Shout out to the girls


Meet Helen. Helen is Executive Assistant to our CEO and has recently contributed to an exciting new book published by the Executive Assistant Network.

Introducing Tatiana. She is an Associate Financial Advisor and takes inspiration from being able to compete and succeed within a predominantly male-dominated industry.

Say hello to Siobhan. Siobhan is a Director in our Sydney office, she is a Mother of three children, and she is a Pioneer for working mothers.

Today is International Women’s Day, and this week we have been celebrating and showcasing some of the amazing women we are fortunate to work with at Prosperity. We salute IWD and acknowledge the tremendous contribution of our female team to the growth and success of the firm.

We all know there is a large gender gap in the finance and accounting sector; a recent report showed that in financial institutions women are holding only 19% of senior positions, 14% of board seats, and a shocking 2% of CEO roles.

Prosperity is proud to support a majority female workforce with a combination of flexible working practices, a supportive team-based environment and excellent role models to advance their careers. We are also proud that more than 40% of our Director team are women who have established themselves as leaders in their fields and who have been recognized individually for their contribution and success in their profession.

To hear more about some of the motivated and inspirational women we are fortunate to work with at Prosperity, head over to our Facebook page where we have been sharing their stories all week.

Happy #IWD2018 !

A smarter way to buy a car

If you’re planning on purchasing a new car but don’t have a lot of time or the means to do all the legwork on your own, engaging a car broker or car buying service can be an excellent option. A car buying expert can save you a lot of time and hassle and will help you secure the best possible deal.

What exactly is a car buying service?

A car buying service is a third party engaged by you, the buyer, to assist you with buying a new car. Essentially, it is a car broker’s job to make your job easier when it comes to buying a new or used car.

When purchasing a new car, a significant deal of research is recommended to ensure you’re getting the best price on the car. A car buyer will complete all this legwork for you, including researching and negotiating a price across their database of dealerships. Using their networks, they’ll be able to do this for you much faster, and often more effectively, than you’d be able to on your own.

Car buying is an end-to-end service which includes finding the car to completing the transaction; test drives will be arranged on your behalf if desired, as well as negotiating the best trade-in value on your existing car and arranging competitive finance and insurance if required.

Ultimately, the benefit of engaging a car buying service is the minimalisation of hassle and the maximisation of savings. You are placed on equal footing with professional car sellers by employing a professional car buyer who can negotiate you the best deal.

Introducing Darren Lewis, Prosperity’s car buying specialist

Prosperity is thrilled to be launching the Smart Drive car buying service, and to have Darren Lewis on board as our car buying specialist. Darren has over 25 years’ experience in Motor Vehicle and Motorcycle sales, and is passionate about achieving outstanding value and savings for his customers. His solid background in vehicle sales means he is an expert at working with dealerships and sourcing the best possible price available.

Let us do the legwork for you

Prosperity Smart Drive makes buying a car easy.

  • We do all the legwork – sourcing models, getting quotes, arranging test drives, ordering and contracts, sorting valuations and arranging delivery
  • We will save you money by getting you the best available price on your new car, and the best available trade-in value on your current car
  • Our extensive experience and expertise means we can assist you in choosing a competitive loan for your personal circumstances

Contact Darren to discuss your next new car today.


Prosperity Smart Drive Pty Ltd is licensed under the Motor Dealers and Repairers Act 2013; License No. MD066789

Opportunities for improved patient outcomes and fee growth

Many of you would have heard that as a result of consultations with the Primary Health Care Advisory Group in August 2015, the Federal Government has legislated reform plans designed to increase quality of care. One of the key initiatives is the provision of comprehensive care plans to over 65,000 patients with chronic or complex conditions, who require ongoing care. The plan is to roll out to 200 practices nationwide who opt to become Health Care Homes.  Financial incentives will be available in the form of regular bundled payments. The total allocated funding until 2019 amounts to $114.3 million in additional funding and redirected MBS funding.

The Health Care Homes opportunity is a new approach to care in the community however as with any new reform program, it is important to plan carefully how and when to get involved so that your practice is well equipped to participate. There are some upfront differences that will arise with the new approach, not least the need for tailored care plans which need to be managed and scalable, and the integration with various practitioners will bring a raft of challenges.

