How much Superannuation should I have?
The short answer is: as much as possible. The long answer: it depends on the quality of lifestyle you’d like to live in retirement, the value of other assets you have, how long you’ll live for, will you continue with paid work in your later years…and so on. Obviously some of these questions are impossible to answer and others are probably unclear to you at this stage of your life. That’s why we revert back to the short answer. Save as much as you can in your Super so you’ll have more choices and flexibility in retirement. We believe that erring on the side of having more than enough is far preferable to having just enough to get by!
We can’t stress enough that the current employer Super contribution of 9.5% (2014/15) won’t be enough to fund your retirement. If you plan for your Super to be your primary source of income in retirement you’re going to have to add more money yourself. Watch our video and use our super estimator calculator to find out more.
When can I access my Super?
To access your Super you need to do two things – firstly be old enough and secondly – retire. That’s pretty much it. There are some exceptional circumstances where Super can be accessed early but these aren’t pleasant scenarios and we hope you never find yourself in this type of position. One such example is permanent disablement.
When we talk about being old enough to access your Super – we mean reaching your preservation age. If you were born after 1 July 1960 this means reaching 60. If you were born before this date your preservation age is between 55 and 59. Accessing your Super is an exciting time of your life. We can guide you through the decisions you need to make and point out things to be aware of. You’ll find more detailed information here.
Can I change my investment option in Super?
Yes! And frankly you should. If your Super has been sitting there largely ignored and unloved it will be invested in a ‘default’ option – the plain ‘vanilla’ version of Super. In our experience this option is ok but not great. Generally most people are better off with a few more flavours contributing to the overall makeup of their Super. This translates into more diversification, the potential for greater returns and a reduction in risk.
Your Super is a 40+ year investment and it’s well worth taking the time to select the right combination of ‘flavours’. This is something we’ll enjoy doing with you and we’ll have a chat about you, your risk profile, the options available to you and help you choose your optimum flavour combination. Just click here for more information on this important topic.
How do I get Income Protection Cover?
Chances are you may already have it. If you’re part of the Flight Centre IOOF Lifetrack Corporate or Employer Super fund you have automatic Income Protection cover (unless you chose to cancel it). This generally covers 75% of your salary up to age 65 – with a 30-day waiting period. You can double check by reviewing your Fund statement, or by giving us a call.
If you don’t have Income Protection cover you need it. You can get it by applying through your Super Fund, or as ‘stand alone’ cover. The process involves choosing a provider, getting a quote, filling in forms and going through a medical check.
If this all sounds too hard or you’re struggling to find the time, we can do all lot of the hard work for you. All you’ll need to do is sign the final form and have a 10-minute medical check phone call. Sometimes if your medical history is a little more complicated you may need to visit your doctor.
So why bother with Income Protection cover? Well if you earn $60,000 p.a. and work for 25 years this equates to an income of $1.5m. This is too much money to forgo if you become sick and can’t work. You can learn more by clicking here or watch a brief video on the topic here .
How do I salary sacrifice to Super?
Now you’re thinking! Salary sacrificing means exchanging some of your pay for increased Super contributions. The benefits are twofold – you save tax and boost your super. Setting up your salary sacrifice arrangement is easy. You need to send an email to Paymatters asking them to salary sacrifice your designated amount into your super fund. It will come out of your retainer on the 18th of each month.
You need to be aware of limits that apply in making additional contributions to Super dependant on your age, and tax penalties can apply if you exceed those limits so make sure you check with us before you start. Watch our video here for the full picture or look at our infographic here. You can also calculate the benefits of salary sacrifice here .
I have a lot of debt what should I do?
Stay calm. Make a list of what you owe and then prioritise your efforts based on a ‘worst first’ scenario. Your worst debt is the debt that is costing you the most and for most people that’s usually credit cards. Then have a think about how to manage the situation. Have you done a cash flow recently? This is the best way to reveal hidden costs that you can eliminate or reduce – which can free up more cash to direct towards your debt. Moneywise Global are experts at cash flows so please let us help you. Your cash flow helps identify areas that you can compromise on in the short-term and repay the debt faster.
