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    Different retirement income streams

    Mature couple with bills sitting at dining table in houseWhen you start thinking about retirement, one of the first questions you should ask yourself is, ‘How much money will I need?

    Once you know that answer, you can start looking at different retirement income streams and determine which will best suit your needs.

    Here at North Advisory, we can work with you to help assess the viability of each option and find the most appropriate for your personal circumstances. Whether it’s a single income stream or a combination of two or more, we’ll make sure it fits your lifestyle… so you can live your dream retirement.

    How do you determine income needs?Closeup hand fill a coin into a savings bottle on the table

    There are many variables that will impact your income needs in retirement. And it will greatly depend on the type of lifestyle you want to live. But it is important to have a clear understanding of your financial requirements before the security of a regular salary is gone.

    An easy place to start is with all your standard expenses… things like your utilities – power bills, phone and internet, council and water rates. The bills that will always be there. Plus, you want to include other regular costs like vehicle registration or insurance premiums.

    Calculate everything that you can already identify, then you can move onto the wish list.

    Next up you can start thinking about your ideal retirement expenditure. All the ‘nice to haves’ – eating out, holidays, looking after grandchildren, any new hobbies. These expenses combined with your essential spending will give you a solid indication of your income needs.

    You also need to think about how often you would like to receive payments; do you prefer to have a lump sum and spend from that, or would regular payments – almost like a salary – be more suitable? Different income streams offer different benefits, so you need to choose the one that works best for you.

    Account-based pension

    An account-based pension is the most common type of retirement income stream. It draws directly from your superannuation and is tax free.

    In order to access the funds in your superannuation and start your pension, you need to meet a condition of release. Most often, this is reaching your preservation age and preparing for retirement.

    While there is a minimum amount that you have to withdraw from your super each year, there is no maximum. This means you have flexibility to access as much as you need. Plus, not only does it provide a regular income payment, it also offers the additional flexibility of withdrawing a lump sum. For example, if you needed to make some repairs to your home, you could immediately access a larger single amount.

    You should also note that because an account-based pension relies on invested assets within superannuation, the balance can go up and down with investment market fluctuations.

    AnnuitiesA man using a calculator

    Annuities are another regularly chosen income stream. You purchase an annuity, and it provides you with a regular, guaranteed income payment.

    To buy an annuity you can use money from your superannuation or any other savings, and you select a set period of time or even the rest of your life… it all depends on the provider you purchase the annuity from.

    People select annuities because they are very stable. You know exactly how much you are going to receive over the term, and it gives sound peace of mind that you will always have that steady income. But unfortunately, you don’t have the ability to access any lump sums.

    Unlike superannuation account-based pensions, the balance of your annuity is fixed. It is not connected to investments and therefore will not fluctuate.

    Senior couple viewing the beachInvestments and other assets

    In addition to account-based pensions and annuities, you might also have other investments or assets and it’s important to consider how they will support you in retirement.

    During your working life, it’s possible that you haven’t had to access your regular dividend payments; you might have simply re-invested… but once you retire you will probably start to include them as part of your regular income.

    The easiest option is to keep them in your bank account and use them as day to day funds, but it’s important to understand potential tax implications. We recommend discussing how to minimise your tax obligations with a professional. We can help determine the best way to effectively manage these funds.

    Age pensionA women taking out her money from her wallet

    There is also the Federal Government’s age pension. This is provided through Centrelink and is means tested. How much you receive from other retirement income streams and the total value of your assets impact your eligibility and the amount you might receive through this payment.

    The more wealth you have, the lower your age pension payments… or you might not receive anything. It is common for retirees to receive an account-based pension from their superannuation and a part age-pension from the Government. Again, it’s worthwhile discussing your situation with a financial advisor to make sure you are maximising your income options.

    We are here to help

    Finding the right balance of retirement income can be difficult, but our team is here to help! We can work with you to determine how much income you will require and then find a tailored solution to meet your needs.

    If you want to find out more about our wealth management services and retirement planning, contact us today.

