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Aged Care Options

As much as we may not like to admit it, we are all getting older.

And inevitably we all need to consider the options for our twilight years, be that considering moving into one of the many aged care facilities in Melbourne, or simply remaining in the family home.

Often when we raise this topic with clients, its not just to discuss what your care preferences are for dear old mum or dad, but also for you and perhaps your spouse later on down the track.

There are many different options to consider, so let’s look are some of them:

Staying at home

Many people like the option of being able to stay at home, some stubbornly so. The familiarity, comfort, security and sense of independence are all things which understandably offer great appeal, much more so than an aged care agency. if this is part of your plan, the great news is that there are many different options to support you in being able to stay at home for as long as possible.

Government calculations show that it is cheaper to offer and provide in-home aged care services than to have you move into a higher level of care with permanent professional assistance, so no one is forcing you out of your home.

Various types of assistance are available, some are offered free of charge, some at heavily subsidised rates, and there are always paid personal assistance options. This can also be psychologically far less stressful than considering moving an elderly relative into one of the many aged care services Melbourne has to offer.

Many councils, aged care agency entities, and other government agencies offer in home assistance – whether it be meals-on-wheels, or assistance with cleaning tasks. These are complimented by many religious institutions and community groups willing to help those in need.

There are also some great aged care service agencies who can arrange personal careers such as nurses, facilitate drivers to attend doctor appointments etc, domestic chores such as cooking, cleaning, shopping and washing. This paid outsource solutions can work very well as you know you are dealing with professionals, tailored to assist elderly and frail patients, who have ready solutions to accommodate changing needs. Whilst coming at a cost, it’s a great option for relatives too, who may not live nearby, or lead busy schedules and cannot afford the time away from work, or may not have the necessary skills or health to be able to assist their family.

And of course there is always family/friend assistance. Generally children assisting their parents, but it can also be other family members such as siblings and grandchildren etc. There are also many friendly neighbours who have become close friends over the lifetime of living next door to each other.

If you are considering involving an agency, it is important to select an agency that meets not only the needs of the individual, but also your requirements.

Retirement Villages

Whilst not for everyone, retirement villages have come a long way. Often seen as a place to co-habitat with other older downsizing residents, the types of facilities and their features are very diverse. To avoid the clichés of Retirement Villages, many call themselves independent living units or lifestyle units. Melbourne has many of these facilities located all over, some of which are in our own backyard, near our offices in Ivanhoe.

Many places restrict entry to over 55’s, which by current standards is anything but old. Whilst you may still be working full/part time, the option of downsizing and living a more simple life without all the maintenance headaches does have appeal. A community feel, with group activities and functions, combined with a communal meeting venue or clubhouse as the often have, gives residence instant opportunities to try new things and meet new people.

In most facilities, you do not own the home or room, but instead buy a right to occupy licence. Prices vary drastically depending on location, services offered, demand, size, features and quality of the building. Amounts in excess of $400,000 are certainly common.

And when it comes to the finances, reading the fine print is super critical. Almost always there will be a deferred management fee (or other names meaning the same thing) which is a fee paid when you leave the facility and the property is re-sold to the next occupant.

The amount of the fee is determined by the length of occupancy, and often hits a maximum fee of about 30% around year 10 – ie 3%pa with a 10 year maximum. There can also be marketing and agent fees deducted at the time of sale, along with any make good requirements such as painting and carpet.
So forget the thought of being able to sell your retirement village property for a profit down the track, as all these fees add up to be virtually the same as the original purchase price – so you get your money back roughly.

Assisted Living Units

Very similar to retirement villages, and often within the same facility, the managers will provide residents access to some additional services above what an independent living offers. Perhaps it might have on-site nurses who can attend if required to administer medication etc. They may have a communal dining room to avoid the need to cooking either on a permanent or when you feel like it basis. They might arrange for a bulk billing doctor to attend the facility once a week for scheduled checkups etc.

These extra services are usually on a user pays basis, so if you need it, they are always available, but just at a cost.

Aged Care Hostels & Nursing Homes

There are a lot of confusing and similar sounding terms when it comes to hostels and nursing homes, so for simplicity, we will use laymen’s language to give you some basic ins and outs, but the team at GNS Group are happy to run through some more specifics with you and your family to understand your situation and guide you through the maze of options. Simply book an appointment at our Ivanhoe offices with one of our friendly, expert staff.

