SMSFs are the fastest growing sector in the superannuation environment.

Australian Prudential Regulatory Authority (APRA) Quarterly Superannuation Performance statistics, as at June 2009, found the SMSF sector boasted $336.1 billion worth of assets, ahead of retail funds at $306 billion and industry funds at $191.1 billion.

One of the key attractions of an SMSF is the control it gives the investor over superannuation investments.

Due to set-up and running costs, SMSFs normally become economical to run with superannuation funds in excess of $200,000, but this is only one of several factors that need to be considered before deciding if a SMSF is an appropriate superannuation investment strategy for you.

AMKS can assist you to decide if a SMSF is appropriate for you, and if so, help you to implement a SMSF and assist with the ongoing administration of your SMSF.

Please click here if you wish to make an appointment with AMKS to discuss your suitability to implement a SMSF or review your current SMSF strategy. We can help with other superannuation options should you decide that an SMSF is not the appropriate superannuation investment vehicle for you.

Transition to Retirement strategy

As a result of legislative changes, workers who have reached their superannuation preservation age (currently age 55) can now commence a Transition to Retirement Pension or “TTR pension” (also referred to as a Transition to Retirement Allocated Pension or “TRAP”) from their superannuation account without the need to retire.

This has created the opportunity for those who qualify to restructure the way they presently receive their income, such that they can retain their present level of income by combining a TTR pension with a salary sacrifice strategy and potentially significantly increase their balance in superannuation at the point of retirement. This is due to the tax advantage of salary sacrifice and superannuation pension income over normal income.

To help preserve superannuation balances following the global financial crisis, the minimum TTR pension at age 55 to 64 was set at 2% for financial year 2010/11, and the previous 2 financial years. The minimum rate is expected to return to 4% for financial year 2011/12 and beyond.

For pensions commences on a day other than 1 July, the minimum payment amount is pro-rated in accordance with the number of days in the financial year that include and follow the commencement day. For pensions commenced in the month of June no pension payment needs to be paid in that financial year. The maximum pension payment per financial year is 10% of the account balance on 1 July. The 10% maximum pension payment is not pro-rated. There is no access to lump sum withdrawals during the TTR pension phase.

The TTR pension can be rolled back to the accumulation phase at any time and then commuted once a condition of release has been met, or when other limited specified situations arise. There is also the option to annually reboot the TTR pension strategy.

The TTR pension reverts back to an ordinary account based pension when a condition of release is met, such as reaching age 65 or ceasing gainful employment after turning age 60.

The benefit of the TTR strategy is determined by a number of factors that include your marginal tax rate, level of accumulated superannuation benefit, your current age, expected retirement age, the components of your current benefit, level of salary sacrifice, projected superannuation investment return throughout the TTR strategy, and whether the strategy is rebooted during the TTR period,

AMKS can model your benefit of the TTR pension strategy and help you to implement the strategy. Please click here if you are interested in having AMKS model your projected benefit of the TTR strategy.

Insurance Bonds

Insurance bonds are suitable for investors seeking a tax-effective investment over the long-term. In certain situations they can also be beneficial over the short to medium term.

They are ideal for accumulating a Tax-Paid lump sum for a specific objective or to build an investment nest-egg to draw down over a future period.

There are numerous situations where insurance bonds can play a very important role in financial planning. AMKS recommends the Austock Life Imputation Bond for its strategies and investment option choices.

The Bond’s aim is to produce superior “after-tax” investment returns for appropriate investors.

Click here for examples of situations where Austock Life Imputation Bonds can play an important role in financial planning.

Click here for details of strategic applications for Austock Life Imputation Bonds.

Click here if you would like to arrange a meeting with AMKS to discuss how Austock Life Imputation Bonds could fit into your wealth accumulation and protection strategy.

Who can benefit from Austock Imputation Bonds

General financial planning

  • Individuals (or couples) with a marginal tax rate above 30% wishing to save for life-event objectives that will occur before access to their superannuation benefits is available, or in a financial year when their marginal tax rate will be low or nil.
  • Those wanting to accumulate wealth with the knowledge that imputation bonds have certain protections against creditors in the event of bankruptcy.
  • Those wanting to make financial provisioning for loved ones with disabilities or for children in divorce circumstances.
  • Those wanting to control tax bracket creep above 30%.
  • Those wanting to control taxable distributions of income or capital gains on funds invested.
  • Business partner wanting to accumulate funds to buy-out a business or property venture partner.
  • Those wanting to build a lump sum for early mortgage payout or discharging geared investments.
  • Specific individuals using an insurance bond held in a trust could reduce the income-tested nursing home or hostel fee by minimising ordinary income and consequently the total assessable income used in determining the income-tested fee.