Have you considered a debt consolidation strategy? For example, combining multiple credit cards onto a single interest free credit card will allow you to make easier headway on what you owe. If you have a mortgage this will be at a lower interest rate than your credit card/s. It could be appropriate to extend your mortgage (don’t make a habit of this), pay down your credit card debt and increase your mortgage repayments to reduce the debt faster.
Have you spoken to the companies you owe money to? It may be possible to arrange a debt repayment plan with them. Normally companies would prefer to receive some money than none.
We understand that dealing with debt is stressful. We’re here to help you through this difficult period plus you also have access to Flight Centre’s counselling services. Ask for help and you will find it. Learn more about managing your money and debt here.
Whatever you do you need to deal with your debt issues head on. Avoiding the problem or ignoring your creditors will only make the situation worse and can have long-term consequences for your credit file.
How do I find my lost Super?
Have you looked under your bed? Okay maybe try the Government’s lost Super Register. This only lists “lost” Super. This means that the Super fund has written to you and the mail has been returned to them unopened. You may have Super funds that aren’t on this register. To find these requires a bit more detective work.
Do you have any old Super statements? Who did you use to work for? Can you check any mail that has gone to an old address? These are all starting points to find your lost Super and it’s definitely worth tracking down if you can…after all it is your money! Once you’ve found your Super you can combine it with your other Super fund, which will make it easier for you to manage and avoid unnecessary fees. Check out our FAQ below on combining your Super into one account.
How do I combine all my Super funds?
Bringing your entire Super together in the one place makes it easier for you to manage and avoids unnecessary fees. You may even find that you’ve doubled up on your insurance cover as well which increases the costs.
You can combine your Super funds yourself by using the standard government rollover form available here. Once completed you send the form to the funds you want to move from. They will then send a cheque onto your main fund and you should get a letter confirming the rollover when it’s completed.
Alternatively we can do it for you. If you would like us to do the paperwork and the following up (sometimes the super funds need a nudge) we can. This is also a great opportunity to check how your Super is invested and if you have the right amount of insurance cover.
If you do want to look after this yourself, just make sure you watch out for exit fees and inadvertently cancelling insurance.
Do I have Insurance Cover?
You probably do. If you are in the Flight Centre IOOF Employer Super fund you will have life insurance, total and permanent disability cover and income protection insurance. You get this cover automatically when you join. If you have cancelled the insurance or moved your Super elsewhere you may not have the cover any more.
If your Super is with another fund you could still have some cover. Taking a look at your annual statement is the best way to check – It’s normally listed on the front page.
If you need cover (and everyone does!) let us know and we can run you through your options. You can learn more about personal insurance here and watch a video on the topic here.
I have saved some money, how do I start investing?
Congratulations – that’s great news! You can take the first step to learning about investing here. Your second step should be to define your investment time frame, as this will determine whether defensive or growth asset class investments are more appropriate for you. Your third step is to do it!
As always we’re happy to provide you with objective investment advice on where you should invest, how much to commit and how to set it all up. Once you’ve started investing you can continue building your wealth through your savings plan. Onwards and upwards!
I want to buy a property, how much do I need to save?
The minimum amount you need to save is 5% of the property value plus costs. Costs generally include, mortgage insurance, loan fees, stamp duty, legal fees, rates and taxes and as a rule of thumb you’ll need to factor in another 5% to cover these areas. So at a bare minimum you will generally need 10% of the value of the property. But that really should be a bare minimum.
Why would more than 10% be better? To avoid putting yourself under financial pressure, so you can eventually buy some new furniture for your new home and so you won’t have to pay Lender’s Mortgage Insurance (LMI). LMI is an additional cost banks charge if you borrow more than 80% of the value of the property. It covers the banks in case you default and can add a significant amount onto your costs.
