Understanding CGT when you inherit

Receiving an inheritance is always welcome, but people often forget the tax man will take a keen interest in their good fortune.

When ownership of an asset is transferred, it triggers a capital gain or loss with potential tax implications. So what are the tax rules when you inherit a property, or another investment asset like shares, and when you eventually decide to sell?

Tax and your inheritance

The main tax applying to the transfer and sale of an asset is capital gains tax (CGT). This is added to your tax bill in the financial year in which you sell an asset acquired on or after 20 September 1985.

CGT is not a separate tax but forms part of your normal income tax and is imposed at your marginal tax rate. It applies to the sale of assets such as residential and investment properties, shares and managed funds.

The tax is calculated based on any increase in the value of the asset between the time you acquire or buy it and when you eventually sell.

Inheriting an asset

Fortunately, when someone dies, a capital gain or loss does not apply when an asset passes to the deceased person’s beneficiary, their executor, or from the executor to a beneficiary.

This means if you inherit a property, shares, or an interest in an investment asset, the capital gain on the asset is disregarded by the tax man.

There are also exemptions for personal use assets you inherit that were purchased for less than $10,000. This includes furniture, household items and the like.

Generally, CGT is not payable if you inherit collectables such as art, jewellery, stamps or antiques, provided their market value is $500 or less.

Selling your new asset

Although there is no CGT when you inherit a property, that’s not the end of it, as there may be a tax bill when you eventually sell. If the asset is a dwelling, special rules such as the main residence exemption apply in part or full.

Generally, if you sell an inherited property within two years of the person’s passing and it was either purchased before September 1985 or was the deceased’s main residence at the time or just before their death, and in most cases, not rented being at the time of their death, CGT does not apply.

The two-year period relates to the time from the date of death to the settlement – not exchange – of the sales contract. In some cases, it’s possible to apply to the ATO for an extension to this two-year period.

Special tax rules may also apply if the property was not the deceased’s main residence but it was purchased prior to 20 September 1985. This may result in a full or partial exemption from CGT, so it’s important to talk to us about your particular situation.

After the two-year deadline

If you decide to sell your inherited property after the two-year exemption period has elapsed, you will generally have to pay CGT on the capital gain on your property unless it has become your main residence.

The amount of CGT you pay is based on the increase in your property’s value from the date of the deceased’s death to the date of the sale.

When working out the capital gain on an inherited property asset, CGT is calculated based on the sale price less the cost base of the asset. In most cases, the cost base is equal to the market value of the asset at the date of the deceased’s death, although this will depend on when the home was purchased (before or after 20 September 1985).

If CGT applies when selling an asset, you normally receive a 50 per cent discount on the amount of tax payable if the asset is owned for over 12 months.

CGT is a complex area of taxation, especially as it applies to inheritance, so if you would like help with handling the tax matters relating to an inherited asset, contact our office today on 03 5120 1400 or click here to send through your enquiry and an adviser will be in contact.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

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Sharing super a win-win for couples

Australia’s superannuation system is based on individual accounts, with men and women treated equally. But that’s where equality ends. It’s a simple fact that women generally retire with much less super than men.

The latest figures show women aged 60-64 have an average super balance of $289,179, almost 25 per cent less than men the same age (average balance $359,870).i

The reasons for this are well-known. Women earn less than men on average and are more likely to take time out of the workforce to raise children or care for sick or elderly family members. When they return to the workforce, it’s often part-time at least until the children are older.

So, it makes sense for couples to join forces to bridge the super gap as they build their retirement savings. Fortunately, Australia’s super system provides incentives to do just that, including tax and estate planning benefits.

Restoring the balance

There are several ways you can top up your partner’s super account to build a bigger retirement nest egg you can share and enjoy together. Where superannuation law is concerned, partner or spouse includes de facto and same sex couples.