    Read More Blogs

    Company tax cuts

    For 2018/19 income year, companies with an annual aggregated turnover under $50m will have a reduced tax rate of 27.5%. To be eligible for the reduced rate, the company must be a base rate entity.

    Instant asset write-off increased, extended and allowed for medium-sized businesses

    The $20,000 instant asset write-off for small business has been increased to $30,000 from 2 April 2019. The scheduled end date of the write-off has been extended from 30 June 2019 to 30 June 2020.

    Also, there is another limit of $25,000 which is available from 29 January 2019 to 2 April 2019.

    For medium-sized business, which is defined as being over $10m in aggregated turnover but under $50m, an entitlement to a $30,000 instant write-off is allowed until 30 June 2020. The assets must be purchased after 2 April 2019.

    Single touch payroll

    Entities who are employers are required to report the following information to the ATO from 1 July 2019:

    •  withholding amounts and associated withholding payments, on or before the day by which the amount is required to be withheld
    •  salary or wages and ordinary time earnings information on or before the day on which the amount is paid, and
    •  superannuation contribution information on or before the day on which the contribution is paid.

    There are some exceptions to the single touch payroll allowed for employers who only make payments to closely held employees.

    Non-compliant withholders to be denied tax deductions

    From 1 July 2019, businesses will no longer be able to claim deductions for payments to their employees where they have not met their PAYG obligations. This includes where the employer is required to withhold PAYG from gross payments, but fail to report or remit it to the ATO.

    PAYG withholders will be required to ensure that all lodgements are made on time to avoid large penalties with denied tax deductions.

    Additionally, the deduction for businesses on certain payments to contractors which have not met PAYG obligations will be denied unless a genuine mistake has been made.

    Taxable payments reporting system

    Beginning with the 2018/19 income year, the following industries have introduced a taxable payments reporting system:

    •  Couriers
    •  Cleaners

    Starting from 1 July 2019, the taxable payments reporting system will be extended to include the following industries:

    •  Security services
    •  Road freight
    •  IT services

    Entities who engage contractors, or subcontractors, will need to provide additional reports to the ATO. This treatment has the same requirements as salary and wage employees.

    Similar business test

    A company is now allowed to claim a prior year loss against business profits as long as it satisfies the similar business test from 1 July 2015. This test adds on to the same business test, which was less flexible to pass.

    The former same business test is failed unless the company carries on the same business and has not derived income from any new kinds of business or transactions. The new test makes it easier for companies to pass where early investors have entered the company ownership.

    As the legislation takes effect as of 1 July 2015, companies in this position have an opportunity to amend income tax returns from the 2015/16 income year. Also, a company going back and amending their tax return to include the company loss deduction would do so in that prior year at a higher company rate. However, careful analysis of the company loss is advised.

    Fodder storage assets allowed immediate write-off

    For primary producers, a new law has been enacted which allows fodder storage assets to be immediately written off.

    Fodder storage assets may include silos and hay sheds, and are used to store grain and other animal feed. The immediate write-off will apply if the asset is purchased and first installed ready for use on or after 19 August 2018.

    R&D tax incentive change not law

    The research and development (R&D) tax incentive was due to be amended for income years starting 1 July 2018. Under the announcement, the incentive would have been based on an uplift of the entity’s corporate tax rate in the particular income year.

    However, changes relating to a company’s “R&D intensity percentage” have not become law. All rules as they related to R&D have not changed for companies.

    If you have any questions regarding the above points raised, please do not hesitate to contact us.

    Martin van der Saag
    T: 02 9984 7774

    Norman Ruan
    T: 02 9984 7774

    Read more about business tax.

    Dividend imputation

    The Australian Labor Party (ALP) has announced an intention in government to change franking credits from a refundable to a non-refundable tax credit from 1 July 2019.

    A “Pensioner Guarantee” would be included in the franking credit change for individuals in receipt of an Australian Government pension or allowance. Also, self-managed superannuation funds with at least one pensioner or allowance recipient before 28 March 2018 will also be exempt from the changes (ALP website).