Below are some of the areas to consider for practices looking to be involved:

  • The patient relationship will change.
    The Advocacy Group is of the opinion that increasing emphasis will be on regular contact instead of appointment based management as the focus will be less on today’s problem and more on the plan. Less face to face visits will be required as follow up and tracking can take place remotely using new technologies. Similarly, patient visits to allied health practitioners will become a regular visit as part of the care plan.
  • Collaboration with specialists and allied health practitioners will need to improve
    The main aim of the initiative is to provide comprehensively managed care to patients with seamless transition from practitioners to allied health practitioners. Building integrated networks with the required specialists and allied health providers to assure quality at a reasonable cost will be of the highest priority and is not an insignificant hurdle
  • Information technology will become ever more important
    Workflows will need to be tracked and actioned from multiple locations by multiple users. Information sharing between various practitioners will be of high importance and needs to be effortless in order to be successful. Automation of workflows is a key concept that will free up resources which can then be re-deployed where they add more value. Cloud based information sharing and data management will provide practices with an opportunity to minimise IT spend while at the same time enjoying application support and maintenance under a service model; the practice can focus on its core business without the need to maintain hardware and software. A seamless integration with billing and management analysis will ensure that changes in profitability can be identified early and profit can be maximised.
  • Communication needs to be open
    While traditional practice management will remain vital to running the practice efficiently, it is important to ensure that administration staff and nurses understand the deliverables and strategy behind the change in how the practice is run. Engaging them early and enabling them to contribute to the change will result in a smooth transition.
  • Staffing is critical to success
    As information technology and process flow management become increasingly important, having the right people with the right skills on your team is essential. Problem solvers and staff who embrace change to improve daily operations will be an asset to the practice and drive the change proactively, identifying risks and possibilities early. An understanding of new technologies, project management and also traditional practice management is required. It’s not the number of staff, but their quality and ability to leverage resources will be a key success factor.
  • Impact on associate doctors
    Feedback we have received from associate doctors is around the fear that over the long term the changes will benefit only practices and support staff and divert funding from associate doctors who will not be able to provide the desired client care due to a lack of resources. Careful consideration should be given to how rewards for associate doctors are aligned and the benefits of the new model will need to be tangible for them.
  • Fees per patient and profitability will be major key progress indicators.
    Funding comes with very little conditions and can be used as each practice deems fit to serve its patients the best way possible. This puts cost management and efficiency at the centre of the success of the new health care homes. Fees per patient will be a strong indicator regarding how much care each individual will require. Profit per patient will indicate the efficiency of the practice and ongoing improvement in operations over time.
  • Outcomes will be tracked over time and benchmarked.
    As only ten primary health networks have been nominated for the first stage it has already been announced that the results from these ten networks will shape the future of the program and the rollout into other areas. Regional averages of patient health improvement in areas such as diabetes, body mass index, strokes and other medical events will be used to compare the different approaches used by the different Health Care Homes. The better performers will be rewarded with additional funding while the lower performers might see funding withdrawn. This approach to KPI setting introduces a risk/reward mechanism to the management of individual health. It sets a new precedent for healthcare in Australia.
  • Not every Health Care Home will be successful.
    Due to the limited amount of conditions attached to funding, different approaches will be developed by different practices. As the public seeks to maximise the value of the spend on Health Care Homes, practices which score higher in benchmarking exercises can be expected to be granted additional funds for expansion while under performing practices will see funding reduced.

Overall, the aim is that successful practices will deliver improved services to patients. In order to do so, the practice will need to run efficiently which in turn will result in greater profitability for practice owners. As practices demonstrate this efficiency through better client outcomes, funding will increase which will again lead to further growth and profit potential.