One of the simplest ways to spread the super love is to make a non-concessional (after tax) contribution into your partner’s super account. Other strategies include contribution splitting and a recontribution strategy.

Spouse contribution

If your partner earns less than $40,000 you may be able contribute up to $3,000 directly into their super each year and potentially receive a tax offset of up to $540.

The receiving partner must be under age 75, have a total super balance of less than $1.7 million on June 30 in the year before the contribution was made, and not have exceeded their annual non-concessional contributions cap of $110,000.

Also be aware that you can’t receive a tax offset for super contributions you make into your own super account and then split with your spouse.ii

Contributions splitting

This allows one member of a couple to transfer up to 85 per cent of their concessional (before tax) super contributions into their partner’s account.

Any contributions you split with your partner will still count towards your annual concessional contributions cap of $27,500. However, in some years you may be able to contribute more if your super balance is less than $500,000 and you have unused contributions caps from previous years under the ‘carry-forward’ rule.

If your partner is younger than you, splitting your contributions with them may help you qualify for a higher Age Pension. This is because their super won’t be assessed for social security purposes if they haven’t reached Age Pension age, currently 66 and six months.iii

Recontribution strategy

Another handy way to equalise super for older couples is for the partner with the higher balance to withdraw funds from their super and re-contribute it to their partner’s super account.

This strategy is generally used for couples who are both over age 60. That’s because you can only withdraw super once you reach your preservation age (currently age 57) or meet another condition of release such as turning 60 and retiring.

Any super transferred this way will count towards the receiving partner’s annual non-concessional contributions cap of $110,000. If they are under 67, they may be able to receive up to $330,000 using the ‘bring-forward’ rule.

As well as boosting your partner’s super, a re-contribution strategy can potentially reduce the tax on death benefits paid to non-dependents when they die. And if they are younger than you, it may also help you qualify for a higher Age Pension. These are complex arrangements so please get in touch before you act.

A joint effort

Sharing super can also help wealthier couples increase the amount they have in the tax-free retirement phase of super.

That’s because there’s a $1.7 million cap on how much an individual can transfer from accumulation phase into a tax-free super pension account. Any excess must be left in an accumulation account or removed from super, where it will be taxed. But here’s the good news – couples can potentially transfer up to $3.4 million into retirement phase, or $1.7 million each.iv

By working as a team and closing the super gap, couples can potentially enjoy a better standard of living in retirement. If you would like to check your eligibility or find out which strategies may suit your personal circumstance, get in touch with Prue Cox via email:  p.cox@rgmgroup.com.au or via 03 5120 1400.

https://www.superannuation.asn.au/ArticleDocuments/402/2202_Super_stats.pdf.aspx?Embed=Y

ii https://www.ato.gov.au/individuals/income-and-deductions/offsets-and-rebates/super-related-tax-offsets/#Taxoffsetforsupercontributionsonbehalfof

iii https://www.ato.gov.au/Forms/Contributions-splitting/

iv https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/transfer-balance-cap/

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.












A helping hand onto the property ladder

Buying your first home is always a big step, but with property prices rising faster than pay packets taking that first step seems more challenging than ever.

National house prices rose 20 per cent in the year to September, the fastest growth since 1989. Higher prices have also fanned out from capital cities to the regions, as city folk discover the country lifestyle and cheaper housing during the pandemic.i

While this is great news for homeowners and investors, it’s putting home ownership further out of reach for many hopeful first home buyers. The combination of rapid price growth and weak wages growth have pushed up the cost of an average first home deposit from 70 per cent of income to more than 80 per cent.ii

And in another blow to first home buyers, the Australian Prudential Regulation Authority (APRA) has told lenders to assess whether new borrowers can afford their loan at an interest rate at least 3 percentage points higher than the current rate on their home loan. Previously, banks used a 2.5 per cent buffer.iii

So what strategies are available to help younger Australians get a foot on the property ladder?

Government supports

In recent years, the federal government has launched three schemes to close the deposit gap for first home buyers.

