CONNECT
September 2013 ISSUE
In our September edition of Connect we cover the importance of trauma insurance, changes to the Medical Tax Offset, Superannuation Guarantee changes, and new obligations for trustees of Self-Managed Super Funds.
Trauma & Risk Insurance - Often Misunderstood Risk insurance represents a conundrum for most because it addresses the question of “what if?”. If something were to happen to you or a loved one, would you receive the appropriate financial cover? Trauma insurance provides a lump sum payment in the event that you are diagnosed with a specified illness (it can be for up to 45 major illnesses such as cancer, a heart attack or a stroke – depending on the insurer). It provides money for you and your family to use when it is needed most for medical care or to pay the mortgage and to relieve financial pressure. The benefit is paid when diagnosis is confirmed - not when you die. Over the last 12 months, a number of Powers clients have received a diagnosis of a debilitating medical condition. This news has been devastating to both our clients and Powers staff. In some cases due to forward-planning with Powers Investment & Finance Services, we have been able to use a trauma insurance policy to manage
INSIDE THIS ISSUE
the clients’ needs. In one case, following a review of a client’s investment strategies, it seemed fitting to look at their risk cover. In December 2008, the client received our advice, recommending Income Protection Cover (living expenses) and Trauma cover to the value of $150,000. The applications were completed in January 2009. In early 2012, the client began having problems with their balance and shaking so was referred to a specialist, and diagnosed with Parkinson’s Disease in August 2012. The claim form was lodged on 10th August and specialist medical statements were lodged by August 21st. On 18th September a claim of $173,643 was paid to the clients bank account. This
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• Changes to the Medical Tax Offset More means testing from the ATO will have future tax implications
• Client celebrates 20th Anniversary Powers client Wolter Consulting Group has reached a major milestone
increase in cover was due to annual CPI increases. This was only six weeks from inital diagnosis, an excellent and speedy result by any measure. In addition, the insurance company provided $2,000 for provision of financial advice. The claim has paid out the mortgage, existing debts and with the excess funds, invested to produce income and to help with any ongoing medical costs or lifestyle adjustments required for their home. The most important thing for us was being there for our client and providing peace of mind at what was a most distressing time. Take the time to evaluate your situation and remember that insurance is there for your protection. Speak to Powers Investment & Finance on 07 4995 6655.
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• ATO tightens the reins...again
Superannuation Guarantee notification for employers
• New obligations for SMSF trustees Recent legislation amendments mean new obligations for trustees of SMSF’s
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• Join us in the cloud
How joining the Powers Portal can benefit you.
• In-House Announcements
Long-Serving staff and new additions
The information presented in the following articles was correct at the time of publication. The information is subject to change following the 2013 Federal Election.
Major Change to Medical Tax Offset
The Australian Tax Office and Federal government are beginning to means test a number of different tax benefits, which could bring about major change for higher income earners. In the 2011-12 financial year, all tax-payers who incurred out of pocket net medical expenses of greater than $2,060 received a 20% offset on expenses over and above this amount.
couples or families) will only be able to claim a tax offset of 10% of out-of-pocket medical expenses exceeding the increased threshold of $5,000.
In the 2012-13 budget, the Federal Government imposed means testing on the medical expenses tax offset, raising this threshold.
Additionally, from 1 July 2013, taxpayers who received the offset in their 2012-13 income tax assessment will continue to be eligible for the offset for the 2013-14 income year.
Under the new legislation, taxpayers with ‘adjusted taxable income’ exceeding the Medicare Levy Surcharge thresholds ($84,000 for singles and $168,000 for
However, if you did not receive the offset in the year ended 30 June 2013, you will no longer be eligible to claim the offset in future years. Similarly, those who receive
the tax offset in their 2013-14 income tax assessment will continue to be eligible for the offset in 2014-15. The changes mentioned above relating to not being eligible in subsequent years will not apply to all taxpayers - the offset will continue to be available for taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019. To find out how this affects you, call your Powers Accountant on 4995 6677 for Biloela or 3251 4444 for Brisbane.
