Money Magazine June 2018

Along with many readers, I’ve been horrified by the revelations of the banking royal commission. I’ve touched on the topic on our social media platforms but this is the first opportunity I’ve had to address it in our magazine. First, my thanks go to those Aussies who have stood up and told their stories. Without you there’d be no change. Understandably, I’ve received a few emails and Twitter remarks about Sam Henderson. Damning evidence emerged against Mr Henderson, the founder of Henderson Maxwell. Regular readers would be aware that Mr Henderson has been a contributor to Money for a number of years and more recently to the website. During this time he provided high-quality information that fitted the Money ethos. While the information featured in the magazine is general in…

Unfair franking plan Labor’s proposed change to the imputation system is unfair, unjust and worse than some of the money-grabbing rorts exposed by the royal commission. Currently, the franking credits are included to determine a person’s total taxable income and any excess over their tax liability is refunded as cash. Simple, fair and easy to understand, calculate and implement. However, if they cease the cash refund it is likely to produce a range of anomalies. The inclusion of the franking credits in total taxable income can drive the taxable income over various thresholds for other benefits/allowances but if the government does not refund excess franking credits the taxable income amount is a fiction. The taxpayer never sees the excess amount even though they are treated and penalised (by the government)…

Young workers miss out on super guarantee I am annoyed with the rule regarding companies not having to pay the superannuation guarantee when their employees are receiving a salary/wage of less than $450 (before tax) in a calendar month or are under 18 and working less than 30 hours a week. I see this as manifestly unjust to both young people and part-time staff. I have a daughter who has been working for a well-known fast food chain for over 18 months – every week, early shifts, late shifts and weekends – and has not received a cent of super because of her age and their clever rostering system, which ensures that they don’t incur a superannuation liability. She was “onboarded” to the company and became a member of its…

EFFIE ZAHOS Effie is Money’s editor and author of The Great $20 Adventure. Effie says: “I never understood why the Pension Loans Scheme wasn’t available to somebody on the full pension. Nice to see some flexibility and common sense. But let’s not forget that this is a type of reverse mortgage so the next generation may not be too thrilled.” MARK STORY Mark is director of Prime Strategy Media. Mark says: “Rather than paying lip service to the superannuation imbalance between men and women, the government could have used the budget to ensure that the growing cohort of ‘gig economy’ workers – predominantly women – are not shut out of the compulsory super regime.” VITA PALESTRANT Former editor of the Money section of The Sydney Morning Herald and The Age,…

It comes as no surprise that I have had a lot of comments and questions such as “who do I trust?” when it comes to financial advice. I am sure the royal commission hearings have shocked you. What saddens me is that I am equally as shocked as you are. It is not just the stories of poor advice, or it seems no advice at all. What really hit me hard was the seemingly indifferent culture of our big institutions. Since I first appeared on the Money TV show in 1993, letters and then emails have been sent to me in large numbers about all sorts of awful investments and outright fraud. Things like investments that pretended to be safe but collapsed. Then we have always had the property seminar…

‘You need to see a financial planner” is one of the mantras of the financial services industry. And, obediently, 2.3 million Australians did just that in 2016. Around 35% sought retirement advice, 25% obtained loan and investment guidance, 20% got self-managed super help while the rest received tax and estate planning advice (10% each). But going to see a financial planner has been to many people’s detriment, according to evidence uncovered by the royal commission’s investigation into financial planning. It heard how planners have been overcharging clients and forging signatures, as well as selecting expensive investments and insurance that was eroding people’s wealth. The regulator, ASIC, told the royal commission that 305,946 customers had paid for services that they didn’t receive. They were being repaid a total of $216 million…