Alternative to Superannuation

  • Those wanting an accessible, alternative or supplementary investment without super’s age preservation restrictions, contributions caps and no restriction on loan security.
  • High income earners who are (1) young and want an accessible tax-effective investment, or (2) unable to invest in, or make further super contributions.
  • Those with surplus cashflow exiting super income streams that cannot be re-contributed back to super due to their age or work-test restrictions.
  • Those with large employer termination payments can use an imputation bond as a ‘roll-over’ vehicle to drip feed funds into the superannuation system.
  • Simple ‘annuity-like’ income streams can be created by progressive bond part-withdrawals.

Estate Planning

  • Individuals can convey private and tax-effective inheritances outside Wills and estates.
  • Single or multiple bond nominees with set percentages of imputation bond benefits can be appointed. In the event of the imputation bond owner’s death, tax-free distributions go to the nominated beneficiaries.
  • Imputation bond nominations can be used to make financial provision (outside of your Will) for children of previous marriages, solving potential conflicts and inequities arising through your Will, and to provide philanthropic bequests to charities, churches, hospitals, schools etc.
  • As benefits paid in the event of the imputation bond owner’s death are outside Wills and estates, they are not subject to their legal contests.
  • Bond death distributions are tax-free to all recipients regardless of dependency, unlike the 16.5% tax that applies to the taxable component of superannuation benefits paid to non-dependants that include, with only very few exceptions, adult children.

Education Funding

  • Parents and grandparents can establish an imputation bond to fund education costs and importantly maintain control over the investment/s enabling the parents or grandparents to alter their strategy and re-direct funds if circumstances change.

Loan and gearing

  • Imputation bond investors can use the bond’s borrowing capacity as loan security, and tax deductibility of interest applies for loans used for business or income producing investment purposes. A bond loan can also be used for “non-investment” private or domestic purposes.

Strategic Applications for Austock Imputation Bonds

Are you paying too much tax?
Are you looking for an Alternate to Superannuation?
Are you operating as a Business or Sole Trader?
Are you interested in Estate Planning?
Do you want to provide for the future needs of your children or grandchildren?
Are you concerned about Funding you Childs Education?
Are you interested in Borrowing to Invest?
Are you, or a family member or friend, in or going into Aged Care?

Are you paying too much tax?

Imputation Bonds offer valuable tax planning opportunities stemming from their fundamental taxation elements explained in more detail below.

Controlling Taxable Income

During a Bond’s accumulation growth phase its investment returns do not add to your personal taxable income.

As such, the effective “quarantining” of investment income to future years can lower your level of taxable income during the accumulation years, and may therefore assist you in not infringing income qualification thresholds for some government rebates and welfare benefits. These could include for instance, the Commonwealth Seniors Health Card, Study Assistance, Parenting Allowances, Family Tax Payments (Part A and B), and qualifying for Tax Offsets, such as the Low Income Tax Offset and Senior Australian Tax Offset.

Helping With Tax Bracket Creep

As an Imputation Bond does not add to your personal “taxable income” during its accumulation phase, unlike other investment structures that annually produce taxable returns, (e.g. bank accounts, unit trusts and master funds) your Bond can assist with controlling the level of your taxable income, and therefore what tax bracket (marginal tax rate) applies to you.

In practical terms, an Imputation Bond can assist you moving into a lower tax bracket, or perhaps you not moving into a higher one.

A Form of Income Splitting

High marginal tax rate investors in effect income split, by having their Bond investment income excluded from their own taxable income and included in the taxable income of Austock Life instead.

Effective Portfolio Tax-Paid Rates

Each of the Bond’s 25 options has its own Portfolio Tax rate. This is nominally stated as 30%, however from year-to-year, depending on the kind of Investment Portfolio and its level of imputation credits and tax provisions, the actual effective Tax-Paid rate can be significantly less. For Bond Owners, the benefit of a lower effective tax rate translates to higher Unit Prices and improved performance.

To assist your understanding, this Section explains the fundamentals of Tax-Paid insurance bonds in terms of their primary taxation elements as they apply to Imputation Bonds.

