Australia expected to follow French New Era of Corporate Governance

In light of the Australian government’s impending new anti-corruption and anti-bribery legislation to be enacted, ethics experts are asking whether we should be looking at what’s happening elsewhere for guidance on what might be in store for Australian businesses. New anti-corruption law recently passed in France is particularly interesting and relevant to Australia. France calls it a “Law on Transparency – the Fight against Corruption and Modernization of Economic life”, commonly referred to as SAPIN II – named after France’s Finance Minister who fought for its passage.

Why has new French legislation got our attention?

This piece of anti-corruption law – is said to be setting a new bar for anti-corruption while still being in-line with the strictest European and international standards.

As a result, French companies have had until June 2017 to implement whistle-blower compliance programs to comply with this new legislation, which is not a long time to implement the requirements of the legislation.  SAPIN II adds to the host of other legislation from first world economies in recent years, a clear recognition that anti-bribery and anti-corruption compliance are at the forefront of legislative and regulatory agendas globally.

SAPIN II also applies to bribery and corruption activities committed outside of France by French companies and French nationals, or to others who conduct business in France or within French territories.

Where is Australia up to?

In December 2016 the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP issued a consultation paper seeking public comment on whether corporate sector whistle-blower protections should be harmonised with that of the public sector whistle-blower protection laws (in recognition that Australia’s public sector protection laws are very stringent by international standards, but that corporate sector laws lag behind most developed nations). Around the same time, the Australian Senate referred an inquiry to the Joint Parliamentary Committee on Corporations and Financial Services into whistle-blower protections in the corporate, public and not for profit sectors with a report due back by 30 June 2017. This deadline has been  recently extended to 17 August 2017.

Consequently, experts expect new legislation to unfold from early to mid- 2018 as Australia races to look good and meet its G20 commitment for improving its corporate sector whistle-blower laws. This is expected to form part of the  Australia report to the G20 Summit in Buenos Aires in 2018.

What can Australia learn from SAPPIN II?

France’s new legal requirements of this compliance program include:

  • Developing and implementing a Code of Conduct which defines and illustrates the different types of prohibited behaviours, notably those relating to bribery and/ or influence peddling;
  • Implementing Disciplinary sanctions and consequences for non- compliance with the company’s code of conduct;
  • Implementing a Whistle-blower System that enables employees and others to highlight and report violations of this Code of Conduct;
  • The need to have in place regular and continuous Risk Mapping to identify, analyse and rank the organisation’s exposure to bribery and corruption related risk;
  • Requirement to assess and conduct Due Diligence of clients, providers and intermediaries associated with the organisation for bribery and corruption risk;
  • Implementing Accounting Controls designed to ensure the company’s financial accounts are not used to conceal acts of bribery or influence peddling;
  • Conducting regular and continuous anti- bribery and associated influence peddling training for managers and employees exposed to this risk;
  • Establishing an internal control system to regularly assess the design and effectiveness of the compliance controls of the program (i.e. including audits of the anti-bribery and anti-corruption compliance program within Internal Audit Plans).

In passing SAPIN II, the French government has established a new regulatory anti-corruption agency, the Agence Francaise Anti-corruption (AFA) to oversee and administer this law. For any company which fails to comply with SAPIN II, the AFA will in the first instance issue a warning letter to the Board and Executives and may refer the non-compliance for enforcement.

The implications of enforcement action range from fines against the Executive Officers of the company of up to €200,000 individually and up to €1million for the company, with possible compensation payments to the victims of corruption as well. Further consequences include more stringent monitoring by the AFA of the company prosecuted for up to 5 years (at the company’s expense). These are significant actions for any company caught foul of the Act.

In Australia there have been calls for a similar Australian federal agency to be established to oversee the new legislation under development. It is widely expected that this will occur.

How can your organisation prepare?

If Australia goes down the path of France and other developed nations such as the USA and Canada – experts expect this will be the case – then now is the time to start preparing your organisation for this new world.

Many experts argue that whether there is a compliance obligation or not, it makes good business sense to think about an organisation-wide Ethics Program and to implement a sound Whistle-blower approach in order to be recognised as a leading organisation.  Prosperity’s Corporate Assurance and dedicated Ethics experts can help organisations to understand their risks and to implement a sound and effective Ethics & Whistle-blower Program, including independent support for whistle-blowers and investigations.

