A FINANCIAL MOMENT

Real estate and your payment

Hank Jongen, General Manager, Services Australia

WHEN Services Australia considers your eligibility for a payment, most real estate you own is included in the assets test. That includes property you rent out, leave vacant, have as a holiday home, or let someone live in for free.

The only real estate we don’t include is your principal home, which we define as the home you live in, as well as the first two hectares of land it’s on.

We assess your real estate based on the current market value, but we don’t count any mortgage amount that is secured against the property.

For example, if you own a holiday home worth $350,000 but have a mortgage secured against the holiday home for $200,000, then the assessable value of the asset is $150,000. However, if the mortgage secured against the family home to purchase the property, then the full value of the property will be assessed.

When you claim a payment, we’ll ask you to estimate what the present market value of the property is. We can also request an independent valuation of the property at no cost to you.

Over time, real estate values can change. With that in mind, we index the value of a residential property each year to keep them up to date. If the new valuation affects your rate of payment, we’ll let you know.

Of course, if you don’t agree with a valuation, you can ask for a review and we will arrange a formal valuation.

This may require an independent professional property valuer coming to assess the property in person. We’ll organise this at no cost to you and the property valuer will arrange a time that is convenient for you to complete the valuation assessment.

myGov is changing

If you use myGov, you may have noticed that it’s changing. While the homepage and layout may look a little different, many things are still the same. You don’t need to download anything, create a new account, change your password, or set up your linked services again.

All your personal information remains safe and secure. Just sign in as you normally would to start accessing government services. You can also explore information on payments and services relevant to where you’re at in life.

These updates are the first step towards a simpler way to connect with government online services.

Until next time, Hank Jongen.

Accessing Super

Damian Gibson, Financial Adviser and Partner, Elevate Wealth

SECOND to the family home, for most Australians, their superannuation is their next biggest asset. As workforce participation slows down or winds up completely, people want to access their superannuation to supplement their income.

As you get to that stage of your life it is helpful to understand the rules around accessing your super. To access your super benefit, you must satisfy a condition of release. Here we will discuss the most common ways superannuation can be accessed.

Between preservation age and 60

Preservation age is the earliest age where you can potentially access your super. In order to access your super, you must not only meet your preservation age (table below) but also retire from any employment arrangements and satisfy the fund trustee that you do not intend to be gainfully employed for ten hours or more in any week in the future.

If you are accessing super benefits between preservation age and 60 there may be tax consequences depending on the withdrawal amount and how it’s withdrawn from the fund.

Date of Birth

Preservation Age

Before 1 July 1960 55 years 1 July 1960 – 30 June 1961 56 years 1 July 1961 – 30 June 1962 57 years 1 July 1962 – 30 June 1963 58 years 1 July 1963 – 30 June 1964 59 years After 30 June 1964 60 years

Meeting preservation age and starting a Transition to Retirement Pension (TTR)

If you have met your preservation age but intend to keep on working, you can access a portion of your super through a TTR which will pay you a regular income.

A TTR can be used to supplement income if you reduce your hours at work or can help you save money on tax while maintaining your current hours. One of many important considerations with a TTR is that you are obligated to withdraw a minimum of four per cent of the balance but no more than 10 per cent each financial year.

Between 60 and 64

If you are between the ages of 60 and 64 and have stopped working (regardless of how long for) you will generally have full access to your super benefit. You also have the option to go back to work and retain access to your super. In most cases, withdrawals from your super are tax free after the age of 60.

Reaching 65

Once you reach the age of 65, regardless of employment status, the balance of your super becomes unrestricted non-preserved, meaning that the funds are no longer preserved and you have the ability to access your super.

Here we have only discussed aged-based conditions of release. There are other conditions where super can be legally released to a member, such as permanent or temporary incapacity, terminal illness, compassionate grounds, or severe financial hardship.

There are strict rules around accessing your super, and if accessed incorrectly penalties apply. Before accessing your superannuation, it is important to seek advice from a professional adviser regarding your situation.

There are also many things to consider before accessing your super including, tax consequences, impact on Centrelink payments, how it is accessed (income stream vs lump sum) and longevity risk.

Information in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

Anglicare Tasmania Financial Resilience & Wellbeing Program Manager Mat O’Brien Mat helps a client

Balance your budget for free with Anglicare

ANGLICARE operates the National Debt Helpline in Tasmania. It’s a free service for Tasmanians, operated by Tasmanians.

Mat O’Brien is the southern program manager for financial counselling at Anglicare.