Aged Care Hostels are for people requiring low levels of personal care. With permanent on-site nurse and attendant care to assist where and when required for things such as eating, mobility, bathing, toileting, dressing, administering medication etc.

They are secure facilities, as some of the residents may be suffering from dementia related conditions, so the residents are not able to freely leave, unless accompanied by family or friends and arranged with management.

Nursing homes are for people with higher levels of personal care needs. Without being able to eat, move, bath, dress yourself or go to the toilet, permanent and frequent nurse and attendant care is essential.
They are secure facilities, and the residents typically do not leave the facility as family may not have the requisite levels of care or training to be able to assist such a high degree of needs.

24hour care such as this does come at a cost, and for those residents in receipt of the government age pension, most of this is paid to the facility manager for their care. Depending on what other assets or income sources you have, an entry fee may be required (which is largely refunded upon leaving).

The amount you pay is determined by 2 things:

What type of facility you are entering and your financial classification.
Entry to these facilities can be funded either through paying a lump sum bond, making periodic monthly payments, or a combination of both options.

All facilities offer a variety of ‘additional’ services above what would be required for basic care. These extras come at a cost. Facilities are also required to list the entry cost of each room on the government website https://www.myagedcare.gov.au which acts a bit like a realestate website, where you can compare one room/facility to another to see what the asking price is, and what you get for that price.

Besides the extra services that you may select, you may also have to pay an additional fee if you have additional financial assets or income which could help cover the cost of your care rather than relying upon subsidised government funding.

Working through this means testing and the many options available to you and your family is where the team at GNS Group can add value and assistance to what may be a difficult and emotional time. Please contact us today to see how we can help.

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Estate Planning

They often say there are only two certainties in life …DEATH and TAXES.

As you can imagine, being Accountants – we are all over taxes!

But when it comes to Estate Planning, it’s something that you may not have discussed or want to discuss.

Obviously we cannot make recommendations or prepare a Will, but we are often involved in the structuring of an Estate Plan with your Solicitor.

And if you don’t have a Solicitor, we are happy to recommend one to you.

We have seen some deceased Estates administered in an orderly fashion, with effective Tax Strategies, and Centrelink benefits.

On the flipside, there have been some real nightmare ones where a lack of proper advice from a Solicitor and our input from a tax perspective, have led to some unfortunate and costly outcomes

Some important reasons to address your Estate Planning:

If you die without a Will, an Administrator will distribute your assets in accordance with a Government Formula. It’s your money, you should decide who get is, not the Government.
Any assets in joint names will pass directly to the survivor and bypass your Will. This can work both for and against your wishes without consideration from your Solicitor.
Most people think of assets as being their house, bank account, shares, and Super. But Super is generally not an Estate Asset. It is up to the Trustee (Manager) of your Super Fund to work out who to give your Super balance to.
A Binding Death Nomination will direct the Trustee in how to pay out your Super and any Life Insurance inside your Super Fund. It is very important to make a valid Binding Death Nomination which reflects your wishes. And unlike a will, there are restrictions on who you can nominate as your Super Fund Beneficiary. Generally you can only nominate your spouse, a child or your Estate (commonly referred to as your “Legal Personal Representative LPR”). There are some other options, but leaving your Super to your parents or sister/brother is not always a valid nomination.
Power of Attorney documents are really important, but not often addressed. They can be issued for a specific purpose (such as while you are overseas on holiday) and they can be enduring (last through until revoked or death).
There are three main power of Attorney documents Financial: Able to deal with decisions regarding Bank Accounts, Property, Investments and Super.
Medical: Able to decide what treatment is to be administered.
Guardian: Able to decide where you will reside i.e. rehabilitation centre or aged care facility.

It is generally advisable to address all 3 Power of Attorney documents at the time of preparing a Will.

A Solicitor will be able to appropriately advise on how to best address your Estate Planning needs. We recommend a joint meeting with ourselves and your Solicitor to make sure there are no adverse tax implications.

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Investments

Financial Adviser Ivanhoe

You are never too old nor too young to invest, or to seek investment advice. Similarly, the saying that it is the time in the market, rather than trying to time the market, which should always be remembered.

