In This Issue

Dear Friends

Budget Blues

Over the years I’ve noticed all big budget announcements get leaked by politicians, therefore I do not expect any surprises on May 14… but there is a first time for everything.

The reality is that the price of Australia’s biggest export commodity, iron ore, has bounced around US$100 per tonne, which means our government will have less cash to run the country on. The price of our ‘red rocks’ has a history of fluctuating between US$239.50 and US$39 a tonne – with the result that the bean-counters will be looking elsewhere for revenue. In turn that may also mean those with robust retirement savings should be cautious of Canberra. I will be keeping a close eye on this!

Recently a client asked me: “Will the government bring in death duties?”

He was surprised to hear my answer: “Death duties already exist” – in the form of the oddly misnamed ‘Death Benefits Tax’.

In essence, 17% of any remaining ‘Taxed’ amount in super (where there is no surviving spouse or other financial dependant) is paid as ‘Death Benefits Tax’ unless you’ve used a ‘cash-out-and-recontribution’ strategy, (speak with me at our next meeting if you are unfamiliar with this strategy). It essentially renders ‘Death Benefits Tax’ an optional tax. I doubt this will be expanded any further.

The government is, however, proposing to bring in a $3 million cap on superannuation balances from 1 July 2026 – so changes are in their sights. We will remain vigilant.

Australians are typically charged up to 23.5% Capital Gains Tax (CGT) upon the sale of our investments such as our holiday homes. CGT is basically a replacement of the old Death Duties, as it taxes the growth on as asset. At the risk of being speculative, I wonder if there might be consideration given to how much we can take from our primary residence CGT free. Currently, CGT is not applicable to the primary residence once it is sold. If this were to be capped at say, $3 million, this may not affect most of us, but for people in Sydney and Melbourne that cap could be a challenge.

There is also discussion around ‘older-Australians-with-super’ being asked to pay more for their nursing home care. This may be another area to watch at the upcoming budget.

Our parliamentarians are always looking for new revenue streams – and so we need to remain vigilant to lobby our politicians if they propose to target those who take responsibility for funding themselves in retirement. Close readers of eGrow will know I am regularly in touch with senior politicians about many issues (you can read my correspondence here). As usual, we will be on the front foot, if there is anything coming out of the May 14 federal budget which adversely affects our clients.

Why haven’t I got a ‘Retirement Bonus’?

A few weeks ago, there was a flurry of interest in the media about some super funds offering a ‘retirement bonus’ for those people who seamlessly move from the wealth creation to draw-down phase. Obviously, that begged the question from some clients “why didn’t/don’t I get a retirement bonus too?” The simple answer is that it is an illusory benefit. The funds promoting them are expensive, and in my view, not well managed. The ‘bonus’ is just refunding some of your own money which had been held to cover taxes etc. Our clients are invested in much more cost-effective funds where they pay less fees – meaning from day one their balance will be higher.

And One More Thing:

I note with some amusement articles in the media (you can read one here) where the large Industry Superannuation Funds like Australian Retirement Trust (ART) are suddenly realising that a truly client-first model is not about being a ‘stock-picker’. Like Marinis 18 years ago, ART is now recognising you can’t beat the market, so you should invest in index funds. It is about time.

However, as Paul Keating is reported to have said, “In the race of life, always back the horse called self-interest.” Whether or not the institutional greed of other large super groups will prevail waits to be seen.

In the meantime, we continue to focus on keeping our fees and costs to a minimum, whilst allowing for the services we provide and the cost of the compliance regime the law requires us to follow. Less overhead cost translates as better outcomes for our clients.

Don’t forget, stay Cyber security alert:

As always, if I or any of my team can be of assistance, please don’t hesitate to contact us via email or on (08) 8130 5130.


Yours sincerely

Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative



The information in these articles is general information only. It is not intended as financial advice and should not be relied upon as such. The information is not, nor is intended to be comprehensive or a substitute for professional advice on specific circumstances. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional on whether the information is appropriate for your particular needs, financial situation and investment objectives.

The information provided is correct at the time of its creation and may not be up to date; please contact Marinis Financial Group for the most up to date information.