End of year strategies and opportunities

2. End of year strategies and opportunities Speaker’s nameTitle/departmentApril 2013

3. Disclaimer • This information was prepared by Securitor Financial Group Ltd, ABN 48 009 189 495 AFSL & Australian Credit Licence (ACL) 240687 (Securitor) and is current as at January 2013. • Material contained in this presentation is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. • This presentation contains general information only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. • All case studies and examples used in this presentation are for illustrative purposes only and nothing in this presentation should be construed as an indication or prediction of future performance or results. • Any taxation position described in this presentation should be used as a guide only and is not tax advice. You should consult a registered tax agent for specific tax advice on your circumstances. • As the rules associated with the super and pension regimes are complex and subject to change and as the opportunities and effects differ based on your personal circumstances, you should seek personalised advice from a financial adviser before making any financial decision in relation to any matters discussed in this presentation. April 2013

4. Agenda • Super – it’s still super! • Transitioning to retirement • Other opportunities • Next steps April 2013

5. Choose your tax rate! April 2013

6. Super is a tax structure, not an asset class • No greater investment risk when investing through super • you can invest in same assets • cash is an option • Bankruptcy protection • Low tax environment SUPER Insurance Shares Cash Fixed Interest Property April 2013

7. Maximise your deductible contributions • More important to start salary sacrificing earlier than ever before! • 9% compulsory super counts towards cap. • Proposed legislation to allow $50,000 cap for over 50s from 1 July 2014 where super balance is less than $500,000 April 2013

8. Salary Sacrifice * SG is only required on first $45,750 of income per quarter ($183,000 p.a.) April 2013

9. Personal contributions can help plug the gap • Case StudyBrad (age 55) Employed on a package of $180,000 plus SG Was sacrificing up to $50,000 cap. From 1 July 12 only have $25,000 cap Note: Assumes a return of 7% after fees and tax April 2013

10. Maximise your personal contributions • No deduction is claimed • Personal contributions capped at $150,000 p.a. • If under 65 you can bring forward 2 years of cap and contribute up to $450,000 April 2013

11. Don’t forget super for a low income spouse • Co-contribution • Co-contribution up to $1,000* • Income up to $31,920 for full benefit or up to $61,920 for partial • Spouse contribution tax offset • Tax offset up to $540 for contribution of $3,000 • Spouse income up to $10,800 for full or $13,800 for partial * The Government has proposed halving the co-contribution to $500 from 1 July 2012, thereby reducing the cut-out income threshold to $46,920 April 2013

12. Insure pre-tax with super • Save up to 87% on pre-tax cost of funding Life and TPD premiums • Improve cash flow • Can hold through your SMSF April 2013

13. Double the deduction on income protection • Income protection deductible personally • Salary sacrifice – “otherwise deductible” • Prepay 12 months in advance • Double up - Deductible contributions to super up to cap plus personal deduction on income protection premium • Inside super – cash flow April 2013

14. Transition to retirement

15. Transitioning to Retirement • If you’re 55+ you may be able to: • Reduce your working hours • Use super to supplement your incomeOR • Maintain fulltime work • Salary sacrifice to super • Draw tax effective income from super April 2013

16. Transitioning: Let’s take Ian, for example • Ian would like to boost his super without affecting his lifestyle • Salary $100,000 p.a. • Receiving $9,000 superannuation guarantee • Age 60 $16,000 salary sacrifice Ian Super $9,840 income April 2013

17. Ian’s super accumulates much quicker Current Proposed Includes Medicare levy Plus, benefit of 0% tax on earnings when in pension phase April 2013

18. Other opportunities

19. Terry and Vicki • Both age 50 and happily married • Vicki’s an employee earning $200,000 p.a. • maxed out concessional contribution cap • Terry no longer works due to poor health • They have recently sold an investment property • Proceeds of $400,000 • Outstanding loan - $100,000 • Initially purchased 3 years ago for $300,000 April 2013

20. They seek advice • Repay property loan of $100,000 • Put $100,000 into a margin loan in Vicki’s name • Conservative portfolio of investments • 50% LVR – borrow $100,000 • Prepay interest – assume rate of 10% • Surplus of $200,000 in term deposit (Terry’s name) • Vicki donates $2,000 to Cancer Council • Prepay premium of $3,000 on income protection April 2013

21. The result... Vicki’s assessable amount for this capital gain is $10,000 as opposed to $25,000 if the strategy was not in place. April 2013

22. Recycle your debt using home gearing • Borrow against equity in own home to invest in a growth portfolio • Shares • Property • Managed fund • Income from portfolio used to pay non-deductible debt first April 2013

23. How debt recycling works... Family Home Investment loan (deductible) Interestonly Principal & Interest Home loan (not deductible) April 2013

24. Prepayments • Prepay interest (simplified tax system) • Margin loans • Investment property loans • Equity access • Prepay other deductible expenses • Income protection insurance • Donations • Variation of tax • Section 15-15 notice April 2013

25. Next steps

26. Next steps • Choose what tax rate you want to pay • Start salary sacrificing early • Reassess your insurance needs • Have a disciplined approach • Seek good quality advice April 2013

27. Questions?