To find out more, contact Michael Mahabeer on 1800 855 844.

Have you got a risk management strategy?

With the commencement of a new financial year, now is the time to stop and think about how your organisation has weathered the risks in the year gone by and plan ahead for the future. If you are one of those businesses that has fared well in 2017, then it could be down to a case of good risk management or good luck. Sound and effective Risk Management is the best way to manage your risks rather than relying on good fortune, especially as you try to navigate through the challenges ahead in 2018.

Risk is not only about threats but also about forgone or lost opportunities.

With change being a constant, businesses need to be agile to be able to respond to the challenging and evolving risk landscape. In the year ahead, being prepared + proactively adjusting + timely response = agile.

Risks to look out for in 2018

To be agile, you need to consider risk management a priority and devote appropriate time to risk management activities. Some of the top risks likely to be faced by businesses in 2018 include:

  • New technologies (increased connectivity, nanotechnology, artificial intelligence, drones etc.)
  • Disruptive business models & innovation coming to market (e.g. Uber and the taxi industry, Airbnb and the hotel industry)
  • Macroeconomic developments and government policy directions
  • Cyber incidents and privacy breaches
  • New regulations
  • Negative events that can damage a reputation.

Risk Appetite Statement and Enterprise Risk Management Framework

Having in place an effective Enterprise Risk Management Framework supported by a Risk Appetite Statement should be an integral part of your business. Embedding of a risk culture within your organisation is the next step towards business success. A mantra that should permeate across your organisation should be: “Risk is everyone’s business – not just the management team”.

The risk appetite underpins your group’s strategic and business planning process. It involves the board of directors or owners setting the risk appetite within which management operates, highlighting those decisions outside of risk tolerances which need escalation to the board or owners. This could mean management is not authorised to accept risks that are assessed as “Extreme” or “High” which requires board/owner approval. For example an offshore expansion or a new product development.

An Enterprise Risk Management Framework refers to the overarching structure by which the organisation organises itself for managing risks. These include things such as:

  • Defining the Risk Response Strategy (determining appropriate actions such as avoidance, reduction, taking alternative actions, sharing or insuring or just accepting the risk)
  • Articulating risk definitions and risk rating criteria
  • Developing and actively maintaining a Risk Register
  • Defining accountabilities and responsibilities for risk management
  • Defining the risk management process for your organisation and
  • Using watch lists to monitor emerging risks etc.

The key is ensuring that the level of risk management sophistication is appropriate to your business and seen as a value adding aspect to running your business. It should never be a ‘tick the box’ approach or be in isolation to the core activities of the business.

Negative Events and Reputation Risk – Ethics Management

Managing your organisation’s reputation and brand as well as demonstrating your commitment to being a good corporate citizen means having in place the necessary systems to enable this. It is very much a part of sound risk management.

One of the neglected areas in managing business risks is considering the impact of negative events on your reputation and on your business, especially in the area of ethics. All it takes is for a small issue or event to snowball out of control and the next thing you find is that you are embroiled in controversy and embarking down the road of managing an ethics-related media crisis.

The last twelve months have seen a number of high profile reputations damaged through ethical misconduct matters raised by whistleblowers. These organisations failed to put in place an appropriate mechanism for wrongdoing to be appropriately raised, especially from an anonymous source, with the result that some whistleblower’s took the last resort which was to air their grievances through the media and bring events to a head.

Good governance on ethics starts at the top, and should pervade through an organisation, becoming an embedded part of your culture. Consideration towards introducing an external independently managed hotline for individuals to raise concerns should be a key consideration in the year ahead.

Reasons why Ethics and Ethics Risk Management should be on your agenda

  • Sweeping new legislation is on the way. A Parliamentary Inquiry is currently underway looking at legislation change around Whistle-blower systems and protections;
  • Engaging your people as an employer of choice. Active policies and procedures backed up by a hotline supports and encourages reporting of wrongdoing;
  • Providing assurance to your stakeholders that you have the required systems in place for identifying damaging allegations within a safe environment and that these are properly managed before they snow ball out of control, thus protecting your brand;
  • Demonstrating that you are a good corporate citizen who values the input from your staff and others relating to wrongdoing even if it means some short term pain.