The First Home Loan Deposit Scheme (FHLDS) and the New Home Guarantee (NHG) allow eligible first home buyers to purchase a home with a deposit of as little as 5 per cent. While the Family Home Guarantee helps eligible single parents buy a home with an even lower deposit of at least two per cent.

Another way for first home buyers to build a deposit is to contribute voluntary savings to your super account and withdraw up to $30,000 plus investment earnings when you are ready to buy. The First Home Super Saver scheme takes advantage of the low tax super environment and investment returns that have consistently outpaced bank savings accounts.

Rentvesting

If you can’t afford to buy your dream home in a suburb or location you like, “rentvesting” may be worth exploring.

Rentvesting is where you buy property in a location you can afford with good rental yields and capital growth prospects and lease it out, while renting in an area you prefer. Or live with your parents for minimal rent and pay off the mortgage on your rental property even faster.

You can also claim a tax deduction for allowable expenses, depreciation, and interest on the loan for your investment property. The downside is you will be liable for capital gains tax when you sell.

Alternatively, under the six-year rule if you buy and live in the property for at least six months before you rent it out, you will be exempt from capital gains tax on the growth of your investment for up to six years.

Bank of Mum and Dad

It’s not just younger Australians who worry about housing affordability. Their parents often worry just as much. So much so that recent research found the Bank of Mum and Dad is the nation’s ninth biggest mortgage lender.

According to research by Digital Finance Analytics (DFA), 60 per cent of first home buyers are getting help from their parents.iv Parents typically do this by giving their children cash towards the deposit or by going guarantor for the loan.

DFA found the average parental contribution was $92,000, indicating parents may be choosing to help with the deposit. Not only are banks reluctant to lend to first time buyers with less than a 20 per cent deposit, but any less means borrowers must pay lenders mortgage insurance.

Going guarantor

Parents without cash to spare sometimes agree to guarantee their child’s loan by using the equity in their own home as security. This can have the advantage of helping children get into the market sooner, but there are risks.

If the borrower can’t make repayments the guarantor is responsible for the debt, putting their home at risk. To limit this risk, you can choose to guarantee a portion of the loan, so you are only liable for that portion if the borrower defaults. You can also arrange to be released from the loan once the borrower builds up the same portion of equity in their home.

Saving for a first home is a challenge in the current market, but there are strategies to help make your dream a reality. So get in touch if you would like to discuss your options.

https://www.corelogic.com.au/sites/default/files/2021-09/211001_CoreLogic_HomeValueIndex_Oct21_FINAL.pdf

ii https://theconversation.com/as-home-prices-soar-beyond-reach-we-have-a-government-inquiry-almost-designed-not-to-tell-us-why-168959

iii https://www.apra.gov.au/strengthening-residential-mortgage-lending-assessments

iv https://www.savings.com.au/home-loans/we-need-to-talk-about-the-rise-of-the-bank-of-mum-and-dad

and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

New financial year new perspective

The start of the financial year is always an excellent time to take stock of your current situation and visualise where you’d like to be in the future.

It’s fair to say this year hasn’t been ‘business as usual’! While no-one could have predicted the first six months of 2020, nor want to repeat them, it’s likely there have been lessons learned. So as you review and set new goals, consider any takeaways from lockdown and how they have influenced your goals and path for the future.


Different priorities and new goals

Your priorities may have forcibly changed in response to the change of circumstances, or perhaps you realised that some things are more important to you than others. Do you now want to spend more time with family, improve your connection to your friends, help out in the community? Perhaps you have a reignited passion for your work or have been motivated to look for greater opportunities. Has not being able to travel in the short-term made you more determined to hit the road or jet off to a new destination?

Work/life balance remains a top priority for many people, yet it can feel elusive at the best of times. By identifying what is important to you and what you want more (or less) of, you’ll be better placed to make changes to reach more of a balance.

