing education about money and debt reduction. Everyone’s financial position is unique. There’s no one-size-fits-all, so it’s important that your action plan is specific to your needs and that you’re 100% comfortable with any decisions you make. If you’re uncertain, seek the assistance of a qualified financial planner. What’s crucial is that you do something; being proactive is empowering and sets you on the path to financial recovery.
Quarterly Economic Update: Jan-Mar 2024
Quarterly Economic Update: Jan-Mar 2024 The first quarter of 2024 saw the Government roll out considerable changes to the Stage 3 Tax Cuts, inflation continuing to slow but remaining stubbornly high across some areas, surging stock market highs and continuing pressures in the property sector. Government Overhauls Stage 3 Tax Cuts In January, the Labor government unveiled changes to the proposed stage 3 tax cuts, aimed at providing bigger tax cuts to middle Australia. The new changes, which passed the Senate to become law in February, retain the tax bracket that would have been scrapped under the original proposal, and adjust tax rates to benefit both lower and higher-income earners. The changes will take effect from July 1 and are summarised as follows: Inflation continues to ease Global share markets have been breaking records this quarter, with the ASX200, S&P500, Eurozone and Japanese markets reaching record highs, helped by US inflation data coming in as expected, leaving the Fed on track to cut rates from mid-year. Whilst economic growth both locally and globally is forecast to slow, there is optimism in the market as inflation has started easing and is likely to continue falling, and central banks across the US, Canada and Europe are expected to start cutting rates in the coming months. Recession still looms as a risk, but it appears the economy may be moving toward a soft landing. Housing market continues to tighten The national vacancy rate fell to a new low of 0.7 per cent in February, highlighting the ongoing supply and demands challenges in rental properties across Australia, as a result of a construction sector under strain, rapid population growth from migration, and rising property prices. Whilst the government has put stricter measures on international students to try to ease demand pressures, supply continues to be an issue, with building approvals falling by 1 per cent in January, though multi-unit dwelling approvals increased by 19.5 per cent in the same period. Property prices continued to rise despite higher interest rates, inflation and cost of living concerns. The Home Value Index was up 0.6 per cent nationally in February, and showed an increase in all capital cities except Hobart. Labour market cooling Labour market conditions cooled over the December quarter 2023, with an ongoing shift away from full-time employment and growth in part-time jobs, and a decrease in recruitment activity. These trends are consistent with Treasury forecasts that growth will continue to ease and the unemployment rate will increase from 3.9 per cent in January to 4.2 per cent by June, and 4.3 per cent by the end of the year. Despite clear softening, labour market conditions remain tight, and many employers are experiencing challenges finding suitable workers to fill positions, while some shortage pressures remain evident.
The Wealth of Gold: Investing in a Timeless Asset
The Wealth of Gold: Investing in a Timeless Asset As investors navigate through unpredictable and volatile economic times, it is essential to consider asset classes that can provide a level of stability and protection against market fluctuations. One such asset that has stood the test of time is gold. For centuries, gold has been a symbol of wealth and has played an essential role in the global economy. In this article, we will explore why investors turn to gold during uncertain times, the benefits and consequences of investing in gold, and how investors can get exposure to this precious metal. Why Investors Turn to Gold During Volatile Times? Gold has long been considered a safe haven asset, as it has maintained its value throughout history. When the stock market experiences downturns or geopolitical tensions escalate, investors often flock to gold as a way to protect their portfolios against market fluctuations. The price of gold typically moves in the opposite direction of the stock market, making it a valuable hedge against economic uncertainty. Moreover, gold is not subject to the same risks as other investments such as bonds or stocks, making it a reliable store of value. Benefits and Consequences of Investing in Gold The primary benefit of investing in gold is its ability to provide a level of diversification to an investment portfolio. By including gold in a portfolio, investors can reduce their exposure to other assets, thus lowering overall risk. Additionally, gold is a tangible asset that investors can physically hold, making it an appealing option for those who prefer assets they can see and touch. However, investing in gold also comes with some drawbacks. The most significant risk associated with investing in gold is its volatility. While gold has maintained its value over time, its price can still fluctuate significantly over shorter periods. Furthermore, investing in gold does not provide a source of income, as it does not pay dividends or interest. Investors looking for regular income streams should consider other investments, such as bonds or stocks that offer dividend payouts. Interesting Facts About Gold Gold has been used as a form of currency for thousands of years. In ancient times, individuals and countries stockpiled gold as a way to preserve their wealth. For instance, during the California Gold Rush in the mid-1800s, the US government established the first national gold reserve to help stabilize the economy. Similarly, during World War II, countries like the US and the UK stockpiled gold to finance their war efforts. Getting Exposure to Gold Investors have several options to get exposure to gold. The most common way is to invest in physical gold, such as gold coins or bars. However, buying physical gold can be expensive, and investors also need to pay for storage and insurance costs. An alternative option is to invest in gold exchange-traded funds (ETFs), which track the price of gold and offer investors an easy way to invest in gold without the hassle of buying physical gold. Finally, investors can also invest in gold mining stocks, which provide exposure to the gold industry and can potentially offer higher returns than investing in physical gold or gold ETFs. While investing in gold can offer protection against market fluctuations and diversify an investment portfolio, it is crucial for investors to carefully consider the risks and benefits associated with this asset class. By weighing the pros and cons and assessing how gold aligns with their investment objectives, investors can make informed decisions about whether to include this timeless asset in their investment strategy.
