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Financial Planning

In Home Care: A guide to receiving a home care package

If you or a loved one has decided that you need some long-term assistance to remain living at home while enjoying the lifestyle that you are accustomed to, you may be eligible for a government funded Home Care Package. We have outlined below the 7 steps to receiving a Home Care Package to help guide you through the process.

The 7 Steps to Receiving a Home Care Package:

1. Arrange an Aged Care Assessment   

If you have not already been assessed by an Aged Care Assessment Team (ACAT), you or your representative will need to contact My Aged Care on 1800 200 422. Alternatively, a loved one or trusted advisor can make a referral on your behalf through the My Aged Care website referral form.
The staff at the contact centre will ask you some questions in order to understand your needs. If your discussion with them indicates that you might need a Home Care Package then they will arrange a free assessment with your local Aged Care Assessment Team.

2. Be assessed for a Home Care Package 

A professional health and community care clinician will visit you at home to assess your eligibility for a Home Care Package. They will talk to you about how well you are managing in your day-to-day life and explain to you the assessment process.
You can have a representative or family member present with you during the assessment if you wish.

3. Receive the outcome of your assessment

You will receive a confirmation letter from ACAT to tell you if you are eligible to receive a Home Care Package.
If you are eligible, the letter will tell you the level of home care package that has been approved and your priority for care.

The table below show what levels of care are available and the approximate funding per annum for each level of care (amounts are correct as at 15 June 2018):

Level 1 – Basic care, which might include cleaning once a week $8,000
Level 2 – Low level care, which might include cleaning and some personal care $14,500
Level 3 – Intermediate care, which might include cleaning, personal care and some nursing care $32,500
Level 4 – High care, which might include cleaning, personal care and more complex nursing care $49,500

4. Make enquiries about who will provide your services

Contact Service Providers in your area to find out what services they offer and how those services can best suit your needs.
Be aware that Service Providers can apply administration and case management costs and these may vary from provider to provider so you may want to enquire about what charges can apply.
Only an approved Home Care Package Provider can host a Home Care Package. They have satisfied the Department of Health’s criteria to administer packages on behalf of consumers.

5. Be Assigned a Home Care Package 

Your Home Care Package will be assigned based on your position in a national queue. When it becomes available you will receive a letter from My Aged Care that contains a unique referral code that you will need to provide to your chosen Service Provider.

6. Enter into a Home Care Agreement with your chosen Service Provider 

Once a Home Care Package is assigned, you have 56 days to choose a Homecare Service Provider and enter into a Home Care Agreement.
The Home Care Agreement sets out how your services will be provided, who provides them and how much they cost. Your chosen Provider will work with you develop a personal care plan and budget which will form the basis of your agreement.
The care plan will take into account your needs, personal preferences and lifestyle choices. Your Service Provider will help you identify services that are appropriate for you taking into account the lifestyle you wish to maintain.
Your budget will detail the government subsidy, the basic daily fee, your maximum income tested care fee and any additional amount you have agreed to pay for services not covered in your package.

An important note about Fees and Costs: 

Home Care Packages are only fully subsidised for those on the full pension. There will be a cost to self-funded retirees, including those on a part pension. This cost will be determined after you have received your package, and you will usually have to provide details of your income and assets to Centrelink.
For an estimate of what it is likely to cost, please use this fee estimator.

7. Start Receiving Services 

Once you have a Home Care Agreement with a care plan and budget you can start receiving services that will help you to enjoy the lifestyle you are accustomed to in your own home.
As an Accredited Aged Care Professional, Simon Schembri of Lifewealth Group is heavily involved in providing Lifewealth’s Aged Care and Home Care service to clients and assist them to navigate the maze of aged-care services. Gives us a call to have an initial & obligation free discussion to talk through what’s important to you and the next steps (if any). This includes introducing you to our preferred Provider of Home Care Packages; Colbrow Home Care

Call Simon Schembri on 03 9670 3434 or email simons@lifewealth.com.au to find out more about home care services.

Colbrow Homecare is Approved Provider of Home Care Packages and has been providing in-home nursing and care since 1957. We have an extremely competitive Administration and Case Management fee structure, which means that you have more of your package to use on services. Call Colbrow on 1300 33 11 03 or email homecare@colbrow.com to find out more about home care services.

Key opportunities and planning for EOFY 2017|18

With 30 June fast approaching this is a reminder of the superannuation and tax planning strategies that you may wish to consider and implement before 30 June.

Government Co-Contributions

Eligible low-income earners ($36,813 or less) who make an after-tax contribution into their superannuation account of up to $1,000 may qualify for a government paid co-contribution of up to $500.  Please contact our office for eligibility.