You might have also discovered a new hobby. If you’re a gym junkie, you might have made the shift to exercising outdoors and discovered a love of trail running or mountain biking. If you love visiting restaurants and cafes, perhaps you started to enjoy more time in the kitchen, trying to replicate your favourite chef-cooked meals. Whatever hobby you’ve picked up or re-sparked, think about how you can keep it up when life returns to a new normal. Perhaps this hobby could even be a side business or has ignited an idea for a new career path?

Awareness of your finances

It’s likely your financial situation has changed in 2020. Your income and expenditure may have altered during the period of lockdown, and while we were all impacted in different ways, the period presented a degree of uncertainty for everyone, highlighting the need for financial security.

The financial goals you established last financial year or in January are likely to have shifted due to the year’s upheaval. And you may also have new goals following the COVID-19 pandemic. Review your finances and your budget to set new objectives, working with your current situation to build a financial safety net and work towards your future goals.

Setting and achieving your goals

The first half of the year has shown us that plans can and sometimes, must change. But don’t let this stop you from setting goals and working towards your vision of the future.

Ensuring your goals are smart, or specifically SMART – Specific, Measurable, Assignable, Realistic and Time-related, will make it easier for you to follow through and achieve them. Whether they’re related to finances, your career or spending more time with family and friends, drill down into the details.

The SMART framework strengthens your goals by making sure they are thought through. For instance, if this has been a time of financial instability for you, your priority could be having more savings behind you. But how much money will you put away and how often, who will make this happen, and is this feasible? With increased uncertainty, it may be beneficial to set micro goals with shorter time frames. This will allow you to be adaptable while still progressing towards your larger goals.

Getting support

This tumultuous year has also highlighted the importance of reaching out for support. This may be a coach, friend or mentor who provides guidance, encouragement and keeps you accountable on your journey. When it comes to establishing your financial goals and working through concerns, you don’t have to go it alone.

We can help keep you on track to achieving your objectives and guide you through the process, so feel free to get in touch today via our contact page or 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.


The Gift of giving this Christmas

Christmas is a time when we come together to celebrate with our family and friends. And, for those who haven’t been able to see friends and family due to border closures, it will be an even more joyous occasion this year.

Gift-giving is typically a big part of celebrating Christmas and provides a great opportunity to reach out to support those who have done it tough this year.

Charity is not just about money

There are so many ways you can give back to the community. It’s not always about making a monetary contribution – giving your time is just as valuable. Volunteering at the local soup kitchen on Christmas Day or helping at your local Foodbank or food rescue service like OzHarvest can be just as valuable. Donating clothes, blankets or any other household items that will help those less fortunate or vulnerable is always welcome, especially at shelters for both men and women.

In recent years, gift bags or hampers are becoming increasingly popular too. It’s as simple as buying non-perishable food items or toiletries from the supermarket and creating a food hamper or gift bag.

Every Christmas, Kmart has the Wishing Tree Appeal whereby you can purchase a gift for a child and leave it under the tree in the store.

If you’re unable to donate cash or volunteer your time, a blood donation at the Australian Red Cross is another option. They are always in desperate need of donors. And when you donate, you’ll not only get to enjoy a little snack afterward, but you’ll receive a text message a few days later telling you exactly where your donation went.

Donating regularly

During the pandemic, there was a significant decrease in the number of donations made to charities across the country, and unfortunately, the amount of money we donated declined as well. People were unsure about job security, whilst others had chosen to donate specifically to the Bushfire Appeal early in 2020.i

Now we are coming out the other side of the pandemic economically, reports show donations are rebounding and are on the rise again. Those who donate, do so regularly and they usually have specific charities that they donate to. This may be due to personal circumstances or to support something they are passionate about.

If you’re considering donating to a charity this Christmas, you may want to do a little research first to find out exactly how your money is being distributed. How much goes directly to those in need and how much is being spent on admin and running costs. This is an important factor for many and may impact your decision in terms of which charity you choose to support.