Now is the time to consider your risk management, and Ethics management response for the year ahead. For help in understanding your risks and developing appropriate strategies, including an independent whistleblower system, contact Prosperity Advisers on 1800 855 844 for a confidential discussion.

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.


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.

Is it time to review your insurance?

Things change.  Families, incomes, debts, health, all are subject to different events each year.  This is why it is important to periodically review your insurance covers, to ensure you have the level of protection that you need and avoid paying for excess cover or features that are of little real benefit.

Life changes

Life events like having a child or increasing your borrowings are often a good trigger for people to review their insurances, but often other changes such as an increase in income, a child starting school, or marriage are important times to be reviewing your cover.  A little-known feature of many insurance policies is the ability to increase your sum insured, following certain life events, without medical underwriting.  This means if there has been a change in your health status that would ordinarily prevent you from obtaining new cover at standard rates, you may still be able to utilise this feature to increase your insurance.  Considering the change in health status this extra cover could be that much more important.

Changes to the Insurance Industry

The insurance industry is also facing changes to both their regulatory requirements and the nature of their medical claims which is why many policy holders have seen increases to the cost of their insurance covers in the last 12 months, particularly for income protection and trauma cover.  Until recently there seemed to be a race amongst the major insurers to see who could add the most features to their policies.  While these ancillary benefits may sound good in theory (for example, paying a benefit to relocate you back to Australia if injured overseas) the conditions to claim can be quite specific making them less likely to be used and they can add substantially to the overall cost of the cover.  Pleasingly some insurers are now recognising not everyone wants or needs every single benefit and are now offering the ability to opt in or out of these features.  It is important to work through this with an adviser that understands both the policy and your financial situation so they can tailor the cover to best suit your specific circumstances.  In addition, how the policies are owned can make a big difference to the tax implications of both the cost of the cover and any future benefits so it important to get advice on this to make sure you are maximising the tax effectiveness for your individual situation.

Recent example

As an example, we recently worked with a GP who had substantial covers in place but they hadn’t been reviewed for a number of years.  As the cost of that cover had changed significantly since it was originally obtained we were able to restructure the policies using the client’s existing trust structures and super fund to reduce the after tax costs substantially and apply some of those savings to funding new insurances to protect the client’s business if they were unable to work for a period to time.  As a result the client is now paying much less in insurance premiums each year with more comprehensive cover in place.

If you would like to review your insurance strategy please let us know and we will arrange a meeting with one of our specialist advisers.

Hamish Landreth 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.

Help is available to those struggling after the devastating week in NSW

It has been a rough week of weather for parts of New South Wales (NSW) and we all know someone who has been affected.   So as the week comes to a close we wanted to reach out with some information that may be of help to you, or may help you assist a neighbour, friend or relative who has been affected.Here are some of the things you should consider if you have been affected by a natural disaster.

Are you eligible for natural disaster assistance schemes? The government has emergency assistance grants and loan schemes available for

1) People facing personal hardship and distress The Ministry for Police and Emergency Services can provide disaster relief grants to eligible individuals and families whose homes and essential household items have been destroyed or damaged by a natural disaster. Find out more

2) Small businesses that meet eligibility criteria Loans of up to $130,000 are available at a concessional rate to small businesses affected by disasters and which meet certain eligibility criteria. This finance is available to those unable to obtain assistance through normal channels.   Find out more 

3) Primary producers that meet criteria for loans and transport subsidies Loans of up to $130,000 are available (subject to certain eligibility criteria), at a concessional interest rate for those in urgent need.  Transport freight subsidies of up to 50 percent are available to help with the carriage of livestock and fodder to help primary producers  Find out more

These schemes are all subject to eligibility.

Have you notified your insurance company of an intention to claim? If you intend to claim on an insurance policy, it is important to start enacting this process as soon as possible.  Insurance brokers and companies provide extra support for the high volume periods and often prioritise on a first come basis. Further, there may be records and information you need to collect and retain to ensure your claim is valid and maximised. For example if you have suffered a business loss and your business insurance covers “loss of profits” or “business interruption” it may be necessary to capture information about the hours of staff or loss of income during and following  the disaster. Such information may be more difficult to collect afterwards or not having it may impact the amount paid under the policy. For property damage it is important to understand the process required to be followed by your insurer to ensure costs are covered. For example you may need to get a certain number of quotes for repair work or use certain providers to have the work done in order for your insurer to reimburse you.