    Negative gearing

    Under an ALP government, negative gearing will only be allowed on newly constructed residential properties after 1 January 2020 (ALP website).

    All prior investments would be grandfathered, meaning that income losses on an asset class are able to be offset against other assessable income.

    It has been suggested that any negative income amounts would be allowed to be carried forward and offset against a future capital gain on the asset (Ref: MinterEllison, p 5).

    However, investors with many rental properties may be able to “stagger” the gearing levels across currently held assets in the same class. Specifics relating to how the new policy would work with regards to split loans, redraw or credit facilities are to be determined.

    CGT discount

    From 1 January 2020, the ALP has proposed to halve the capital gains tax discount from 50% to 25%. This change in the discount rate will apply for all assets purchased after 1 January 2020 that are held for longer than 12 months (ALP website).

    The media release goes on to say that all purchases made prior to 1 January 2020 will be fully grandfathered. There has been no announcement regarding any consequences this development may have on employee share scheme acquisitions.

    Limit on deductions for managing tax affairs

    The proposal in its current form is a $3,000 limit per taxpayer per year for managing tax affairs. This may include preparing and lodging tax returns and activity statements, and obtaining tax advice from a recognised tax adviser.

    Other areas which have been seen as controversial in the media relate to tax agent charges in large “one-off” events, such as divorce, inheritance or retirement (Ref: CPA In the Black). Also, there has been no further guidance on whether the deductibility of general interest charge on a tax debt will also be limited to $3,000 per year.

    Discretionary trust distributions tax

    A prior announcement made by the ALP in opposition intends to introduce a 30% standard minimum rate of tax to adult beneficiaries for discretionary trusts. There intends to be no change to the trust taxing rules for non-discretionary trusts, such as testamentary trusts or fixed unit trusts (ALP website).

    Extension of budget repair levy

    Following the 2019 Federal Budget, the ALP confirmed that, in government, they will bring back the temporary budget repair levy of 2%. ALP shadow treasurer stated the levy would remain in place until the budget surplus was 1% of gross domestic product, anticipated to be 2023 (AFR story, 3 April).

    The 2% levy would apply to individuals who are above $180,000 in taxable income.

    Australian Investment Guarantee

    The ALP leader confirmed in the 2019 budget reply speech a commitment to the Australian Investment Guarantee (AIG). The AIG will be an immediate write-off of 20% for any new eligible asset costing more than $20,000.

    Further information on eligible assets would be made available later, but are intended to include machinery, plant and equipment, including upgrades. It is announced that investments in buildings (capital works) would be excluded, as well as motor vehicles.

    Superannuation contributions

    The federal opposition has committed to changing certain rules relating to superannuation contributions (ALP website). These include:

    • providing superannuation guarantee payments of 9.5% for paid parental leave, and
    • phasing out the $450 per month minimum income threshold for superannuation guarantee.

    Catch-up concessional contributions

    Labor has announced their intention to repeal the catch-up concessional contributions, introduced in the 2016/17 income year (2018 ALP National Platform, p 15).

    Under the enacted legislation, individuals with a total superannuation balance of less than $500,000 are able to make additional concessional contributions. Eligibility to make additional contributions apply where an individual has not reached their concessional contributions cap in previous years, with effect from 1 July 2018. Unused amounts will be carried forward on a rolling basis for a period of five consecutive years from 1 July 2018.

    Other announcements

    • Maintaining the company tax rate of 25% for businesses with aggregated turnover under $50m, scheduled to commence in the 2021/22 income year.
    • Managed investment trust tax rate to be reduced from 30% to 15% in a “Build to rent” scheme, commencing 1 January 2020.
    • Removal of thin capitalisation calculations for debt deductions, leaving international entities with only the worldwide gearing ratio test to apply.
    • Reducing non-concessional contributions cap from $100,000 to $75,000.
    • Reducing threshold for Div 293 tax from $250,000 to $200,000.
    • Banning new limited recourse borrowing arrangements in self-managed superannuation funds.
    • Reintroducing recently repealed legislation surrounding deductibility for salary and wage earners to make additional deductible superannuation contributions. In the past, only self-employed individuals could make personal deductible superannuation contributions.