The positive effects of donating or volunteering

Donating – whether it’s our time or money – will always make us feel good, but it shouldn’t be the key driver. Think about the impact your donation or time will have on those who are on the receiving end.

Donating will not only have a positive effect on the recipient, but it can also be beneficial to your children. You can teach them from a young age that giving back to the community can be very rewarding for many reasons.

Maximising your donation

There are so many charities to choose from in Australia, but it’s also worth considering international organisations as well. You may prefer to donate locally, but if you decide to choose an international charity, your dollar will more than likely go a lot further. Especially in developing countries, where they may need clean water, medical supplies, or even infrastructure to build schools for young children.

Remember, if you donate $2 or more, you may also be able to make a claim on your donation at tax time.

So, whether you’re volunteering at a homeless shelter or soup kitchen or giving a monetary donation – helping others who are less fortunate could be the best gift of all this Christmas.

To find out more about volunteering or donating in your local city go to – Christmas In Australia


i JBWere and NAB Charitable Giving Index

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

New COVID-19 relief schemes explained

As we navigate ongoing lockdowns due to COVID-19 across Australia, here is a guide to the latest benefits you may be entitled to from the Federal and State Governments.

Australia-wide initiatives

The Pandemic Leave Disaster Payment (PLDP) is a program to support you, if you find yourself in a situation where you are unable to earn an income because you are required to self-isolate, quarantine, or are caring for someone with COVID-19. The payment provides a lump sum of $1,500 per fortnight and you will need to meet certain criteria, which does vary between states and territories.

COVID-19 Disaster Payment (CDP) is available for workers who are adversely affected by a state public health order including a lockdown, hotspot or movement restrictions. Again, the eligibility criteria vary by state, as can the amounts.

In addition, Centrelink provides a one-off Crisis Payment for National Health Emergency payment for those affected by COVID-19. You would need to already be eligible for income support or in severe financial hardship and are required to quarantine or self-isolate or are caring for someone required to be in quarantine or self-isolation. You will only be able to access 2 Crisis Payments for National Health Emergency in a 6-month period.

New South Wales
  • The Pandemic Leave Disaster Payment will provide $1,500 for each 14 day period you must self-isolate or quarantine, or are caring for someone who has COVID-19 or must quarantine or self-isolate, and unable to earn an income.
  • From July 14, there is a 60-day moratorium on evictions for residential tenants who have lost 25% or more of their income due to stay at home orders.
  • Businesses who suffer a 30% reduction in revenue due to the restrictions, which have a turnover between $75,000 and $250 million, can now apply for up to $100,000 in JobSaver grants a week.
  • For businesses with a turnover between $30,000 and $75,000, the COVID-19 Micro Business Grant provides a fortnightly $1,500 payment, if your revenue has declined by more than 30%.
  • Businesses now have the option to defer the payment of their payroll tax, including the 2020-21 annual reconciliation, July and August 2021 monthly return periods until 7 October 2021. Interest free payment plans will be available for up to 12 months.

