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June 2021 Newsletter
Smart super strategies for this EOFY
Want to help boost your retirement savings while potentially saving on tax? Here are five smart super strategies to consider before the end of the financial year.
1. Add to your super – and claim a tax deduction
If you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for this financial year – and potentially pay less tax. And at the same time, you’ll be boosting your super balance. 
How it works
The contribution is generally taxed at up to 15% in the fund (or up to 30% if you earn $250,000 or more). Depending on your circumstances, this is potentially a lower rate than your marginal tax rate, which could be up to 47% (including the Medicare Levy) – which could save you up to 32%.
Once you’ve made the contribution to your super, you need to send a valid ‘Notice of Intent’ to your super fund, and receive an acknowledgement from them, before you complete your tax return, start a pension, or withdraw or rollover the money.
Keep in mind that personal deductible contributions count towards the concessional contribution cap, which is $25,000 for this 2020/21 financial year. Although you may be able to contribute more than that without penalty, if you didn’t use the whole $25,000 cap.
Concessional contributions also include all employer contributions, including Superannuation Guarantee and salary sacrifice – speak to your financial adviser to find out more.
2. Get more from your salary or a bonus
If you’re an employee, you may be able to arrange for your employer to direct some of your pre-tax salary or a bonus into your super as a ‘salary sacrifice’ contribution. 
Again, you’ll potentially pay less tax on this money than if you received it as take-home pay – generally 15% for those earning under $250,000 pa, compared with up to 47% (including Medicare Levy). 
How it works
Ask your employer if they offer salary sacrifice. If they do, it can be a great way to help grow your super tax-effectively because the contributions are made from your pre-tax pay – before you get a chance to spend it on other things. 
Remember salary sacrifice contributions count towards your concessional contribution cap, along with any superannuation guarantee contributions from your employer and personal deductible contributions. Also, you may be able to make catch up (extra) contributions if your concessional contributions were less than $25,000 last financial year.
3. Convert your savings into super savings
Another way to invest more in your super is with some of your after-tax income or savings, by making a personal non-concessional contribution. 
Although these contributions don’t reduce your taxable income for the year, you can still benefit from the low tax rate of up to 15% that’s paid in super on investment earnings. This tax rate may be lower than what you’d pay if you held the money in other investments outside super. 
How it works
Before you consider this strategy, make sure you’ll stay under the non-concessional contribution cap, which in 2020/21 is $100,000 – or up to $300,000 if you meet certain conditions. That’s because after-tax contributions count as non-concessional contributions – and penalties apply if you exceed the cap. 
Also, to use this strategy in 2020/21, your total super balance must have been under $1.6 million on 30 June 2020.
Remember, once you’ve put any money into your super fund, you won’t be able to access it until you reach preservation age or meet other ‘conditions of release’. For more information, visit the ATO website at ato.gov.au. 
4. Get a super top-up from the Government
If you earn less than $53,564 in the 2019/20 financial year, and at least 10% is from your job or a business, you may want to consider making an after-tax super contribution. If you do, the Government may make a ‘co-contribution’ of up to $500 into your super account. 
How it works
The maximum co-contribution is available if you contribute $1,000 and earn $39,837 pa or less. You may receive a lower amount if you contribute less than $1,000 and/or earn between $39,837 and $54,837 pa.
Be aware that earnings include assessable income, reportable fringe benefits and reportable employer super contributions. Other conditions also apply – your financial adviser can run you through them.
5. Boost your spouse’s super and reduce your tax
If your spouse is not working or earns a low income, you may want to consider making an after-tax contribution into their super account. This strategy could potentially benefit you both: your spouse’s super account gets a boost and you may qualify for a tax offset of up to $540.
How it works
You may be able to get the full offset if you contribute $3,000 and your spouse earns $37,000 or less pa (including their assessable income, reportable fringe benefits and reportable employer super contributions). 
A lower tax offset may be available if you contribute less than $3,000, or your spouse earns between $37,000 and $40,000 pa.
Need advice?
You’ll need to meet certain eligibility conditions before benefitting from any of these strategies. If you’re thinking about investing more in super before 30 June, talk to us. We can help you decide which strategies are appropriate for you.
Tax time tips for 2020/21

As the end of financial year approaches, we’ve put together some tips to help you maximise your tax effectiveness.