“You don’t have to be in financial crisis to ring the Helpline,” Mat said.

“You don’t need to have accumulated any debts, despite the name of the service! We all know that the cost of living has risen. You might need some simple hints and tips on how to balance your budget and make your income go further.

“We’re here to support you whatever your situation.”

Mat said the earlier you reach out, the better.

“Our conversation will be about much more than numbers,” he said.

“We will challenge you and motivate you. We will explain the consequences of the choices you are making about money.

“If you are in debt we can assist you to negotiate an affordable repayment plan. And in some cases we can arrange for a debt waiver.”

Mat encourages people to accept and admit that they can’t afford everything they would like to have.

“There’s so much pressure for people to think that spending money is good and makes you and others happy,” he said.

“This can have a negative impact on both your mental and physical health.

“A financial counsellor can coach you on how to have conversations about money and commitments with others in your family, including children.”

The Anglicare team is particularly concerned about the take-up of Buy Now Pay Later programs, such as AfterPay and similar products.

“These products are very easy to obtain. If you use them without a budget to work with, you will run into problems,” Mat said.

“We explain the hidden fees and charges. If you miss a payment or pay late, you can be hit with a fee that can be as big as $15. Then there are fixed monthly fees, a payment processing fee and some providers also charge an establishment fee.

“It may become difficult to get approval for a loan to buy a car or a house in the years ahead if you have this kind of debt. Even late payments will affect your credit rating.

“We show people where their money is going. We explain how working more to earn more to cover the cost of material things is not the answer. We talk to people about what it will feel like to achieve a long-term financial goal.”

Tips for younger people

The Anglicare team offers these tips for younger people who live on a limited income. • Reach out to

NILS, the No-Interest

Loans Scheme, for items related to your education such as a laptop, or to pay for things like car repairs, a sofa or a new fridge. You can also use a NILS loan to cover medical and dental expenses. • Be aware of how little things, such as your morning caffeine fix and subscriptions to gaming and streaming services, can quickly add up. • Shop around for your service providers. Look for a bank that offers no fee/low fee accounts, and a ‘nofrills’ phone/internet company. • Make sure you include everything in your budget, including a provision for special splurge items or experiences.

Lewis’s story

Lewis* signed up for the BeforePay app. This gave him early access to his fortnightly salary, for a flat fee according to the amount that he borrowed. He spent the money and was then ‘short’ well before his next payday.

“In the beginning I was borrowing very small amounts, like $50,” he said.

“Then the company increased my borrowing capacity so that I could borrow 25 per cent of my pay in advance. And the fees went up.

“I thought it was a great idea at the time, even though I was already under financial stress. I felt like I was on a hamster wheel and I couldn’t get off.”

Financial counselling supported Lewis to make changes to his spending patterns and live within his means.

Ruby’s story

Ruby* called the National Debt Helpline because her debts had become unmanageable. The constant phone calls she was getting from creditors were making her anxious.

She cried throughout the call. When asked about her debts, she said they were “all the bad ones”.

The Anglicare financial counsellor arranged to meet Ruby in person to make a plan. It became clear that most of Ruby’s debts were with Buy Now Pay Later creditors.

Ruby explained to her counsellor that she found these services easy to use when she was out shopping. She could take the item home straight away. She could split the costs into several payments. This made her think that her purchases were affordable.

Ruby opened five BNPL accounts and none of the providers checked with her to see if she could afford them. They offered her increases to her credit limits.

When the repayments became too much, she took out some quick ‘payday’ loans to buy groceries for her family.

Ruby’s counsellor took her through her options and together they designed a repayment plan and a new budget.

Next steps

“What happens after you make that first call is up to you,” Mat said.

“We can continue talking to you over the phone or we can arrange to meet you in person.

“We can continue the conversation for as long as you need it. The beauty of our service is that it is free, friendly and confidential.”

Financial counselling is about budgeting and goal-setting. It doesn’t cover investments or growing your wealth. Your financial counsellor will tell you if they think you need legal advice.

Phone an Anglicare financial counsellor on 1800 007 007, between 9am and 5pm Monday to Friday.

*Clients’ names have been changed to protect their privacy.

Worried about the cost of living?

Our financial counsellors can help you fine tune your budget for FREE.

Anglicare Tasmania provides a FREE, independent, non-judgemental and confidential counselling service throughout Tasmania. They can help you organise your budget, suggest ways to manage any debt you have and refer you to other useful services.