None of us have a crystal ball of what will happen in the future, but there are some key tools which we use when offering advice to clients, that help to deliver appropriate and risk adjusted returns over the medium to larger term.

So what exactly can you invest in and how can the GNS Team help you achieve your investment goals.

1. Cash and Bank Accounts
Relatively simple to understand, low risk, low interest rates, but your money is generally available ‘at call’ or when you need it. Great for day to day transactions.

2. Term Deposits
Again, quite a simple to understand investment, with a low level of risk, money is likely to carry a government guarantee depending on the amount. You get to nominate the term (length) of the term deposit – typically 30, 60, 90, 180 days or 1,2,3,4,5 years. The Bank will pay a fixed rate of interest for the length of the term. You can cash out a term deposit before maturity, but you will need to give the bank 31 days notice and you will also lose any accumulated interest.

With all of these strategies, your adviser should help to determine what is most suitable for your situation. At GNS Group, our financial planning team, based in Ivanhoe, have some of the most knowledgable investment advisers Melbourne has to offer. Please contact us today to book an appointment to discuss your requirements.

3. Bonds
Generally buying a bond directly is out of reach for most of us. Most bonds trade in $500,000 amounts, although there can be opportunities to buy in smaller amounts. So what is a bond – generally issued by a Public company, a Government, or a Government agency – will be for a fixed term, have an identifiable asset as security for the bond and can offer either a fixed rate of interest or a floating rate of interest. Typically, closed as a conservative investment due to the predictability of returns, the biggest variable will be the interest rate offered. This is determined by the quality of the organisation, the type of security being offered and the length of the bond term.

If you don’t have $500,000, don’t lose heart. You can still access bond investments via a bond managed fund. Your money is pooled with other investors to collectively get far in excess of $500,000 and to be then able to have multiple bonds in a portfolio to give you diversification and to minimise risk. Your money will also be professionally managed again giving you an advantage over choosing bonds yourself.

To help you select an appropriate bond fund, talk to a GNS Financial Adviser Ivanhoe today.

4. Hybrid Shares
Are part share/equity and part debt. Usually listed and traded like normal shares, hybrids will pay a fixed or variable interest payment or an unsecured Note. Often these notes will convert into ordinary shares at some future time if not redeemed by the issuer.
Being unsecured, they will carry a higher interest rate than a bond due to the increase risk associated with them. Many investors have treated these investments as a Term Deposit on steroids, and discounted many of the risks of hybrid shares. The regulator ASIC has raised this as area of concern.
Hybrids do play an important role in an investment portfolio, but care needs to be taken, this is where a GNS Group Financial Consultant can assist. If you are based in Melbourne, we recommend coming into our offices to discuss matters further.

5. Shares
Most of us have shares either owned directly or as part of our super funds. Being a shareholder means you are a part owner of a business, and as a result you share in the profitability of the company. If the business suffers a loss or even a expectation of a lower profit, then your shares can decline in value and can even become worthless should he company enter bankruptcy.

It is for this reason that shares are the most volatile form of investing, but history tells us that over the longer term, share based investments perform very well.

The trade off between risk and return is something that the team at GNS Group spend considerable time discussing with clients, and should only be considered for long term investments.

Shares will also pay out some of its profits as dividends. Profits earned in Australia will have been subject to company tax at 30%, and this 30% tax can be passed on to shareholders as an Imputation Credit or a Franking Credit, this is done to avoid double taxation.
The Financial Advisers at GNS Group can assist you with both share recommendations and placing the trades for you. As a trusted consultant, this is what we do regularly for our clients.

6. Managed Funds
These are a great way to increase diversification, by pooling your money with many other investors to access investments and markets that cannot be easily and cheaply obtained directly.

Whether it be to start off with a small balance, or to get exposure to a particular type of investment, Managed Funds play a role in most people’s investment portfolio.

Besides choosing the asset class – ie (Aust/International) shares, property (Aust/International), Fixed interest (Aust/Int), cash, commodities, infrastructure etc, it’s also important to consider the style of fund manager – Growth, value, income, active, passive etc. Each have their role to play and this is where a GNS Group Financial Adviser can add real value. We will understand what your goals are and how best to reach those goals through appropriate investing.