Fixed Rate Mortgage Expiring. Now What?
Fixed Rate Mortgage Expiring, Now What? They say all good things must come to an end… and that includes your home loan fixed interest rate period. If your fixed rate expiry is approaching, you might have started to ponder about the next steps and the necessary actions to ensure a smooth transition. Conversely, you might be tempted to ignore this impending change. A word of caution – taking no action could lead to unintended financial complications. Time to Review Your Finances When your fixed interest period is nearing its end, it signals an opportune moment to reassess your finances. Let’s discuss a few key steps: Revisit your budget: A fixed rate expiry will inevitably result in an adjustment to your home loan repayment – often one of the largest monthly expenses. Particularly in a rising interest rate environment, your revised repayment might be higher, requiring careful budgeting. By revisiting your budget, you can plan for the new home loan repayment amount and make necessary spending adjustments. Understand your current Financial Situation Your financial situation plays a critical role in determining the options available to you post-fixed rate expiry. Recent changes to your income position, such as a job loss, reduction in salary, or a maternity break, might affect your ability to refinance your loan. This could potentially leave you stuck with your current lender on less-than-ideal terms. On the other hand, if you have surplus cash flow that you wish to utilize in debt reduction, a variable rate loan might be a more suitable choice, providing more flexibility with repayments. Alternatively, if cash flow is tight, the predictability of a fixed rate loan can offer financial stability, ensuring your repayment amounts won’t increase during the fixed rate period. Keep an Eye on Market Conditions One significant factor to consider when deciding between a fixed and variable interest rate is the current market landscape. It’s crucial to keep tabs on the economy, housing markets, and interest rate trends. Ask yourself: Are interest rates trending up or down? What could the market trends mean for both fixed and variable interest rate loans? Evaluate Your Options As your fixed interest term expires, you will need to decide between either re-fixing your loan for a period or switching to a variable interest rate loan. This crossroad also presents an excellent opportunity to review your existing loan provider against other potential lenders to ensure you’re getting a competitive rate. Armed with market research, initiate a conversation with your existing lender to negotiate a rate review. Let them know you’re considering refinancing your loan and inquire about the best rate they can offer. If they aren’t willing to present a competitive rate, it might be time to explore other lending institutions. Seek Professional Guidance Navigating your fixed rate expiry may seem daunting, but remember, you don’t have to journey alone. A qualified financial adviser can provide valuable assistance throughout the process. They can help determine the best course of action based on your budget, financial situation, and market trends. So why wait? Contact your financial adviser today and take the first step towards navigating your home loan fixed interest rate expiry with confidence!
Five Steps to Manage Your Super Better
Five Steps to Manage your Super Better Know your superannuation fund balance, always make sure you know what’s happening with your super funds. Keeping on top of your superannuation fund balance is an important element to consider when analyzing the future of your financial well-being. Knowing your fund balance can help you decide if it is suitable for retirement or if additional contributions or aggressive investment strategies are needed to reach your goals in a timely manner. You can easily check your super balance through various providers, either online or through mobile applications, with just a few clicks. With online access to your account, you can keep track of progress as well as make changes anytime, anywhere. This gives you the assurance and comfort that your funds are in safe hands and going where they need to go. Checking up on your super regularly will put you in the best possible position for the years ahead when it comes time to retire. Create a budget and stick to it, make sure you are making regular contributions to your super fund Creating a budget and sticking to it is one of the best ways to ensure a secure financial future. The first step in budgeting is to list all your income, expenses, and debts. Once you have an understanding of your financial situation, you should allocate money for specific items such as utilities, insurance, medical expenses, and investment contributions. Setting up an automatic savings plan can help make sure that contributions made to your super fund are regular and consistent. You can get help from a financial adviser or use online apps that can help with budgeting tasks such as creating spending plans and tracking income and expenses. Consider consolidating your super funds – this will help simplify the process of managing multiple accounts and reduce fees If you are one of the many Australians who have lost track of their multiple super accounts, consolidating your funds is the best way to manage them. By combining all of your super into one account, you can reduce fees and simplify the process – plus give yourself access to potentially higher returns from a wider range of investments. To help you with this process, it is always advisable that you consult