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Tuesday, 29 November 2011 15:56

Protect Your Biggest Assest: Your Ability To Earn

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Protect your biggest asset: your ability to earn

If your lifestyle is dependent on your ability to work, an extended period of absence through illness or injury could be devastating to you and those who are dependent on you.

Income protection insurance replaces your income up to the insured benefit amount of the policy. Most commonly the maximum cover is 75% of earnings (after business expenses, but before tax)

The waiting period can vary; it can be as short as 14 days or as long as two years or more. It is important to remember that benefit payments usually do not start immediately; a waiting period will apply during which no benefit is payable.

The maximum period of time that payments continue is called the benefit period. A range of benefit periods are available — some as short as one year, with the longest continuing through to age 65. Once benefits start, payments are usually made monthly in arrears.

Tax effectiveness - Premiums for income protection policies have the benefit of being fully tax deductible – a good way to protect yourself and reduce tax.

What are the alternatives? - Is this the insurance you have to have? It’s up to you of course, but consider some of the alternatives……….

Family assistance - You could rely on family or friends to help you but they’re likely to have their own financial obligations, and this may needlessly strain your relationship.

Savings - You could use savings in the short term to support yourself, but problems arise if your savings are not readily accessible or your incapacity is long term. You are also spending money that you’ve worked hard to save over an extended period of time.
Employer - You may be a valuable employee but your employer is unlikely to be able to continue paying you and find, train and pay your replacement.

Benefits - Workers’ compensation may help if your injury or illness is work related. Or social security may be available, if you meet the means tested eligibility criteria. In both cases, the benefit levels are unlikely to meet your needs.

 

Note: Advice contained in this flyer is general in nature and does not consider your particular situation or needs. If information contained is not appropriate to you at this stage please pass on to family and friends who may benefit. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.

For more information on Income Protection Insurance or to arrange a no-cost, no-obligation first consultation, please contact: GEM Capital on Ph:8273 3222

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life. Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

What are Essential Fatty Acids and why are they so important in our diet?

Essential Fatty acids (EFAs) are the “good fats” and are necessary fats that humans cannot synthesize, and must be obtained through diet. There are 2 families of EFAs: Omega 3 and Omega 6.

Western diets are deficient in omega-3 fatty acids, and have excessive amounts of omega-6 fatty acids compared with the diet on which human beings evolved and their genetic patterns were established.

Good fats compete with “bad fats”, so it’s important to minimize the intake of cholesterol (animal fat) while consuming enough good fats. Also good fats raise your HDL or “good cholesterol” one of the jobs of your good cholesterol is to grab your “bad cholesterol” (LDL), and escort it to the liver where it is broken down and excreted. In other words these good fats attack some of the damage done by the bad fats. This is very important in an age when so many people in the Western world are struggling to get their cholesterol down, and fight heart disease and obesity.

EFAs support the cardiovascular, reproductive, immune, and nervous systems. The human body needs EFAs to manufacture and repair cell membranes, enabling the cells to obtain optimum nutrition and expel harmful waste products. A primary function of EFAs is the production of prostaglandins, which regulate body functions such as heart rate, blood pressure, blood clotting, fertility, conception, and play a role in immune function by regulating inflammation and encouraging the body to fight infection EFA deficiency and Omega 6/3 imbalance is linked with serious health conditions such as heart attacks cancer, insulin resistance, asthma, lupus, schizophrenia, depression, accelerated aging, stroke, diabetes, arthritis, ADHD, and alzheimer’s disease, among others.

What foods provide omega-3 fatty acids?

Salmon, flax seeds and walnuts are excellent sources of omega-3 fatty acids. Very good sources include scallops, chia seeds, cauliflower, spinach, pumpkin seeds, brazil nuts, avocado, cabbage, cloves and mustard seeds. Good sources include halibut, shrimp, cod, tuna, soybeans, tofu, kale, collard greens, and Brussels sprouts.

It is important to note the EFAs are perishable, they deteriorate rapidly when exposed to light, air and heat so freshness is important.

There are many EFA supplements available including fish oil, flaxseed oil, cod liver oil etc, for more information consult your health professional.

This information is for general educational purposes only and does not replace individualized diagnosis and care.
Donald Rudin, MD, and Clara Felix. Omega-3 Oils; A practical Guide. US: Avery, 1996.
Andrew L. Stoll, MD. The Omega-3 Connection. New York: Fireside, 2001.