Spouse Contribution

Where a member of a couple earns less than $37,000, their partner can make an after-tax superannuation contribution of $3,000 on their behalf and receive a tax offset of up to $540. Please contact our office for eligibility.

Maximising your concessional superannuation contributions and claim a tax deduction.

Effective 1 July 2017, the 10% maximum earnings condition was removed for the 2017-18 and future financial years. This means that most people under 75 years old can claim a tax deduction for personal super contributions (including those aged 65 to 74 who meet the work test).

The concessional cap is currently $25,000 for all individuals, please keep in mind this includes your SGC/employer contributions; you can therefore make up the difference and claim a tax deduction on the balance up to the cap.

Non- Concessional superannuation contributions

The non-concessional contributions cap is $100,000 p.a. or a bring forward $300,00, over a three-year period.

If your total superannuation balance is equal to or greater than $1.6million you will no longer be eligible to make non-concessional contributions.

Pre-payment of deductible expenses

Pre-payment of up to 12 months of premiums on an income protection policy held outside super or interest expense on an investment loan can bring forward that deduction into this financial year. For individuals making pre-payment for the first year they may have the added bonus of being able to claim up to two years’ worth of deductions in the one tax year.

Small Business – “Base Rate Company” Eligibility

From the 2017-18 income year, a Base Rate Entity is eligible for the lower 27.5% company tax rate.

However, you still need to be a small business to be eligible for other small business tax concessions.

A base rate entity is a company that has a turnover less than the turnover threshold – which is now $25 million (increased from $10 million) for the 2017-18 income year.  Please contact our office for further criteria.

Small Business – Immediate Write-off

The $20,000 instant asset write-off has been extended until 30 June 2018 (and 2019 subject to senate approval). This deduction is used for each asset that costs less than $20,000, whether new or second hand. You claim the deduction through your tax return, in the year the asset was first used or installed ready for use.

If you are a small business, you can immediately deduct the business portion of most assets that cost less than $20,000 each if they were purchased and your annual turnover is less than $10million.

Capital gains and losses.

A capital gain arising from the sale of an investment property or shares and capital losses can be used to offset the capital gain. Specialist advice should be sought before making changes to your investments. Please contact our office for further information.

Remember the 30th of June falls on a Saturday.

Please keep in mind that the 30th of June is on a Saturday this year. Therefore, please make sure any contributions you want to make this financial year are received by your fund before the 29th of June. With electronic transfer (including BPay) the contribution takes effect the day your superfund receives the money, not the day you make the transfer.

Photo Credits  |  Photo by Brooke Lark on Unsplash |  Photo by Tyler Franta on Unsplash

Australian Banks – What’s all the fuss?

For more, please read: Is This A Market Correction Or Something Worse?

Australian Banks – What’s all the fuss?

Australia and New Zealand Banking Group announced last week a $3 billion capital raising to prepare for the Australian Prudential Regulation Authority’s new capital rules. News of ANZ’s capital raising, with an outlook downgrade on Thursday, weighed heavily on the share market late last week and the banking sector in particular.Westpac and NAB had already raised new capital in recent months and it is now expected that Commonwealth Bank of Australia will also raise when it reports its full-year earnings on Wednesday.

With banks making up a core component of many Australian investors portfolios, and depressing headlines over the weekend papers, we thought we would share our view if we see trouble ahead in the banking sector, or consider the capital raisings as an opportunity.

Background, why are the banks raising capital?

In July APRA announced an increase in the capital requirements for residential mortgages under the IRB approach (involving ANZ, CBA, NAB, WBC and MQG). This will lead to the average risk weight rising from 17% to at least 25%. The move addresses a FSI recommendation and is also consistent with the International Basel Committee’s current thinking on global capital adequacy. The higher risk weight will apply to all residential mortgages other than SME lending secured by residential mortgage and will come into effect on 1 July 2016. The move should not have come as a surprise to Investors with the major banks already having extensively gamed a 25-30% mortgage risk weight scenario.

The other recent development in the banking sector is that the banks raised interest rates for property investors and introduced tougher loan-to-value standards in response to a move by regulators to rein in the riskier corners of the nation’s housing market. With interest rates stuck at record lows due to the slowdown in the wider economy, the central bank and the Australian banking regulator have been grappling with ways to prevent a property price bubble. Last year, the Reserve Bank of Australia called the housing market unbalanced, and the Australian Prudential Regulation Authority urged banks to limit the growth in investor home loans, which make up a record 53 percent of all mortgages, according to latest government figures.