Selecting the right consultant to help you on your investment journey can be a challenge. We pride ourselves on our ethics and knowledge and always like to meet face-to-face with our clients (if they are based in Melbourne) in our Ivanhoe offices. However, if you are located interstate, a phone call to discuss your requirements is perfectly fine.

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SMSF’s

SMSF Ivanhoe

Lots of people get excited by the thought of setting up a self managed super fund, and we are certainly big fans of them. But it’s certainly not for everyone.

We spend considerable time with our clients, not just those from Melbourne, but all over Australia, exploring all of the options and education them on the alternatives before making a recommendation to establish a SMSF.

A well-thought out smsf investment strategy that suits your situation is vital when considering this as an option.

We feel too many people are seduced by slick salesmen with properties, loans, incorrect smsf strategies and get rich quick schemes – and are very sceptical of these arrangements as a result. But a smsf setup that is tailored to your needs can certainly work in your financial favour, however a sound strategy is required to ensure it works for you.

Here are some key points:

Self Managed Super Funds allow up to 4 members and are governed by the same type of rules that apply to public super funds.

SMSF’s certainly give the members absolute control and discretion over how they invest their retirement nest egg, but this does not mean you cannot seek professional assistance from the team at GNS. If you need guidance with the smsf setup process, book a consultation at our Ivanhoe offices, we’re here to help.

Being able to make an investment in Term Deposits, listed shares, managed funds and residential/commercial property comes with a lot of attractions, particularly if you are borrowing to invest or a small business owner looking to pay rent to your own SMSF.

Because the government gives so much flexibility to SMSF’s, you are required to lodge an annual tax return, prepare financial statements and most importantly, subject yourself to an annual compliance Audit. This is where the GNS team can further assist you in meeting your compliance obligations.

Generally, as part of our investment strategy for you, we would not recommend setting up a SMSF with less than $250,000 as the annual compliance cost would outweigh the benefits in many situations.

Besides the flexibility of investment and control that we mentioned earlier, another big advantage that comes with a SMSF is the benefit of TIMING.
Having control over when to sell an asset and trigger a Capital Gains Tax event can have a major impact on your overall performance.

Eg- selling an asset inside 12 months will not allow access to the CGT concessions, similarly selling an asset on 29th June will mean the tax is payable this year, whereas selling on say 2 July means you can hold onto an investment for longer before paying the CGT to the ATO. The same principle holds true selling before the commencement of a pension where Capital Gains Tax applies compared to waiting until after a pension has commence and no CGT is payable.

The benefit of timing cannot be underestimated as a great way to enhance your returns and should be a consideration in your assessment of the pros and cons of a SMSF.

Based in Ivanhoe, in the north-east of Melbourne, the team at GNS Group, spanning Financial Planning, Tax Accounting and Audit have all of your needs met and can answer all of your questions regarding these types of financial services, including the self managed super fund property investment rules, as we are members of the SMSF Association.

Our strength lies in our ability to tailor an investment strategy that is best suited to your needs.

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Superannuation

Superannuation really should be fairly straight forward, but instead all governments like to tinker with it.

So here are some of the basics:

When you are working, your boss will contribute 9.5% of your wage to your superannuation as a minimum.
This money is generally taxed at 15% on its way into your superannuation Account.
Once added to your Super Fund, it is invested and preserved until you retire.
Under the current rules, if you start a pension after the age of 60, your pension payments will be tax free to you.

Now that you have a few of the basics sorted out, let’s look at a few more of the important issues in a bit more detail.

CONTRIBUTIONS:

Whilst your boss will pay a minimum 9.5% into your Super Fund, you can decide to make additional superannuation contributions. This is generally done as a Salary Sacrifice, where you give up some of your wage and have that paid into your Super Account.

So why would you do that? There are 2 main reasons; you want to put more money aside for retirement and often the biggest driver – to save Tax.
Both the compulsory Super (9.5 %) and Salary Sacrifice amounts are treated as Concessional Contributions. This means they are subject to Concessional Tax Rates – generally 15% (for high income earners > $250k it’s 30%). Paying 15% Super Contributions Tax compares very favourably to wage taxes of 19-47%.

So as you can see, popping some extra cash into Super can be a smart strategy.