    If you have any questions or concerns about how the Australian Labor Party tax policies may impact on you, please do not hesitate to contact us. Read more Financial Industry articles.

    Norman Ruan
    T: 02 9984 7774

    Single Touch Payroll (STP) has changed where every employer will be required to use the system from 1 July 2019. If you are still using a manual system to pay your staff, you will need to change soon.

    If you haven’t started using STP yet, you will need to do the following before 1 July 2019:

    • update your payroll system so that it can complete STP requirements, or
    • engage with us to complete these payroll reporting requirement for you.

    What is STP

    Employers will need to report the following through their payroll system:

    • payments made to individuals and amounts withheld from those payments
    • payments of salary or wages and ordinary time earnings (OTE), and
    • employee superannuation contributions.

    Also, other amounts such as “sacrificed ordinary time earnings amounts” and “sacrificed salary and wages amounts” will be reportable. The objective of these additional reporting requirements ensures that superannuation guarantee is not reduced by amounts salary sacrificed. These amounts, along with ordinary time earnings and superannuation contributions can be reported either separately or combined. Either way, the ATO has stated that they will be aware of an employee’s overall package from which they work out their superannuation guarantee.

    Payments not made through the payroll system (eg contractor payments, payments of superannuation income, payments of dividends, interest and royalties, etc) are excluded.

    PAYG payment summaries

    There will no longer be a requirement to provide employees with PAYG payment summaries at year end.

    Essentially, the employees will be able to see their payment summaries at year end online from myGov and also they will be available on the Tax Agent Portal.

    For more information, please do not hesitate to contact us. Read more business accounting articles.

    Martin van der Saag
    T: 02 9984 7774

    Norman Ruan
    T: 02 9984 7774

    Officially, the $30,000 instant asset write-off has been passed by both houses of parliament on 4 April 2019.

    This means that from 7:30pm AEDT 2 April 2019 to 30 June 2020, assets purchased less than $30,000 will be entitled for an immediate write-off.

    The instant asset write-off means that a small business can claim a complete deduction for assets costing less than the threshold. In the past, assets of this size needed to be written off over a number of years under depreciation rules.

    There have been a number of changes for assets first used or installed ready for use during the 2018/19 income year. The threshold for immediate deduction is as follows:


    Purchase date or date asset first used (or installed ready for use) for a taxable purpose Threshold
    1 July 2018 to 28 January 2019 $20,000
    29 January 2019 to 2 April 2019 (7:30pm AEDT) $25,000
    2 April 2019 (7:30pm AEDT) to 30 June 2019 $30,000

    Significantly, an increase of the threshold to $30,000 may mean that your small business depreciation pool can be written off for the 2018/19 income year.

    The entire balance of the pool will be available to be fully deducted in the 2018/19 income year if the pool balance before the calculation of depreciation is less than $30,000.

    If you would like to go through the matter with us further, please do not hesitate to contact us. Read more business accounting articles.

    Martin van der Saag
    T: 02 9984 7774

    Norman Ruan
    T: 02 9984 7774

    Legislative Instrument Taxable Payments Reporting System – Reporting Exemptions for Certain Entities Determination 2019 and Explanatory Statement (TPRS 2019/D1) regarding the de minimus exemption for entities required to lodge Taxable Payments Annual Reports (TPAR) under amendments enacted by the Sch 2 Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Act 2018 and Sch 2 Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Act 2018 have been issued for comment. Affected entities are:

    • cleaners
    • couriers or road freight service providers
    • security, investigation or surveillance service providers, and
    • IT service providers.

    The legislative instrument when finalised will replace, in the same terms, the determination that was taken to have been made by the Commissioner on enactment of the new reporting provisions. Comments are due by 15 April 2019, the final instrument is proposed to commence on 1 July 2019.