At Prosperity Health we understand the challenges that Health Care Homes will be facing in the coming months. Our team is able to support practices with this new operating environment, provide teams with the right tools to analyse your success and help practices to plan and implement a strategy to achieve  beneficial outcomes for all involved To find out more, please contact Prosperity Health on 1300 795 515 or

5 Super charged tips to maximise your corporate superfund


A corporate superannuation plan is the default superfund that a new employee has the choice to join when they commence as an employee at a company. After reviewing our clients’ corporate super plans, it’s clear there is plenty of opportunity for members to utilise their default super fund in a more optimal way. This article looks at some quick, simple wins that a member – of any corporate fund – can take advantage of today.

Super charged boost #1: Paying multiple fees and premiums?

If you are like many Australians entering a new job, it’s likely that you have accepted the default employer corporate plan with the default investments and insurances, perhaps not considering current superannuation arrangements that may already be in place.

Quite often, fund members have multiple funds and this doubles up on fees and also lacks one consistent investment strategy. Fund members may also be doubling up on insurances, such as salary continuance insurance, and don’t realise that they can’t claim on both policies at once should they need to.

If you are considering consolidating your super funds, be sure to compare the fund administration fee, investment option fee, the insurance cover and premium. Also keep in mind if you move away from your employer fund there is the possibility of losing benefits such as lower fees and automatically accepted insurance (no medical underwriting) which is usually part of a group employer plan.

Super charged boost #2: Do you understand where your super is invested?

If you joined the fund after January 2014, it’s likely that you will be invested in a MySuper compliant product.

MySuper is part of the Stronger Super reforms announced in 2011 and took place to ensure market participants create a range of easily comparable, relatively simple products, which in turn will focus  on net costs and returns.

Under current legislation, there are two types of default investments allowed. The first is an aged based or “Life Cycle” investment option which changes its investment style and mix overtime as the fund member approaches retirement.

The second is a single diversified investment option that is generally based on the age demographic of the members within an employer super fund plan.

This does not necessarily mean that the default is appropriate for you.

To help assess whether or not this is appropriate for you, you may want to consider:

  • Investor profile: are you a conservative or a growth investor?
  • Attitude to volatility: are you likely to make emotional decisions based on movements in the market?
  • Time horizon: how long do you have in the work force? When do you want to retire?
  • Diversification: is your super invested across the different asset classes to manage risk?

Super charged boost #3: Not all insurances are created equally

Just because you have default insurance offered in your fund, it does not mean you are adequately protected to the level you need to be.

Typically, a person will receive default cover based on income levels. This is a great start as a base but consider if the following events are adequately covered.

If a death or total disablement occurs, have you factored in an amount to clear debt? Have you considered that your household income will now reduce – is there an amount factored in to ensure a similar standard of living for your surviving family? Have you considered carer costs if you cannot look after yourself? If you have children, have you considered the impact of their ongoing educational expenses?

If a major medical event should occur such as cancer, heart attack or stroke, have you considered protection to ensure medical costs are covered at a minimum? You may also want a buffer to reduce some debt, have an amount for emergency or if you require time out of the workforce for recovery.

If you are unable to work due to injury or illness, have you considered the impact of a drop in income or even worse, no income at all? You may want to review your income protection policy to ensure that your income is supplemented whilst you are unable to work. Things to consider include how long you are willing to wait for your first monthly payment or how long would you want the benefit for if you had to rely on it for income.

Super charged boost #4: Who is the real beneficiary?

It’s important that you have made clear nominations about what happens to your super balance in the event of your death. It’s all too common that advisers see account holders not making a nomination of beneficiaries. Without any nomination, your super is potentially contestable – for example, by a relative who you might not have a good relationship with.

If you are proactive and have made a nomination, it’s important to review your situation on a regular basis to ensure the beneficiaries are still appropriate. This is especially important if you have had a major event in your life such as a marriage, inheritance, divorce, new birth or asset acquisition. Also, be aware that you may need to refresh your nomination every three years depending on your superfund and type of nomination.

Because planning your estate is personal to you and your family, it’s important to seek advice for your specific situation.

Super charged boost #5: Is your lost Super sitting with the ATO?

It’s not unusual that we discover funds for clients that they did not even know they had. In one particular case, we were able to retrieve a remarkable $40,000.

If you have a lost account or not sure if you have lost any super, your ‘lost’ super account could be transferred to the ATO without your consent. The good news is that you can still retrieve it.