1. Make sure you have lodged your 2020 tax return

There are a number of reasons to get your tax affairs in order before June 30:
  • If you receive family payments from Centrelink and have not lodged your 2020 tax return by 30 June, 2021 you will be required to repay all of your Centrelink payments.
  • If you are eligible to receive family tax payments from Centrelink and have not yet claimed, you will be ineligible to claim if your return is not lodged by 30 June 2021.
  • If you want to claim a tax deduction for personal superannuation contributions in your 2020 tax return you need to have notified your superannuation fund by 30 June, 2021.
  • Risk of ATO issued default assessments and penalties.


2. Consider your work-related expenses

For employees there are a number of deductions you can potentially claim. 
To claim a deduction for work-related expenses:
  • you must have spent the money and you weren't reimbursed
  • the expense must directly relate to earning your income
  • you must have a record to prove it (usually a receipt).
Phone - You need a phone log to claim more than $50 for phone calls on a phone you own. This diary can be created from a detailed monthly phone bill. Just go through and mark the work-related calls and work out what percentage of your total calls they make. If you don’t get a detailed statement then you need to take a screen shot of your recent calls for the last month. Print it and work out the work-related calls. 
Home Office - The most important thing you need to do before 30th June, 2021 is keep a log of your hours worked from home for a month. The choice from 1 March, 2020 is 52 cents an hour and claim other expenses such as stationery, internet and computers on the basis of actually incurred, or 80 cents per hour to cover everything. Keep receipts for stationery and the like, and your accountant can help you work out the best option when completing your tax return.
Car - Take your odometer reading at 30 June 2021 as for some claims this is required. If you are using a logbook to claim your motor vehicle expenses make sure you start it before 30 June 2021. A logbook has to be kept for 3 months every 5 years. If your work-related percentage has not changed you can use your previous logbook as long as it is less than 5 years old. Without a log book you can only claim up to 5,000kms per car at 68 cents a kilometre. In that case you are required to have a detailed reasonable estimate of the deductible kilometres travelled.
Self-education - You can claim a deduction for work related course fees paid in the FY21 year. All study you claim as self-education must be connected to the income you are currently earning (either to maintain or improve your specific skills or knowledge) or is likely to result in increased income from existing income earning activities. Doing a course while working full time does not make the course deductible so make sure you get a letter from your employer saying that the course is relevant.
3. Capital gains considerations
Are you considering selling a rental property or shares before 30 June, 2021? The date the contract is signed determines the year that the capital gain is taxed, not the date it is settled. 

If you are making a capital loss that can be carried forward to offset against future capital gains. If you already have a capital gain in your 2021 income then you need to make sure this loss is in the 2021 financial year if you want to offset the gain you have already made.
4. Important tips for property investors
  • Travel - you can no longer claim a tax deduction for travel when inspecting rental properties. 
  • Repairs - consider whether you can bring forward any repairs that may be needed and have them completed before June 30 2021.
  • Remember that expenses for property repairs are deductible provided that they relate to wear and tear or other damage as a result of earning rental income.
  • The cost of initial repairs at the time of purchase are not deductible.
  • Prepaying interest on property investment loans - Consider pre-paying interest on property investment loans. This can also protect against possible interest rate rises over the next 12-month period. 
  • Short-term holdings - Renovating a property with the intention of selling it for profit in the short term may incur tax as a “profit-making scheme”. CGT concessions will not be able to be taken advantage of as a result and GST may be a consideration.
  • Personal expenses - Ensure that any claims or interest on borrowings for investments can be clearly separated from interest on borrowings of a personal nature. 
  • Depreciation deductions - A qualified quantity surveyor can provide a depreciation schedule outlining the available tax deductions and providing a significant return. The cost of having a depreciation schedule prepared is also tax-deductible. 
5. Cryptocurrency – Gains or Losses 

Cryptocurrency gains and losses need to be declared just like any other investment.
The ATO has announced that it is paying particular attention to this emerging market as they now have access to crypto transaction data obtained from digital currency exchanges

Tax treatment of crypto transactions is dependent on an individual’s circumstances. Some people will have capital gains and losses from their crypto transaction, but others will have income tax gains or losses.

6. Superannuation strategies

Super contributions are one of the areas that individuals need to review each year according to their circumstances.

Tax deductible (Concessional) contributions

Concessional contributions are before-tax contributions made into a super fund. They include employer contributions; salary sacrifice payments and personal contributions that can be claimed as a tax deduction. In the 2020-21 financial year, the concessional contributions cap is $25,000 for all ages but will be increasing to $27,500 in the new year.

