Now on afternoons.
All things finance with Blake were from Pretzel Wealth. Organize your free consultation at Pretzelwealth dot com dot au twenty.
Two to two.
Yes, money, money, money, indeed, let's talk about our money with Blake went of course from Pretzel Wealth. You can answer your questions on home loans, superannuation, investments, other general financial advices you might need a bit of a hand on.
Already had a couple of emails and texts come.
Through, so if you've got a question calls always do take priority one three one eight seven three. Take advantage of the free advice Blake. Good afternoon.
Look at a Michael.
Now we've just had the inflation and not inflation, we've had the GDP numbers come out.
Really it's it's looking pretty weak. Yeah, lower than expected.
So quarter on quarter growth was sitting at point two percent where the market was expecting point four. Year on year one point three percent was the outcome, whereas the market was expecting one and a half percent, so lower than expected. The market's performed quite well, the stock market because what that means in rate just rate cuts, which
is great for businesses and economic activity. So well, that number will be welcomed by those with a home loan, less welcome with those with cash in the bank.
Okay, so we're barely growing. If it weren't for population increases, we'd be going backwards. We are going backwards per person. But you also made the point to be during the ad break that there was some number in all of this sowing that government spending is a percentage of the economies the lower since twenty seventeen.
Is that right, That's right.
It's government spending pulled back, which obviously has an impact on economic growth. So their spending level has reduced this last quarter. So it's interesting to see and so that does play into economic activity.
Well, that fact seems to uncountered all of the rhetoric, the numbers I've seen for well for at least the last six months.
Well, yeah, certainly, and that's what sort of the shocking sort of message out of it all that what's happened to spaning. So I haven't dived into that and see where what's benefit to there, but just interesting to see that government spending is down. That can have an impact on GDP figures if they're not spending or maybe people are out of work. Okay, what is that, what's the
flow on effect to all that? And so Yeah, interesting to see that the market was expecting higher figures come in lower, expect more rate cuts to come.
Okay, fine, Now if people have the question of course one three, one eight seven three, we are approaching the beginning of the new financial year, or if you want to look at the other way, we're coming to the end of this one mirror accounts talk to me about these.
Yes, So often often we have clients who first priority, of course, is to build Super. Get money into SUPER. It's great, you get to retirement, it's tax free. So that's sort of the first priority that we want to do. But often we're seeing people who have cash they want to allocate it into Super, but for whatever reason, they can't get it in. Maybe they're over seventy five years of age. You cut it out from adding moneys into Super.
Maybe you've already maximized your contributions into SUPER and there's funds flying around. You could have received an inheritance, you may have sold a property. There's cash that needs to be allocated somewhere. Now, the last couple of years has been great. We've had interest rates at higher levels and so your cash is generating enough of an income for you to say, well, I'll keep it out of the stock market, or I won't invest the funds, I'll just
get my cash. Now that's changing. There's now concern that interest rates are coming down, cash is not producing as much, and so we have to do something else with the money. Hence a mirror account. Now, a mirror account is simply personal investments that mirror your superannuation. So you could have your SUPER fund invested in ETFs, BHP shares, common Wealth Bank, whatever you want. Inside of Super. We can do the same thing outside of Super. Different tax arrangement. There was
different tax arrangement, yeah, personally taxed. Now the mirror account can provide a vehicle for you to invest the money is get similar returns to what you're getting in Super, and then once Super opens up again, maybe you allocate those funds back in. So it's a way to try to generate a better return than just simply holding moneys in the bank or in cash. And what we want to do is make sure that you know, if we are impacted by further rate cards. You know, we're currently
getting about four percent on cash at the moment. If that goes down to three or two and a half. Unlikely in the short term, but may end up being the case. Well, at least we're getting that money working and we're getting a higher rate of return for our funds. So mirror accounts are great. I'd encourage everyone. If you've got cash floating around and you want to allocate that,
speak to your financial advisor. Remember you are taking on risk when you are investing, and so just be mindful of what you're getting yourself into before taking that plunge.
Okay, let's get to questions. That's what this is all about. Of course, it's about you. And if you've got a question one three one eight seven three a grame road. Earlier on the email, he says, I'm fifty two, may have in excess to three million by retirement. This obviously super if this new tax on super fund's over three million comes in. If I have, say three point three million,
is a balance? Is the text calculated on the full return on three point three million or the return on the three hundred thousand above the threshold.
