Archives for April 2017

Prosperity creates opportunities for professionals to thrive

Prosperity is delighted to be a finalist in this year’s Australian Accounting Awards across two categories.

It follows recent awards for excellence among our team – Hillross Adviser of the Year for Gary Dean and 2016 Rising Star of the Year for Alex Hardy. Siobhan Sellick has been announced as finalist for Partner of the Year while Prosperity’s Professional Development Program is also shortlisted for recognition at this year’s Australian Accounting Awards.

Staff feedback surveys tell us that what sets Prosperity Advisers Group apart from other firms is our collaboration, professionalism, learning culture and team ethos – especially the lengths that we go to make a difference for our clients and to support each other.

This recognition builds on firm and individual successes awarded in 2016. We have been recognised again for the contribution our people make in helping to create stronger financial futures for our clients.

In becoming a finalist for Partner of the Year, Siobhan Sellick consolidates her 20 years of business advisory, accounting and tax experience working closely with individual, family and business clients.

Siobhan says: “I like to spend time with my clients getting to know them well. I meet with a client’s team, partners, children and people who influence or rely upon them. Prosperity gives me the freedom to work with other teams and the time to get close to clients and their families. I am not restrained in my approach so that I can provide holistic solutions and not just piece meal advice.

Mentoring my team to go beyond traditional compliance accounting has reaped rewards for individuals who have stretched themselves and discovered new skills and knowledge. It’s a very satisfying part of being a Partner.”

The Professional Development Program award recognises achievement for innovation in program development, implementation and outcomes achieved. Prosperity’s Learning Organisation approach underpins how we engage with each other and how we work with clients. For us to be recognised as the Firm of the Future we are embracing technology, changing how and when we advise and engage with clients and reshaping how we build enduring client relationships.

HR Director, Tanya Craft said “Personal and career development is an important consideration when people join Prosperity and our program aims to address the balance between technical, personal and professional growth.”

Category winners will be announced on 26 May at a gala dinner in Sydney.

Organisations need ‘to step up to speak up’

Encouraging employees to report wrongdoing (‘blow the whistle’), and protecting them when they do is an important part of fraud and corruption prevention and creating an ethical culture in any organisation. With a joint parliamentary committee set to report in June – now is the time for organisations to act.

Audit committees, boards and executive teams ignore at their peril the danger of ineffective or non-existent ethics and whistleblower programs in their organisations. New rules are likely in Australia soon and are anticipated to be wide-reaching, affecting companies and not-for-profit organisations alike.

Prosperity has answered the call for professional and independent support. We offer a unique service in the Australian market – Ethics Matters – developed in conjunction with leading Canadian ethics and whistleblower specialist, WhistleBlower Security (

Designed to be intrinsically independent, Prosperity’s Ethics Matters and WhistleBlower Security approach provides support for organisations to create policies and procedures and then deploy an organisation-wide ‘speak up’ hotline with online portal and independent case management system, along with support for investigations and effective reporting.

Organisations with programs already in place often struggle to ensure independence as well as satisfy stakeholder demands for detailed reporting, trend analysis and quantification for the impact that fraud, corruption and wrong doing is having on their organisation.

Globally recognised provider, WhistleBlower Security, is now available exclusively in Australia through Prosperity Advisers. Their state of the art hotline and case management system facilitates anonymous and confidential dialogue between the reporter and an organisation’s representative – whether initiated through a call centre, fax, and email or online. Each report is assigned a unique number and password, facilitating anonymous and confidential dialogue. Fast case management and resolution can happen in a protected environment and reporting can be detailed and in real-time.

Australians don’t need to go far to find damaging examples of poor detection and management of wrong doing in organisations. Recent cases such as the David Jones sexual harassment allegations against the former CEO, high profile cases at Seven News, Queensland Health, University of Queensland, NSW Health and Leighton/CIMIC, are all memorable examples.

Michael Mahabeer, Prosperity’s director in charge of Ethics Matters says, “From my experience on the other side, working in a large and complex corporate organisation, the implementation of an effective and independent program gave a voice to issues which would have gone undetected. It gave visibility to the Board and stopped issues escalating, effectively minimising the long-term financial impact from wrongdoing.”

Soon legislative changes in Australia are likely to drive companies and not-for-profits to implement programs and potentially report on wrong doing too. Australia could end up following the United States in this regard.

Directors of boards have a responsibility to shareholders for ensuring their organisation is protected. Avoiding brand damage which can have a lasting impact, affecting revenue and profitability must be a key consideration. Pulling the curtains back and providing support for employees to ‘speak up’ is going to be a key agenda item for boards across Australia in coming months.

