The Blogs that appear on this page may be sourced from outdated material so please seek appropriate professional advice. The blog material is in no way intended to be personal financial planning advice.

Catherine's Chat

Wholistic Financial Solutions provides information and updates regarding the property investment industry. Learn more from Catherine's chat here.

Stuart Westhoff on Pension Changes

Tuesday, February 16, 2016

Pension changes 1 January 2017 – editorial/newsletter article

Don’t get caught offside when the pension rules change

The commencement of 2017 will see some significant changes to means testing for Social Security pensions (including the Age Pension).

Uncertainty around income can be unsettling for those receiving a pension or considering retirement. That’s why it’s important to understand if and how you might be impacted by the new rules so that you can review your game plan before they change.

What’s changing?

The Government is making two changes to the assets test which will take effect from 1 January 2017.

Pensioners need to be aware of how the changes impact their entitlements. For some, the changes will create a cashflow shortfall and may have a significant impact on standard of living.

1. Increasing the lower assets test threshold

The lower assets test threshold refers to the level of assessable assets that can be owned before pension entitlements are affected. Pension payments are reduced once assets exceed this level.

Encouragingly, it is estimated this change will result in around 50,000 part pensioners qualifying for a full pension. Those already on a full pension will be unaffected by this change.

Thresholds differ, depending on your relationship and home-ownership status. Here’s how the new levels compare to the current ones:


Current lower asset threshold

Lower asset threshold from 1 Jan 2017

Single homeowner



Single non-homeowner



Couple homeowner



Couple non-homeowner



2. Increasing the assets test taper rate

The taper rate is the rate at which pension entitlements reduce where assessable assets exceed the lower threshold. The rate will be increased from $1.50 to $3 per fortnight for every $1,000 in assessable assets above the asset threshold.

As a result of this increase the pension the upper threshold is effectively lowered, meaning the pension cuts off at a lower level of assets. It is estimated that approximately 91,000 part pensioners will no longer qualify for the pension and a further 235,000 will have their part pension reduced.

Once again, the upper threshold will depend on an individual’s relationship status, home-ownership status and whether they are asset tested or income tested.


Current upper assets threshold

 Estimated upper assets threshold from 1 January 2017            

Single homeowner



Single non-homeowner



Couple homeowner



Couple non-homeowner



Pensioners who lose entitlements as a result of the changes will cease to be eligible for the Pensioner Concession Card (PCC). They will, however, automatically qualify for the Commonwealth Seniors Health Card (CSHC) or if less than pension age, the Health Care Card (HCC).

What about income tested pensioners?

While the changes are more directly relevant for assets tested pensioners, those who have their pension entitlement determined under the income test may not be unaffected. The changes could mean that certain pensioners become asset tested and this could lead to a loss of some or all of their entitlements.

What can be done?

Thankfully, there are a number of potential strategies that could be put in play to reduce the impact of the new rules.

Strategies which reduce an individual’s or couple’s assessable assets, like gifting or expenditure on the main residence, may potentially help. As every situation is different, it’s important that your game plan is both appropriate and sustainable for your circumstances.

Don’t get caught offside when the rules change, talk to your financial adviser about your game plan.

Stuart Westhoff From Wholistic comments on the current state of the market

Wednesday, February 03, 2016

Is there any reason to be positive on stocks?

Right now there’s apprehension over the economic growth of China, the US and the world economy. If everyone was positive on these economies’ outlooks, commodity prices would be higher and groups, such as OPEC, would actually cut supply, knowing that businesses and consumers of the world can take higher energy prices. Instead, we have a lower growth expectation for these economies. Until that view changes, stocks will have a tendency to fall rather than rise.

Some recent rallies needed to be followed up by good news but instead oil slipped under the psychologically important $US30 a barrel level. The Beige Book put out by the Federal Reserve — America’s central bank — found that in nine of its 12 economic districts surveyed there was only modest growth. If it was spectacular growth, then Wall Street would be up and would keep going up!

The same goes for China — it needs to show that its transition to a more service-oriented economy will still produce good economic growth rates.

It’s funny that we’re focusing on Chinese manufacturing data and how its reduction has hurt iron ore and oil prices and the shares of BHP, Rio, Santos, etc. However, there are changes, such as the tourist numbers out of China to Australia, which this week were 1,013,700 in the year to November. This is the first time annual tourist numbers from the country have breached one million.