Seek out programmes that might be available to help. Many financial institutions and organisations are releasing programmes to help their customers.  We have already been contacted by a number of banks, as well as Chambers of Commerce and Government bodies.  Our team is across many of the programmes that are being offered and will continue to monitor this space as it unfolds to help people in their local areas. Please contact us for assistance in understanding what help is being provided.

Do you need help getting your business, home, family or charity through this period?  People who are struggling might not have the tools, skills or equipment they need to lodge claims, manage issues or obtain help that will get them back on track faster.  Our team is just one call away for someone you can trust to be a second set of eyes or hands at this time.  Whether it be a sounding board, processing payroll while systems are down, helping you apply for assistance or insurance or longer term planning to help you or your business recover from this event, we are here to support you.

Most of all, we want you our clients and friends to know that if there is any way we can help you at this time, to please reach out to us.  Natural disasters and the aftermath can be soul destroying, and there are plenty of hands and minds here to put to work on solving any issue, personal or business that you might be struggling with

Effective Asset Protection – Control the risks and protect your wealth

“It won’t happen to me”, “It is unlikely I will be sued,” and “I have insurance” are things we as Accountants hear our clients say all the time in our day-to-day activity.  Occasionally these statements are tested when something unexpected happens in someone’s life or business, and sadly, for those without a good approach to risk management, the outcome can be devastating.

Rarely do many of us stop and take a good look at our lives, to recognise changes in our personal and business situation and to take time out of our busy schedules to focus on the protection of our hard earned wealth.  Good risk takers find the time to work with a diligent adviser to oversee and ensure their wealth building plans are not easily undone.

An effective asset protection strategy is about reviewing and understanding the risks and adopting measures to protect family and business assets.

Many people think that lawsuits only apply to high risk occupations such as obstetricians, engineers and professional advisers.   Sadly, this is just not the case.  In fact litigation is becoming quite common and its prevalence continues to increase in Australia.  Quite often, if not carefully examined, you may find your insurance policy does not actually cover what you expected.

Recently I was speaking to a family colleague, his wife was caught in a defamation claim, the home was in her name and unfortunately they did not have an asset protection strategy in place. While it was no fault of her own, they had to settle the claim. With careful planning and implementation of a well designed trust structure including an equity protection solution for their home, they would have had a much greater degree of protection from the legal claim. Not long after, I met with one of our new clients for a preliminary risk review.

Identifying the risks
Our client owns a successful engineering business. As part of our strategic review process we conduct a business and personal risk review which examines each of the items below:

  • We confirmed the engineering business was operating through a hybrid unit trust structure which had been set up years prior. The trust was the ideal structure to run and operate the business. All the business assets were owned by another asset protection trust and therefore adequately protected. The trust deed did however require an upgrade to ensure that it was covered for recent legislative changes.
  • Recently an offer was made to two employees of the business to become equity owners. The problem with the unit holders agreement was the absence of a clear succession plan and in addition to this no funding mechanism to protect the business owners if one decided to sell, retire, was required to leave due to health reasons, disability or traumatic illness; or unexpected death.
  • We confirmed that the key person, skill retention and emergency management plans and policies were in place.
  • We found the family residence with no mortgage, was owned in the clients wife’s name, which provided a reasonable degree of asset protection.
  • Upon inspection of the portfolio of investments (property/ shares/cash), we found all were protected appropriately by insurances and appropriate asset structures except for one property in the husband’s name. All other assets owned either in their family investment trust their superannuation fund.
  • We looked over the couple’s personal insurance cover confirming that the family was adequately covered.  We did however update some of their policies to take advantages of important new features and more favorable clauses offered by other insurance providers.
  • We checked to see that general insurance, health cover, professional indemnity and business insurance was all in place and adequate, finding the only deficiency was that the professional indemnity had not been updated to cover a new area of service the business was operating in.
  • We confirmed they had completed binding nominations for their superannuation and nominations for their insurance in accordance with their estate planning review. We had previously arranged for their wills to include discretionary testamentary trusts which are created upon death. The trusts are designed to protect personal assets for future generations (Children/ Grandchildren) from potential creditors, bankruptcy and/ or due to marriage/ de facto breakdown.