Sunday, 16 October 2011 12:38

Tribute to Peter Ruehl (who passed away on 11th April 2011)

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Understanding Gillard is a Little Taxing (from the book Men are Stupid, Women are Crazy) – published on 1st March 2011 in the Aust Financial Review

When ‘s a tax not a tax? When Julia Gillard says it isn’t. At least that’s what she says about the carbon tax, you know, the one she said, just before the last election, that she would not bring in. So it’s not really a tax. It’s really just a little something Hallmark will be sending out to you to remind you to have a nice day and, by the way, give the government a bunch of your money.

I don’t know what you think about global warming, not having made up my mind about it myself. I mean, I know things are heating up in some parts of the world but I don’t know whether it’s my fault or whether it was going to happen anyway, sort of like the latest Charlie Sheen meltdown. But let’s say global warming is our fault. Well, not ours. It was our parents’ fault. They were the ones who were driving around in those big cars with leaded fuel. They were eating all that red meat from cows that broke wind all over the place and killed the ozone layer. But we should fix it up, right?

So we do it with a carbon tax. Gillard, by the way, has since recanted a little bit, or depending on your view, a whole lot of a real little bit. She now admits she said before the election that there wouldn’t be a carbon tax (nice to know she believes in videotape), but if I’m following her through this, she thinks the situation has changed. What’s changed? Have the polar ice floes reached Sydney? Are you starting to feel a little scammed here?

It reminds me of the time George H W Bush said “Read my lips: no new taxes. You can dress up and disguise a new tax any way you want, but people can spot one the minute you put it out there. Bush tried that trick. He was also a one-term president. Too bad, in a way, because overall he was a better president than his fruitcake son, who lasted two terms.

Gillard will probably get the tax through because it has the backing of the Greens and independents. The Greens never met an environmental tax they didn’t like, and the independents know they’d better go along because it wouldn’t take much to change governments and they’ve got enough trouble just showing up for work as it is. But that’s the high price you pay for having two of the loonier elements in politics propping up your government.

This must have been really comforting to Gillard: Kristina Keneally backed her stand on the carbon tax. Getting an endorsement from anybody in New South Wales Labor on anything is like having Lindsey Lohan appear as a character witness, but Kristina wanted everybody to know she thought it was a hot idea. Great. Any time that anybody from the New South Wales ALP comes up with a hot idea, about five people have to quit their jobs.

Keneally said that households should be compensated for the carbon tax. This is a great governmental solution to any problem that comes up (and that is, as is more often the case than not, a problem caused by the government). When in doubt, compensate. In other words, you’ve just proposed something a lot of people can’t pay for so you have to use your money to pay them to pay you. Makes perfect sense. After all, who’s going to be paying the wacky carbon tax; we’re also going to be helping the people who can’t pony up (and like the rest of us, shouldn’t have to anyway)

Fuel and electricity prices are going up. Retailers all over the country are singing the blues because they’re not hearing enough ka-ching, ka-ching. Now I not the time to be coming up with a new tax most people don’t completely understand to begin with. (Every time I think I’ve got a grip on it, somebody comes along, changes the subject and I have to start all over again.)

The 1st July 2011 marks a significant change in the formation of the Senate in Australian politics.  The balance of power in this house of Government now shifts to the Greens.

Leading Australian businessmen have voiced their concerns that the current Government is anti-business and that they are being dictated to by minority parties (including the Greens).  This sentiment is best captured by John Symonds, the founder of Aussie Home Loans who recently said “We’ve got a Government in limbo, dictated to by minor factions”.  Gerry Harvey from Harvey Norman called for a fresh election suggesting that the current state of the Government is contributing to poor consumer sentiment.

Usually investors do not have to concern themselves over politics, however given the circumstances Australia now finds itself in politically, we argue that investors must pay attention to this issue as it has the potential to influence investment outcomes.

Given that the Greens now arguably have greater influence over Federal politics, we thought it appropriate to examine some of what they stand for.

We have produced a table that outlines 10 of the Greens policy ideas, and included some of the risks to the Australian economy that each policy idea represents.