Tax-Free Access After 10 Years

After 10 years, Imputation Bonds enter their most tax-effective phase. From this point onwards, whatever you receive in your hands carries no personal income tax or capital gains tax whatsoever.

All Bond proceeds are Tax-Free receipts, including investment growth accessed by you making withdrawals or received at investment maturity.

In effect, the tax rate arbitrage becomes permanent with your Imputation Bond taxable only in Austock Life’s hands at the 30%, (or lower effective) Portfolio Tax rate, and never being taxable again in your hands as an investor.

Tax-Free Distributions in the Event of Death, disability or Financial Hardship

If your Imputation Bond matures due to the death or disability of its Life Insured(s), its full Investment Benefits are not subject to personal tax or capital gains tax in the hands of recipients, (i.e. Bond nominated beneficiaries or your estate recipients). This applies even where these distributions occur within your Bond’s first 10 years.

Similarly, if your Bond proceeds must be paid out because you are experiencing unforeseen serious financial difficulties, this same Tax-Free treatment will apply.

No Capital Gains Tax

Unlike other types of investment, such as unit trusts, direct share ownership and property, Imputation Bonds do not usually involve any capital gains tax. This includes circumstances of:

  • receiving your Bond’s investment growth component at any time;
  • switching between its Investment Portfolio options; or
  • transferring your Imputation Bond to another person (unless when transferring you are not the original Bond Owner and this transfer is done for consideration).

A “Set-And-Forget” Investment

Imputation Bonds are called “set-and-forget” investments because whilst your Bond is in its accumulation phase, no personal taxation or capital gains tax liabilities apply, and this translates to you:

  • not needing to keep personal taxation and capital gains tax records;
  • not having to make annual tax declarations in your tax returns of any of its investment growth; and
  • not being subject to Pay-As-You-Go (PAYG) tax instalment liabilities on its investment earnings.

Additionally, Imputation Bonds are exempt from Tax File Number notification requirements when you establish the investment.

“Set-And-Forget” does not refer to the investments choices made when setting up Imputation Bonds. Our strategy is to review each bond on a regular basis (normally annually) to take account of current projected returns for each investment option that is suitable for the bond holder at that time. Switching between investment options with no personal tax implications is part of the attraction of Imputation Bonds.

Maximising the Tax “Arbitrage” Benefits

An Imputation Bond’s tax “arbitrage” benefits can be maximised by selecting Investment Portfolio options that have the lowest effective Portfolio Tax rates.

For instance, effective tax-paid rates for the Bond’s three Australian Shares based portfolios fall in an estimated range of 21% to 27% p.a. With the effect of compounding over time, this can represent a substantial tax arbitrage for higher taxed investors who can have a marginal tax rate of up to 45% (current top marginal tax rate) plus Medicare Levy.

Maximising the Tax Deferral Benefits

Because Imputation Bonds are designed to accumulate growth and do not make annual taxable distributions, a key tax planning application is to use their tax deferral capacities.

This can work best for investors on the highest marginal tax rate by a deferred bringing to account for personal tax purposes their Bond’s investment growth component. This deferral could be to a particular future year, (or over a series of future years) and perhaps being a time when the Bond Owner is on a lower marginal tax rate.

The timing of a tax deferred withdrawal is controlled by you. When a withdrawal is made during the Bond’s first 10 years, the 30% Tax Offset is attracted. For instance, a high marginal tax rate Bond owner would benefit when withdrawing in a year when he or she becomes a lower marginal tax rate taxpayer, such as in the early years of retirement.

Are you looking for an Alternate to Superannuation?

Imputation Bonds, (like superannuation) are long-term, Tax-Paid investments, and for higher taxed investors they can play a role as an attractive, accessible alternative to non-compulsory superannuation. For others, they might be a useful investment to supplement superannuation in retirement.

Whilst there is a level of “after-tax” performance trade-off favouring superannuation’s lower taxed environment, Imputation Bonds do not have the same restrictions of superannuation, such as:

  • Preservation Age restrictions. (You do not have to wait until age 55 to 60 to make withdrawals from your Bond);
  • contribution caps. (Imputation Bonds have no upper or aged based/work-test contribution limits);
  • contributions tax. (This does not apply to Imputation Bonds); and
  • restrictions on using superannuation as loan security for gearing strategies. (These do not apply to Bonds).

Contribution Limits Strategy

For investors who are unable to make superannuation contributions, or perhaps restricted due to contribution caps, Imputation Bonds offer a valuable alternative, tax-effective investment structure.