Try and aim for a 20% deposit. This will avoid LMI and give you a bit more breathing room. Take a look at our home loan calculators here.
What are 3 things I can do to improve my financial situation?
Number one. Get a cash flow done by us or do your own here. A cash flow is the foundation of your finances. You need to know how much you earn, how much you spend and what is left over. You also need a system to automatically organise your money each pay.
Number two. Set your goals. What is it you want to achieve financially? Go on a world trip? Buy a house? Just have money for stuff? Having a goal that you want to achieve (not what you think sounds good) will motivate you to do it. Set your goals in writing here.
Number three. Take action. It’s absolutely pointless to have a cash flow and a picture of your dream home on the bathroom mirror and then do nothing about it. You need to identify the steps to achieve your goal. So if you want to save a home deposit, you will know from your cash flow that you have say $1000 a month available to save. You will also know that this money is being automatically put into a separate savings account (that you can’t access easily) and that it is real because you made it happen! Start your financial journey now.
Do I really need a budget?
No you don’t. Budgets are boring and uninteresting. What you do need is a cash flow – which is interesting. An understanding of your cash flow is the key to your success, and is similar to your store profit and loss statement. Your cash flow shows you what is going on with your money, areas of weakness and where you can improve. Get your cash flow in order and everything else will follow.
The first step we take with everyone is to do a cash flow. You can do it yourself here or we can help you. Just as long as you do it! Are we harping on about this? Yes. Do. A. Cash. Flow!
Does it cost anything to use Moneywise Global Home Loans?
No it doesn’t! The services offered by Moneywise are always available for you to access whenever you need to. Over the years we’ve helped thousands of people buy their first homes, upgrade, refinance and purchase investment properties. We work with a group of over 25 lenders with hundreds of home loan products from which we select the most suitable loan for you.
You can rest assured that our advice is always objective. Because we’re not aligned to any one provider – our Home Loan Specialists are paid the same – regardless of which loan you take out from any one of our lenders.
Do you come to me?
Of course! We can meet at your home, store or office. Just tells us what’s convenient for you.
Do you have meetings outside of business hours?
Yes. We are flexible and will organise the best time for you.
Can I choose which bank I want to use?
Of course you can. We can also check to make sure that the bank and product you have chosen meets your needs and situation. (Who knows – maybe we can do better!)
How much money do I need to buy a property?
The minimum amount you need is 5% of the property value plus costs. Costs include stamp duty and legal fees and as a rule you’ll need to factor in an additional 5% to cover these areas. So at a bare minimum you will generally need 10% of the value of the property.
But more is better. Why? Having more than a 10% deposit gives you some ‘wriggle room’ for unexpected expenses, any home improvements you may want to make and also the odd bit of furniture to put into your new home. You’ll find some useful calculators here.
What happens if I have a bad credit rating?
Get a copy of your credit file to find out if the information is correct. It will show any outstanding debts you have (e.g. parking fine, doctors bill) that could be the cause of the ‘bad’ rating. Rectify any problem areas on your report as soon as you can. Defaults, bad debt and credit applications stay on your credit file for 5 years.
If your credit file looks a bit ugly set about making it prettier – organise payment plans, repay outstanding debt, start building a savings history, limit credit applications and so on. Every time you apply for a phone, credit card or ‘buy now pay later’ deal it’s recorded on your credit file. When you go to apply for a home loan the bank is interested in your defaults, outstanding debt and how frequently you apply for credit.
Essentially time and a demonstration of ‘good, clean credit living’ will fix up your credit file. Be wary of dodgy websites offering miracle credit report fixes too. Aside from costing a lot they don’t do much.
What is Lender's Mortgage Insurance?
Lender’s Mortgage Insurance (LMI) applies on loans where more than 80% of the property value is borrowed. That is – the deposit is less than 20%. It provides protection for the banks in case you default. What do you get out of it? Nothing, it’s just an extra cost to you.
