The Australian property market is showing signs of change.
CoreLogic data reveals a -0.1% drop in national home values in December 2024 which is the first decline in nearly two years.
However, it’s important to recognise the diversity in Australia’s property markets. For example, Adelaide, Perth and Brisbane have shown strong growth whilst Melbourne, Hobart and the ACT are seeing declines. Sydney has held steady.
With up to three rate cuts predicted for 2025 and more properties expected to hit the market early in the year, now is the time to get your finances in order. Being prepared ensures you can act quickly when the right property becomes available.
Be Ready To Act
Allan Hall Finance specialises in helping buyers navigate the financial landscape. We offer free consultations to discuss your financial situation, come up with structures tailored to your needs and help you prepare for the opportunities ahead.
If you’ve chosen to manage your own SMSF, it’s likely you’re also proactive and responsible regarding insurance.
Whether you currently hold life insurance outside super or within an existing super fund, starting an SMSF requires attention to your insurance strategy.
SMSF trustees must assess whether to obtain suitable insurance coverage for each fund member as part of developing their investment strategy.
What are the rules?
Legally, all SMSFs must prepare a documented investment strategy during setup.
This strategy—including any insurance coverage—must be regularly reviewed by the fund’s trustees to ensure it aligns with members’ evolving needs and circumstances. Compliance with this investment strategy is checked annually by a licensed SMSF auditor.
In 2015, the Federal Government’s Super System Review found that SMSF members were more likely to hold insurance outside super compared to members in other superannuation sectors. Consequently, SMSFs are not required to provide default insurance for members as many public sector funds do.
However, SMSF trustees still need to carefully consider each member’s financial situation to determine if they have adequate insurance coverage. Key considerations include:
Current debt levels of members
Whether members have dependents and, if so, how those dependents could be financially supported in the event of the member’s death or inability to work.
What types of insurance cover can SMSFs provide?
SMSFs are permitted to offer any insurance cover that aligns with one of these superannuation conditions of release:
Death (life insurance)
Permanent incapacity leading to the member’s permanent cessation of work (total and permanent disability insurance or TPD)
Temporary incapacity that causes the member to stop working temporarily (income protection insurance)
Terminal illness diagnosis (by two medical professionals) indicating likely death within two years, generally included as a feature in life insurance policies.
Note: With TPD insurance, insurers apply different definitions and features. A key distinction in TPD policies is occupation type, with two options:
‘Own occupation’ provides benefits if the member cannot work in their specific role
‘Any occupation’ offers benefits only if the member is unable to work in any gainful role they are reasonably suited for.
SMSFs cannot hold ‘own occupation’ TPD policies unless issued before 1 July 2014, as policies issued after this date must meet a condition of release to ensure proceeds are accessible before members reach preservation age. The ‘any occupation’ definition aligns with the permanent incapacity condition, so it is the permissible definition.
Each of the above conditions of release allows a fund member to access their super funds regardless of reaching preservation age.
Once you determine the insurance cover type you need, you can weigh the benefits of holding it within your SMSF, an existing super fund, or personally, outside super.
Ensure your SMSF’s insurance strategy meets legal standards and protects your members — review your coverage options and compliance obligations today.
Managing a Self-Managed Super Fund (SMSF) requires a well-structured investment strategy to ensure that retirement goals are met and the fund meets the ‘sole purpose test’.
This test requires the fund to be maintained solely for the purpose of providing retirement benefits to members or their dependants if the member dies before retirement.
All investment decisions need to be made in the members’ best interests and also to meet the sole purpose test. The decisions regarding how the funds are invested need to be documented in the investment strategy.
As per Australian superannuation laws, trustees must develop, implement and regularly review the SMSF investment strategy, ensuring it aligns with the fund’s objectives and its members’ circumstances:
Reflect Member Needs: Circumstances change; make sure the strategy still fits members’ retirement goals and risk profiles
Adapt to Market Changes: Markets shift; adjust the strategy to reflect current economic conditions and protect fund performance
Audit Readiness: Avoid potential audit issues by ensuring the strategy matches actual investments, preventing any compliance breaches
Fund Future-Proofing: Use this review to plan for the next financial year, adjusting for diversification, liquidity and evolving fund goals.
