The Australian Taxation Office (ATO) has altered the way that temporary residents departing Australia claim there superannuation monies. Where the funds are claimed within 6 months of departing Australia, members will continue to claim from the super fund. 

 

The ATO however, will write to super funds who have members who have been gone for over 6 months and require the fund to transfer the member’s benefits to them. Members will then need to apply to the ATO for a Departing Australia superannuation payment (DASP).

 

This rule applies to temporary residents who have left Australia and whose visa has expired.

 

It appears that the ATO will identify these people by data matching with the Department of Immigration and Citizenship.

 

From 1 April 2009, there will also be new withholding tax rates for DASPs. These are:

·         35% for a taxed element of a taxable component  

·         45% for an untaxed element of a taxable component.

POSTED: 21-Jan-2009

 

Posted in Legislation | Add Comment »

Predictably, Storm Financial is to be wound up. Not too many people will shed tears about that no doubt.  The loss to investors from this will be significant and nothing short of a disaster for many.  Should the Storm advisers be accountable, or is it just bad luck, the stockmarket is to blame?

It is obvious that the investors trusted their adviser, and they should be able to do this.  The financial services industry runs on trust, indeed couldn’t function without it. The failure here was the model. The Storm model was a one size fits all model which was built for the good times and good times don’t always last. Any adviser worthy of the name should have recognised the risks in the model. Certainly there were warning signs, but are we expecting too much from “unsophisticated” investors to recognise these. The adviser is required by law to take into account each client’s individual circumstances and tolerance to risk.  It appears that this didn’t happen here and the advisers must be held accountable.  

It will be up to the courts to sort the liability issues out and in the meantime, ASIC must step up to the plate and call the advisers to account.  Neither of these actions will give much joy to those whose financial future is in tatters, however. 

POSTED: 20-Jan-2009

Posted in Rants & Raves | Add Comment »

Unless you have been living alone on a deserted island you would have to be aware of the financial crisis that has gripped the world. In Australia, the economy is still on the down hill run with a lot further to go.  Recession is a possibility.

 

Whilst markets have fallen significantly however, does the value of your investment matter all that much if you are not intending to sell? (Obviously it will if the stock is a dog and the loss is likely to be permanent).  Stockmarkets are forward looking and run well ahead of economies and it is a reasonable proposition that recovery here is not too far off.

 

The downturn continues to deter many people from investing now, fearful of further loss.  But what is the alternative, cash? For the last 18 months or so, cash has been king. But look at the return on cash investments now.  Instead of focusing on the possibility of capital loss, investors now should be focused on the income their money generates. When it comes to income now, share dividends are a far better proposition than a cash alternative, particularly after tax is considered.  The share dividend advantage will be even greater as interest rates fall further this year, (a near certain proposition).

 

Effectively, you will finish up with more money in your pocket if you buy shares now (but not just any shares) than you will if you keep invested in cash. So what if the shares fall some more if you are getting your income.  If you are prepared to ride out the volatility on share prices for awhile longer, investment in good dividend paying shares makes a lot of sense.

 

Ultimately buying companies with quality earnings, will see the prices of those shares rise, as it is the increase in dividends that will drive the share price upwards. As recovery sets in therefore you will pick up an increase in the value of your holdings and in the meantime receive better than cash returns.

 

So consider investing now. But be aware that not all shareholdings are the same.  Look for those companies that pay good dividends and have growth prospects.  Most importantly, get some professional advice.

 

POSTED: 14-Jan-2009

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