Client Celebrates 20th Anniversary
Established in Brisbane by Michael Wolter in 1993, Wolter Consulting Group employs over 50 personnel in offices in Brisbane and the Sunshine Coast and are celebrating their 20th year of operation.
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Wolter Consulting Group is a respected multi-disciplinary property consultancy servicing the government, development and infrastructure sectors. They offer a highly motivated team of town planners, designers, environmental scientists, landscape architects and surveyors and continue to grow in the industry. As a point of difference, Wolter Consulting Group adopts a commercial mindset and collaborative approach across their service teams to deliver
streamlined and balanced results which maximise project success. Their purpose and values are built on the central ethos of delivering the highest level of service to their clients and this is a contributing factor to their success over the past 20 years. Powers are proud to have Wolter Consulting Group as a client and congratulate them on this tremendous milestone. Pictured above left, Michael Wolter (Left) & Powers Senior Consultant John Cox (Right).
ATO tightens the reins...again The ATO will be investigating employers that intentionally try to avoid their tax and superannuation obligations and, where non-compliance is detected, will be applying penalties.
The ATO will be monitoring employers to ensure the correct amount of superannuation guarantee (SG) contributions are made and, where appropriate, will use the new director penalty regime to make directors personally liable for their company’s outstanding SG liabilities. Changes in SG compliance requirements for employers changed from 1 July 2013 The SG rate has increased from 9% to 9.25%. An employer must pay 9.25% of each eligible employee’s ordinary time earnings each quarter. It will be prudent for all employers to check their payroll
functions and software to ensure the correct SG rate is being used from 1 July 2013.
been 9%. Employers should ensure their payroll records use the payment date for calculation of the applicable SG rate.
SG rate is on the date of payment
From 1 July 2013, there is no longer a SG upper age limit.
It’s the date of payment of the salary or wages that determines the relevant SG rate to apply, not the day when the obligation to pay accrues. For example if the employee is paid a fortnightly salary on, say 1 July 2013, in respect of a pay period of 16 June 2013 to 30 June 2013 the relevant SG rate is 9.25%. If the fortnight’s pay had been paid on 30 June 2013, the SG rate would have
An employer should assess its work force and ensure SG contributions are paid for the eligible employees who are aged over 70, and who were previously not eligible for the SG. If you have any queries regarding your obligations, please contact your Powers Accountant on 3251 4444 in Brisbane or 4995 6677 for Biloela.
New obligations for SMSF trustees Trustees of self-managed superannuation funds (SMSFs) now have some new obligations to comply with as a result of recent amendments to superannuation legislation. The changes that took effect from 7 August 2012, codify measures originally announced as part of the Government’s Stronger Super reforms. The key changes you need to be aware of include: Investment strategies While trustees of SMSFs have an obligation to formulate an investment strategy for their SMSF and invest in accordance with that strategy, legislation now requires trustees to also regularly review their investment strategy, taking into account any changing circumstances of the fund or its members. For example, a member commencing an income stream (pension) from their fund is generally regarded as a change in circumstances that necessitates a review of the investment strategy. Insurance Trustees are also required to consider the insurance needs of the members of the fund. Consideration of insurance also forms part of the fund investment strategy.
Trustees need to consider the types and levels of insurance cover, taking into account the personal circumstances of each member and whether the insurance should be held inside or outside the superannuation environment. Separation of fund assets Superannuation legislation has always contained a provision that assets of a SMSF must be kept separate from assets owned in any other structure or entity. This requirement is now an operating standard giving the Australian Taxation Office (ATO) power to enforce compliance. Trustees must now take the time to review the assets held by their SMSF to ensure they are correctly recorded as being owned by the trustees of the SMSF. Where an SMSF has members as individual trustees, it is important to ensure that the assets are held by the trustees in their capacity as trustees of the SMSF.