An SMSF investment strategy must consider crucial factors, including risks, diversification, liquidity and insurance coverage for members. It should address how the fund will make, hold and realise assets in a way that meets members’ retirement needs, factoring in their age, employment status and risk appetite. The strategy must be tailored to the fund’s unique circumstances and must go beyond simply restating legislative requirements.
Trustees are free to choose their investment types, provided they comply with superannuation laws. However, placing all investments in one asset class can lead to concentration risk, especially if the asset is leveraged. To mitigate such risks, trustees should outline how the strategy addresses the lack of diversification and ensures the fund’s long-term stability.
Regular reviews of the investment strategy are essential
Significant events like market changes or members transitioning to pension phase should prompt a review to ensure liquidity and cash flow needs are met. Additionally, trustees must demonstrate that these reviews have taken place, with documented evidence available for auditors.
Auditors will assess whether the SMSF has a compliant investment strategy and if it was adhered to throughout the year. In case of breaches, trustees must rectify the situation promptly to avoid penalties or disqualification.
For expert advice on creating or reviewing an SMSF investment strategy, trustees should consult a licensed financial adviser to ensure the strategy’s effectiveness in meeting retirement goals.
The fund’s accountant is generally not able to provide this but can assist trustees to complete a compliant template to create a suitable investment strategy for the fund.
Caution Advised Amid Enthusiasm for AI Investments
A new analysis highlights the long-term potential of artificial intelligence (AI) while urging investors to approach current market trends with caution.
Key Points
Although AI promises substantial benefits for productivity and economic growth, the payoff is expected over a more extended period than some anticipate
This comes at a time when AI-driven optimism is contributing to high US stock valuations, raising concerns about market sustainability
The analysis reveals that current investment levels in AI, though significant, are not enough to drive immediate economic transformation.
In 2023, US AI investment reached approximately US$67 billion. Even optimistic projections for 2025 put spending at around US$248 billion, far below the US$1 trillion needed to spur major economic acceleration.
Stock valuations, particularly in the growth sector, remain stretched.
Current US market prices are estimated to be 32% above fair value, with earnings growth needing an unprecedented 40% annual increase to align with these high valuations.
Such growth rates, double those seen in past technological booms, are unlikely, especially as US economic growth for 2025 is forecasted to slow to between 1% and 1.5%.
Despite these challenges, the long-term prospects for AI remain promising.
Economic benefits from AI are expected to take fuller shape between 2028 and 2040, as the technology matures and investments yield results. However, near-term gains are limited, underscoring the importance of a cautious and well-diversified investment strategy.
Implications for Personal Wealth
This analysis underscores the importance for our financial planning clients to manage expectations and maintain strategic investment approaches.
While AI has significant potential, its immediate economic contributions may not justify current market highs. Clients are advised to prioritise diversified portfolios, maintain realistic outlooks, and be prepared for possible market corrections.
A long-term, balanced approach that aligns with individual risk tolerance and investment goals remains crucial as AI continues to evolve.
For more information on diversified investment strategies, please contact your Allan Hall Financial Advisor.
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.
Source: 5 Sept 2024. Vanguard Australia FAS. Available from https://www.vanguard.com.au/adviser/learn/insights/markets-and-economy/economic-payoff-of-ai-is-coming
If you are looking to maximise your personal contributions in 2023/24, please carefully review the limits and information provided below.
There will be an increase in the contribution limits taking effect from 1 July 2024 so these are also noted below for planning purposes.
Financial Year
Concessional Cap (pre-tax)
Non-concessional Cap (after tax)
(Employer / Salary Sacrifice Personal Deductible)
(Personal After Tax & Subject to Total Super Balance <$1.9m)
2023/24
$27,500
$110,000
2024/25
$30,000
$120,000
Concessional Contributions
Your contributions must be received in your super fund before 30 June 2024 to ensure that:
you are eligible to claim a deduction in 2023/24 for your contributions made;
the contribution is counted against your limit in the correct financial year.
Please remember that 30 June 2024 falls on a Sunday so please do not leave your contributions until the last minute. They need to be cleared in the fund’s bank account by no later than Friday 28 June 2024. Please allow at least three days for any interbank transfer to occur.