How can this happen? If you change jobs regularly, worked in part time jobs, started your own business, moved house, or just simply not paid attention, you could lose track of any correspondence from your super fund. Without regular contributions or contact, your account could be transferred to the ATO as lost.

If this is you, the ATO offers a free online tool called SuperSeeker which will give you a good start in relocating any lost super or your adviser can help you.

Although retirement seems a long way off for a lot of us, it’s worth spending a few hours on a regular basis to take stock of your situation and consider where things can be improved.



Prosperity Wealth Advisers is one entity within the Prosperity Advisers Group which spans three office location.

Disclaimer: Prosperity Wealth Advisers ABN 32 141 396 376 is an Authorised Representative and Credit Representative of Hillross Financial Services Limited, Australian Financial Services Licensee and Australian Credit Licensee 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. Before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your advisers, our firm, Hillross Financial Services Limited, its associates and other companies within the AMP Group may receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details. If you no longer wish to receive direct marketing from us please call us on the number in this document and if you prefer not to receive services information from AMP, you may opt out by contacting AMP on 1300 157 173.


To (bulk) bill or not to (bulk) bill, that is the question

Feet and two arrows painted on an alphalt road

The business of running a medical practice is what GPs seem to fall into from necessity rather than choice, more often than not from a desire to deliver patient care in the way they choose. Yet the business environment of the modern general practice is full of challenges and hurdles, to name just a few:

  • continued freeze on indexation of Medicare rebates proposed by the Liberals vs Labor’s promised “partial” unfreeze from July 2017
  • contention around pathology rent control proposals, which would see an additional hit to the revenue stream of many practices
  • ongoing competition and pressure from corporate-run practices.

Clients tell me they feel locked in to bulk billing and patient care models which no longer offer job satisfaction. Long hours and decreasing returns make for many unhappy practitioners!

What’s the alternative?

Against this backdrop, the Australian Medial Association (AMA) is launching their Future Practice project, which is designed to help GP’s take back control of the profession’s business model and transition from bulk billing to a mixed fee model. Having attended the launch of the project, I feel the AMA should be congratulated on seeking to better resource GP’s and practice managers with tools, templates and a forum to exchange ideas and stories.  The website, which is still at an early stage, will act as a forum with contributions sought from practices to share their journey from bulk billing to a mixed bulk billing / private fee model.

Listening to GPs and practice managers who have already started the journey reinforces a number of “change management” principles which should be kept in mind by transitioning practices:

  1. Change is always possible, given the right approach and the right people. Many of the practices highlighted in the discussion were from low income areas with significant socio-economic challenges, yet with the right approach there was progress and improved practitioner satisfaction.
  2. The practice needs a persuasive vision driving the change process. This vision needs to be shared by all the doctors and all the team and be explainable to patients in simple terms which demonstrate the benefits to them in terms of improved care, more efficient processes and better health outcomes.
  3. The staffing team is critical to success. The team needs to see the benefit and buy-in, with training, support, communication and clear responsibilities. Consistency of message and approach to patients will be crucial. Expect lots of meetings to bring the team along on the journey.
  4. The responsibility for selling the change to patients starts with the GP’s. The message that Medicare is the patient’s insurance and rebate and not the revenue receivable by the GP needs clear articulation. Thought needs to be given to emphasising the benefits to the patient, down to the language used by the front line team in their patient interactions.
  5. Start with small incremental changes. Creating an expectation of payment for service, even if this is initially only a few extra dollars. Be imaginative in how to price your services and consider multi-tiered fee structures. Practices with mixed fee models might still bulk bill 50-60% of daily appointments but this is a large improvement on the national average of 84%.
  6. Look for early wins to demonstrate improved patient outcomes. Track patient outcomes over time against regional averages to show improvements in areas such as diabetes, BMI, etc.
  7. Understand the demographics of your practice area. Look for opportunities to deliver higher value services which are outside the Medicare system. Build relationships with local companies and develop “back to work sooner” programs or similar initiatives.
  8. Make better use of technology to improve patient outcomes before they see the GP. Patients really value SMS communication of reminders, appointment times and waiting times.