 

Policy Idea Potential Risk to Australian Economy

Limit Australian Banks ability to move interest rates for housing loans so that they can only move in line with official Reserve Bank rate movements (bill presented to parliament last year, supported by some of the Independants) During times when Banks have to pay more to buy funds to lend out to consumers like we have recently seen, would lead to housing lending becoming unattractive for banks.

 

This could lead to banks making less credit available for the housing sector, which in turn would most probably lead to severe stress in housing prices (but at least this would achieve one of the other policy agendas for the Greens which is affordable housing).

 

Consumer spending is also heavily influenced by state of the housing market.

 

There was an excellent article written on this issue at Greens Banking Bill article

 

Ensure all employees, including casual, fixed term and probationary workers, and employees of small business have the same rights to challenge termination of employment where it is unfair, with reinstatement to be the remedy except in exceptional circumstances.  (source www.greens.org.au)

 

Likely to provide disincentive for small business to hire staff.

 

Small business employ the majority of the workforce in Australia.

 

This could contribute to heightening unemployment in Australia.

Repeal any independent contractors legislation that strips employment rights from individuals (source www.greens.org.au)

 

Use of contractors is widely used in construction industry.

 

Employees rather than contractors makes a workforce less flexible, and arguably more expensive for business.

 

Probable result is increase in construction costs for housing, NBN, and other constructions.

 

Seems at odds with the Greens affordable housing idea.

 

Article on Contractors under attack

 

Legislatively protect the right to strike, as recognised in International Labour Organization conventions No. 87 and No. 98, as a fundamental right of workers to promote and defend their economic and social interests. (source www.greens.org.au)

 

Likely to lead to increased industrial action, which could result in businesses opting to run their operations from other countries.

 

Likely result is to increase costs for Australian business which could lead to business looking to locate more of their operations offshore

 

Limit the tax deductibility of any executive salaries to 25 times the minimum full-time adult wage (source www.greens.org.au)

 

Arguably one of the reasons the standard of our political leaders is relatively poor, is that they are poorly paid when compared to leadership positions in the private sector.

 

This could lead to Australia’s top business leaders being enticed away from Australia and Australian business being run by poorer quality management.  This in turn could lead to lower returns for investors from Australian companies.

 

 

Abolishing the 30% Private Health Insurance Rebate in order to increase funding for public hospitals (source www.greens.gov.au)

 

Private system is already overstretched.

 

 

Removing the concessional arrangements for Capital Gains Tax (source www.greens.org.au)

 

Disincentive for people to invest in assets that grow in value such as shares, property and businesses.

 

Asset values could fall, fewer people start businesses as incentive removed to build assets.

 

 

Oppose any increase or extension to the GST (source www.greens.org.au)

 

One of the benefits of GST is that all those who consume goods or services, pay tax.  Even those who operate in the cash economy end up paying tax when they spend money.

 

It has broadened the tax base for Australia and while we are not necessarily supporting an increase in GST, we would question the wisdom of removing this as an option to increase Government revenue in a broad way if required in the future.

 

Could lead to further complexity in the tax system as new taxes are introduced to bolster revenue.

 

Increase the Company Tax Rate to 33%

(source www.greens.org.au)

 

Reduces company profits, which reduces shareholder returns (virtually all Australians own shares directly or through their super funds).

 

Conduct a full review of the superannuation system with the aim of reducing its complexity and establishing progressive rates of superannuation taxation. (source www.greens.org.au)

 

Peter Costello removed much of the complexity from the superannuation system in 2006.

 

Is this code for increasing taxation on superannuation savings, particularly for those who would be considered as self funded and considered “well off”.

 

 

It would seem apparent that several of the Greens policy ideas are already influencing the current Government’s policy positions.

The Greens until now have not really had to stand up to scrutiny over their policies as they have never been in a real position of power.  That has now changed and it is appropriate that the Australian public pays close attention to the effects of what some of the outcomes are likely from what this political party stands for.

There is concern that there are many unintended consequences of the policies being promoted by the Greens, that could not only effect investors, but all Australians.  The purpose of this article is to put the spotlight on some of these policies so that informed choices can be made for the good of Australia.

As One Nation discovered, it was relatively easy to be anti policies of the day, but they did not stand the test of scrutiny when they began to develop policies of their own.  We are about to see how the Greens fare now that they are in a position where they too have to develop policies that reach well beyond the environment.

This article has been written by Mark Draper, and do not reflect views of the dealer group.

 

Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at June 2011.

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