- Lawrie Reid and Simon Hunter retire
- Work test for Super moves to 67 from July 1
- Spouse contributions up to 74
- If you are on the minimum pension payment your pension will reduce by 50% from July 1
- EOFY cut-off times
The recent months have been dominated by the impact of COVID-19 on all our lives. Australia appears to have managed the crisis better than most, with restrictions now starting to be relaxed and the biggest impact on our lives set to be interstate travel.
However, the major concern from a financial perspective, that still remains, is the eventual impact on the economy and unemployment. The Government initiatives such as Job Keeper and Job Seeker are helping to mitigate the immediate fallout from the pandemic but there is likely still further economic pain to come.
Judging by the traffic back on the roads, WA seems to be returning to almost normal and talking to Eastern State colleagues, their recovery has also commenced, though perhaps not quite to the same extent.
We sincerely hope that your lives have now returned to a semblance of normality and any financial strain has been relatively small. If anyone is struggling, then we are here to help, particularly if you are interested in accessing super under the government guidelines, or if you are a business or self-employed that requires assistance in applying for Government grants. Please don’t hesitate to contact us on (08) 9380 6333 or email@example.com
Wealthwise Team news
We are very sad to announce that our esteemed colleagues, Lawrie Reid and Simon Hunter have both recently retired after each serving more than 40 years in the industry. Many of you who knew Lawrie and Simon will appreciate that now, at long last, they will have time to work on their golfing handicaps – something which remained stubbornly high for both of them for almost as long as they have been in the industry. On a personal note I have known both Lawrie and Simon for more than 30 years and would like to say that their company and counsel will be sadly missed. On behalf of myself, the business and their clients, we would like like to offer our heartfelt thanks and wish them the very best for the next chapter in their lives. Happy golfing Lawrie & Simon.
Super and other Legislative Changes
There is a big change to Superannuation that will commence from 1st July 2020. The work test for voluntary concessional and non-concessional contributions is being pushed out to age 67 (previously 65). This will allow a number of clients aged 65 and 66 who are not presently working to make contributions to Super up to the contribution caps. The change will also allow spouse contributions up to age 74. As always, your Adviser can provide further clarification.
One important point to note here is that the $300,000 bring forward rule, currently available under age 65, is not automatically available and actually needs to be legislated for. The bill is currently before parliament.
If anyone is suffering financial hardship, there is also the interim emergency measure of accessing $10,000 this Financial year and another $10,000 next Financial year.
Most pensioners will be aware that they can reduce their account-based pension payments by 50% and many have already arranged the reduction for this year. The reduction is set to continue for the new Financial year as well. However, one point to note is that if you are currently receiving the minimum, in previous years this would continue to be the case if you did not reply to the provider’s EOFY communication asking for your preference for the next Financial year. In this instance, being on the minimum means your pension would reduce to the minimum of 50% of the standard amount. Refer to the Account Based Pension Minimum Income table for the relevant rates.
Super contributions for this Financial year must be received by a certain date to be processed in time. If you’re intending to make a contribution to super before the EOFY, check with your product provider & ensure you act in time. Most providers allow contributions by various methods, but have different cut-off times for each. For example, Colonial First State require cheques to be posted to Sydney & received by 3pm (Sydney time) on 30 June, however EFT/Bpay contributions must be processed by 26 June.
The Stock market achieved new highs back in late February, only to see concerns about the virus result in a substantial 30% plus drop in the space of a few weeks.
These concerns centred on the damage the pandemic would do to the world economy, filtering down to the profitability of the companies listed on the Exchange. Many of those companies have made announcements suggesting that their profitability would be severely impacted and in some cases suspending the payment of dividends.
Interestingly, the crisis has seen some technology stocks and online retailers benefit from the situation. And even the larger companies like Coles and Woolworths survived the correction quite well. Technology companies like Zoom, which I am sure many of us are now intimately familiar with, and Kogan the online retailer had substantial growth during the period.
Some interesting market facts relating to the last couple of months:
- Oil surged over 80% in May following a brief period where the price was negative, caused by there being no available storage for the oversupply
- The Australian dollar had one of it’s strongest periods on record, edging back above 66 cents (against the US) but also appreciating against most other currencies
- Resources stocks have performed at almost double the rest of the market since the bottom of the correction
- There is a new acronym for technology stocks; WAAX, referring to Wistech, Altium, Afterpay, Appen and Xero, all of whom had a stellar rise since the correction.