Suppose your total superannuation balance was less than $500,000 on 30th June 2020. In that case, you may be entitled to carry forward your unused contributions, contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts. This is particularly useful for people who have made capital gains or are approaching retirement. Your accountant and financial adviser can help you determine just how much money you can contribute to super this year and still be entitled to a tax deduction.
Concessional contributions are taxed at 15%. Individuals may also pay Division 293 tax, which is an additional tax on concessional contributions for individuals whose combined income and contributions are greater than $250,000.

Non-concessional contributions

Non-concessional contributions are paid into super funds from after-tax income. They include contributions made by individuals or their spouse to a super fund where contributions are not claimed as an income tax deduction. The annual non-concessional contribution cap for the 2020-21 financial year is $100,000 and is increasing to $110,000 in the new year.
Eligible individuals may make bring-forward contributions, allowing them to bring the next two years of their annual non-concessional contributions cap forward into the current financial year without breaching the contributions cap.
Non-concessional contributions are not taxed unless the caps are exceeded.


Tax can be very complex to navigate and tax strategies should support your overall financial goals.  Make sure you speak with your accountant or financial adviser to ensure your tax approach is the most appropriate one for your needs.


Economic update - June 2021

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Key points

  • Inflation fears rise as US inflation data pops but interest rates unmoved and hold on to April levels
  • Australian unemployment rate falls, JobKeeper withdrawal has not had the impact anticipated
  • COVID infections not going away anytime soon, lockdowns in Australia still the first line of defence

The Big Picture

The US Federal Reserve (the “Fed”) has maintained an accommodative monetary policy stance – to a greater or lesser extent – since the onset on the GFC in 2008. On a couple of occasions, the Fed caused a stir with consequent falls in share prices. The first resulted in the so-called ‘taper tantrums’; the Fed was talking about reducing its bond purchases that were aimed at keeping longer term interest rates low. More recently, the second followed Fed chair, Jay Powell, talking about raising rates at the beginning of his term in office.

Since the onset of the pandemic, the Fed has maintained an all but zero Fed funds rate. We all know the party will end one day; nobody knows quite when.
The Fed recently changed its policy to wait for actual increases in inflation before it moves – rather than basing its policy decisions on expected inflation. It has also stated that it is prepared to live with inflation above its 2% target for ‘some time’ before it acts.

Because prices of some goods and services fell sharply at the onset of the COVID 19 pandemic (March – May, 2020) as a result of the original lockdowns early last year, the annual inflation rate was destined to jump up 12 months later. Fed Chair, Powell, warned us of this well in advance but the markets got the jitters at the start of May when the CPI came in at 4.2% for the year against an expected 3.6%. Matters were not helped when Powell’s predecessor, Janet Yellen – now Secretary of the Treasury – made a public statement to the effect that rates would have to go up sooner than previously expected. She knows that the Fed is meant to be independent of government – as is our Reserve Bank (RBA) – and she even said as much. Yellen’s expressed opinion was unhelpful.

The 4.2% inflation level was high because of two major factors. The first was due the price falls at the beginning of 2020. The second was, by chance, that the US economy was opening up 12 months later. Big discounts on hotels, air fares and second-hand cars were being removed. These categories jumped about 10%. The combination of these two factors creating a double whammy and inflation prints 4.2% which will almost certainly be transitory. However, the next month might also be a bit high for similar reasons – and then likely to fall back under 2% again is both our current view and the Fed’s.

The 10-year bond yield jumped on the inflation fears so share prices fell as their yields were less competitive against a higher bond yield. However, this effect was short lived and it didn’t take long for the markets to recover the losses. The S&P 500 got back to well within 1% of its all-time high and the ASX 200 actually made a new all-time high at the end of May.

The Fed’s preferred inflation measure – the so-called core Personal Consumption Expenditure (PCE) inflation – strips out volatile energy and food price variations. The PCE measure, at the end of May, came in at a more modest 3.1% and the market barely reacted to that data point.

With U.S. President Biden handing down his first budget on the same day as core PCE was published, the ‘punch bowl’ is still overflowing and we currently have little fear of any substantive change in policy this year.

And it’s much the same in Australia except for our latest inflation read of 1.1% being adversely impacted by lockdowns. The RBA has revised its forecast of GDP growth for 2021 to 4.75% from 3.5% with a fall in the unemployment rate at the end of the year to 5.0% from 6.0%. Given that the latest read on unemployment was only 5.5%, the RBA couldn’t have waited much longer to play catch up!

