Most of us do not hesitate to insure our car, house and other possessions; however, we often neglect to insure the most valuable asset, ourselves and our partners. Around 6.3 million Australians are protected by life insurance policies, with claims in excess of $1 billion being paid by life insurers annually. **

There are compelling reasons to cover ourselves, since the one thing we can guarantee in life is injury, illness or mortality.

Facts and stats

• 50,000 Australians have heart attacks every year¹
• One third of women and a quarter of all men will suffer cancer at some stage in their lifetime – over 60% of whom will live for longer than five years after diagnosis²
• 43,000 people died from cancer in 2010³
• 70% of small business people are doing business without income protection (even though it’s tax deductible) ⁴
• Over 1600 people die on Australian roads every year, the majority of whom are aged between 26 – 59 years ⁵
• There is a one in three chance you will need to be off work for three months due to illness or injury before you turn 65⁶

How would your life change if you had a sporting or work injury or if you were diagnosed with cancer? How you would pay your medical costs or keep up with day to day bills? Not having insurance would erode your savings or worse, result in a financial crisis.

Generally, there are two types of life insurance products: lump sum payments and monthly income streams.

Lump sum

Term Life Cover: can provide a lump sum payment in the event of death or terminal illness

• Total and Permanent Disability cover: can provide a lump sum payment if sickness or injury leaves you totally and permanently disabled
• Trauma cover: can provide you with a lump sum payment in the event you suffer a serious medical condition (such as cancer, stroke or heart attack)

Monthly income steam:

• Income Protection cover: can provide a monthly income stream to help you meet your financial commitments if you are unable to work due to sickness or injury

Life insurance can be the safety-net to your financial well-being. In times of need, life insurance can assist with your day to day financial commitments (mortgage repayments and living expenses), which will give you time for your emotional and physical recovery and most importantly, enable you to spend time with your loved ones.

For further information on these products, please contact us on 08 8250 9434.

Brought to you by,

Yianni Tsimopoulos
Managing Director; Registered Tax Agent
Senior Financial Advisor

There may be a more tax effective way to fund your studies

Education savings plans have been around for many years and have been traditionally used as a savings vehicle for young students. Education funds have evolved to take advantage of changed investment opportunities,variations in education related expenses as well as cater for the mature age and post-graduate student.

The Australian Tax Act changes in 2003 officially sanctioned ‘scholarship plans’, which assist students to save for education related expenses. As a result, contemporary education funds can provide for a range of expenditures including post-graduate courses and overseas study.

The investment income of an education fund is taxed at a maximum of 30%. This tax is paid by the education fund – not the nominated student – and while the earnings accrue within the fund there is no assessable income to declare in the annual tax return of the student. In addition, the fund’s tax rate may be lower due to tax credits such as franking and foreign tax credits from the underlying investments.

When a claim is made for education related expenses from policy earnings, the education fund can obtain a refund of tax on the expenses claimed. This produces an education tax benefit, which is passed on to the nominated student as part of an education claim.

Education claims which include the education tax benefit are treated as assessable investment income earned by the student. Education claims can utilise the adult tax-free   threshold in a highly effective manner which is a major advantage of this kind of investment.

Example:  Joanne, 30 year old post-graduate student

*Combined adult tax-free threshold, $16,000 for 2011 – 2012 financial year.

Other benefits

• Withdrawals of investor capital for reasons other than education are also treated as tax-free refunds of capital to the investor
• No age limit of nominated student
• Investment earnings within bond do not form part of the assessable income of the nominated student
• Investment earnings are not included for eligibility for Centrelink benefits that are based on taxable income
• No minimum or regular deposit requirements
• No use by date on accumulated earnings

For a detailed plan personalised to your requirements, see you financial adviser.

Source: Lifeplan

Brought to you by,

Yianni Tsimopoulos
Managing Director; Registered Tax Agent
Strategic Financial Advisor

The life long debate, what is a better investment, property or shares? Yes, there has been numerous studies done on this topic but it still remains the ‘great debate’. I am going to conclude in saying my personal preference is property and I’m going to give you 11 reasons why.
Just a little fact, property has been the way most Australians have created the majority of their wealth even if it was by purchasing their family home.
Let’s get into some of the reasons why I think you should consider getting involved in property:

1. More millionaires have been created through property than any other form of investment.
Remember, there’s nothing wrong with seeing what successful people do and following there steps to benefit your own life. If the majority of wealthy people have used real estate to profit in life, there is no reason why you shouldn’t also.

2. Anyone can do it
Property investment is not just for the wealthy. It doesn’t really take large sums of money to get involved in real estate. We can help you with all the aspects of purchasing your first investment property.

3. Security
You don’t have to believe me when I say that residential property is a secure investment. Just ask the banks. Banks have always recognised property, and especially residential real estate, as an excellent security.

4. Income that grows
The rental income you receive from your investment property allows you to borrow and gain the benefit of leverage by helping you pay the interest on your mortgage. Over the years the rental income received from property investments has increased at a rate that has overtaken inflation.

5. Consistent capital growth
Over the past 25 years the value of the average property in all capital cities has doubled in value every eight to 10 years.