Investors in this situation could for instance, invest in an Imputation Bond – say over their last 5 or 10 working years – and then during their pre-age 65 retirement period they can make structured draw downs against their Bond, whilst leaving their superannuation intact. By doing this, any deferred tax assessability on the Bond’s growth can be structured over a succession of the early years of retirement, where you may be able to best utilise its imputed tax benefits in the form of 30% Tax Offset claims.

Better still, if you have held your Bond beyond 10 years, then your draw downs would be free of any income tax or capital gains tax in your hands.

Redundancies and Golden Handshakes

Australia’s “simplified” superannuation regime, which commenced in 2007, ended long-standing benefits of rolling over employer termination payment (ETP) monies into superannuation - making them taxable outside super as ordinary investment monies.

These changes have opened scope to use insurance bonds (and Imputation Bonds) as a “roll-over” vehicle. For instance, someone receiving a redundancy in early or mid working life may be advantaged by drip feeding these ETP monies into the super system via an Imputation Bond.

Funds Exiting Superannuation Income Streams

Monies coming out of the superannuation system via annuities and pensions often cannot be re-contributed back into super. Investors aged 65 to 74 must satisfy the work-test, and generally those over age 75 cannot make superannuation contributions in any event.

These ‘exited’ monies can for example accumulate in bank accounts and cause income tax issues. Insurance bonds (e.g. Imputation Bonds) are the next best tax product structure after super and can represent an attractive repository investment vehicle for exiting superannuation income stream monies.

Create a Flexible Income Stream

Because Imputation Bonds do not restrict the frequency and amount of making progressive part-withdrawals, you can structure your Bond to provide a simple “annuity-like” income stream.

You can control the frequency and amounts withdrawn, and this might suit some investors unable to invest (or who have too little) in superannuation due to age based restrictions or contribution caps.

Are you operating as a Business or Sole Trader?

Long Service Leave Provision

You can use your Bond to build a capital sum for draw-down whilst you are on extended leave from your work or business. Your business can invest funds set aside to cover employee accumulated annual leave, (extended) sick leave, and long-service leave payments.

Succession and Buy-Outs

Imputation Bonds can be a useful succession planning tool.

For instance, an Imputation Bond can be established in conjunction with Buy-Sell Agreements as a flexible financing structure to buy-out a business or property venture partner, or to handle succession of farm interests.

The transferability of insurance bonds without personal tax or capital gains tax implications can be an obvious benefit in succession planning applications.

Creditor Protection

As your Imputation Bond is technically an investment-linked life insurance contract, it carries certain protections against creditors in the event of bankruptcy.

Loans Used for Business or Investment Purposes

Tax deductibility of interest should apply where a loan secured by an Imputation Bond is used for business purposes, (such as for working capital and normal business outgoings) and for investment purposes, (such as investing into income producing investments, like shares, property and managed funds).

Are you interested in Estate Planning?

An Imputation Bond can be a valuable estate planning tool. An important aspect of this is that when a Bond matures due to the death of its Life Insured, all of its proceeds are Tax-Free distributions to:

  • nominated beneficiaries under your Bond (see below); or
  • your estate recipients, if you have not used the Bond’s Nomination feature.

Bond Nominations and Estate Planning

By using an Imputation Bond’s special Bond Nomination feature you can appoint Bond Nominees as beneficiaries to receive set proportions of its Investment Benefits if you die prior to the end of your selected Investment Term.

Advantages of Bond Nominations

Besides being “Tax-Free” distributions, the advantages of making a Bond Nomination are:

  • Bond Investment Benefits are outside of your Will and do not form part of your legal estate. Thus, they can be paid directly by Austock to your Bond beneficiaries without the cost and burden of normal probate and estate procedures; and
  • these proceeds are not available to claimants against your estate, including for family provision or in testators family maintenance claims. (They also have certain creditor protections.)

Some Bond Nomination Uses

You might for instance use Bond Nominations to;

  • make financial provision (outside of your Will) for the children of a previous marriage;
  • solve potential conflicts and inequities between bequests in your Will for your children and grandchildren. A Nomination can be used to privately “balance-up” things outside of your Will and legal estate;
  • nominate legal entities, such as companies and incorporated associations. Thus, a Bond Nomination can be used for philanthropic purposes in favour of charities, churches, hospitals etc. Using a mechanism outside of your Will can be important in keeping these types of bequests private and beyond challenge of estate beneficiaries.