At 5.5%, our unemployment rate is barely above the rate that existed just prior to the pandemic. The same cannot be said of the US. It’s rate up is 6.1% against an expected 5.8% and its pre-pandemic rate was 3.5%. This month’s US jobless data showed 266,000 jobs were created against the one million expected. They still have about eight million jobs that were lost in the pandemic but not yet re-filled.

There have been massively different responses to the pandemic in the US and Australia – both in vaccination take up and lock downs. Around 60% of Americans have been vaccinated at least once (40% have had both shots) whereas many are reluctant to get vaccinated in Australia most probably because of the bungled messaging from both the government and the drug companies. Only about 1% of NSW and Victorian resident are fully vaccinated.

We obviously feel like a ‘lucky country’! The NAB business conditions and confidence surveys produced the best ever response in their 24-year histories. The Westpac consumer sentiment index was not at its highest level but it was not far off it.

Australia has taken a strong approach against allowing people in and out of the country. With over 7 billion people in the world nowhere near getting vaccinated yet, we’ll be in near isolation for a long time unless vaccination rates improve.

But vaccination rates at home alone don’t solve the world’s problems. Singapore had 25% of its population fully vaccinated and another 8% on one shot but they just experienced an outbreak that closed the schools again.

The Tokyo Olympics are still hanging on to a slight hope of going ahead. However, the European Cycling Union just cancelled its European Track Championships to have been held in Minsk, Belarus. This cancellation was not, however, because of COVID, but allegedly because the Belarus government forced a Ryan Air jet to land (assisted by a Mig fighter jet!) on its way to Lithuania from Greece so that Belarus could detain a journalist who is an alleged ‘dissident’!

On another bellicose front, Britain, now free from EU policies, sent out warships to help guard Jersey’s (one of the Channel Islands) fishing grounds. France retaliated by threatening to stop its electricity supply to Jersey (the island is only a few miles off the France coastline but it is a member of the UK). Was it a coincidence that the UK entrant in the Eurovision Song Contest this month scored zero points from the member states and zero points from viewers? They had never scored zero before!

On the UK economic front, the struggling economy is now forecast by the Bank of England to grow by 7.25% this year. That might not be far off the mark as the UK retail sales jumped +42.4% in the latest month. Brits have just been let out after a very long shutdown – and they’re very happy about it.

UK prime minister, Boris Johnson, married Carrie in Westminster Abbey at the end of May. Carrie attracted extra attention because her wedding dress was reportedly rented for the day at about $100 and she walked shoeless in the garden party. 

Even without all of the global monetary and fiscal stimuli, major economies are expected to do well for the remainder of 2021. Savings ratios went up sharply in most relevant countries from mid-2020. Limited travelling to work; many shops, bars and eateries closed; and simply the fear of the future, aided hoarding. Now it is time resume a more normal existence. Yes, there will be occasional lockdowns for quite some time but we’re all starting to get back to normal – and markets like that.

The US celebrated its Memorial-Day weekend (1 June) with pandemic record air travel and 135,000 spectators half filling the grandstands at the Indianapolis 500 (car race). If there is no spike in infections following that weekend, the end may seem to be in sight.

Asset Classes

Australian Equities 
Although the price of iron ore retreated from its all-time high of $233 per tonne, resources stocks remained strong and the ASX 200 reached an all-time high on May 31st with gains of (+1.9%). That is eight months in a row that the index has posted positive capital gains

The Financials sector had a particularly strong month at +4.4%. The consumer discretionary and health sectors posted 3.5% capital gains over May.
However, we do not estimate that the index is significantly over-priced and market volatility has fallen almost back to average levels.

International Equities 
The S&P 500 experienced a short-lived pull back in May but returned to within a whisker of the all-time high. Gains in May were +0.5%.
Emerging markets were all but flat on the month. However, the German DAX posted a healthy gain of +1.9%. The Shanghai composite did even better at +4.9%.
Bonds and Interest Rates

The steepening of the US yield curve was halted in May and, indeed, 10-year treasury yields retreated a little towards the end of May.
The market chatter about the Fed moving to taper its bond buying program and short-term rate hikes had all but vanished towards the end of the month. Markets seem settled that ‘lower for longer’ remains the Fed’s view and most probably reality.