    If you have questions on any of the above issues raised, please do not hesitate to contact us.

    Kim Edwards
    Chartered Tax Adviser
    Chartered Accountant
    T: 02 9984 7774

    Read more about business tax.

    The Federal Treasurer, Mr Josh Frydenberg, handed down the 2019/20 Federal Budget at 7:30 pm (AEDT) on 2 April 2019.

    Mr Frydenberg said the Budget is “back in the black”, announcing a budget surplus of $7.1b, and forecasting a surplus of $11b in 2020/21, $17.8b in 2021/22 and $9.2b in 2022/23. The budget focuses on “restoring the nation’s finances”, further strengthening the economy to create more jobs and to “guarantee the essential services”.

    The government proposes various changes to further lower individual taxes, including increasing the low and middle income tax offset, and lowering the 32.5% rate to 30% in 2024/25. More businesses will have access to immediate deductions for asset purchases, with the expansion of the instant asset write-off to businesses with an annual turnover of less than $50m.

    The tax, superannuation and social security highlights are set out below.

    Income tax

    • The legislated Personal Income Tax Plan will be changed to further lower taxes for individuals, including changes to the low and middle income tax offset (LMITO), the low income tax offset (LITO) and the personal income tax (PIT) rates and thresholds.
    • The instant asset write-off threshold for businesses with an aggregated turnover of less than $10m will be increased to $30,000 for eligible assets that are first used, or installed ready for use, from 7.30 pm (AEDT) on 2 April 2019 to 30 June 2020.
    • Businesses with an aggregated turnover of $10m or more but less than $50m will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from 7.30 pm (AEDT) on 2 April 2019 to 30 June 2020.
    • The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2018/19 income year.
    • Payments to primary producers in the Fassifern Valley, Queensland affected by storm damage in October 2018 will be treated as exempt income.
    • An income tax exemption will be provided for qualifying grants made to primary producers, small businesses and non-profit organisations affected by the North Queensland floods.
    • Six more organisations have been approved as specifically-listed deductible gift recipients.
    • The list of countries whose residents are eligible to access a reduced withholding tax rate of 15% on certain distributions from Australian managed investment trusts (MITs) will be updated.

    Tax integrity and black economy

    • Australian Business Number (ABN) holders will be required to lodge their income tax return and confirm the accuracy of their details on the Australian Business Register annually to retain their ABN status.
    • The start date of amendments to Div 7A will be delayed by 12 months to 1 July 2020.
    • Minor amendments will be made to the hybrid mismatch rules to clarify their operation from 2019.
    • The ATO’s Tax Avoidance Taskforce will extend its operations and expand its activities, including increasing its scrutiny of specialist tax advisors and intermediaries that promote tax avoidance schemes.
    • The ATO will receive funding to increase activities to recover unpaid tax and superannuation liabilities with a focus on large businesses and high wealth individuals.
    • A dedicated sham contracting unit will be established within the Fair Work Ombudsman to address sham contracting behaviour by some employers.


    • Members of regulated superannuation funds will not have to meet the work test after 1 July 2020 if they are 65 or 66 years of age.
    • The restrictions on claiming the spouse contribution tax offset will be eased from 1 July 2020, giving 70 to 74 year old spouses eligibility.
    • The calculation of exempt current pension income will be simplified for superannuation funds from 1 July 2020, allowing a preferred method of calculation and removal of some actuarial certificates.
    • Transitional tax relief for merging superannuation funds will become permanent from 1 July 2020.
    • SuperStream will be expanded from 31 March 2021 to include electronic ATO requests for release of superannuation funds and SMSF rollovers.
    • An expression of interest process will be undertaken to identify options to support establishment of a Superannuation Consumer Advocate.

    Indirect taxes

    • For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.
    • Access to refunds of indirect tax, including GST, fuel and alcohol taxes under the Indirect Tax Concession Scheme has been granted or extended.