Valuation of fund assets Prior to the introduction of the amending legislation, trustees of SMSFs have been free to record the value of their fund assets at historical cost or market value. However, from the 2012/13 financial year, trustees will now be required to value all fund assets at market value. This requirement does not necessarily mean that trustees will need to embark on a process of obtaining valuations from independent qualified valuers, but in certain cases this may be necessary. Need help? At Powers Financial Group we have a specialist SMSF Adviser with over 20 years experience in working with SMSF’s and an investment team who can evaluate, with you, what will work. To find out more, contact Director of Powers Superannuation Services, Charles Page on 07 3251 4444.
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In-House Announcements David Moves On
We are sad to announce that David Butler has moved on from Powers Financial Group. David had been with Powers since the establishment of the Brisbane office in 2008 and developed a good relationship with many clients.
Join us in the cloud
Did you know that Powers offer a Client Portal? This means that you have the opportunity to receive more of your Powers correspondence electronically in a secure environment that you can access anywhere. For those who love opening envelopes, that’s fine; you won’t be forced onto a computer, but it is almost daily that we are asked by clients to email them a copy of their tax return or financial statements. There is however a faster and more secure way to get important documents to and from your accountant. If you prefer speed and security, our client portal provides a secure means for us to deliver documents to clients. Clients can also upload items such as MYOB data files, Quickbook files, Excel Workbooks and more, which of course means no more sending in USB sticks, CD’s or having emails blocked
due to large file sizes. Using the same data encryption as the major bank websites, the Powers portal allows us to send clients important data and forms such as, tax returns, financial statements, assessment notices, PAYG letters, ATO correspondence, Financial Plans etc. Using the portal saves you the hassle of scanning your own electronic copy of important tax documents, allows you to keep all of your personal tax information in the one secure place and gives you the opportunity to view and download a copy of your tax return etc, whenever you want, 24 hours a day, 7 days a week. If you would like to know more about our client portal, please contact your Powers Accountant on 4995 6677 for Biloela or 3251 4444 for Brisbane.
Along with this news comes an exciting new addition to the Powers team. Joel Canning will be taking over David’s position as Business Services Manager in the Fortitude Valley office. Having worked in a similar role with a Roma based accounting firm, Joel comes with a background in primary production and business taxation experience. We believe he will prove to be an asset to the firm and of great assistance to our clients.
Staff Milestones
Powers place a high importance on our staff and our office culture. In 2013 three staff have major milestones for length of service. Shiela Rideout from our Biloela office has entered into her 20th year of service. Mia Francis from our Monto office and Leanne Seagrott from our Biloela office are celebrating their 25th anniversary of working with Powers. We are proud to have such dedicated staff and look forward to many more years working together.
For real-time financial updates, make sure to like our Facebook page, connect on LinkedIn and follow us on Twitter.
Contact us
For further information on any of the articles in this issue contact your local office: BILOELA 54 Callide Street (PO Box 98) Biloela QLD 4715 P 07 4995 6677 F 07 4992 1787 8.30am — 5.00pm
BRISBANE L7, 269 Wickham Street (PO Box 310) Fortitude Valley QLD 4006 P 07 3251 4444 F 07 3251 4422 8.30am — 5.00pm
mail@powers.net.au
MONTO 3 Newton Street (PO Box 69) Monto QLD 4630 P 07 4166 1366 F 07 4166 1343 9.00am — 3.00pm
MURARRIE 6A/57 Miller Street Murarrie QLD 4172 (PO Box 115) Morningside QLD 4170 P 07 3890 1808 F 07 3890 1809 8.30am — 5.00pm
www.powers.net.au
The information in this document is of a general nature and is provided for information purposes only. It does not take into account your particular objectives, financial situation or needs and should not be used as a substitute for independent advice from a qualified professional. Liability limited by a scheme approved under Professional Standards Legislation, except where financial services are provided by Authorised Representatives of Professional Investment Services Pty Ltd (PIS) AFSL 234951 ABN 11 074 608 558.
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