The RBA also kept rates on hold in May but upgraded its economic forecasts for the country. We think that the bank was just a tad slow to catch up with market views.

Other Assets 
Bitcoin and other cryptos made repeated headlines throughout May but for all of the wrong reasons. Elon Musk, the CEO of Tesla and SpaceX, seems to playing to the crowd as he moved prices up and down by over 20% on single tweets. We find it hard to take cryptos seriously as a viable asset or currency. And the complex tax implications may come back to bite some ‘investors’ though we think ‘speculators’ is a more appropriate description. 
The answer to the question, “How much of my portfolio should I allocate to cryptos?” perhaps should be, “About the same as your allocation to lottery tickets. Prudent investors should aim for modest, consistent returns!

Gold prices rose by 7.7% over May with iron ore, copper and oil prices following closely behind. Iron ore did retreat from $US 233 per tonne during May to just over $US 200 at the end of the month.

Our dollar, against the $US, lost a little ground. There is speculation that China may ‘do something’ about the price of iron after it reached $233 a tonne. It was less than half of that just a year ago. Since the $A is widely thought to be a commodity currency, its plight might worsen if, indeed, commodity prices push back. However, in the opposite direction, lax monetary policy in the US might send our dollar higher. Currency forecasting is very difficult at best – and even harder right now. 

Regional Review

The unemployment rate fell again for April (the latest data) to 5.5% but 30,600 jobs were lost when +15,000 were expected. The numbers do bounce around quite a lot so we are not immediately perturbed by this outcome.

The Westpac and NAB confidence indexes all performed well indicating that the nation is quite comfortable with the way the pandemic and the economy are being managed.

The vaccination rate is certainly too low but there is currently little danger to our population as there is limited opportunity for locals to be infected from outside the country.

Morrison has ordered 25 million Moderna shots (which is based on the same technology as the Pfizer vaccine). He has also said that the over 50s who are hesitant about getting the AstraZeneca shot will be able to get Pfizer from October.

The fresh outbreak in Melbourne was met with a swift seven-day lockdown. This outcome might be frustrating for many but the alternative seems a lot worse. We suspect there will be occasional such responses around the country over at least the remained of 2021. Regular international travel seems unlikely before the middle of next year.

China’s retail sales missed expectations at 17.7% (24% was expected) but when big numbers are expected – because of the influence of lock-downs a year ago – the margin of error has to be given more latitude. The industrial output and fixed asset investment accorded with expectations at about 10%.
The China manufacturing PMI came in at 51.0 against an expected 51.1; the services index variant came in at 55.2 against an expected 54.9. Both statistics confirm that the Chinese economy continues to flourish.

President Biden seems to be in control of the vaccination programme and he is certainly pushing hard for fiscal stimulus. There is some concern that he is pushing too hard on that front and problems may occur further down the line. Wanting to run the budget deficit at one trillion dollars a year for the next decade does seem a little excessive. 

The $6 trillion budget he handed down at the end of May actually included the previously announced American Jobs Plan and the American Families plan (totalling about $4 trillion but is still under negotiation). Only $300 billion of the new part of the $6 trillion is proposed to be spent this year!
The jobs data, which were a big miss for April were even worse than the headline when the revision to the previous month is taken into account. The March data were revised down from 916,000 to 770,000 while the latest month was a mere 266,000 – a number that would not have been unreasonable in a pre-COVID month.
There are many reports of certain types of workers being hard to find and/or attract. Childcare problems and possible exposure to COVID in customer-facing jobs might be worrying some potential workers from returning to jobs.

While these job-matching problems might have caused – or be causing – localised wage hikes, we do not think the effect will be strong enough to pass through into significant consumer price hikes – hence inflation and rate hikes may be avoided.

Europe continues to struggle with the economy and the pandemic. Internal politics in Britain are undermining Boris Johnson’s handling of the pandemic at its start. Whether he is guilty of ineptitude or incompetence or not, decent sized crowds were allowed back into English Premier League football matches and other big sporting events. They even staged a ‘rave’ for 3,000 kids in Liverpool under strict controls but so far there is no reported major downside from these crowds.

Rest of the World
India continues to struggle with COVID, though its daily infection rate had declined from recent record highs, but major nations are offering help in medical supplies and vaccine supplies.

Japan is running down to the wire over the Olympics. There are still lock-downs in the country and the majority of the residents do not want the games to go ahead.