If possible try and have a deposit of greater than 20% to avoid LMI. If it’s not possible, be aware that on top of your deposit and regular costs, such as stamp duty, you will need to pay for LMI.
What is LVR?
Loan to value ratio is the amount of a loan as a percentage of the value of the asset it was used to buy. It means if you take out a loan of $400,000 on a house worth $500,000 the LVR is 80%. The loan is 80% of the value of the asset. As a general rule most banks will lend up to an LVR of between 80 and 90%.
Why do you need to care about LVR? You need to know how much of the value of your house you’ll need to borrow and this will tell you whether you are in Lender’s Mortgage Insurance territory. See the FAQ about this.
Do I need to increase my insurance cover when I buy a property?
Yes. Buying a home is a huge investment and you need to protect this investment in case something unexpected happens to you. Should you become disabled or injured the last thing you want to do is have to sell your house because you cannot pay the mortgage. Not to mention finding somewhere else to live, meeting your living costs, medical bills and so on. Insurance is designed to avoid the financial and emotional stress of such events.
At a minimum you need to have life and total and permanent disability cover for the value of your house. You also need to have income protection for your salary. So if you’re covered and something happens, you can completely repay your mortgage and have most of your salary being paid to you while you get back on your feet.
The type and amount of insurance cover you need depends on your situation. Have a chat to one of our financial planners to find out more.
How do I find out what is in my credit file?
You are entitled to a free credit report every 12 months. There are a few companies that provide these and they take 10 days to process for the free version. If you want one sooner you’ll need to pay. You’ll need to dig around on the websites to find the free version.
Your credit report will detail your personal history, credit applications you have made, any overdue payments, defaults and debt agreements in place. It is a good idea to get a copy of your file in case there are any errors as these could affect your borrowing ability down the track. Find out more information on the Money Smart website here.
Will I qualify for the First Home Owner's Grant?
The FHOG is an ongoing government scheme that provides cash to prospective first homeowners. The rules and the amount of the grant are different in each state. Essentially if you haven’t owned a home before and you are an Australian resident you should be eligible. There are a few extra criteria that need to be satisfied. Check the government website here.
Should I get a fixed or variable interest rate?
Excellent question and we’ll always try and give you an objective, insightful answer. Essentially a fixed interest rate ‘locks’ in your interest rate for a set period, and provides you with certainty of repayments and protects you against rising interest rates. A variable interest rate gives you more flexibility, lets you increase your repayments, and allows you to benefit from any reduction in interest rates.
There are positives and negatives on both sides of this equation. You can even take a combination of both if you are unsure. It’s a big decision to make and we’re always happy to guide you along the way and lend you our experience.
How does an Offset Account work?
An offset account is a useful feature of a home loan. It’s a separate account that’s linked to your mortgage. Any money deposited into this account (i.e. pay, savings) is used to ‘offset’ the interest charged on your mortgage.
Say you owe $300,000 on your mortgage and you have $20,000 in your offset account you’ll only pay interest on $280,000 not the full $300,000. The money in the offset account can be used at any time as you would with a normal bank account. Read more here.
What do I need to know before applying for a Home Loan?
It’s really more about what you need to do! And the first step is to get your paperwork organised. Be prepared to provide the banks with a considerable amount of financial information so they can assess your creditworthiness. We can help you with every step of applying for your home loan and do it as quickly as you need us to. However most delays with home loan applications tend to be related to getting the paperwork together – payslips, bank statements, ID documents and so on. Start this process early, and you and your lovely blue eyes will be ever so thankful down the track.
If you’re starting to think about buying a property, we’d be happy to talk to you about what you need to know before we start the process. You can also start your own journey here .
Where do I start?
Initially you’ll probably want lots of information. Take some time to browse through our content here and use our calculators to work out how much you can borrow and what your mortgage repayments will be.
