{"id":63891,"date":"2021-05-07T18:27:58","date_gmt":"2021-05-07T18:27:58","guid":{"rendered":"https:\/\/websitedesigns.com.au\/elankanew\/?p=63891"},"modified":"2021-05-07T18:27:58","modified_gmt":"2021-05-07T18:27:58","slug":"noel-news-20","status":"publish","type":"post","link":"https:\/\/websitedesigns.com.au\/elankanew\/noel-news-20\/","title":{"rendered":"Noel News"},"content":{"rendered":"

Noel News<\/span><\/h1>\n

\"Noel<\/p>\n

I put two children through Harvard by trading options.\u00a0 Unfortunately, they were my broker\u2019s children.<\/em><\/span>
\nJASON ZWEIG AMERICAN JOURNALIST<\/span><\/p>\n

Welcome to our May newsletter \u2013 the fact that May has arrived tells us that we are less than two months from the end of the financial year, and also heralds the pending arrival of this year\u2019s Federal Budget which will be handed down on Tuesday 11 May.<\/span><\/p>\n

We\u2019ll talk about that more after we know what\u2019s in it. Just keep in mind there will be leaks aplenty before budget day and some will be correct and some will not. The Catch-22 is that the devil is in the detail and it\u2019s only when we get the huge amount of information emailed to us by fund managers on budget night that we find out what sneaky stuff never made it to the press.<\/span><\/p>\n

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In this newsletter we focus on preparing for June 30 because there are often many things people can do to improve their financial situation \u2013 BUT most of these strategies cannot be put into place once June 30 has passed. I appreciate that it contains some technical stuff but that\u2019s the way the laws work. If it doesn\u2019t apply to you just move on.<\/span><\/p>\n

Bank dividends are back<\/span><\/h1>\n

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\nAll my life I\u2019ve been urging investors to take a long-term view. Just think about this extract from my newsletter of April last year \u2013 that\u2019s just 12 months ago:<\/span>
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Noel News April 2020:<\/span><\/h3>\n

\u201cAnd, of course, the newspapers are now featuring headlines like \u201cproperty may drop 30%\u201d which is nonsense because every property is different \u2013 some will drop and some will stay static. But all this argy-bargy between governments, landlords, and tenants highlights the difficulty of owning residential property when the going gets tough.\u201d<\/em><\/span><\/p>\n

1 March 2020:<\/strong><\/span><\/h3>\n

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And this:<\/span><\/p>\n

Noel News April 2020:<\/span><\/h3>\n

\u201cRetirees suffered another blow recently with strong hints in the media that the big four banks may suspend all dividend payments for the next six months. As a result, I have received a flood of emails asking if that\u2019s a real possibility\u2026these are uncertain times, but I believe the worst that could happen is that dividends here may be suspended for six months, but then restored after that. And if that happens, the renewed dividend may well be bigger than expected.\u201d\u00a0<\/em><\/span>
\n\u00a0<\/span><\/p>\n

6 March 2021:<\/strong><\/span><\/h3>\n

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I am not telling you this to boast about being some kind of prophet. Having been in the investment business for more than 60 years I know that papers thrive on bad news, and that good times always follow bad. The big question now of course is how long is the current boom going to continue. Anyway, bank dividends are back with a vengeance.<\/span><\/p>\n

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Westpac Banking Corp pledged to reduce costs by $2 billion by 2024, as it reported interim cash earnings of $3.5 billion, up 256 per cent on the provision-hit first-half of last year, as the economy rebounds quickly from COVID-19. Westpac\u2019s cash earnings came in higher than analysts\u2019 expectations, and so did the interim dividend of 58\u00a2 per share. Westpac reinstated its dividend and is paying out 60 per cent of its profits, after deferring its first-half dividend in 2020 before electing not to pay one, and in 2019 paying out 94\u00a2 a share.<\/span><\/p>\n

You can bet all the other banks will have a similar results.<\/span><\/p>\n

Preparing for June 30<\/strong><\/span><\/p>\n

This has been a most unusual financial year, and your income may be way down. If that\u2019s the case, it may be valuable to postpone personal concessional deductible contributions to superannuation, or repairs and maintenance on investment properties, until a year when your earnings put you in a higher tax bracket, when the deduction would give you a higher refund.<\/span><\/p>\n

If you have some shares with a capital gain, and some with a capital loss, take advice about whether to sell both before 30 June to offset the gain against the loss. Also, if there is likely to be some CGT payable, if you are in a lower tax bracket this year, the CGT may be charged at a lesser rate.<\/span><\/p>\n

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Making superannuation contributions up to your maximum cap of $25,000 a year is a no-brainer. Once you have reached that cap, consider making a contribution for your spouse. If they earn less than $37,000 this financial year you may even get a tax offset as a bonus. Get advice on your particular circumstances, as this tax offset is unlikely to be a better option than making a deductible contribution for yourself. To qualify for the spouse contribution tax offset of $540 all you need to do is make a $3,000 non-concessional contribution, on their behalf. Your spouse may also like to consider making a non-deductible super contribution for themselves of $1,000, if they are eligible for a $500 government co-contribution.<\/span><\/p>\n