This shows us the work of a lower dollar that will help Australia’s economic growth. There are changes like this happening all around the world but markets often concentrate on old rules of thumb that maybe less relevant nowadays.

One big issue being ignored is the fact that one of the world’s most important business costs — energy — is falling and that has to be helping the bottom lines of businesses.

CommSec’s Craig James points out that for many families, the weekly petrol bill is their biggest outlay so the price of petrol has to be a plus for the economy, which (along with the dollar and low interest rates) should ensure our growth rate this year is good, which has to help job creation.

The Yanks have the challenge of a rising greenback but that’s because their economy is doing well. So the big hope for the next month — the time for the earnings show-and-tell — is that US companies, which have been employing large numbers over the past year, will actually come out with better-than-expected profit numbers.

It would help if China’s economic numbers start to look better too but that could be asking for too much in the short-term.

One final point. With interest rates so low and dividends still much higher, shares are still viable and the likes of fund manager, Kerr Neilson of Platinum Asset Management, aren’t worried about a cataclysmic China slowdown that has been spooking stocks this week.

Content sourced from:

Are all Fund Expenses Tax Deductible?

Friday, October 25, 2013

Have you recently seen advertising inviting you to attend a conference or seminar to educate you about self-managed superannuation funds (SMSFs)? Your SMSF pays for the privilege of attending the 'conference' in Australia or overseas and you take a holiday as well, all at the fund’s expense.

You might want to think again and seek advice as to whether this is the type of expense your SMSF should be paying and claiming as a tax deduction.

While it may be possible for your SMSF to get a tax deduction for a range of activities, they must be authorised in the first place by your SMSF’s trust deed.   Also, for any expense of your SMSF to be tax deductible it must be linked to income earning activities of the fund.  No tax deduction is available if the expense is for private or domestic purposes – such as holiday or travel expenses for the trustee which are unrelated to the fund’s income earning activities.  When it comes to expenses that an SMSF trustee incurs for the fund, care needs to be taken so that the expenses relate to the fund's income and not for other purposes which are personal or related to the fund's exempt income (normally its pension income).

Personal expenses may include part or all of the expenses relating to the trustees attending a conference which has both a personal element (such as sightseeing) and an element that relates to the income earning activities of the fund (a SMSF trustee education course).  In cases where the fund pays the personal expenses of the trustees or the expenses are required to be divided between the personal expenses and SMSF income producing expenses there are a number of issues.  The first is that the expenses which relate to personal expenses are not tax deductible for the SMSF but there may be wider implications for purposes of complying with the superannuation laws.

The superannuation law considers if the superannuation fund pays for or reimburses members or their relatives for private expenses then it breaches the rule that the SMSF must operate to solely provide retirement benefits for its members.  These fund activities can also breach the rule which prohibits SMSF members or their relatives using the resources of the fund for private purposes. 

Using the SMSF to pay for private activities in this way exposes the SMSF’s trustees to penalties for breaching the superannuation law.  The fund may be at risk of having the SMSF treated as a non-complying superannuation fund resulting in the SMSF losing its essential tax concessions.  Also, such a breach could result in the SMSF’s trustees being disqualified as trustees.

Unsure of whether fund expenses are tax deductible?

Marketing hype and fantastic offers can often lure SMSF trustees into making decisions that can impact their fund’s compliance. Before your SMSF ends up paying expenses that may not be tax deductible, seek advice from an SMSF specialist.

If you are considering participating in a conference to educate you on SMSFs that also includes a personal element such as an overseas or local holiday, seek guidance on whether your SMSF is allowed to pay for it. Call me for assistance or arrange a time that we can meet to discuss the impact on your SMSF.

 By Catherine Smith

Australian Super Ranked Third in the World

Wednesday, October 16, 2013


An Award Winning SMSF Provider. Take Control Of Your Super Today!

Australia's $1.6 trillion superannuation system has been ranked as the third best in the world, although it emerged with strong marks around integrity, according to a report looking into the retirement income systems of 20 countries.