Be sure to check the amount of actual employer or personal contributions already received / due to be received in your super fund before making any top up contributions.
Any person aged 67-74 must meet the work test during 2023/24 in order to be able to claim a deduction for any personal contributions. See below for further detail. Any person aged 75 or older is unable to make personal contributions.
‘Catch Up’ Concessional Contributions
These rules commenced on 1 July 2018 so we are now into the fifth year of ‘catch up’ contributions whereby a person with a super balance of less than $500,000 as at 30 June 2023 is able to make a personal concessional contribution in 2023/24 equal to the unused amount of the concessional contribution limits applicable from 2018/19 to 2022/23. Please note that 2023/24 is the last year in which any unused contributions from 2018/19 can be claimed as they drop off after five years.
Financial Year
Applicable limit
2018/19
$25,000
2019/20
$25,000
2020/21
$25,000
2021/22
$27,500
2022/23
$27,500
For example, Sam had employer contributions of $15,000 for each of 2018/19, 2019/20 and 2020/21 and $18,500 for each of 2021/22 and 2022/23. His total superannuation balance at 30 June 2023 was $380,000. If Sam has higher than normal taxable income in 2023/24, due to say, a capital gain then, in addition to his current year 2023/24 contributions he can contribute an extra $48,000 as a personal concessional contribution before 30 June 2024 to reduce his taxable income. The extra $48,000 comprises $30,000 in unused contributions from 2018/19 to 2020/21 and $18,000 in unused contributions from 2021/22 and 2022/23.
Please contact us if you want to check your unused catch up contribution amount.
Non Concessional Contributions
It is possible to ‘bring forward’ up to 3 years of contributions in 2023/24 if you were under age 75 on 1 July 2023 and your total superannuation balance at 30 June 2023 was within the thresholds noted below:
Total Super Balance as at 30 June 2023
Age <75 on 1 July 2023
Your Total Super Balance is the combined total of all balances in super funds of which you are a member
Less than $1,680,000
$330,000
Greater than $1,680,000 but less than $1,790,000
$220,000
Greater than $1,790,000 but less than $1,900,000
$110,000
Greater than $1,900,000
$0
Please note for planning purposes that the bring forward thresholds will change on 1 July 2024 with effect for 2024/25. These changes are noted in the following table below:
Total Super Balance as at 30 June 2024
Age <75 on 1 July 2024
Less than $1,660,000
$360,000
Greater than $1,660,000 but less than $1,780,000
$240,000
Greater than $1,780,000 but less than $1,900,000
$120,000
Greater than $1,900,000
$0
Strategy Tip
If wanting to maximise super contributions, consider contributing only $110,000 in 2023/24 to enable a contribution of $360,000 in 2024/25, provided all eligibility criteria are met.
If wanting to equalise super balances between spouses, consider a withdrawal from the high balance and a contribution into the low balance. This is useful for optimising the member balances to take full advantage of the pension cap and various eligibility provisions associated with a person’s total superannuation balance. It also has the effect of lowering the ‘taxable’ portion of that member’s benefit which reduces any future tax payable on death benefits received by the beneficiaries. Please talk to us if you are keen to learn more about this.
If you are aged 67 to 74 years, you must satisfy a work test in order to be eligible to claim a tax deduction for your personal concessional contributions.
Work Test
To satisfy the work test, you must have worked at least 40 hours in a consecutive 30-day period in the 2023/24 financial year.
If you are aged 75 or over, your super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) on your behalf.
Minimum Pension 2023/24
If you are in pension phase, please check to ensure you have withdrawn your minimum pension for this financial year before 30 June 2024. Where these requirements have not been met your fund will be subject to 15% tax on its pension asset investment earnings, rather than being tax-free.
For our SMSF clients, the amount would have been notified to you in the completion letter in the FY23 financials package. Please contact us if you are unsure of your minimum pension payment for 2023/24.
CONTACT US if you would like advice on any of the above strategies that may benefit your circumstances.
Understanding the Implications of the Proposed $3M Super Tax
As the proposed tax on superannuation balances exceeding $3 million draws nearer, individuals potentially affected by this measure are urged to assess its implications thoroughly.