Victoria
  • The COVID-19 Disaster Program is available for eligible Victorians between July 16 and 27th period. Although this period has lifted you still may be able to access this payment if you are eligible. The opportunity to claim closes on August 12th for the July 16-22nd July period and on August 19th for the July 23-27th period.
  • The Pandemic Leave Disaster Payment will provide $1,500 for each 14 day period you must self-isolate or quarantine or are caring for someone who has COVID-19 or must quarantine or self-isolate.
  • The Business Continuity Fund provides relief for up to around 30,000 business, that continue to be impacted by capacity limits on businesses with a $5,000 grant. There are 24 eligible sectors (including restaurants & cafes, gyms and hairdressers).
    For CBD businesses, that are also impacted by reduced foot traffic due to restrictions on staff allowed back into offices, you may also be eligible for an additional $2000 grant. To be eligible, for the Business Continuity Fund businesses must have received, or be eligible for the Business Cost Assistance Program round two.
  • The Licensed Hospitality Venue Fund 2021 will receive extra funding to provide grants of up to $20,000, to support licensed venues that continue to be impacted by the current restrictions. This grant recognises the higher operating costs of larger licensed venues. Licensed venues that have received or were eligible for the previous Licensed Hospitality Venue Fund. CBD venues will again, also have an additional $2,000 grant available.
  • The Small Business COVID Hardship Fund provides grants of up to $5,000 to small businesses with a payroll of up to $10 million where the current restrictions have resulted in at least a 70% reduction in revenue.
  • The Alpine Business Support Program will provide $5,000 – $20,000 grants to 430 Alpine based businesses, recognising the impact of restrictions of movement and limited interstate travel, throughout peak season. There is also an additional $5 million support to alpine resort operators and management boards.
  • The Commercial Tenancy Relief Scheme has been reintroduced to assist eligible tenants with proportional rent relief and to support landlords assisting tenants. Eligible businesses must have experienced at least a 30% reduction in turnover and have an annual turnover of less than $50 million. Again tenants and landlords are encouraged to reach an agreement directly, the Victorian Small Business Commission (VSBC) will be available to provide mediation.
Queensland
  • In addition to the PLDP, workers in Queensland may be eligible for support and relocation incentives.
  • Small and medium businesses impacted by the South East Queensland lockdown commencing 31 July 2021 may be eligible for a $5000 grant to use on business expenses. To be eligible, the business needs to have a turnover of more than $75,000 and an annual payroll in Queensland of up to $10 million and need to have at least a 30% reduction in turnover as a result of the lockdown.
  • Grants are also available for large hospitality and tourism businesses operating in the 11 local government areas in lockdown, eligibility criteria apply. Applications open mid-August.
Australian Capital Territory

While the ACT has a number of smaller support packages in place to help the community, the primary COVID-19 relief scheme available is the $1,500 Pandemic Leave Disaster Payment.

Northern Territory

Similar to other states, if you can’t earn an income because you need to self-isolate or quarantine for 14 days, or need to care for someone with COVID-19, you may be eligible for the $1,500 Pandemic Leave Disaster Payment offered to Territorians.

Western Australia

On top of the state’s one-off 2020 $600 electricity bill credit, WA now offers the Pandemic Leave Disaster Payment.

South Australia

In addition to PLDP, one-off grants of $300 are available to eligible workers required to self-isolate.

Tasmania

In addition to PLDP, grants are available to eligible low-income casual workers or self-employed Tasmanians required to self-isolate.

As you know things can change rapidly, so please call us if you have any questions about the grants available or whether you are eligible – Contact us on 03 5120 1400 so we can assist you further.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.


The Financial rewards of optimism

If it wasn’t already clear, the past 12 months certainly cemented the fact that life has a habit of throwing us the occasional curveball. The reality is we all face challenges, however approaching life with a positive mindset can help us deal with any issues we may face and improve our lives in many ways.

Having a positive outlook not only improves our health and wellbeing, it can also have a meaningful and very positive impact on our finances.


How optimism can improve our finances

If you have a cautious or anxious approach to your finances, such as worrying you’ll never have enough money or being wary of spending, it will likely come as a surprise to hear that being optimistic can improve your financial situation.

A recent study connected the link between financial well-being and an optimistic mindset, finding that people who classify themselves as optimists enjoy 62 per cent fewer days of financial stress per year compared to pessimists.

Superior financial well-being

When you are positive in your outlook, you are also much more likely to follow better financial habits in managing your money. Optimists tend to save for major purchases, with around 90 percent of optimists having saved for a significant purchase, be it a car, a house or an overseas holiday, compared to pessimists at just 70 per cent.i

However, optimism does not equal naivety and optimists still tend to have contingency plans in place for unforeseen events that may detrimentally impact their bottom line. Some 66 per cent of optimists had an emergency fund, compared to under 50 percent of the pessimists.i

This goes to show that maintaining an optimistic approach to your finances does still involve planning for the future. By being prepared, you’ll reduce the stress that comes from feeling the rug could be pulled from beneath you without a safety net.