Feel free to get in contact at any point. Whether you would like to talk more specifically about buying, the types of loans available to you or to get the process underway, we are always standing by to help.
How much can I borrow?
Good question! Use our calculator to give you a general idea. If you would like to get more specific give us a call. We would be happy to go through your situation and work out exactly how much you can borrow.
What are interest only loans?
When you borrow money you need to repay the principal (the amount you borrowed) plus interest (the cost of borrowing money from the bank). Typically with each repayment you pay a bit of both back. However with an interest only loan you are doing just that – only paying the interest back. The amount you borrowed will still need to be repaid at some point.
Interest only loans are used for various reasons. We are happy to talk about whether this is suitable for you when we meet. Read more here.
How do I contact you?
You can call us on 1300 360 517, email us on email@example.com or chat to us online via the website.
How much do you charge for a Tax Return?
Our fees start at $175 and increase depending on the complexity of your affairs and the amount of work entailed in preparing your return. If you would like further detail beforehand, please give us a call. Our fee covers any basic advice you may need over the 12 months. If you need complex advice that requires further research there may be an additional charge. We’ll let you know at the time.
Remember the fee can be salary sacrificed; paid using perks points, direct debit or credit card.
Do you have flexible hours for appointments?
Absolutely. We’re more than happy to fit in with your schedule. During tax season we work extended hours – including Saturdays – to make sure we get to see everyone.
Do I have to come in to meet with a Tax Accountant?
Whilst we would love to meet you face to face, it isn’t always necessary. We can do phone meetings at times that suit you. Just pre-arrange a time when it’s convenient for you to talk tax.
Help! I haven't lodged my last 5 tax returns and don't know where to start.
That’s what we’re here for. We’ll liaise with the ATO on your behalf, access your tax history and then recreate your tax returns. Generally it is a quick process and we can get you back in the good books with the ATO.
I don't know what I can claim on my tax return. Can you help people in any profession?
Yes we can. In addition to our travel industry expertise we have experience with many other industries and often complete tax returns for non-travel workers. Our clients include executives, miners, teachers, lawyers and nurses to name a few!
What is the Medicare levy and Medicare levy surcharge?
The Medicare levy is an additional tax used to fund the Medicare system. It is in addition to your marginal tax rate. The Medicare levy of 2% includes the National Disability Insurance Scheme levy. If your marginal tax rate is 32.5% your actual tax rate is 34.5% due to the Medicare levy.
The Medicare Levy Surcharge (MLS) is an extra tax up to 2% payable if you don’t have private health insurance. Due to the cost of the Medicare system the government is encouraging people to have private health cover. If your income is over a certain threshold and you don’t have private health cover you will pay the MLS.
The MLS kicks in for singles earning over $90,000 and families earning over $180,000. If you earn under these thresholds you do not have to pay the MLS. These are the 2015/16 rates. You can check out the full threshold table here.
If you are about to take out private health cover to avoid the MLS make sure you get “an appropriate level of private patient hospital cover”.
This is how the ATO defines it:
An appropriate level of private patient hospital cover is cover provided by an insurance policy issued by a registered health insurer for some or all hospital treatment provided in an Australian hospital or day hospital facility which has an excess of:
$500 or less (for a policy covering only one person), or
$1,000 or less (for a policy covering more than one person).
Will the ATO fine me for lodging my tax return late?
Possibly. Your tax return needs to be submitted by the end of October unless you are using a registered Tax Agent. Because we are registered Tax Agents we have lodgement extension capabilities that may allow us to extend your deadline and avoid the potential for an ATO fine or penalty due to missing the October deadline.
What happens if I:
Receive an inheritance?
You may need to include it in your tax return. It depends on the type of inheritance you received (e.g. cash, shares, property). Our tax accountants can discuss this with you when we meet.
Leave the country?
There are a few things that need to be considered such as your residency status, private health cover and investment properties. We’ll go through what you need to be aware of before you go.