Yeah, so it's it's a percentage. So there's a formula that gets applied and they work out the percentage of growth in excess of three million based on your account balance, so good example, in Graham's case, he starts with three point three, has a good year, ends up with three and a half million, so two hundred thousand gain. Irrespective of selling the asset or not, there is tax on
that gain. On a two hundred thousand dollars gain, in Graham's case, there would be tax of about four three hundred dollars, which if you look at that as a percentage of the gain, it's a two hundred thousand works out to be about two point one percent, So it's
not it's not a straight fifteen percent. It's a proportional tax that applies, and so it's worthwhile keeping that in mind because you know, there's a lot of people out there making irrational decisions right now, selling properties, looking to liquidate share portfolios, trying to get away from having as much money in SUPO, and you know, my advice at the moment is just to keep a level head, work out what the implication looks like for yourself, and just remember that it may not be as bad as I
originally thought. It's still a new tax, so it's not welcomed, but it's certainly not as bad as what people may believe it is.
I mean, as we discussed, and we've discussed this now even before the election, you were raising this whole issue with me. We were one of the first in radio to be looking at this. The advice I think from you was Okay, the principle here stinks, but in practice
many people may not be better off trying to dodge it. Yes, because the tax arrangements outside correct me if I'm wrong, but ure saying the tax arrangement outside of super could be more punitive than if you just cop it whilst remaining within Super.
Exactly a right. So you take that money out of SURPA, you're investing in what we just spoke about, a mirror account as an example, You're then subject to a personal tax being applied. So you know, maybe it's not the best move to be shifting money's outside of Super. Maybe it's okay to accept the tax that's going to be on there. Again, it's not welcomed, but maybe it's better than investing personally.
Okay, Dan's got a question.
Hi, Dan, just on a mirrored accounts you it's walking to about is it possible to have a strategy like that with a linked offset, So you're putting all your money in, for example, to share the investments with etms, but you're also that's also against you, that you will between you say, not interested?
Good, good question, Daniel.
The simple answer that is, it's not possible to have shares or an investment account that's attached to the home loan because the bank wants to use that cash. So they want you to come in get your home loan with them, and then have a cash account that's linked to the home loan as an offset account. And so what the bank can then do is take that cash and go and lend it out again. So they don't want you investing in shares to offset debts. So unfortunate.
That would be a great a great vehicle for the banks to have if they if they could, but they're wanting to use that money to make more money, to make them more profits, I suppose. So now, unfortunately, not Daniel can't have an investment count.
What a pity that same logic doesn't apply to government super and text, so that we've actually got to have the cash before they can taxt it.
Well, exactly, you can't just print money, Diane, good afternoon, Good.
After the name Blake. My question, I'm sixty four, hobby is eighty two, so we may have the season last year for me to retire. And I have two allocated pensions. One is a thousand a month and the other one is five hundred or fortnight. Now, we did a twenty thousand redraw, Chris, the can't blew up in this current financial year, but we're thinking we're going to need to do another redraw? Are there tax implications because I'm only sixty four? Are their tax implications on our recourse?
When you say redraw, Diane, are you referring to pulling funds out of that allocated pension and withdrawing No, they.
Came out as the accumulation super.
Okay, yes, so if you withdraw money out of SUPER over the age of sixty, there's no tax implications. However, if you've got an accumulation account where the money isn't providing you with a pension, it's just simply there invested. There are potential tax consequences for selling investments in accumulation phase, and so there could be capital gains tax to consider
if you are liquidating investments from the accumulation account. If you were to take it out of an allocated pension or an account based pension, there's no tax in that environment.
So consider potentially taking it out from the account based pension as a priority to the accumulation account first and foremost, though, Diane, I'd encourage you just to get some advice around making the withdrawal, just to understand whether or not there are tax consequences on the accumulation side if you are wanting to withdrawal from that account. But certainly over the age of sixty, if you pull money out of supun there's
no tax on that withdrawal. It's just behind the scenes, maybe there's some tax involved.