Issues identified 
Key to these issues was the fact that our client had structures and estate planning in place to protect their assets.  We had concerns about the risks of holding the equity in their home in the wife’s name and the property in the husband’s name.  The goal was to remedy this without incurring significant transfer costs of stamp duty on the properties and capital gains tax on the investment property.

We arranged for an equity protection strategy and implemented the following:

  • Establish a family investment trust controlled by the parents for the benefit of their beneficiaries (children, grandchildren and other family members). The trust structure designed to protect assets from potential creditors, bankruptcy and for future generation from a claim due to marriage/ de facto breakdown.
  • Arrange for legal documents to gift the equity to the family investment trust without incurring tax costs.
  • Implement legal documents, registrations and security documents to take a first mortgage over the properties.

This strategy achieved the same level of asset protection as transferring the properties to a family investment trust without incurring substantial taxation costs. This also gave the couple peace of mind that the assets in personal names are also protected.

We were also keen to put in place a formal unit holders agreement to include the transfer of ownership to the surviving equity owners rather than transfer the ownership to the executor of the estate. This would occur at the time the estate is paid from the insurance policy in the event of death or disablement. The policies also owned by the appropriate structures to ensure tax efficiency.

The overriding thing to remember is that while accidents and incidents might happen in life, significant financial downside risk can be prevented with proper planning.

As a practicing accountant and financial advisor for over 20 years, I have heard of many other unfortunate business lawsuits, family disputes, financial setbacks which with some legitimate and sensible asset protection strategies could have been avoided.

Could you be eligible for the Commonwealth Seniors Health Card?

If you are ineligible for the Age Pension due to your wealth but still have an annual income below $50,000 pa for singles or $80,000 pa for a couple, you might be eligible to receive the Commonwealth Seniors Health Card (CSHC).  And the benefits are nothing to shirk at. 

As a holder of the card, you can access a whole host of things you might never have known about, the first of which is cheap medicine.  And it is worthwhile noting up front that there is no assets test to qualify.

The main attraction of CSHC is that eligible pharmaceuticals under the PBS are available at just $6.00 per script.

In addition to this, you can receive a Seniors Supplement from the Government of up to $858 pa (singles) and $647.40 (for each member of a couple). You may also be able to take advantage of bulk billed GP appointments and a range of other benefits at concessional rates.  So if you think you might qualify, it is definitely worth a look.

More money in your pocket
As detailed above, CSHC holders are entitled to receive the Seniors Supplement and the Clean Energy Supplement, both annual payments made to cardholders. The maximum seniors supplement is currently $858 pa for single people and $647.40 pa for each member of a couple, paid quarterly. The clean energy supplement is currently $356.20 pa for a single person or $267.80 pa for each member of a couple.

Services and Benefits of the CSHC
The services specifically available through the CSHC may include:

  • Bulk-billed GP appointments, at the discretion of the GP.
  • A reduction in the cost of out-of-hospital medical expenses in excess of a concessional threshold, through the Medicare Safety Net.
  •  In some instances, additional health, household, transport, education and recreation concessions which may be offered by State or Territory and local governments and private providers. These concessions are offered at the discretion of the private providers, and their availability may vary from state to state.

Could you be eligible?
So, could you be eligible? In order to receive the CSHC, certain criteria must be met:

You must be an Australian resident, or a holder of a special category visa, and be living in Australia at the time of lodging the claim.

You must have reached Age Pension age or qualifying age for DVA recipients.

You must not be receiving:

  • A social security pension or benefit (eg age pension), or
  • A DVA service pension or income support supplement.

Income test
You must have an adjusted taxable income of less than:

  • $50,000 for a single person
  • $80,000 for a couple

Assets test
There are no asset limitations or requirements.


I think I’m eligible, what do I do now?

If you believe you are eligible for the CSHC then contact your Prosperity Financial Adviser who can help with any questions you have. Alternatively you can contact the Department of Human Services on 13 23 00 or visit their  website on:



National Wealth Advisory Accolade

John Manuel, Director of Financial Services has recently been named as one of five national finalists in the 2013 Australian Private Banking and Wealth Awards under the category Outstanding Wealth/Investment Adviser.

The awards are hosted by the Australian Private Banking Council with the aim to recognise individuals within private banking and wealth services who are excelling in their profession.