While not yet enacted into law, the Division 296 tax warrants careful consideration in investment strategies, especially concerning end-of-financial-year contributions into super.
For those affected, a strategic reassessment may be necessary, considering whether high-growth assets should be held within superannuation, given the potential tax implications
Individuals may need to reconsider investment vehicles, balancing tax effectiveness with asset protection
Estate planning and succession plans for Self-Managed Superannuation Funds (SMSFs) will require revisitation post-implementation of Division 296 to mitigate unnecessary tax burdens on beneficiaries.
Division 296 legislation proposes an additional 15% tax on investment earnings of super accounts with total super balances (TSB) exceeding $3 million at the end of the financial year.
It’s important to note that this extra tax applies only to the portion exceeding $3 million.
Key aspects of the legislation include the concept of Adjusted Total Super Balance (ATSB), which determines the $3 million threshold. The ATSB calculation by the Australian Taxation Office (ATO) considers the market value of assets regardless of realisation, significantly affecting super funds holding property or speculative assets. Additionally, the legislation introduces a new formula for calculating ATSB for Division 296 purposes.
Under Division 296, deemed earnings exceeding the $3 million threshold will be apportioned and taxed accordingly. Negative earnings in such instances may be carried forward to offset future liabilities.
For those unaffected by Division 296, super remains an attractive option for retirement savings. Making additional contributions prior to EOFY presents an opportunity to maximise savings through various avenues such as concessional and non-concessional contributions, salary sacrifice arrangements, and downsizer contributions.
The draft Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, introduced to Parliament in 2023 is currently under scrutiny by the Senate Economics Legislation Committee, with a report expected next month. If passed and granted Royal Assent, Division 296 will come into effect from July 2025.
This forthcoming regulation represents a substantial change to superannuation rules, particularly impacting members with significant account balances. Given its complexity, seeking professional advice is crucial for informed decision-making concerning super and wealth creation strategies in the upcoming years.
How self-managed super fund (SMSF) trustees can meet their responsibility to keep accurate tax and super records.
Keeping good records
Keeping good records is more than just knowing which records to keep and for how long. It involves having a system for organising and maintaining records that makes it easier for you, and any SMSF professional you use, to:
complete the fund’s independent audit each year
lodge your fund’s annual return.
It may also help reduce audit and administration costs for your fund.
To help keep your records organised, you may want create separate files for your fund’s more permanent records, and for records that relate to a specific financial year.
For example, in your permanent file you may want to keep:
the fund’s trust deed
the fund’s investment strategy
details of the regular reviews of the fund’s investment strategy, including the consideration of insurance for members of the fund
reasons for decisions on the storage of collectables and personal use assets
minutes of trustee meetings
all signed trustee declarations
records of trustees consenting to their appointment as a fund trustee
records of all changes in fund members and trustees.
As each SMSF is unique, with its own investment strategies to achieve its objectives, you should consult with a professional licensed adviser when setting up a record-keeping system that suits your fund.
Keeping all relevant records together will simplify the process of compiling the records you need to give to your fund’s independent auditor. If your fund regularly holds trustee meetings, you could create a separate folder for them, and sort them by date.
Take minutes of all investment decisions
You should take minutes of all investment decisions, including:
why a particular investment was chosen
whether all trustees agreed with the decision.
This is because if you, as one of the fund’s trustees, invest the SMSF’s money in an investment that fails, the other trustees could take action against you for failing to be diligent in your duties.
However, if your investment decision was recorded in meeting minutes signed by the other trustees, you will have a record to show that they agreed with your actions.
Signature requirements for financial statements
Under Australia’s super laws, SMSF trustees must sign their SMSF’s financial statements before finalising their annual audit. This includes an operating statement and a statement of financial position which must be signed by the required number of trustees or directors of the corporate trustee.
Minimum record-keeping requirements
The most important reason for keeping good records is that it’s a legal requirement for you to do so. You may also need to provide accurate records to us if we ask to see them.
You need to keep any SMSF records for a minimum of 5 years.