We mentioned Concessional Contributions just before. Getting a Tax break on Super Contributions does come with some restrictions. Depending on your age, there are limits on how much money can go into Super each year at the lower Tax rate of 15%.
The maximum Concessional Contribution is $25,000 for all workers aged under 65.

Many people will work backwards in order to get the maximum into Super. Start with $25,000, subtract how much work will contribute as part of your compulsory 9.5% Superannuation (say you earn $55,000 – your compulsory Super is $5,225) which will leave up to $19,775 that can be salary sacrificed into Super.

As of the 1st July 2017, you no longer need to enter into a Salary Sacrifice arrangement with your employer in order to get extra money into Superannuation, you can now make a personal contribution to your Super Fund and claim this a tax deduction and be entitled to tax credit when you lodge your tax return for the year.

There are few more important considerations and that’s where a GNS Group Financial Adviser can help you to get the maximum super contributions too.

After-tax contributions are called Non Concessional Contributions and go into super tax free and can be withdrawn tax free in retirement as well.

There is also a limit of $100,000 pa or you can put up to 3 years worth of contributions into super in one go ($300,000) so long as you don’t exceed the limit in the next 3 years. Commonly this is referred to the bring forward rules.

An example of how this could be used would be following the sale of the family home, Mary and Jason have downsized and freed up $600,000. Jason has already retired and is aged 66, so he can not contribute to super. Having not made any previous non concessional contributions, Mary can contribute $300,000 this year to super and will keep the remaining $300,000 in her savings account.

Before any large contributions are made, professional advice is always highly recommended to make sure you are maximising the contributions and your retirement savings. This is where a GNS Group Financial Adviser can play an important role in guiding you through retirement planning.

If you are based in Melbourne, we recommend coming in for a visit to our Ivanhoe offices to discuss your option. We are one of the most knowledgable firms regarding superannuation companies Melbourne has to offer, and we’d love for you to take advantage of that.

Should you be based outside of Ivanhoe, or even Melbourne, we can initiate conversations over the phone.

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Individual Income Tax

Tax Accountant Ivanhoe

For many of us, doing a tax return is a hassle and a chore, and we only do them because we have to, not because we want to.

While you might think your affairs are fairly straight forward, its important that you don’t overlook something. There could be hundreds or thousands of dollars in refunds available to you, just by understanding what you can legitimately claim.

And this is an important consideration, just because your friend or family member can/can’t claim a particular deduction, doesn’t necessarily mean the same rules apply to you. Different occupations or role descriptions make a difference, so too does your age, health, marital and family status – so its important to make sure that your GNS Group accountant fully understands your situation and to best advise you. At our offices based in Ivanhoe, we have some of the best tax accountants Melbourne has; they’re passionate, knowledgeable and can advise you on all your accounting needs.

We find most people fall into one of two categories. The eager beavers who like to do their return as soon as they have all of the required documents in order; or, the tortoises who get around to doing things towards the deadlines.

Either way, it’s important to make sure a few basics are followed to maximise your return:

Keep everything (original or soft copy) throughout the year that could potentially be claimed (we have checklists to help)
Try to summarise all of the documents and records, it will make our life easier & your accounting fees cheaper!
Book an appointment at our Ivanhoe office and talk to your GNS accountant about what might have changed in your world over the past 12 months (there might be extra things you can claim)
Ask questions about what might have changed with tax legislation affecting your claims
Provide GNS with your current contact details; perhaps you have moved from Melbourne to rural Victoria, or interstate, or visa versa. (in case there are some queries)
Let us know your bank account details for an Electronic Deposit of your refund
Book a face to face appointment (if you are based in Melbourne) or a phone based consultation (to cover all of the above)

There are three key areas on a tax return – Income, Deductions, Rebates & Offsets.

Income

This could include things such as your salary, bank interest, capital gains, rent received, dividends or managed funds etc.

Deductions

This could include things such as your car or travel costs, union or subscription fees, rental property expenses, Interest on investment loans, Income Protection Insurance, home office costs etc.

Rebates & Offsets

These are generally things which entitle you to a tax credit, and can include Private Health Insurance, Out of pocket medical expenses, credit for foreign income tax paid etc.

If you would like more information on what you might be able to claim, talk to one of our accountants today – we’d love to be able to help you.

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