For more information on Ethics Matters and WhistleBlower Security click here.


What’s all the noise about mortgages?

In recent weeks we’ve seen a shift in lending policy combined with interest rate hikes across many of the major lenders. So what’s happening and why?

There is ongoing debate about whether we are living in a property bubble. What is fact however, is the fast rate of growth in property values. Sydney housing values for March grew at the fastest annual pace for 15 years. According to the latest monthly CoreLogic Hedonic Home Value Index, Sydney housing values grew by 19.7 per cent, while units in the NSW capital grew by 15.3 per cent over the last year. The study also found that four of the nation’s eight capital cities recorded an annual growth rate in housing values in excess of 10 per cent.

Disturbingly, what’s moving in the other direction is household indebtedness and slow growth in household income. At more than 120 per cent of GDP, Australia’s household debt is substantially higher than in most other advanced countries and has risen markedly in recent years. The governor of the Reserve Bank recently flagged that Australian households are carrying more debt than they have before, which is a “significant issue” that the central bank is “watching carefully”. RBA governor Philip Lowe explained recently that an increase in housing prices has gone “hand-in-hand” with a further pick-up in household indebtedness: “In aggregate, households are carrying more debt than they have before and, at the same time, they are experiencing slower growth in their nominal incomes than they have for some decades. For many, this is a sobering combination,” he said.

Recent changes to lending rules plus interest rate rises

APRA, the mortgage regulator, recently introduced measures to limit the flow of new interest-only mortgages from banks to 30 per cent of total new residential mortgage lending. The regulator also provided instructions to banks to ensure that growth in housing investment mortgages remains comfortably below a 10 per cent limit.

APRA has advised the banks that they won’t tolerate going beyond the growth speed limit and that any breach will prompt a review of the offending bank’s capital requirements.

In the past two weeks, the industry has seen a flurry of mortgage rate hikes from big banks and non-major lenders. Increases at AMP, CBA, ANZ, NAB, Homeloans, Auswide, Bendigo Bank, St. George and Westpac have ranged from seven to 117 basis points. Many of the rate rises have been targeted at investor loans and interest-only loans. Lenders cited APRA’s measures as one of the reasons for hiking their rates. The ratings company Moody’s warned that even though Australian banks have already started to raise lending rates, lending rates for interest-only mortgages “are likely to rise further”.

Impact on borrowers

Industry analysts have warned of hard times ahead for borrowers due to increasing interest rates. The mix of record house prices, pending oversupply of apartments in some cities, investor lending curbs, and elevated household debt levels, coupled with rising interest rates on mortgages could be a volatile cocktail for some borrowers.

Plus, it’s possible negative gearing rules may come under fire at this year’s Federal Budget causing even more changes ahead.

What can you do?

For most borrowers, the lending interest they pay is the biggest cost and the biggest expense they’ll ever have and therefore they need to look after themselves. They need to be alert and, as the rates go up, check whether there is a better rate available and shift where it makes sense.

Borrowers can take action to potentially limit the financial impact of these changes by refinancing their home loans. Those borrowers who have not recently reviewed their cost of debt should certainly be talking to an adviser to see if their rates are appropriate. There are many options available from lenders and in today’s market where credit policies and rates are changing constantly, getting a clear view on what is available from an experienced adviser is important.

To discuss your household debt and explore your mortgage options, please call Prosperity on 1800 855 844.


Matthew Guy is an Authorised Representative of Prosperity Finance Advisers Pty Ltd ABN 69 143 861 303, 309 Kent Street Sydney, NSW 2000 is a Credit Representative (No 479852) of Hillross Financial Services Pty Ltd Licence 232705 ABN 77 003 323 055 and is one entity within the Prosperity Advisers Group Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person.

Super changes just around the corner

For more than 20 years, superannuation has been compulsory for Australian employees. In this article we discuss the key considerations in relation to the changes foreshadowed in the 2016 Federal Budget, and enacted by legislation in November last year, which are the biggest superannuation changes that have come into play in the last 10 years.

Most of the changes will commence from 1 July 2017 and it’s important you have appropriately planned for, and taken any necessary action, in the months leading up to July.

Pension reforms

By way of background, there are two phases within the superannuation system:

  1. Accumulation (Savings Phase), subject to a 15% tax rate; and
  2. Pension (Drawdown Phase), exempt from tax.

There are two main changes to consider: 

  1. A limitation on the funds that can be held in the Drawdown Phase, known as the Pension Transfer Balance Cap (PTBC), being $1.6 million. Any excess funds will have to be moved to the Savings Phase, subject to15% tax, or withdrawn.The system will be managed by the ATO through measurement of your personal transfer balance account via a series of debits and credits. Credits will be applied when you commence a pension and debits will be applied when you cease a pension.Indexation on the $1.6 million is available, however it will only be indexed in $100,000 increments and will only apply if you haven’t fully utilised your PTBC.
  1. Cessation of the tax exemption applying to the pension type known as Transition to Retirement, meaning any earnings in that pension type will be subject to 15% tax. Note, no cap applies to this type of pension.