At Prosperity Health we work with GPs looking for change and struggling under the burden of practice management. This new initiative from the AMA offers GPs access to shared resources and tools to support the change they want to see in their business. We strongly support initiatives to help the GP community develop and grow.

Are you hungry, smart and humble?

Team player

Image source: The Ideal Team Player: How to Recognize and Cultivate The Three Essential Virtues Hardcover – April 26, 2016 by Patrick M. Lencioni


An organisation is only as successful as the great people that go above and beyond to see the company succeed and to make clients happy.

Success is a team sport and there are various theories on what makes a great team player.

As our old friend Verne Harnish says those who don’t read barely have an advantage over those who can’t – one of the latest books he has recommended The ideal team player“ (by Patrick Lencioni) reminds us of the key attributes that we should look for when we are recruiting new members to the team.

Lencioni explains it like this ….

The Concept
An ideal team player embodies three virtues: humility, hunger and people smarts. The power this combination yields drastically accelerates and improves the process of building high-performing teams.

Ideal team players are hungry. They are always looking for more. More things to do. More to learn. More responsibility to take on. Hungry people almost never have to be pushed by a manager to work harder because they are self-motivated and diligent. They are constantly thinking about the next step and the next opportunity.

Ideal team players are smart. They have common sense about people. Smart people tend to know what is happening in a group situation and how to deal with others in the most effective way. They have good judgment and intuition around the subtleties of group dynamics and the impact of their words and actions.

Ideal team players are humble. They lack excessive ego or concerns about status. Humble people are quick to point out the contributions of others and slow to seek attention for their own. They share credit, emphasize team over self and define success collectively rather than individually.

We have a great team here at Prosperity and this also resonates with our Prosperity DNA (Passion = Hungry and Team/Integrity= Humble) and our Brand promise of One Team, One Plan, Smart Advice.

Do you know if you have the ideal team players in your business? Do you agree with the ideal team player attributes that Lencioni discusses?

Did you know that Prosperity Advisers Group has business consulting services that can benchmark your business performance against others? Benchmarking is a great way for SMEs to measure the effectiveness of their team and their business against their competition in order to improve internal processes and ensure they stay one step ahead of the game.

Australian Benefits for Export Industries and Opportunities for Foreign Investors

Empty road and containers in harbor at sunset

Over the past decade, Australia has actively participated in intensive activity in the Asia-Pacific region to link its economy into increasingly integrated systems and ways of doing business.

The Trans-Pacific Partnership is one of the latest in a suite of Free Trade Agreements supported by Australia. An overview of the impact and opportunity for different sectors can be found in this quick reference tool (click here). For more information and to speak with one of our business advisers on how you can take advantage of a Free Trade Agreement, please contact Prosperity Advisers directly on 1800 855 844.

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

Share scheme changes herald clever country thinking

A significant concession, and improvement, was announced to the Employee Share Scheme rules on Tuesday by the Federal Government. Employee shares schemes in emerging businesses had faded from relevance over the last 5 years following the implementation by the former Government in 2009 of measures that had the broad effect of taxing any discount on shares or options issued upfront to employees of most businesses.

Taxation occurred at a time prior to the employee shareholder having any cash flow with which to pay their tax bill – clearly a killer consequence. This removed the major form of employee remuneration that emerging businesses could use as an incentive to employees without affecting free cash flow. It also led to clumsy arrangements where a company would have to “loan” the employee the value of their shares to prevent then obtaining any taxable benefit.

The Tax Office become notorious for 20:20 hindsight valuation reviews which left employees unwilling to expose themselves. Many employees just would not buy the idea of their employer becoming a major creditor. What if the shares tanked? The employee could be stuck with repayment of a loan without any benefit.

The shareholder/ employee loan created a variety of difficulties ranging from potential requirements for the employee to use real cash flow to repay the loan under statutory “Division 7A” private shareholder rules. In some cases the loan became a problem for the employer who was required to manage it under the FBT regime. An employee might make a long term commitment to a company and be subject to a vesting period of 3-5 years before they became entitled to deal with the shares. However when this period expired, the employee would be obligated to “cash-out” their loan, often by taking a fully taxable one-off bonus.  This one off bonus often distorted the employee’s real earning position over their period of employment and forced them to be taxed on this component at a tax rate which was unfairly high.