Australia was beaten by the retirement savings system in the Netherlands and Denmark, and its super system was described as having a ''sound structure, with many good features, but has some areas for improvement''.

According to the Melbourne Mercer Global Pension Index, Australia's improved score - of 77.8 points, up from 75.7 in 2012 - was ''primarily caused by the introduction of the Stronger Super reforms leading to improved governance and stronger regulation''.

The Stronger Super reforms included requiring super funds to offer a low-cost, default fund for disengaged members.

The report - completed by financial services firm Mercer and the Australian Centre for Financial Studies - said Australia could boost its score by requiring that part of the retirement benefit must be taken as an income stream.

It also recommended increasing the labour force participation rate among older workers, boosting the pension age as life expectancy increases, aligning superannuation access age with the pension age, and removing legislative barriers to encourage more effective retirement income products.

Mercer senior partner David Knox said the ageing population meant Australians needed to change their attitudes towards retirement and that businesses needed to develop more flexible workplaces to take advantage of older workers' skills.

The report, funded by the Victorian government, concluded the global shift from defined benefit pension schemes necessitated a focus on provision of retirement income, rather than wealth accumulation.

The UK's super system was ranked ninth while the US came in at 11.

Read more:

EOFY Tax Planning

Friday, April 19, 2013

Hello All,

Catherine is away at National’s for Dragon Boat racing and I thought I would take this opportunity to hijack her blog and write about tax. It is getting to the point in the financial year where people need to start thinking about end of year tax strategies and how the tax changes implemented for 2013 can really affect them. For example, does the tax free threshold rising to $18,200 mean that you no longer need to lodge a tax return? The ATO have some good calculators available on their website to help you make this decision. But when in doubt remember to ask a professional.

For those in business it is time to look at whether or not you have contributed enough into superannuation for yourself and does the business have enough profit in it for you to contribute more? It also time to make sure if you are a sole trader that you register with you super provider to claim super contribution’s as a deduction in your personal tax.  As we get closer to the end of the financial year (EOFY) we will give you more hints and tips. Please feel free to comment below if you have any questions you would like answered or have anything in particular you are interested in hearing about for EOFY. Remember that now can be the best time to get in and see your accountant for some tailored strategic advice.

That’s enough from me for now but you might see me again posting on Catherine’s blog as we get closer to the new tax season.

Lexie O’Toole

SMSF Proposed Changes for 2014

Monday, April 08, 2013

Hi all,

As we probably all know by now the government has released it's proposed changes.  At this stage we can't say exactly how this will affect SMSF and property investing.  It is very disappointing the the government is yet again tinkering with the SMSF rules.  This will erode confidence in SMSF's to some extent.  As usual, the announcements come with no technical detail as to how they will actually work in practice.

All we know so far is 15% tax on earnings over $100,000.  Yet Capital Gains on Properties in super have always been taxed at a maximum of 10%.  My guess is that, if these rules get through, which is doubtful, the following will occur.  When a property is sold and say a gain of $500,000 is realised, then the first $100,000 will be tax free and then the balance of the gain of $400,000 may be taxed at 10% or $40,000. In other words property is still a extremely viable investment option.  You have still made a net profit of $460,000.

However, the tax is still unfair and inequitable as at this stage it appears it will only apply to SMSF's.  Retail and Industry Funds also invest in property on a large scale.  Is the same rule going to apply to the proportion of funds allocated against pension members who have more than $100,000 in income stream.  Probably not, as most people with supposedly super rich superannuation of $2,000,000 or more are smart enough to have their money in SMSF despite the tinkering of the rules.


I will update again when we find out more about this.


This week we are in Canberra Weekly Magazine

Thursday, March 28, 2013

Queensland Property Research

Friday, March 01, 2013

I just wanted to update you as to my property research findings so far.

Note: I haven’t finalised my research but just wanted to let you know the direction I am heading.

I have been examining QLD in depth.  I have previously mentioned that Gladstone & Mackay are definitely ongoing hotspots.  My research has revealed this is still the case.  However, Gladstone has already had significant price rises so I would only recommend Gladstone if we can find a bargain.  Mackay (and neighboring Emerald) have not yet risen as significantly as Gladstone and are my preference in this area.  The price point however is still in the mid to high $400,000’s and SMSF stock is hard to come by.  SMSF stock needs to be a completed house rather than house and land package and due to the high demand builders are able to sell off the plan so quickly they are reluctant to sell to SMSF’s as they have to wait longer to receive their money.  Watch this space though as I do have a developer promising me SMSF stock next week.