These reforms have no impact on the taxation of benefits you receive in your own hands. If you are over 60 and receive a super benefit, no matter how you are able to access it, it is non-assessable, tax-exempt income and it won’t affect your taxable income.

One-off CGT relief

Under the PTBC, some members will be required to move funds from the Drawdown Phase to the Savings Phase. To the extent that taking that action triggers a capital gain, an unexpected but welcome one-off relief is available through what is known as the Pre-Commencement Stage, being 9 November 2016 through to immediately before 1 July 2017.

During this time, the trustee of the fund must elect to apply for that relief, however it is important to note that this election is irrevocable. If a superannuation fund is in the Drawdown Phase and another member is in the Savings Phase, the relief will apply across all assets. This may trigger a capital gain in the Savings Phase that you will never be able to unwind.

This is a tricky area and you should seek close advice from your Prosperity Adviser before electing to apply for the relief.

Amendments to contribution caps 

Since 2007, contribution caps have been the main way in which super has been regulated. There are two types of contributions you can make to your superannuation fund:

  1. Concessional contributions, where a tax deduction is claimed either by yourself or your employer; and
  2. Non-concessional contributions, where no tax deduction is claimed.

Currently, the cap on concessional contributions is $35,000 for those over 49 years of age at 30 June 2016, or $30,000 for those under 49 years of age. After 1 July 2017 the cap will be $25,000, regardless of age.

The non-concessional cap is currently $180,000, and for those under 65 there is the ability to bring forward the next two years of contribution caps to make a $540,000 contribution.

From 1 July 2017, the cap will be reduced to $100,000 annually and a limit of $300,000 will be placed on the ‘bring forward’ limit for those under 65.

Apart from a reduction in the amount of money you can put into your superannuation fund, there is one other change, being a concept called Total Superannuation Balance. From 1 July 2017, balances which are close to or exceed the PTBC of $1.6 million will be assessed, and a further constraint on the money you can put into super on a non-concessional basis could be down to $0. Therefore, there may be a one-off opportunity available to some superannuants which will no longer be available after 1 July.

Time to act

 While the reforms may be seen as an attack on superannuation, you should not consider superannuation as any less useful in retirement savings. Notwithstanding the reforms, superannuation remains the most effective retirement savings vehicle. However, the clock is ticking and there has never been a more important time to contact your Prosperity Adviser for a review of your arrangements.




Gavin Fernando is an Authorised Representative of Prosperity Wealth Advisers Pty Ltd (ABN 32 141 396 376) is part of the Prosperity Advisers Group and an Authorised representative of Hillross Financial Services Limited, Australian Financial Services Licensee 232705. This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. Readers need to consider their own financial situation and needs before making any decisions based on this information.

Government delivers good news for business to support economic growth


There is finally good news for some businesses in the lead up to the new Federal Budget being handed down in May. Items flagged in last year’s budget are finally progressing through the Government and the Senate. This includes company tax cuts and the ability for more businesses to access the small business tax concessions.

Legislation containing the proposed tax cuts for companies – bringing company tax down to 27.5% – has now been passed however it is limited to companies with under $50m turnover.  The company tax cuts were intended in last year’s budget to apply progressively to all companies, however objection from opposition parties and deals made to pass the legislation resulted in the tax cuts being limited to small and moderate sized businesses.

For the 2016/17 year (this tax year) it will be limited to companies with less than $10m, for the 2017/18 year the threshold will raise to $25m turnover then $50m from the 2018/19 year onwards. The tax rate will gradually decrease from 27.5% to 25% from the 2025 to 2027 years.

Importantly, the new legislation also includes the budget proposal to increase access to the small business tax concessions (excluding CGT) to $10m from 1 July 2016. This means, for example, companies with between $2m and $10m turnover will be able to obtain an immediate write-off for depreciable assets acquired prior to 30 June. This is great news for a large number of businesses and should factor into business planning strategies for the 2017/18 financial year. Small business owners should contact their adviser to discuss these changes and how they can take advantage of this immediate stimulus prior to 30 June.

The legislation also progressively increases the small income tax offset for sole proprietors (eventually to 16% by 2027) and raises the threshold to $5m turnover.  Another great win for small business!

Contact Prosperity on 1800 855 844 or if you would like to know how these changes can benefit your business.