Frequently Asked Questions

Selling your home and using the proceeds is a common strategy to fund the costs of Aged Care. However, depending on your financial circumstances, you may not need to sell your home. By negotiating with the Aged Care facility, you may find that they are prepared to accept alternative arrangements. In any case, it is a complex area and you should seek specialist advice.

Increasing the tax free portion of your super can be very beneficial if you plan to withdraw funds as an income stream before the age of 60 and for benefit payments in the event of your death.

There are strategies can be put in place to increase the tax free component of your super balance.

You should seek advice sooner rather than later. That would give you time to decide on a strategy and become comfortable with that strategy. There will be enough other things happening in your life at retirement without having to grapple with major financial decisions.

Many people assume that you must have thousands to start trading in the share market. This is not the case. Clients can begin investing with $500 (a 'marketable parcel').

We generally suggest that $500,000 is a good starting point to ensure fees (such as accounting and audit fees) are relative to the earnings and size of the portfolio.

This is generally different for everyone and depends on the lifestyle you would like to maintain upon retirement. Speak to one of our advisers about what might be right for your circumstances.

Many of our clients live interstate, internationally or local. Scott Keeley regularly visits his clients in Naracoorte and the broader South East. Lynette Anderson travels to the Yorke and Eyre Peninsulas to visit her country clients also. Call us to discuss your needs today.

Our suggestion is that you talk to a Financial Planner who can explain clearly to you what services they can provide and what the costs will be. All fees and commissions must be disclosed to you so you know how much you are being charged and how much remuneration they are receiving.

A share trading account must be set up, including paperwork and ID requirements. The shares are purchased and then paid for within 2 days of the trade. You can choose to manage the investments yourself or we can do this for you.

Yes, it can be done in a number of ways (borrowing against your home, margin loans, installment gearing). There are many benefits associated with this, as well as many risks. If this is of interest to you, you should seek additional advice.

Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances.

For example, buying a particular investment product might help you pay off your mortgage faster, or it might delay your retirement significantly.

By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

There are four possible fees for Aged Care accommodation:

1. Basic Daily Care Fee - This fee is paid by all residents and is set at 85% of the full pension. This pays for your food and care within the home.
2. Means Tested Fee - This fee is based on both your income and assets. For most residents this fee does not apply or is a nominal amount per day.
3. Accommodation Payment - This fee is set by the Aged Care facility based on the room selected and the location of the home. There are 3 ways to pay this fee:
   1. Pay the RAD in full with cash.
   2. Pay the Daily accommodation payment (the interest on the bond amount).
   3. Or pay part proceeds up front and the rest via daily interest payments.
4. Extra Services Fee - This fee is set by the Aged Care Facility and is for optional extra services such as a glass of wine with meals, the daily paper etc.

If you elect to commence a super pension you be will required to satisfy a set of minimum standards in order for you to claim an exemption for the income earned on your pension assets. These standards include:

• The pension must be account-based.
• A minimum amount must be paid out to you annually.
• The capital supporting the pension cannot be increased using contributions or rollover amounts once the pension has started.
• Upon your death your pension can only be transferred to a dependent beneficiary of yours.
• The capital value of the pension or the income from it cannot be used as security for borrowing.
• Before a pension can be commuted, the minimum pension must be paid out.

If you elect to commence a Transition to Retirement Pension you will also be restricted to withdrawing a maximum of 10% of your opening balance annually.

Wakefield Partners is self licensed boutique firm that strives to provide clients with products and services that best suit their circumstances.

If you breach your concessional cap there are four aspects you need to be aware of:

1. The excess contributions are included in your assessable income and taxed at your marginal tax rate.
2. You will be liable to pay an excess contribution charge to neutralise any benefit that you may have received from having the funds held in the concessionally taxed super environment.
3. You can elect to have up to 85% of the excess amount released from your super fund.
4. Any excess amount remaining within the fund will count against the non-concessional contributions cap.

If you breach the non-concessional cap there are three aspects you need to be aware of:

1. An amount equal to the excess contributions tax (46.5%) will be subtracted from your non-concessional contributions over the cap limit.
2. You must withdraw the after tax excess contributions from your superannuation fund.
3. Amounts in excess of the concessional contributions cap that you have not withdrawn count towards the non-concessional cap.

There are a few options:

• You can leave the money in the fund.
• You can ask your new employer to pay contributions to your old fund – they may or may not be able to do this.
• You can transfer or roll-over the money from your old fund into your new fund.

If you have made a binding nomination and appointed a beneficiary, this person will receive your funds.  If you haven’t done this, the trustee decides who they pay the money to based on what is set out in the trust deed.

Superannuation death benefits are taxed differently depending on who receives them.  It essentially depends on whether the recipient is a dependent or a non-dependent.

A dependent includes:

• A spouse or de facto.
• A child under 18.
• Someone financially dependent on you (this could include an adult child).
• Or a person with whom you had an 'interdependent' relationship (e.g. may be a same sex relationship or someone with whom you lived in a close and ongoing relationship with  financial and domestic support).

