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The Australian Prudential Regulation Authority (APRA) continues to work on both superannuation and the lending sphere in response to the commissions into superannuation and banking.

On June 18, APRA announced directions and additional license conditions for AMP Superannuation,  noting its concerns about AMP Super’s management of conflicts of interest, governance and risk; the processes for breach remediation; how poor risk culture is addressed; and ways to strengthen its board and mechanisms for accountability – all aspects of compliance with the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Under these new directions, AMP Super will need to engage an external expert to report on its remediation and compliance with APRA’s instructions.

APRA is casting its stern and watchful eye over what it considers risky loans as well, announcing capital guidelines for large and small banks on 12 June. The new guidelines come in the wake of its original proposals made in February 2018 and industry feedback on those proposals.

The guidelines target higher-risk, interest-only investment loans, which will now have tighter capital requirements than the principal-and-interest mortgages typically taken out by owner-occupiers. What this means is that, for the investment loans, banks will have to hold more capital to absorb any losses against those higher risk mortgages, which are among the biggest assets of the four major banks.

APRA’s directions affect small to medium enterprise (SME) business lending as well as the mortgage sector, with recommendations for additional types of collateral and more detailed risk assessments for SME loans. Credit cards and personal loans secured by vehicles will also be subject to lower risk weights. Smaller and less complex banks will have a more simplified framework.

APRA says its approach aims to keep outcomes competitive. Most changes won’t take effect until January 2022, ADIs currently using advanced models may need to implement the new requirements from 1 January 2021.

Image Source: Louis Douvis, The Sydney Morning Herald

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

The post APRA announces changes to the lending landscape appeared first on Trend Property.

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

It’s a common misconception that superannuation automatically transfers to the super fund owner’s estate upon their death. 

This isn’t the case. Instead, it is up to the trustee of the fund to pay the death benefit in accordance with the fund’s governing rules and relevant law. This situation might be appropriate for you, for example, if you have a sole dependent. But, you may instead want to have more control over who receives what share of your benefit. To make this happen, you will need to make what is called a binding death benefit nomination.

Before a binding death benefit nomination is ‘valid’ there are several requirements that must be met, such as it must be given in writing to the trustee.

It can include different types of dependents, such as your spouse (including de facto, opposite and same-sex), children of any age (including adopted or ex-nuptial), or any person(s) that are financially dependent or in an interdependency relationship with you. 

Interdependency relationships are close personal relationships between two people who live together, where one provides the financial and domestic support and cares for the other. 

Aside from the dependents, the only non-dependents that can you can nominate as your beneficiaries are your estate or a legal personal representative. Aside from the dependents, the only non-dependents that can you can nominate as your beneficiaries are your estate or a legal personal representative. We recommend you seek independent taxation advice. 1

If you’re an adult aged 18 and over, any number of beneficiaries can be nominated and in whatever proportions you like, but they need to combine for the total (i.e.100%) amount of the estate. 

It’s important to remember that the binding death benefit nomination is no longer valid  if any of the beneficiaries you have nominated cease to be dependent or are no longer your legal personal representative. An example of this might be if your spouse has obtained a divorce. If this happens, revisions will need to be made to the nomination for its validity to be restored.

When the binding nomination is signed by the estate owner, it must be witnessed by two adults who cannot be among the beneficiaries. Each of the signatures must be signed and dated on the same day. Once it is received by the trustee, much like a Will, the nomination is then binding for three years from the date it was signed, unless the superannuation trust deed options allow it to be non-lapsing.

After this is completed you can have peace of mind knowing that the death benefit will be paid quickly to the beneficiaries you nominate and will not be held up by the trustee during the estate distribution. At any time, you have the option to change any of the nominated beneficiaries or the share they will receive.

Generally, after three years, the death benefit nomination becomes non-binding, which gives the trustee discretion to protect the interests of your beneficiaries if their circumstances have changed. An example of this might be if one of the beneficiaries is bankrupt, and the trustee, therefore, elects to avoid putting your super benefit into the hands of the beneficiary’s creditors.

Unlike the binding version, non-binding death benefit nominations don’t have an expiration date but are still worth keeping up-to-date such as when you marry, divorce or have children. The trustee is required by law to distribute to your financial dependents or interdependents where these are present. 

Non-binding death benefit nominations still have the option for nominating the number and share for each of the dependents. Non-financial dependents, however, may be excluded, which is another argument for keeping the binding death benefit nomination valid if this is a decision that you want to control.

Despite the terminology, death benefit nominations are a relatively simple way of increasing the control of your estate. Thinking of it as an adjunct to your Will, it can provide you with a similar peace of mind.