Phasing issues emerged with the 50% CGT discount which generally applies to long term shareholdings. Deficiencies in these rules became so profound for early stage IT companies it became part of the reason emerging businesses began to leave the country. Most notably the IT success story Atlassian. The new rules remove some of the obstacles.

Actions to consider

  • If you presently have any form of share or rights scheme in place, it is likely that it can be “rebooted” under the new rules to drive significantly improved outcomes to employees.
  • Remuneration contracts currently being negotiated should be reviewed for the effect of the new rules.  The rules you thought applied when you inked the deal may not apply for the term of the arrangement.
  • Share schemes are not just for IT businesses.  If you have a SME business where you want to incentivise and tie employees into the growth of your business without a cash flow impact on your businesses – there is no better incentive. Costs of administration have dropped significantly in recent years.
  • If you are an SME owned “stuck” with the problem of how to exit the business and collateralise ownership interests into cash, employee share schemes can be a key tool in opening a dialogue and pathway to business succession.
  • Employee share schemes also have relevance to family businesses where they can be used as a tool to incentivise high performance in the next generation family owners. They are a form of participation which is not just a “gift”. They can be a key tool to assist with perceptions of fairness between family members who are “in the business” and those that are not.

A summary of key points in the new rules

  • Discounted options will generally be taxed when they are exercised (converted to shares), rather than when the employee receives the options.
  • Shares provided at a small discount by eligible start-up companies to will not be subject to up-front taxation, if held for three years. Options under certain conditions will have taxation deferred until sale.
  • Small discounts will be exempt from tax
    • The maximum time for tax deferral is lifted from seven years to 15 years.
  • The existing $1,000 up-front tax concession for employees who earn less than $180,000 per year will be retained.
  • The rules are expected to become effective from 1 July 2015.  Transitional arrangements are presently unclear.

Government freezes super guarantee

The government has announced that it will freeze the superannuation guarantee at 9.5% until 2021.  Under previous plans, the super contributions paid by employers had been set to increase in 0.5% increments from the current rate of 9.5% until they reached 12% in 2019/2020. It will now be 2025 by the time the guarantee reaches 12%. The rationale behind the freeze on super is that it will ease pressure on the federal budget, due to the significant tax concessions associated with superannuation contributions.

There have been many claims by superannuation industry representatives about how this will impact the size of future superannuation accounts. While these figures can only amount to speculation because nobody can accurately predict wages, fund growth rates and the future taxation of superannuation, it is certain that these changes will result in smaller superannuation accounts. It is also likely that the freeze will disproportionately affect younger Australians, women, low-income earners and part time/casual employees.

There are, however, some strategies that may be useful to individuals seeking to counterbalance the impact of the freeze:

  • Salary sacrificing into your super is a great way to offset the impact of the superannuation guarantee freeze. The money that you salary sacrifice into super, known as concessional contributions, will be taxed at 15%, which for most people is significantly lower than their marginal tax rate. Therefore, salary sacrificing is a particularly effective tax strategy for high-income earners. Concessional contributions are capped at $30 000 per year for most people and $35 000 per year for over 50s. For low-income earners, the government co-contribution is a great way to boost super balances. If you earn under $34 448, the government will contribute 50c for every $1 you put into your super account from your after-tax income (up to a total co-contribution amount of $500). If you earn anywhere up to $49 448, you may also be eligible for reduced co-contribution payments.
  • If you are a low-income earner or are taking a break from work, it may be worth investigating the possibility of your partner making super contributions on your behalf. If you earn less than $13 800, then your partner will be eligible for a low-income spouse tax offset with a maximum value of $540.
  • It may also be beneficial to re-examine your superannuation investment strategy, considering the returns and risks involved with different investment options. Your investment strategy choices should be informed by your age, retirement goals and level of comfort with risk.

Regardless of whether or not the super guarantee freeze has affected your superannuation plans, now is a good time to start putting some serious thought into your superannuation, and the retirement that you want.