End of financial year strategies

There are many tax effective strategies that you can implement before 30 June to maximise your retirement benefits.

Government co-contributions

If you are an Australian resident and earn below $61,920 a year, you may be eligible for the Government Co-contribution to super. To claim your Co-contribution you will need to make a personal, after-tax contribution to your super before 30 June 2011, and the government will kick in some extra cash towards your retirement. This may be up to $1,000 in a financial year.

Personal deductible contributions

People may find themselves in a situation where they can significantly boost their retirement savings, as well as reducing their taxable income. The simplification of and changes to deductible personal contribution limits is one such opportunity. The new caps allow deductible contributions of $25,000 per year for under 50s, and until 30 June 2012 up to $50,000 per year for those aged 50-plus.

Split super with your spouse

If your spouse is on a low income, you could receive a tax offset for making a contribution to your spouse’s super fund – as long as their assessable income (including reportable fringe benefits) is less than $13,800.

However, to claim the maximum offset of $540, your spouse must earn $10,800 or less and you need to contribute $3,000 to their super in the same financial year. Because it’s a tax offset, you’ll make a direct saving against your income tax liability.

Income protection insurance

Income protection insurance is an essential part of any financial plan, designed to secure your family’s lifestyle in the event of illness or injury. Income protection insurance premiums are generally tax deductible, so if you purchase income protection insurance and pay your annual premium before 30 June 2011, you will be able to include the deduction in this year’s tax return. Business owners may also be able to claim deductions on their business insurance premiums.

Remember, every small contribution you make now will give significant effect in your retirement benefits due to 8th magic of the world (Compound interest and growth!) plus maximum tax rate of 15% in super and tax free payments after age 60 make super one of the best vehicle to build your nest egg. Please pass it on to your family and friends who may you think would be beneficial.

Above information does not form any personal advice. To review your current financial situation, contact us on 03 9018 5534 or info@fortunewealth.com.au

Rashesh Bhavsar

Financial Planner

Fortune Wealth Creation Group

Ground Floor, 566 St. Kilda Road, Melbourne.

(03) 9018 5534

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US Property Outlook: US Housing Crisis Is Now Worse Than Great Depression

Source: http://www.cnbc.com/id/43395857

It's official: The housing crisis that began in 2006 and has recently entered a double dip is now worse than the Great Depression.

Prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s, according to Case-Shiller data.

The news comes as the Federal Reserve considers whether the economy has regained enough strength to stand on its own and as unemployment remains at a still-elevated 9.1 percent, throwing into question whether the recovery is real.

"The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression," Paul Dales, senior economist at Capital Economics in Toronto, wrote in research for clients.

According to Case-Shiller, which provides the most closely followed housing industry data, prices dropped 1.9 percent in the first quarter, a move that the firm interpreted as a clear double dip in prices.

Moreover, Dales said prices likely have not completed their downturn.

"The only comfort is that the latest monthly data show that towards the end of the first quarter prices started to fall at a more modest rate," he said. "Nonetheless, prices are likely to fall by a further 3 percent this year, resulting in a 5 percent drop over the year as a whole."

Prices continue to tumble despite affordability, which by most conventional metrics is near historic highs.

The rate for a 30-year conventional mortgage is around 4.5 percent, just above the historic low of 4.2 percent in October 2010. The ratio measuring mortgage costs to renting is 7 percent below its norm, while the price-to-income ratio is 23 percent below its average, Dale said.

Yet other factors are constraining the market.

After the fallout from the subprime debacle, in which millions lost their homes when they defaulted on loans they could not afford, banks changed underwriting standards.

More than four in every five mortgages now require a down payment of 20 percent, and credit history standards have tightened. At the same time, foreclosures continue at a brisk pace, pushing more supply onto the market and pressuring prices downward.

Then there is the issue of underwater homeowners—those who owe more than their house is worth—representing another 23 percent of homeowners who cannot leave or are in danger of mortgage default.

Indeed, the foreclosure problem is unlikely to get any better with 4.5 million households either three payments late or in foreclosure proceedings. The historical average is 1 million, according to Dales' research.

The only bright spot Dales found, aside from the slowing in price drop in March, was some isolated strength in states such as Nevada, Michigan, South Dakota, Alaska and Iowa.

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