Your career and earning capacity

An optimistic approach to life and your career leads to achieving greater career success and the financial rewards that come with being successful in your job.

Optimists are 40 percent more likely than pessimists to receive a promotion within a space of twelve months and up to six times more predisposed to being highly engaged in their chosen career.i


Changing your attitude

Knowing that optimism is great for your wallet and your health is one thing, but how do you shift your outlook? If you’re prone to worry, focussing on pessimistic outcomes or a bit of a sceptic, looking on the bright side of life can seem easier said than done.

It is possible to nurture optimism, and you get this opportunity every day. Cultivating optimism can be as simple as adopting optimistic behaviours.

So, what are the financial behaviours of optimists that we can emulate?

Optimists tend to be more comfortable talking about and learning about money and are more likely to follow expert financial advice than their more pessimistic peers.

Positive people display a correspondingly positive approach to their finances. They tend to put plans in place and have the courage to dream big. You don’t have to be too ambitious in how you carry out those plans, every small step you take will help you to get where you want to be.

Everyone experiences setbacks at various times, however optimists rise to these challenges, learning from their past mistakes and persisting in their endeavours. Don’t be too hard on yourself if you are experiencing difficulties. We all face challenges and during these times, focus on solutions rather than just the problems, be conscious of your “internal talk” and don’t be afraid to seek out support. It’s important to focus on what you can do differently going forward, this could be as simple as working towards a “rainy day” fund.

It’s never too late to change your outlook. By embracing optimism, you can reap the rewards that a more positive outlook provides.

https://www.optforoptimism.com/optimism/optimismresearch.pdf/

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Are your life goals on track?

More and more often I am faced sitting across my desk from people who have come to me facing an uncertain future.

What I find interesting about this is that there is no stereotypical type of person, I see a range of people from your stay at home mum or dad who haven’t worked in a number of years, to part time workers, full time and professionals of both genders.

The one thing that they seem to have in common is that for many different reasons, they haven’t focused on their independent financial situation, then a crisis occurs and they begin to panic about their future. Anything from a relationship breakdown, the death of a spouse or a failed business can be one of these triggers.

Recently, in my own time, I have had the privilege to work with a small group of women and mentor them through some everyday issues that will set them up and educate them about ensuring their financial future is sound. We have been able to come together via Zoom Meetings  and it’s been lovely to watch the mentees grow and share their experiences not only with me as a mentor but with each other, which has enabled them to build on their confidence and goal setting.

We have covered topics including superannuation, insurances, wills and powers of attorney, investments, taxes, personal branding and re-education to get back into the workforce. Areas such as ‘how much money do I need to retire with’ compared to existing retirement savings have been explored. We have discussed pushing ourselves outside comfort zones to strive for goals. Having these monthly meetings to flesh out a fresh topic each time then going away with a small amount of homework to report back together has ensured that the ladies have received the best outcome.

We still have a few more months to go and I am personally feeling so rewarded to be able to help educate and make this group of mentees aware of so many issues that they previously had little to no idea about. It means they are on the road to financial independence, long term planning to ensure financial security and in control of their future.

Being a Chartered Accountant and a Financial Planner gives me the leadership skills to be able to help guide and reassure these mentees that together we can build a way forward.

If this resonates with you and you would like to take control of your financial future we would love to be able to assist you.

You can contact Prue Cox via email at our Drouin office – drouin@rgmgroup.com.au or 03 5120 1400.

Soaring to success in 2021

The start of a new year is a great time to reassess where you are in life, your career or business – decide what you want to achieve and put some strategies in place to work towards achieving even your most ambitious goals.