with a financial adviser. As of 1 July 2019, there is even a new law in keeping with the objective of reuniting Australians with their superannuation savings. There are several ways to search for lost super: via myGov phoning the ATO’s Lost Super search line at 13 28 65 completing a paper form (all details can be found on the ATO website) Alternatively, your preferred fund may be able to search on your behalf. Consolidating your funds could help ensure that you maximize potential returns and get the most out of your hard-earned money. Research different types of investments and learn which ones suit your needs best, explore options such as property, cash management trusts, or managed funds Learning about different types of investments can be a great way to diversify your portfolio. There are many options worth considering, such as property, cash management trusts, and managed funds. To get the most out of this research, it is important to take the time to understand each option in detail before making any decisions. This could include examining their risk factors and investment outlooks, along with what benefits they might offer for you financially. While money does play an important role when making an investment decision, it is also important to broaden your horizon and explore options that may have good long-term potential too. Seek advice from an experienced financial planner, they can help you understand how to best manage your investments Financial advisers are becoming increasingly important as Australians seek to make sense of the changing financial services environment. With new regulations and formalized qualifications, the role of a financial adviser is quickly evolving. The introduction of FASEA (Financial Adviser Standards and Ethics Authority) has seen the industry professionalize in order to ensure high standards of service delivery and ethical practice. An experienced financial planner can help you understand how to manage your investments so that your financial future is secure. A comprehensive understanding of tax brackets, calculator structures, and liquidity levels becomes easier to grasp with the guidance of someone who has years of experience in the field. Seek counsel from an experienced adviser and benefit from their knowledge when making key decisions about your finances.
Buying Your Kids A Home- Good or Bad?
Buying Your Kids A Home- Good or Bad?
Economists Keep Watch as Reserve Bank of Australia Determines Interest Rates
Economists Keep Watch as Reserve Bank of Australia Determines Interest Rates The Reserve Bank of Australia’s stance on interest rates has garnered much attention from economists this quarter. The bank has raised interest rates significantly in an attempt to reduce domestic inflation, but recent data shows a slowdown. The Consumer Price Index only increased by 0.2% for the month of February, signaling a possible halt to further rate hikes. However, RBA considered it to be fit to raise another 0.25 percent. Economists are divided on the outlook for interest rates. Some suggest that the low inflation rate recorded for February meant that any further rate hikes could risk pushing the domestic economy into a recession. In fact, local activity has already stalled in industries like housing construction, local tourism, and recreational industries. On the other hand, some argue that inflation remains above the Reserve Bank’s preferred range of 2-3%, and that consumer spending has remained high despite recent rate hikes. There are also growing fears of recession following the ACTU’s push this year for a 7% increase in the minimum wage from $21.38 an hour to $22.88, making the minimum wage $45,337 annually for 2.4 million workers–a $3,000 pay raise. The ACTU argues that low-income workers spend every cent they earn, and that an increase is necessary to keep the local economy growing and prevent impoverished workers. Business groups point to Australia’s low productivity gains and higher funding costs to argue against any pay increases. This comes hard on the heels of last year’s minimum wage rise of 5.2 per cent. Moreover, the ACTU is pushing for this increase to flow to a range of other award rates, prompting concerns any such move could spark a wage rise – price hike spiral, reminiscent of the 1970’s. Meanwhile, the Federal Government will release its budget this quarter. One priority is whether the Government will address the significant structural funding issues within the budget and control the budget deficit. Although Government revenues have been bolstered by strong international trading conditions for Australia’s key exports of iron ore, coal and wheat, the Federal Government spends more than it receives by way of taxes. Recent decisions to acquire a new fleet of state-of-the-art submarines and military equipment will add billions of dollars to government spending over the next few decades. This is happening while the Government also spends billions to transition away from fossil fuel energy sources and build a new low carbon economy. Finally, a growing number of economists believe that the US economy is headed for recession this year. This belief comes in the face of the central bank’s increasing local interest rates to deal with domestic inflation. While US employment figures remain strong, US and international banks have been under undue pressure from recent rate hikes. Two high-profile banks have already collapsed in recent months, which puts the remaining banks under more pressure to retract from lending to businesses. This could increase the depth and likelihood of any pending recession.