Despite what you may have heard or read elsewhere, you cannot access your super before you retire unless you meet one of the very few exceptions to this fundamental rule of super law. Read more »
Five Key Strategies for Successful Business Expansion
Venturing into the global market with your small or medium-sized business (SMB) presents an exciting yet formidable journey. In this article, we delve into five crucial strategies to steer your SMB through new market entry without starting from scratch.
1. Thorough Research: Strategic Market Analysis
Before plunging into a new market, invest in extensive market research. Just like industry giants, SMBs can gather valuable insights to make informed decisions. Scrutinise the target market, study competitors and identify potential challenges such as industry regulations and demand forecasts.
2. Gradual Progress: Prioritise Success over Perfection
Avoid turning planning into procrastination. Keep the primary objective of business expansion in focus to prevent getting entangled in hypothetical scenarios. Prioritise incremental steps, adapt along the way, and ensure progress is not sabotaged by perfectionism.
3. Strategic Collaboration with Peers
Mitigate risks and pool resources by strategically collaborating with other SMBs in the target market. Consider forming alliances with complementary businesses and strategic partners who can assist with groundwork, and therefore accelerate your efforts.
If you are an international business looking to start up in Australia, or an Australian business looking to expand overseas, Allan Hall has a highly skilled and experienced team in International Services. We collaborate with you to develop strategic solutions tailored to your business so you can respond to global opportunities and take on challenges in your chosen region.
4. Foster Visibility: Network for Success
Although networking may seem time-consuming, it is crucial for boosting company visibility and adapting to new markets. Leverage digital platforms to intentionally network, gaining access to opportunities and building relationships. Seek mentorship from successful SMBs in your target market to tap into their expertise on local markets and cultural nuances.
5. Vigilance Over Complacency: Embrace an Adaptive Approach
When considering entry into a global market, learn from the missteps of others. Major multinationals face challenges, and online examples serve as cautionary tales where inadequate localisation efforts led to struggles. However, setbacks faced by others should not be seen as predetermined for your venture. Maintain vigilance and adaptability to navigate unforeseen challenges not initially considered.
Helping international businesses seize global opportunities and minimise risk
We live in an entrepreneurial and globalised market and many businesses are expanding internationally. Businesses entering a new market need to be aware of the differing laws, regulations and customs that govern business in a foreign country. If you are an international business looking to start up in Australia, or an Australian business looking to expand overseas, Allan Hall can assist.
In correlation with this research, our consultants at Allan Hall HR have recently been experiencing daily calls from clients requesting support and advice on employee redundancies.
If you are one of these employers considering redundancies in your business, we have outlined below the key components for you to consider. We also highly encourage you to seek professional guidance to help navigate a smooth and legally compliant redundancy process.
Regardless of whether your employees are award covered or not, redundancy terminations are highly complex, and the specific circumstances of each case must always be considered. There are several rules that apply and steps you should take when managing a redundancy to ensure compliance and reduce your risk of receiving a claim (such as an unfair dismissal claim).
Redundancy Considerations
If you are planning to make an employee redundant, it is important for you to ensure that:
You have taken steps to ensure you no longer require the person’s role to be performed by anyone
All reasonable attempts have been made to find suitable alternative employment within the business for the employee
You have considered and complied with any applicable modern award obligations
You have undergone a consultation process which is best practice and a requirement under some awards
You have prepared for, documented and communicated the redundancy process thoroughly
You pay the employee correctly according to their redundancy entitlements under the National Employment Standards, calculated with reference to their period of continuous service
Allan Hall HR’s Redundancy and Advice Package
At Allan Hall HR we have developed a Redundancy and Advice package which provides employers with an assortment of tools and resources to assist with undertaking a legally compliant redundancy process. The pack includes:
Letter of Notice to the Employee (regarding proposed workplace changes and an invitation to a consulting meeting)
Guidance on Consultation Steps and Meeting Discussion Points
Redundancy Checklist and Consultation Record
Communication Strategies
Termination Letter due to Genuine Redundancy.
If you wish to purchase our Redundancy and Advice Package, please click here. We are also able to manage all or part of the redundancy process for you, according to your preference.
Need Assistance?
Before you consider terminating an employee on the basis of redundancy, we encourage you to call us on 1300 675 393 or contact us here. To learn more about our HR services, please click here.