6. You can buy it with someone else’s money
Okay, of course you need some of your own money, but the ability to use equity with real estate allows you to purchase a substantially larger investment than you would normally be able to.

7. You are in control
Property is a great investment because you make all the decisions and have direct control over the returns from your property.

8. Tax benefits
Property investors are able to take advantage of a range of tax benefits including tax deductions and depreciation allowances.

9. You can add value
There are hundreds of ways you can add value to your property, which will increase your income and your property’s value.

10. You don’t need to sell it
Unlike most other investments, when real estate goes up in value you don’t need to sell in order to make a profit. You can simply go back to your mortgage broker and get your lender to increase your loan or use the equity to purchase your next investment property.

11. Most forgiving
Even if you bought the worst house at the worst possible time, chances are that it would still go up in value over the next few years.

Any investment anyone gets into must not be taken lightly, you must do as much research as possible and then some more! I am simply giving you my opinion on why I think residential property is a great investment and a great way to increase your wealth.

Until the next time, take care and think big!

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GENERAL ADVICE WARNING

The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Professional Investment Services (PIS) Authorised Representative before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Professional Investment Services nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

Personally, everywhere I go, I still constantly see people wanting to buy, people waiting in line for a coffee. Regardless of what the media wants you to believe, there still are sales to be had and people still have money to spend.

Why am I telling you this? Because I believe the media wants you to be afraid. Fear boosts the media. The media doesn’t and will not focus on good, healthy corporations, young business people starting new businesses, companies and individuals launching new products. That wouldn’t sell.

Don’t be manipulated and scared so much so it hurts you and your business. The truth is, your clients are still buying and still NEED you!

Did you know that during the “Global Financial Crisis”, more entrepreneurs and millionaires were made than ever before? Interesting, isn’t it?

Call us today for a review on your business and your future. There is no reason you can’t be at the top.

Contractors and employees have different tax and super obligations.

Similarly, if you have people working for you, your obligations differ depending on whether your workers are contractors or employees.

So it’s important you know whether you are, or your worker is, an employee or a contractor.

Employee or contractor

A key factor in deciding if a worker is an employee is the degree of control that can be exercised over the worker. If the payer has the right to direct how, when, where and who is to perform the work, then the worker is likely to be an employee.

Another key factor to consider is whether the worker is being paid for the time they work, or being paid for a result:

• Workers being paid by the hour are more likely to be employees.
• Workers being paid for a result are more likely to be contractors.

There are a number of factors to consider in determining whether a worker is an employee or a contractor, with no single factor necessarily conclusive. You must consider all the facts in each case.

Entitlement to an ABN

If you are, or your worker is, a contractor, you also need to know about entitlement to register for an Australian business number (ABN) because there are different goods and services (GST) and pay as you go (PAYG) withholding obligations depending on whether a contractor has an ABN or not.

Engaging contractors

If you engage contractors, you are not required to withhold amounts from payments except where:

• the contractor has not quoted their ABN to you
• a contract worker you engage provides their work or services for your client under a labour hire arrangement between you and the client, or
• you have entered into a voluntary agreement with the contractor to withhold from payments. Voluntary agreements can help your contractors to meet their PAYG tax obligations.

For individual contractors, you must also make super guarantee contributions for them if more than 50% of the value of their contract is for labour.

Operating as a contractor

If you are a contractor, you will generally provide for your tax obligations through the pay as you go (PAYG) instalments system. If you:

• have an Australian business number (ABN), your payer may agree to withhold tax from your payments under a PAYG withholding voluntary agreement
• don’t quote an ABN, the payer will be obliged to withhold tax from your payment.

You also need to be aware of:

• how you are taxed if some or all of your income is personal services income
• any super guarantee entitlements you may have.

For further information, please contact us on 08 8250 9434 or visit the ATO website at www.ato.gov.au.

Sincerely,

Ross Monteleone
Accountant

I learnt a lot from this trip. I was lucky enough to see some amazing things but not only that, I got to see how another part of the world lives. You see, after we really enjoyed our resort we decided to venture out into the town of Aitutaki. To cut a long story short, many of the people that actually live on this island don’t have many material possessions. Some of the properties we drove by had nothing but a table cloth for their front door, yet, these people were some of the nicest, happiest people we have ever met. They don’t own TVs, computers, mobile phones, 30 hand bags and an expensive car but each and every one of them had a smile on their face and simply enjoyed everything and everyone around them.

I was having a conversation with one of the locals and he said to me “God has a plan. Forget the stress, anxiety and fear that comes with life… my main goal is to wake up every morning and smile, life is more complicated when you make it out to be“. This to me showed genuine happiness.

I realised that god has given me so many things to be grateful for. For a supportive family, for friends, for love. Sometimes we get caught up in little ityy-bitty details we fail to see the love that’s in every single day.

Today I stumbled across a list of things that we should all be mindful of. Day-to-day things that will make life easier. Have a read through.

1. Don’t try to read other people’s minds. Don’t make other people try to read yours. Communicate.

60. Make mistakes, learn from them, laugh about them, and move along.

From Marc and Angel Hack Life

James Tsimopoulos