You still need to lodge your own tax return separate to your husband/wife.
Can’t find any of my expense receipts?
There are some expenses you can claim without a receipt. We’ll go through this when you meet. However you really do need to keep your receipts so you can claim all the deductions that you’re entitled to.
How does Income Tax work?
Before Flight Centre pays you, a certain percentage of your income is withheld as income tax and submitted to the ATO. The amount of tax withheld depends on your ‘marginal tax rate’. This operates on a sliding scale. No tax is payable for income under $18,200 and tax of 45% applies for income over $180,000 based on 2015/16 rates.
This is easier to understand visually – take a look at our infographic.
In addition to your marginal tax rate you also pay a Medicare levy of 2% on your income. Why? See the FAQ below.
What happens with my HECS/HELP debt?
Nothing until you earn over $53,345 and then you will pay additional tax until the debt is repaid. The repayment rate starts off at 4% and goes up to 8%, based on 2015/16 rates. If you have a HECS/HELP debt you must tick yes and Payroll will withhold the relevant HECS and remit it to the ATO. See the current thresholds here.
Do I pay more tax if I don't have private medical insurance?
You can get a double hit if you are over 31, earning over $90,000 (single) or $180,000 (couple) and don’t have private health cover. The government is focused on encouraging people to have private health so they’ll keep penalising you until you do.
The first hit is the Medicare Levy Surcharge (MLS) and is an additional tax of up to 2% if your income is over the threshold and you don’t have the cover. See our separate FAQ.
The second hit is the Lifetime Health Cover (LHC) loading. This adds an extra 2% to your private health premium for every year over the age of 31 that you don’t have private health cover. It doesn’t matter what you earn, it is your age that triggers the LHC. So if you wait until you are 41 you will pay an extra 20% in private health premiums as a penalty.
There are exceptions if you have been living overseas. Visit www.privatehealth.gov.au.
How can I reduce my tax?
In our experience many people miss out on deductions because they don’t have the paperwork to back up the claim.
If you are unsure if something is claimable (washing your uniform – yes, new dress for Global – no) keep the receipt anyway and check with us.
You manage your paperwork and we will manage your deductions to ensure you are claiming everything you possibly can.
Do I get taxed twice if I work two jobs?
No. The same goes for your retainer and commission. You don’t get taxed twice on this either. The common misunderstanding comes about due to the tax-free threshold. This is the first $18,200 (2015/16 rates) you earn that is tax-free. You can only claim this once. So your second job is added on top of what you earn through your first job making it seem that you are paying higher tax when in fact you are paying the correct tax. This infographic explains it well.
Is my commission taxed differently to my retainer?
The answer is yes and no. Yes your commission is taxed differently, but correctly, as it moves into a new tax bracket and the tax rate increases from 19% to 32.5%. But no – it isn’t taxed differently for any other reason. It is not considered a second job, it isn’t strange or unusual in any way, and it is taxed, as it would be if you were receiving your whole retainer and commission as a ‘normal’ salary.
How it is works is your retainer is paid first and therefore the first $18,200 is not taxed as it falls within tax-free threshold. Everything above this amount – up to $37,000 – is taxed at 19%. Everything between $37,000 and $80,000 is taxed at 32.5%. If you have a HECS/HELP debt you will pay more tax and the Medicare levy of 2% applies to all your income. These are all 2015/16 rates.
Take a look here for a further explanation.
How is my BOS treated for tax purposes?
Your BOS is not taxed. It is completely separate to your retainer and commission. But you will eventually need to pay tax on your BOS. We recommend you keep 40% of what you earn from your BOS aside, placing it in a separate bank account if it is easier, until we have done your tax return. The first year can be a bit confusing; however once you have done one tax return you’ll have a better understanding of your BOS and the taxation implications. Of course we’re always happy to talk to you about this as you go along. You’ll find more information here.