The banks have recently introduced a number of steps to curb borrowing for investment including:

  • reducing the maximum loan amount they will lend relative to the value of a home,
  • increased the interest rate used to assess borrowers’ ability to repay,
  • reduced the sources of income they would accept in investor borrowing applications,
  • CBA, ANZ and WBC have increased home-loan rates for landlords by as much as 30 basis points. For the first time since 1997, investors pay more than owner-occupiers on mortgages from those banks,
  • ANZ and NAB have capped the loan-to-value ratio at 90 percent, down from 95 percent.

 

While the banks could have chosen to only impose the rate rises on new customers, they have gone ahead and charged it on both pre-existing and new loans. This has instantly improved their margins across a significant portion of their lending portfolios.

Last week Moody’s gave Australia’s banking system a stable outlook despite “an increasingly challenging operating environment”. Moody’s predicts economic growth will slow as investment in the resources sector falls and the terms of trade worsens, and notes the outlook for broader business capex is subdued. Rising imbalances in the housing market are a key downside risk for banks over the coming year and beyond, it says.

Still, Australian banks “should retain their strong credit profiles against these potential challenges, as they continue to benefit from their entrenched market power and healthy balance sheets,” said Moody’s Vice President and Senior Credit Officer Ilya Serov.

Moody’s “expects the banks’ financial metrics to remain broadly healthy” even as loan impairment charges rise moderately. Any increase in net credit costs will be contained at a level that is well below the long-run average, it says.

Australian banks’ capital levels will strengthen and remain strong relative to their global peers, and their liquidity and funding profiles — which have materially improved since the GFC with a sharp reduction in the reliance on short-term wholesale funding — will remain stable.

So what should Investors do?

There are indisputable threats to earnings with a slowing economy and frothy housing market, but these are also offset by the increased capital buffer and dividend streams that are unanimously expected continue to provide a competitive yield in a low rate environment. Forward dividend yields on the big 4 banks all forecast to remain above 5 per cent, before accounting for franking credits that have become so valuable to retirement income streams in particular.

The protected nature of Australian banking is also supportive, with the big four acting in unison on pricing which stifles any undesirable customer retaliation over increases.

We believe the banks will look to reprice their mortgage books and/or their household deposit books, in order to protect their ROEs. Given credit growth is still positive, funding costs remain low and the banks have been masters at improving their productivity, it is unlikely bank earnings will come under pressure, particularly while auction clearance rates in Sydney and Melbourne remain close to 80% each week.

If the housing market were to commence a solid correction or unemployment begin to rise, that would likely change our view. Housing prices can’t rise forever, and a downturn will arrive eventually- but in the meantime we remain relaxed about the banks medium term prospects.

The answer to what to do about banks in your portfolio is likely to be different for each individual, and answering it specifically for your personal circumstances is beyond the scope of an opinion piece such as this. I would make the following general observations though:

  • If your portfolio is underweight banks- now may be a good time to add some exposure. The recent share price weakness of the banks is a logical outcome given institutions have had the opportunity to buy discounted shares in the capital raisings. Given they already hold large positions in the banks, selling existing shares on market to fund the discounted purchases has been a rational move for them and does create a temporary stock overhang.
  • If your portfolio has enough banks or is already slightly overweight banks- you may consider using the upcoming Share Purchase plans to reduce your cost base and sell as many shares on market as you subscribe for at a profit above the subscription price.
  • If you think you may have too much bank exposure- I would consider being patient. While we are certainly closer to the end of the current housing cycle than the beginning, you are likely to get an opportunity to reduce your exposure to the banks at higher prices once all the activity around the capital raisings settles down in 6 months’ time.

The table below highlights the current share prices of the major banks in comparison to Bell Potters valuation:

* Until CBA announce details of their impending capital raising the stock will be under review

As always, should you wish to discuss the impact of your bank exposure to your portfolio please contact your advisor.

Benefits of SMSF 2017

This weeks articles give us an insight into investment themes for the coming twelve months, as seen through the eyes of Mauldin Economics. It is an interesting insight when this is viewed in conjunction with the article from The Age showing investment performance from asset classes over the previous decade.

We find it telling that over the full ten year period of time, a period which as we all know saw the greatest economic downturn in our lifetime, asset classes have, in the main, performed to their long term comparative levels. For all that the world changes, risk and return fundamentals remain the greatest predicator of performance.

We have also included a video on the benefits of commencing a SMSF, as well as thoughts on overcoming bad investment behaviours from an article posted by iShares Global Chief Investment Strategist.

Please follow the links below for the full articles.

2013 Investment Themes from Maudlin Economics

Returns of the Decade from The Age

The Eight Benefits of Commencing a SMSF with Grant Abbott, Chairman of ASMA