AFSL

Australian Financial Services Licence: Anyone providing financial advice must be licensed by ASIC. Furthermore, the AFSL details the particular financial services for which the licensee is authorised - not all AFSL holders are licenced to provide advice for all financial services. You can view McKinnon Financial Planning's AFSL here.

After-Tax Super Contribution

Referred to as "non-concessional contributions" by the tax boffins, which is fancy term for when you deposit money into your super fund, after you have paid any tax on it., and therefore you do not claim a tax deduction for the deposit. From 1 July 2014, the deposit is generally limited to a maximum of $180,000 per year, or a $540,000 if averaging over three years (but the limits may change in the future).

APR

Annual Percentage Rate: Usually referred to as the "loan interest rate", and is charged to the borrower, excluding expenses such as account opening and account keeping fees. The APR is the basic cost of your credit as a percentage of the total loan amount. Please note that even one credit card will have more than one APR one for purchases, one for cash advances and one that is charged if you make late payments. A rate that includes all fees is known as a Comparison Rate.

ASIC

Australian Securities and Investments Commission: The Australian Federal Government agency that enforces laws relating to companies, securities (e.g. shares), financial services (e.g. Financial Planning; Investment Advice) and credit (e.g. Home Loans), in order to protect consumers, investors and creditors. You can visit the ASIC website by clicking here.

Comparison Rate

An Annual Percentage Rate that helps you work out the true cost of a loan. The Comparison Rate includes the Annual Percentage Rate, and most fees and charges relating to the loan, reduced to a single percentage figure.

Concessional Superannuation Contribution

Concessional contributions are contributions made into your Superannuation investment account, and taxed at 15%. The most common types of concessional contributions are employer contributions, such as super guarantee and salary sacrice contributions.

FAR

Financial Adviser Register: All licensed Financial Advisers must be included on the FAR, which is managed by ASIC. The FAR enables anyone seeking financial advice to research the adviser from which they are seeking financial advice. The FAR includes details of the adviser's financial advice licence, qualifications, education and experience. You can search the FAR by clicking here.

Non-concessional Super Contribution

Also referred to as "after-tax super contributions", which is fancy term for when you deposit money into your super fund, after you have paid any tax on it, and therefore you do not claim a tax deduction for the deposit. From 1 July 2014, the deposit is generally limited to a maximum of $180,000 per year, or a $540,000 if averaging over three years (but the limits may change in the future).

Salary Sacrificing

Also referred to as 'Salary Packaging', which refers to the agreement an employee has with their employer to use a portion of their employment income to pay for some of the employee's personal expenses.

Some expenses (e.g. Superannuation Contributions) may have a lower tax rate than the employee's tax rate, thereby reducing the overall tax payable by the employee.

Care must be taken when sacrificing part of the employee's employment income, as the expense may be subject to Fringe Benefits Tax (FBT). The FBT rate may be higher than the employee's Marginal Tax Rate ('MTR') and therefore defeat the purpose of Salary Sacrificing (i.e. save tax).

Superannuation Transfer

This is the term used to describe the process of using your superannuation investments (which tax investment earnings) to purchase an income stream (e.g. Allocated Pension, which do not tax investment income - provided you are at least age 60) - i.e. you "transfer" your superannuation investment assets to an income stream investment.

At present, there is no limit on the amount you can transfer, however, in the May 2016 federal budget the government has proposed legislation that would take effect on July 1, 2017 (provided the parliment passes the legislation), which would set a transfer cap of $1.6m.

Any excess over the cap would need to be maintained in a superannuation structure (with the earnings taxed).

Transition to Retirement Income Stream (TRIS)

TRIS is an income stream that allows a member to access their superannuation whilst they are still an employee, provided that the member has reached preservation age (currently age 56) and has not yet reached age 65.

 

McKinnon Financial Planning Pty Ltd ABN 74 155 233 784 Australian Financial Services Licence 417488 | McKinnon Financial Services Pty Ltd ABN 82 056 817 648 Australian Credit Licence 392173 | General Advice Warning: Information contained in the pages of this website is of a general nature only and has not taken into account your particular circumstances. You should consider whether any strategies and or investments mentioned in this website are suitable for you and seek personal advice from a licenced investment adviser before making any investment decision.
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