Using Joint Ownership

Imputation Bonds can be jointly owned by up to three joint Bond Owners.

If you as a joint Bond Owner die during your selected Investment Term, the Bond’s ownership will automatically pass to your surviving joint Bond Owner(s), and importantly, with the benefits of not having to go through normal Will and estate procedures.

Creating Endowment Benefits After Your Death

With a deceased estate, the usual position is for the executor to distribute assets and wind-up the estate as soon as possible.

With your Imputation Bond you can put in place arrangements, that are not only separate from your Will, but can facilitate your Bond’s proceeds passing to your intended beneficiaries well after (e.g. years) the date of your death.

You can do this by specifying in the Life Insured Section of your Austock Imputation Bond Application Form other persons to be “Life Insured 1” and “Life Insured 2” of your Bond, rather than you being the Bond Owner. In order to give greater certainty to fulfilling your intentions, you may want to consider setting up your Bond with younger joint Lives Insured, and selecting an Investment Term well beyond your life expectancy.

By using this Life Insured feature, your Bond can be structured to survive your death and continue its ownership in the hands of the trustee, executor, or administrator of your estate. It will then not mature until the death of the other person nominated as Life Insured (or joint Lives Insured), or its reaching the end of its intended Investment Term.

Overcoming Super’s Estate Planning Limitations

Superannuation is favoured by a low 15% ongoing fund tax. However, as against an Imputation Bond, it can suffer an additional 16.5% exit tax for “death” distributions to non-dependants (importantly, including non-dependant children).

By contrast Imputation Bond distributions due to death are simply Tax-Free to all recipients regardless of the state of dependency.

As an estate planning vehicle, an Imputation Bond can in many situations be superior to convey tax effective inheritances outside wills and estates.

Do you want to provide for the future needs of your children or grandchildren?

You can establish your Bond as a Children’s Advancement Bond.

This feature enables your Bond’s ownership to automatically vest (without personal taxation or capital gains tax consequences) in a nominated child when he or she reaches a Vesting Age set by you. Importantly, the Bond can still vest in favour of the child irrespective of the death of the person who has established the Bond (e.g. a parent or grandparent).

You might structure your Bond in this way to finance secondary or tertiary education, career training, or accumulate a lump sum vesting at say age 21 for a car or deposit on a home.

Until the Vesting Age you retain full ownership and control of your Bond, just in case there is a change of mind about the child or grandchild. Your control includes being able to make withdrawals, switch investments and change your child’s Vesting Age.

When setting up a Children’s Advancement Bond, your nominated child must be under age 16 at the time Austock issues your Bond. The Vesting Age must be at least age 10 years or more, but no greater than age 25 years. Also, your child must be nominated as the Life Insured under your Bond.

A Children’s Advancement Bond is set up by completing the relevant Section of the Austock Imputation Bond Application Form.

Are you concerned about Funding your Child’s Education?

As Australia’s education system becomes more “user-pays,” parents and grandparents are increasingly bearing the education funding financial burden. The potential expense can be enormous, and can go into the hundreds of thousands of dollars for a full private school and university education.

If you are seeking to fund a high cost, private education, an Imputation Bond is well worth considering because it is designed to accumulate large Tax-Paid lump sums for dedicated investment objectives. You can use a Saving Plan or a Lump Sum Plan for this purpose. They are also ideal because they are “set-and-forget” investments (but with the option to change where the funds are invested at any time with no taxation consequence of any such action).

Another useful application is to structure a Bond to pay out a HELP debt, or for meeting university fees upfront (on a discounted basis) rather than incurring a HELP liability.

Education Funding – You Retain Control

An Imputation Bond’s flexible ownership options can facilitate specific education funding objectives without your losing control of the investment.

Trustee Ownership for Education Purposes

An Imputation Bond can be established and held by a Bond Owner in the capacity of a trustee for one or multiple named “education” beneficiaries. At the time of the required funding, the “trustee” Bond Owner can simply control draw downs to meet education expenses.

Importantly, because a Bond does not produce distributable or assessable income from year to year, there are no personal income tax or CGT implications for trustees holding Bonds during the accumulation phase.

Transferring a Bond for Education Funding

Another education funding option is to set up your Bond in your name and control its accumulation to a particular level, and then transfer it by assignment to your intended child at the time education expenses commence.

Children Owning Imputation Bonds

By setting up an Imputation Bond in the name of a child you can vest full ownership (and eventually its full control) in that child. After a child reaches age 16, he or she is free to apply the Bond’s proceeds for education or career training purposes.