For tax purposes:

• Super benefits paid to dependants are tax-free.
• Benefits paid to 'non-dependents' are taxed.

Generally, as an Australian resident, you can choose to direct your super guarantee payments and your personal super contributions to your own Self Managed Superannuation Fund (SMSF).  A SMSF is a do-it-yourself superannuation fund of 1-4 members where each member acts as a trustee of the fund.

There are many advantages and disadvantages of establishing a SMSF including:

Advantages:

• More control over retirement assets with the ability to have more transparent investment strategies.
• Greater flexibility is possible in the investments that a SMSF may invest in including business real property.
• A member may commence a Pension while retaining the assets that were held pre-pension.
• Greater flexibility is possible in the overall management and administration of the fund.
• Greater control and flexibility over the tax position of the fund.
• Excellent estate planning benefits.
• Flat Fee structure may mean lower fees to operate; fees more transparent.

Disadvantages:

• Costs of running a SMSF may be greater than the cost of public offer superannuation funds, particularly when the fund is starting out.
• Increased time needs to be set aside for the ongoing management of the fund.
• The Trustees and Directors of Corporate Trustees are personally liable for any actions of the fund.

A TTR is a non-commutable income stream that provides access to your super money prior to retirement and is available to you once you have reached your preservation age.  If you elect to commence a Transition to Retirement Pension (TTR) you will be faced with a maximum pension limit as well as a minimum limit. 

Upon creation of an SMSF, a trustee must be established to govern the fund. The trustee can take the form of either one or more individuals or a company. The trustee or directors of the company are ultimately in control of the fund and hold and invest the fund’s assets for the benefit of the members.

A trustee’s main role is to:

• Act in the best interests of all fund members when making decisions.
• Mmanage the fund separately from personal non super affairs.
• Ensure the money in the fund is only accessed when conditions of release (“retirement”) are met.
• Ensure that the fund meets the ‘Sole Purpose Test’.  This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement.

It is important trustees understand their duties, responsibilities, and obligations of being a trustee. As a trustee of an SMSF, one needs to act according to:

• The fund’s trust deed.
• The provisions of the super laws, tax laws and trust laws.

Superannuation is a way of saving for your retirement.

Both you and your employer can make contributions that accumulate over time and this money is then invested in shares, government bonds, property, or other appropriate investments.

On retirement, after disability or death you then receive the money as regular periodic payments (ie, a pension), a lump sum payment, or a combination of both.

Superannuation benefits are comprised of two tax components:

1. A tax-free component.
2. A taxable component.

The tax free component includes all non-concessional contributions made on or after 1 July 2007 and all pre-July 2007 components of superannuation that have been crystallised.

The balance of money remaining in your superannuation account, after subtracting the tax free component, is the taxable component.

When part of a superannuation interest is paid out as a lump sum or as an income stream, the benefit must always be paid in proportion to the tax free and taxable components.

The necessary items you will need for your appointment with one of our advisers depends on the circumstances you would like to discuss.

A list of items to consider are:

• Superannuation statements
• Payslips
• Bank Statements
• Aged Care documents
• Centrelink letters
• Power of Attorney paperwork
• ID
• Tax File Number
• Records of financial assets

Insurance needs depend on your working life, debt and asset levels and also your family situation.

We advise on the following insurances:

Income Protection – to cover your salary should you become unable to work.

Total & Permanent Disablement – a lump sum should you become totally and permanently disabled

Death/Life – should you pass away, your family is given a lump sum to cover costs such as the mortgage or ongoing schooling costs etc for children.

Trauma – a lump sum for specified medical events such as heart attack, cancer or stroke.

Generally you can withdraw your non-preserved contributions at any time. However, preserved moneys can usually only be withdrawn when you retire and reach a condition of release.

You cannot withdraw preserved contributions, until you:

• Retire and reach preservation age (between the age of 60 or 55 depending on your date of birth).
• Turn 65.
• Qualify under what is called the “transition to retirement” rules.
• Suffer from a total and permanent disability.
• Have a terminal illness and are under the age of 60.
• Pass away.
• Can show that there is severe financial hardship or other compassionate grounds.

The application forms for Age Pension can be quite lengthy, so we would suggest obtaining these forms from Centrelink approximately 3 months before turning Age Pension age. This will then give you plenty of time to work through the forms and seek advice if required. While the forms can be lodged anytime in the 3 months before turning Age Pension age, we would suggest lodging the forms approximately 2 to 4 weeks prior to this date.

All of our advisers are qualified and licensed appropriately. The changes implemented for education standards have meant that our advisers are studying again to keep up to date with the financial planning industry regulation.

We offer a free no-obligation appointment to discuss your financial matters. Should you wish to utilize our services, our ongoing advice fees can be deducted from your superannuation, pension or investment portfolio.

Aged care appointments are charged at $385 and allow for 2 meetings with Scott Keeley to discuss aged care costs and how to best afford the accommodation needs for your family member entering an aged care facility.