Federal Budget 2023-24 Summary
Federal Budget 2023-24 Summary Lady Luck has once again looked down fondly upon Australia, creating the first budget surplus in 15 years, through a higher tax take on record export earnings and increasing income tax receipts from higher job numbers. But how long will the good times last? Domestic economic growth is expected to buckle under the weight of higher interest rates. As a result,annual gross domestic product is expected to fall to just 1.5 per cent in 2023 -2024, recovering slightly to just 2.25 per cent the following year. This low growth forecast, down from 3.25 per cent currently, comes despite an expected surge in immigration numbers to 300,000, while inflation is forecast to stay stubbornly close to the 6 per cent mark for 2022-2023. The Budget papers suggest inflation will eventually fall within the Reserve Bank’s guidelines, but not for some time, raising the possibility of stagflation engulfing economic growth. At the same time, unemployment is expected to rise from its record low level of 3.5 per cent to 4.5 per cent the following year and remain at this level for the foreseeable future. Nonetheless, this is a true Labor Budget. The Federal Government will boost Job Seeker payments by $40 a fortnight, provide greater rent assistance and energy subsidies to low-income households, as well as lower medicine costs and provide cheaper doctor visits for all Australians. Increased wage payments for those working in the aged care sector and increased childcare subsidies should also help to reduce the pressure on working families struggling to deal with the recent uptick in cost-of-living pressures. An estimated 60,000 single parents will also be able to claim the Single Parent welfare payment benefit from September 1, with the Government lifting the eligibility age for the youngest child in a family from 8 to 14 years. The Government insists these measured spending increases are targeted and restrained and will work to reduce the rate of inflation. However, only time will tell if the Reserve Bank agrees that a lift in overall government spending via the Budget will work to bring down prices. The Government hopes to reduce housing pressures by encouraging investment in rental housing by lowering the annual profit on build-to-rent projects from 30 to 15 per cent. But beyond this, this Budget has very little to help struggling businesses. It does, though, include some $4 billion to encourage new green energy programs, including $2 billion to support large-scale hydrogen production and $1.3 billion to help households upgrade their existing homes through the Household Energy Upgrades Fund. At the same time, big-ticket items within the Budget just get bigger. There is a brave estimate that spending within the NDIS will be restrained, yet there is no actual strategy for achieving this other than to reduce waste. The cost of providing health services has never been higher, while defence spending is expected to surge to $20 billion over the next four years, including some $9 billion to be spent on the new AUK US nuclear-powered submarines. Little has been done to boost Government revenue beyond more fairly taxing windfall profits in the gas industry and increasing the tax bill for super accounts with more than $3 million in assets. Beyond this, nothing has been done to address the structural challenges within the Budget. Meanwhile, there is already unrest that the Job Seeker allowance is not being increased sufficiently to pull recipients out of poverty, with cost of living pressures at record highs for Australia’s most vulnerable people. All at a time when the Budget is in surplus.
Maximizing Your Tax Savings: Effective Strategies for the End of the Financial Year
Maximizing Your Tax Savings: Effective Strategies for the End of the Financial Year As we approach the end of the financial year on June 30, I wanted to take this opportunity to help you manage your taxes more effectively. There have been some changes in the laws for example this year “Low- and middle-income tax offset” has been taken away adding up 625 to 1500 in tax payable for the tax payers depending on the income. I believe implementing certain strategies can help you save on taxes. Let’s explore them together! Employment-Related Expenses If you have any work-related expenses coming up, it’s a good idea to take care of them before June 30. This includes things like uniforms, professional development courses, subscriptions, work-related travel expenses, and even home office expenses if you work from home. By bringing forward these expenses, you can reduce your taxable income. Superannuation Contributions Contributing to your superannuation fund can provide significant tax benefits. You have two options: salary sacrificing and personal deductible contributions. This year, the limit is AUD 27,500 per person. Additionally, you may be eligible for a tax offset if you make contributions on behalf of your spouse. To ensure your contributions are counted for this financial year, please make sure they reach your super fund by June 27. Investment Deductions You can take advantage of certain investment deductions by prepaying accounting or financial advice fees. Additionally, if you have an investment property, consider prepaying interest before June 30 to claim deductions. It’s important to discuss this strategy with us to determine if they align with your specific situation. If a property needs any maintenance do before 30th June to claim deductions. Also make sure to get the Depreciation Schedule prepared so that you claim the correct deductions. Deductions are also available for costs associated with managing shares or other investments, such as brokerage fees or investment advice fees. Charitable Donations Supporting registered charities not only benefits others but can also provide tax benefits through deductible gift recipient (DGR) status. Donations of $2 or more are generally tax-deductible, so keep track of your contributions and claim them in your tax return. Education Expenses If you’re pursuing further education to enhance your skills related to your current employment, you may be eligible for education-related deductions. This includes course fees, textbooks, stationary, and travel expenses directly related to your studies. Paying these costs before June 30 will allow you to claim deductions for this financial year. It is important to remember that everyone’s financial situation is unique, and these suggestions may not apply to everyone. I encourage you to consult with a tax professional or financial advisor who can provide personalized advice based on your circumstances. By being proactive and taking advantage of available deductions, you can optimize your tax position and potentially save money. Should you have any questions or require further assistance, please don’t hesitate to reach out. Here’s to a successful financial year-end!