As a tremendous personal accolade, John was the only adviser from a non institutional firm to reach the finals in any category.

The process involved in reaching the final was an extensive one. All nominees were asked to prepare a paper on a multi layered case study provided by the Council. Nominees were also asked to provide examples of strategic solutions implemented over the last 12 months to assist clients in meeting both short and longer term financial goals. Finally, John attended a searching interview with the judging panel comprised of some of the industry’s most experienced thought leaders. Outstanding service, understanding of individual client needs and relationship management were key criteria considered.

At Prosperity we pride ourselves on providing best of breed strategic advice to our clients and it gives us great pleasure to see John recognised by his peers at a national level.


Are you ready for the Super Guarantee increase?

From July 1, 2013 employees will receive 9.25% compulsory superannuation and this amount will increase gradually  to 12% on July 1, 2019. This is great news for an employee’s super balance, but who will pay?  Either the employer takes the change as a direct, and potentially huge, increase in wage costs, or it convinces its employees to see the increases as part of the normal pay increases they will be expecting over the next seven or so years.In addition to increasing the level of SG contributions to 12%, the legislation also removes the age limit on SG contributions. Presently, SG is not required for an employee who is aged 70 or more.

Schedule of increases in the level of SG contributions

Year starting on    Super guarantee
1 July 2013    9.25%
1 July 2014    9.5%
1 July 2015    10%
1 July 2016    10.5%
1 July 2017    11%
1 July 2018    11.5%
1 July 2019 and after    12%

Minister for Employment and Workplace Relations Bill Shorten insists that, rather than constituting a ‘tax on business’, the super increase will be covered by ‘deferred wage increases’ worked out between employers and employees during wage negotiations.

The real challenge for HR departments, then, will be in communicating the change. Will they build the SG increase into the overall wage increase each year? This will depend on how well they can communicate to staff that super is, in fact, part and parcel of their remuneration. The challenge will be greatest in companies or industries where pay is usually expressed and perceived to be net of super.

A recent survey revealed that 95% of workers believe that job salaries should be advertised as base salary figure plus super and not as a total remuneration package. For most employees, super is seen as an “obligatory payment” from the employer rather than a legitimate component of a salary package.

This would suggest that it’s going to be an uphill battle for employers to convince workers (especially young ones) that their future wage increases will include a superannuation component, when most people only look at how much hits their bank account every pay period..

Another challenge for HR professionals is that the attitudes towards superannuation can vary greatly across industries. In the traditional white-collar industries of banking and accounting there is a better understanding of total remuneration packages as being an overall cost to the employer whereas other industries such as tourism and hospitality there is a focus on cash and super is barely on the radar.

There is no denying that the impact of these changes can be huge for businesses and yet, according to a survey by Aon Hewitt, many employers have not yet fully considered the effect it will have and have also not prepared themselves to avoid fines for non-compliance.

Aon Hewitt questioned 160 Australian companies about superannuation, which produced these interesting results:

  • 58% of employers were yet to determine their response to the SG hike
  • Of the 29 per cent of companies currently paying above the SG, only 11 per cent planned to stay the same amount ahead of the minimum when it went up, whereas 32 per cent expected to absorb the increase

Aon Hewitt senior consultant and actuary Ashley Palmer said “”Broadly speaking, those who use a remuneration packaging method may be passing the cost on to employees, while employers who use the base-plus approach will be bearing the increase themselves,”

So, what to do now?

  • If not already accounted for, the increases will need to be factored into your business’ budgets going forward.
  • Start thinking about how the increased level of SG contributions will affect remuneration packages from 1 July 2013
  • Consider any implications for employment agreements and remuneration packages, and this may require employers to review all staff contracts. Employers may need to seek legal advice in this area.
  • Ensure that their payroll systems are configured to remit the increased contributions to each employee’s superannuation fund.
  • Consider any older workers aged 70 or more, as SG contributions will need to be made for them from 1 July 2013.
  • Be mindful of the concessional cap of $25,000 which from 1 July 2012 applied to all employees.

Article by Mark Sablatnig, Manager, Prosperity Wealth Advisers Pty Ltd.  Mark provides solutions about corporate super, group insurance and employee benefits to our clients from offices in Brisbane, Sydney and Newcastle.