A re-contribution strategy is worthwhile if you have access to superannuation, and are still eligible to make contributions. You could possibly withdraw up to $300,000 tax-free, and re-contribute it as a non-concessional contribution, on which there would be no entry tax. By doing this you would convert a large chunk of the taxable component of your fund to non-taxable, and so alleviate substantial taxes for your inheritors if you died suddenly, and your superannuation went to a non-dependent.<\/span><\/p>\n

Don\u2019t forget the strategy of splitting your superannuation with your spouse. To be eligible, the receiving spouse must be under 65 and, if over preservation age, not retired. Where the receiving spouse turns 65 during the year of the split, you need to act before their birthday. The transfer must be completed by 30 June.<\/span><\/p>\n

As long as the contributing member has a sufficient account balance, the amount that can be split is the lesser of 85% of that year\u2019s concessional contribution or $25,000. This means that, if the contributing spouse has made a $25,000 contribution, the maximum split would be 85% or $21,250.<\/span><\/p>\n

Take advice if you are under 67 and nearing retirement, because apart from the downsizing contribution, it may be your last chance to boost your superannuation. You could still use the bring-forward rule, which will allow you to contribute $300,000 as a non-concessional contribution, and so move funds to an area where tax will be zero once you start to draw a pension from your fund.<\/span><\/p>\n

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The key message in regard to contributions is to make sure they are paid on time. This is especially important if you use a clearinghouse by your employer because the fund could take up to 2 weeks to receive the payment. If the payment is received after June 30 it will count for next year. This could have serious impact on your financial affairs.<\/span><\/p>\n

Lodging a valid notice of intent<\/span><\/h1>\n

Make sure you take advice before you make tax-deductible contribution. It\u2019s a minefield of paperwork, and getting it wrong could mean loss of all or part of the tax deduction. You have to submit a \u201cvalid notice of intent to claim a deduction for personal superannuation contributions in the approved form, to the superannuation fund trustee within the required timeframes\u201d. You then need to receive an acknowledgement from the trustee that a valid notice of intent has been received, before you can claim a tax deduction. The timing of these actions in relation to your contribution and what you do next is important.<\/span><\/p>\n

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Case Study<\/span><\/h2>\n

Allen makes a personal contribution to his fund in April 2021, intending to claim it as a deduction when he does his tax. He does not submit a notice of intent at the time. In September, he rolls his three existing super funds into a new fund that offers investment options more suited to his goals.<\/span><\/p>\n

In early October, Allen is ready to do his tax, and he lodges a notice of intent to claim a deduction for personal super contributions with the fund that now holds the rollovers from his three previous funds.<\/span><\/p>\n

But that notice is invalid as he has not made any personal contributions to the new fund. The notice would also be invalid if he sent it to the old fund (where he made the contribution) for two reasons: first, when he gives the notice in early October, he is no longer a member of the fund and second, the fund no longer holds his contributions.<\/span><\/p>\n

Allen has lost his entire tax deduction for the contribution.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Case Study<\/span><\/h2>\n

Harry\u2019s superannuation balance is $175,000. He makes a $25,000 contribution in March 2021, taking the balance to $200,000. Before lodging a notice of intent, he started a pension using $150,000 of his fund. Because his fund has started to pay a superannuation income stream based in part on the contribution recently made, any notice he gives to the fund will be invalid. Therefore, he will be unable to claim a tax deduction for the $25,000 contribution. However, if he had submitted the notice of intent before starting the pension, he would have been eligible to claim a $25,000 tax deduction.<\/span>
\n\u00a0<\/span><\/p>\n

I appreciate that this is complex \u2013 but as you have just read, the cost of getting it wrong can be the loss of all or part of your tax deduction.<\/span><\/p>\n

Tread carefully.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Age restrictions and the work test<\/span><\/h1>\n

Voluntary super contributions such as salary sacrificed contributions or personal contributions other than downsizer contributions can only be accepted on or before 28 days after the end of the month in which the contributor turns 75 , subject to meeting the work test or work test exemption if above age 67.<\/span><\/p>\n

Since the start of the current financial year, a person aged 65 or 66 is no longer required to meet the work test to make a voluntary super contribution. However, one they are 67 or over at the time of making a voluntary super contribution, they still need to meet the work test or work test exemption to be able to make a voluntary contribution (except for a downsizer contribution).<\/span><\/p>\n

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The work test requires you to be gainfully employed for at least 40 hours in 30 consecutive days in the financial year. Where required, the work test must be satisfied before the voluntary contribution is made.<\/span><\/p>\n

Maximising personal non-concessional contributions (NCCs)<\/span><\/u><\/u><\/h1>\n

These may be useful for people who wish to:<\/span><\/p>\n