    Social security

    • There will be a one-off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2 Apri 2019 and who are resident in Australia.
    • Single Touch Payroll reports lodged by employers will be shared with social security agencies from 1 July 2020.
    • Family Tax Benefit eligibility will be extended to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend secondary school.
    • From 1 July 2019, net income generated from the forced sale of livestock will be exempted from the Farm Household Allowance payment assessment, when that income is invested into a farm management deposit.
    • The HELP debt incurred for recognised teaching qualifications after teachers have been placed in very remote locations of Australia for four years (or part time equivalent) will be extinguished. Indexation on HELP debts of all teachers while they are placed in very remote locations will no longer accrue from 14 February 2019.

    How can we help?

    If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2018-19 Federal Budget, please feel free to contact Martin van der Saag or Norman Ruan on (02) 9984 7774. Read more Financial Industry articles.

    The Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019 was passed by the Senate and the House of Representatives on the morning of 4th April 2019, with 18 government amendments which give effect to the federal budget announcement to increase the threshold to $30,000 and expand the eligibility to medium-sized businesses with a turnover of less than $50 million.

    While the amendments have passed, the bill does not become law until it receives royal assent.

    The amendments mean that there will be three tiers for accountants and their clients to consider within the 2019 financial year, due to Prime Minister Scott Morrison’s announcement to raise the threshold to $25,000 in January.

    1. The first tier will be the $20,000 threshold for depreciable assets that are acquired before 29 January 2019;
    2. the second being the $25,000 threshold for assets first used or installed between 29 January 2019 and 2 April 2019; and
    3. the third tier being the $30,000 threshold for assets first used and installed after the 2 April budget announcement and before 1 July 2020.

    If you have any questions regarding this matter, please do not hesitate to contact us.

    Norman Ruan
    T: 02 9984 7774

    Read more about business tax.

    If you are a NSW business owner, you may be eligible for a payroll tax rebate.

    Businesses that create and fill new jobs on or after 31 July 2016 will receive payroll rebates worth A$6,000. New jobs commencing on or after 31 July 2016 will receive a rebate of up to $2,000 payable on the first anniversary and up to $4,000 on the second anniversary.

    To be eligible, your business must be registered as an employer and paying payroll tax.

    Eligible businesses that increase the number of NSW FTE employees, will receive a payroll tax rebate following the employment of each additional NSW employee in a position that is a new job. A position is a new job if the employment of a person in that position results in a sustained increase in the employer’s NSW FTE employees. New jobs commencing on or after 31 July 2016, will only be eligible for the rebate if the employers full-time equivalent (FTE) employee number, prior to the new job, is at or below 50. This increase must be sustained on both the first and second anniversaries of the date the employment commenced. However, if employment is only maintained for the first year then the rebate will only be paid for that year.

    Please note: a registration for a new job must be made within 90 days of the job commencement date or it will not be eligible for the rebate.

    If you have questions on any of the above issues raised, please do not hesitate to contact us.

    Kim Edwards
    Chartered Tax Adviser
    Chartered Accountant
    T: 02 9984 7774

    Read more about business tax.

    As of 1 July 2018, under this reporting system, businesses in the courier industry and the cleaning industry are required to report payments they make to contractors (individual and total for the year) to the ATO. The reporting system previously was only operational for the building and construction industry.

    The draft ruling LCR 2018/D6 outlines how to work out if an entity comes within the reporting requirements and whether the exemption is available (where total amount of payments an entity receives for courier or cleaning services is less than 10% of the entity’s GST turnover). The ATO also states its views on what is or is not regarded as a courier service or cleaning service, and illustrates its views in many examples.

    Specific payments that do not need to be reported are payments for materials, unpaid invoices as at 30 June each year, PAYG withholding payments, payments within a consolidated group and payments made by individuals for private or domestic reasons.


    If you have questions on any of the above issues raised, please do not hesitate to contact us.

    Kim Edwards
    Chartered Tax Adviser
    Chartered Accountant
    T: 02 9984 7774

    Read more about business tax.