If that price range is too high and/or you would prefer not to go that far South in QLD – I am also looking at really good options very close to Brisbane CBD.  These are a lower price point (mid to high $300,000) and have a great rental yield.

My research has involved reading numerous independent economic and valuation reports, government infrastructure plans and bureau of statistics data.  I am looking into capital growth %’s, rent yields, vacancy rates, future expectations etc.  There is a lot to consider when investing in property and I am hoping to draw all this data together for you ASAP.

I am also expanding my research to include numerous NSW areas such as Newcastle, Dubbo and surrounds.  Watch this space for more information.

I will let you know more next week.


The truth about Self-Managed Super?

Monday, February 25, 2013
Self-Managed Super Fund’s are growing at a rate of 4 new SMSF setups per hour in Australia.  Research shows that the average balance in an SMSF is 17 times higher than balances in industry and retail funds.  Do you want to know why?

SMSF’s allow greater control over your super.  They also allow greatly flexibility. You get to decide how much to put in and take out (within the guidelines of the law). They can also cost a lot less than industry and retail funds.  But most importantly, SMSF’s can buy geared property in a simple and uncomplicated manner.  

Why would you buy property in a SMSF instead of personally?

For many reasons; you get the benefit of leverage (maximizing the amount growing for you), the stability of the property market and the generous tax concessions available in the superannuation environment. There is a maximum of 15% tax on any rental income in excess of costs, you receive a tax deduction for the loan repayments of principal via salary sacrificing, you get asset protection from creditors and most importantly any capital gains on the property when sold will be taxed at 10% or TAX FREE if you are over 60.

Please visit Our Events Page to book in and come along to our free information seminar to find out the simple truth about SMSF’s or call 6162 4546 for a free consultation.

ATO concerns over SMSF investing in Property over stated

Friday, December 28, 2012

The Australian Taxation Office (ATO) recently released a Taxpayer Alert (TA 2012/7) which outlines the ATO’s concerns that some arrangements entered into by an SMSF to acquire property do not comply with the law.

The ATO is concerned that it may not be possible to simply restructure or rectify the arrangements, and unwinding the entire arrangement could lead to a forced sale of the asset, potentially at a substantial loss to the fund.

The ATO is concerned about the potential consequences of poorly structured arrangements regarding direct property investments using limited recourse borrowing arrangement

Under a limited recourse borrowing arrangement (LRBA), the SMSF borrows money to acquire a property which is held via a holding trust (the Bare Trust). The rights of the lender in the event of default of the loan are limited to the asset over which the borrowing is held.


Issues of concern:

  • Where the borrowing and the title of the property is held in the individuals' name and not in the name of the trustee of the holding trust. The SMSF pays part or all of the initial deposit and the ongoing loan repayments.
  • The title of the property is held by the SMSF trustee not the trustee of the holding trust.
  • Where the trustee of the holding trust is not in existence and the holding trust is not established at the time the contract to acquire the asset is signed.
  • The SMSF trustee acquires a residential property from an SMSF member.
  • The asset is a vacant block of land. The SMSF trustee intends to use the same borrowing to construct a house on the land. The land is transferred to the holding trust prior to the house being built.

Superannuation issues that could arise from such arrangements

  • The arrangement may be in breach of the sole purpose test (SISA section 62).
  • The arrangement may be in breach of the borrowing provisions (SISA section 67).
  • The asset acquired is not a single acquirable asset (SISA section 67A(2)).
  • The asset is subject to a charge in breach of the borrowing provisions (SISA section 67A(1)(f)).


In my opinion all of the above issues can be overcome by Trustees of the SMSF obtaining advice from qualified and experienced SMSF administrators.  WFS Canberra Pty Ltd is able to offer such advice as well as set up the Bare Trust and obtain the loan to acquire the property. As long as all the correct legal steps are undertaken, in the correct order SMSF trustees have nothing to be concerned about.


Discover How to Build A Property Portfolio The Right Way Right From The Start

Recent Posts