All right, good question, Diane, Thank you for that. One three one eight seven three. We'll get to some more questions in just a moment. I was speaking earlier, as you would have heard to a dancing experts, thinking to Georgia Freeman, that is, she's going to be part of Burn the Floor, and you'll be there on it because you'll be dancing. Man, you're a student of history. Perhaps you can help me out here. This just came through from Darryl, he said, Michael. In the eighteenth century, not
everyone was happy with dancing. In fact, the Methodist Church banned six in case it led to dancing. Oh jeez, I suspect it's meant to be the other way around. They banned dancing in case it led to six.
Maybe they didn't like dancing as.
Because I'm just thinking. I mean, I don't know, but I'm just thinking.
Most religious institutions like to have repeat customers, you know, and the next generation come through to maintain the buildings. And what if you ban sex unless you've found Methodists among the Catholics, for example, you'd run out of parishioners pretty quick, wouldn't you.
But it's a number of questions for you.
Right, Well, I don't know how this is a numbers question, but okay, well, well we've.
Got one plus one equals two. They get together and make three. But if they can't add the course, you.
Track the population growth and more dancers adds a sign curve to the Yes, that's that's right. Yeah, they carry the four. Yeah, all right. John on the text says perhaps there was Methodist in the madness.
Nice one, John, one of your best. Jerry says, no, I won't read that one.
Thank you.
Jerry.
By the way, Blake Waders hear from Pretzel. We're talking finance, among other things. You can book that complimentary consultation with Blake today.
You should do it.
Visit pretzelwealth dot com dot au. Back to calls Peter good afternoon.
Yeah, good a, Michael good A, Blake. Just a quick question for you, Blake, just following up on what you were saying about the mirrored accounts. Yes, you would then obviously you would pay personal income tax on the on the income derived from those. But wouldn't you, on the other hand, have franking credits as an offset.
Exactly right, Yeah, franking credits would come in to that equation. If we're investing in Australian shares that provide a franking credit to help offset some of that, so you could expect to get a decent amount of income from that that is quite tax efficient. It's just sort of a general point of call because if we compare investing personally with investing through super, especially in retirement phase, it is
quite tax effective investing through superinnuation. So we want to try to focus there first.
But there are.
Cases where we can't get can't get the money's into super and so you know, as a good example, over seventy five years of age, or you've used up or your contribution capacity, and so you know, a mirror account could be a good solution to still get some good returns on the investment, subject to what the markets are doing and subjects are taking on a little bit of risk. But you know, these accounts or account types are quite effective at making sure that you know you're trying to
build wealth. I suppose I have the long term and it also comes into playoffs. Suppose down the track, if you're thinking about passing on wealth to kids, if you've got money sitting in the bank and it's going you know it's getting eroded by the effects of inflation, investing the funds can be a good solution to try to preserve the wealth that gets passed onto the kids. But great observation the Peter. There there could be some franking credits for investing in austrange shares.
Okay, good question, Well done, Peter, Thank you for that. Now back to this situation with the super text. I was saying to you earlier, I think the government of trying to weage the coalition here, and I've got a bit of a fear that the coalition are going to tumble for it. I'll say some more about this after too. But the Prime ministers, according to many reports today, open
the door to rewriting the proposed superannuation tax hikes. Now I can only imagine that would involve a slightly different threshold or something like that.
Perhaps perhaps indexation, perhaps, yeah, hopefully a higher threshold. You know, we yet to see.
I suppose the guess the question for you, Blake, is in your opinion, is there a way to actually make this a worthwhile reform? Is there anything reform aligned with this at all?
I suppose increasing the threshold would be a start getting rid of it is also probably a good idea. It goes against really the nature of our taxation system here. You know, we don't tax unrealized gains, and so that that's really what's behind it all. This is why so many people are upset. People who don't have three million dollars in super are upset as well, mind je, because it goes against the nature or what the intent has
always been. Now, if they're opening the doors up to tax unrealife gains, and I get it, they're taxing people with large super innovation balance and not all of us
are impacted by this. But you know, if they're going through that process, well then what's to say that they don't open the doors up further elsewhere unlikely not being talked about at the moment and not being considered, I'm sure, but you know it does open the doors potentially to say, well, we've done it on super Maybe we look at family trusts, maybe we look at businesses.
Whatever that's the concern. All right, we'll speak again next week. Thank you, Blake.
Seeing that Blake went there from Pretzel, Will