From a tax planning perspective, ownership of an Imputation Bond by a child is a way of overcoming punitive taxation treatment due to very high marginal tax rate for children under age 18 when they own investments and receive taxable investment income.

In the Bond’s accumulation phase Bond earnings do not count as the taxable income of a child. By withdrawing or making a series of part-withdrawals after a child turns 18, the Portfolio Tax can in effect be recouped and replaced with little or no tax in the recipient’s hands. Generally, children under 18 years of age are subject to high income tax rates on taxable investment income earned over a minimal threshold, and are in effect taxed like high income earners.

Are you interested in Borrowing to Invest?

The Bonds offer an ideal form of loan security because:

  • they are non-distributing, capital growth investments that compound in a tax-effective environment;
  • security arrangements are relatively straight forward - the lender will typically assign separate “loan-to-value” ratios for each Investment Option, (generally between 40% and 95%) with an overall dollar loan limit depending on Bond Owner investment menu selection; and
  • lenders against Imputation Bonds will be third parties. Thus, Austock investment strategy to fully invest the Bond’s Investment Portfolios into the underlying managed funds is not impaired by loan transactions.

Imputation Bonds and Margin Lending

For higher taxed investors, the combination of these two long-term, potentially tax-efficient investment structures can open financial planning applications:

  • Tax-Optimal Portfolio Construction - The two product structures are used to tax efficiently allocate between investment classes. For instance, growth-based investments best suited to “gearing” and dividend imputation are structured via the margin lending facility, whilst an Imputation Bond is used to invest in more income oriented (e.g. fixed interest/ high yield) and more passively styled investments.
  • Meeting Specific Investment Objectives - Combine both structures and co-ordinate their durations to meet specific objectives, such as financing children’s education or business succession.
  • Tax-Optimal Interest Tax Deductibility - Use an Imputation Bond in a “sinking fund” strategy for repaying a margin loan. Rather than following a principal and interest repayment program, investors can optimally manage a higher (and uniform) level of annual interest deductibility with an “interest-only” style loan, and apply the Bond’s Tax-Free maturity value to discharging the loan.
  • Meeting margin calls - As accessible investments, Imputation Bonds can be drawn against, or their market value improvement can be applied in satisfying margin calls.

Are you, or a family member or friend, in or going into Aged Care?

With our much talked about “ageing population” more and more of us have to face up to and understand the cost of aged care.

Aged care costs can vary enormously between facilities and from resident to resident. Understanding the rules, so that costs are minimised and investment outcomes are maximised is a specialist task, and one that your financial planner should have a handle on.

Get it wrong and you could pay thousands in additional costs and lost pension payments. Additionally, the correct structuring of investment assets can mean they grow rather than depreciate, during the time you, or a family member or friend, are in aged care.

How it works

Both assessed Income and Financial Assets affect your entitlements, and usually it is the ‘Income Test’ that is the first to reduce them. Let’s look at the impact of income on entitlements: Your pre-aged care affairs may have been subject to a reduction in ‘age pension’ due to the income test (which applies a taper rate of 50 cents of reduced ‘age pension’ for every dollar of assessed income over the ‘income free’ threshold).

Then, once in the aged care system, there is 41.67 cents of income-tested care fee to be paid for every dollar earned over the income-tested care fee threshold. (Note this is different to the ‘age pension’ threshold.) Hence, for every extra dollar you earn over the threshold, you can be effectively penalised at a rate as high as 91.67c i.e. 50c 41.67c.

With specialist advice to correctly structure assets, some serious improvements can be made to the impact of such punitively high rates.

Centrelink or the Department of Veterans Affairs (DVA) plays the central role in assessing your level of income and assets, which in turn determine the cost of care and the maximum level of accommodation bond for pensioners and self-funded retirees. The rules are complex, and again there are ways of structuring your Financial Assets to maximise pension and minimise the income tested fees.

Selling the family home?

Questions usually arise about selling the family home to fund aged care - often a valid strategy. However, after paying the accommodation bond, the balance of the sale proceeds (once invested) can reduce your pension entitlement and increase the level of income-tested care fees due to the application of the income ‘deeming’ rules. A restructure of your assets should be looked at in order to minimise ‘deemed income’.

Please contact AMKS if you wish to discuss your age care specific requirements and undertake a quick analysis as to weather AMKS can be of help to you.