The start of this new year is a little unusual as for many of us, 2020 was a challenging year. The hopes and dreams we had for 2020 may not, in many cases, have come to fruition as planned, whether they were related to your business, your career or personal in nature, were put on the back burner. So let’s look at how to ensure that 2021 is the year to get things back on track and achieve what you are aiming for. 

Let’s start with the fundamentals, it’s impossible to get to where you are going, if you don’t know the destination and challenging to make the journey without a road map of how to get there. 

Identify your goals

This involves some soul searching. What do you want for yourself personally and professionally? What are your priorities? Do you want to climb the corporate ladder and set your sights on that senior management position, or spend more time with loved ones? Have you got an idea for a new business or are you wanting to take your existing business to the next level? 

Make sure you are specific about what you want and don’t be afraid to aim high. Studies show that specific and challenging goals lead to higher performance than “do your best” type of goals.i

Once you’ve identified your goals – jot them down. People who write down their goals, have been found to be 33 percent more successful in achieving them.ii There is something very powerful about the written word. 

An incremental approach

Once you’ve got an idea of what you want, it’s time to devise some strategies to achieve them. It’s important to dream big but sometimes big dreams can seem intimidating. The way to make a big task less intimidating is to break it into smaller tasks and approach it incrementally. What do you need to do to set yourself up for that management role? Do you need to go back to study? Start taking on more responsibilities at work? 

Set up your plan with things you need to do which will act like a series of stepping stones leading to your destination. 

Allocate time and resources

The next part of your strategy is to think about what you need to have in place to support each incremental step in your plan. Do you need to set aside time on a daily basis, each week or every month? Do you need financial support or a loan? How will you access that support? 

You don’t have to go it alone – think about whether you can get some external assistance in the form of a mentor or just someone you can use as a sounding board. If you are running a business there may be government support packages you can access or external consultants you can engage to help you on your way. 

Staying the course

It takes discipline to stay on target when there are so many distractions along the way. Make sure that your strategy has some review points at particular times or when you have completed the tasks you have set yourself so that you can celebrate your wins and recalibrate the plan if necessary. 

If 2020 showed us anything, it was that the best laid plans can and will change and be subject to circumstances beyond our control, so it’s important to have some contingencies in place. Even more importantly, be agile in your approach so that you can adjust and refine the plan as needed. 

Having a strategy and a methodology to implement your strategy will give you the best chance of reaching your goals in 2021 and beyond. Add in a dash of determination and self-belief and you’ll be flying high on your way to the success you’ve dreamed of. 

https://psycnet.apa.org/record/1981-27276-001 

ii https://scholar.dominican.edu/cgi/viewcontent.cgi?article=1265&context=news-releases

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

FASEA Exam

RGM sends our congratulations to our Financial Planning team, all of whom recently passed their FASEA exams. 

The Hayne Royal Commission has completely changed the landscape for providing Financial Advice. Part of this is the requirement that all Financial Planners must pass the FASEA exam. It has caused much angst among professionals in the industry. 

The FASEA exam tests advisers on the latest financial regulatory requirements, advice construction and ethical reasoning. Changes to the study requirements and the exam have seen many advisers leave the profession. 

Here at RGM, we pride ourselves on remaining up to date with our technical expertise so that we can provide the best possible service to our clients. Whilst advisers had until the 1 January 2022 to pass the exam, our advisers were proactive in ensuring their compliance with the latest regulations. 

Our Financial Planning team are committed to providing quality financial advice and wealth management solutions to help you achieve your goals. By choosing RGM, you’ll be working with a professional advisor who can provide you with advice on retirement planning, insurance, self-managed super funds (SMSF) and investments to keep you abreast with the latest developments in the industry.

Concerned about your superannuation and retirement plans? Speak to one of our Financial Advisers about how we can help you meet your financial goals on 03 5120 1400.