Source: 1 ATO – Super death benefits and Super lump sum table

Important note:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Any general tax information provided in this publication is intended as a guide. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

The post The importance of binding nominations in estate planning appeared first on Trend Property.

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

It’s a common misconception that superannuation automatically transfers to the super fund owner’s estate upon their death. 

This isn’t the case. Instead, it is up to the trustee of the fund to pay the death benefit in accordance with the fund’s governing rules and relevant law. This situation might be appropriate for you, for example, if you have a sole dependent. But, you may instead want to have more control over who receives what share of your benefit. To make this happen, you will need to make what is called a binding death benefit nomination.

Before a binding death benefit nomination is ‘valid’ there are several requirements that must be met, such as it must be given in writing to the trustee.

It can include different types of dependents, such as your spouse (including de facto, opposite and same-sex), children of any age (including adopted or ex-nuptial), or any person(s) that are financially dependent or in an interdependency relationship with you. 

Interdependency relationships are close personal relationships between two people who live together, where one provides the financial and domestic support and cares for the other. 

Aside from the dependents, the only non-dependents that can you can nominate as your beneficiaries are your estate or a legal personal representative. Aside from the dependents, the only non-dependents that can you can nominate as your beneficiaries are your estate or a legal personal representative. We recommend you seek independent taxation advice. 1

If you’re an adult aged 18 and over, any number of beneficiaries can be nominated and in whatever proportions you like, but they need to combine for the total (i.e.100%) amount of the estate. 

It’s important to remember that the binding death benefit nomination is no longer valid  if any of the beneficiaries you have nominated cease to be dependent or are no longer your legal personal representative. An example of this might be if your spouse has obtained a divorce. If this happens, revisions will need to be made to the nomination for its validity to be restored.

When the binding nomination is signed by the estate owner, it must be witnessed by two adults who cannot be among the beneficiaries. Each of the signatures must be signed and dated on the same day. Once it is received by the trustee, much like a Will, the nomination is then binding for three years from the date it was signed, unless the superannuation trust deed options allow it to be non-lapsing.

After this is completed you can have peace of mind knowing that the death benefit will be paid quickly to the beneficiaries you nominate and will not be held up by the trustee during the estate distribution. At any time, you have the option to change any of the nominated beneficiaries or the share they will receive.

Generally, after three years, the death benefit nomination becomes non-binding, which gives the trustee discretion to protect the interests of your beneficiaries if their circumstances have changed. An example of this might be if one of the beneficiaries is bankrupt, and the trustee, therefore, elects to avoid putting your super benefit into the hands of the beneficiary’s creditors.

Unlike the binding version, non-binding death benefit nominations don’t have an expiration date but are still worth keeping up-to-date such as when you marry, divorce or have children. The trustee is required by law to distribute to your financial dependents or interdependents where these are present. 

Non-binding death benefit nominations still have the option for nominating the number and share for each of the dependents. Non-financial dependents, however, may be excluded, which is another argument for keeping the binding death benefit nomination valid if this is a decision that you want to control.

Despite the terminology, death benefit nominations are a relatively simple way of increasing the control of your estate. Thinking of it as an adjunct to your Will, it can provide you with a similar peace of mind.

Source: 1 ATO – Super death benefits and Super lump sum table

Important note:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Any general tax information provided in this publication is intended as a guide. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

The First Home Loan Deposit Scheme is a Australian Government initiative to support eligible first home buyers purchase a home sooner.

It does this by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as 5 per cent.

The Scheme will support up to 10,000 loans each financial year, starting from 1 January 2020.

Please contact us on |PHONE| for information on participating lenders.

Are you an eligible first home buyer?

The Scheme is open to singles or couples.

Singles

If you are looking to purchase your first home as the only person named as a borrower in your home loan, then you would apply under the Scheme as a single.

Couples

If you are looking to purchase your first home with your spouse or de facto partner, where you are both named as borrowers in your home loan, then you would both apply under the Scheme as a couple.

NHFIC has developed a tool to help first home buyers find out whether they meet the Scheme’s eligibility criteria.

Click here to view the Eligibilty tool.

Property price thresholds

To ensure the Scheme is only available for the purchase of a modest home, or the purchase of land and construction of a modest home, the property price thresholds (maximum property purchase price under the Scheme) will apply in capital cities, large regional centres and regional areas.

NHFIC has also developed a tool to help first home buyers find out the property price threshold for the suburb in which they are looking to purchase a property. Please note that this tool is provided as a guide only and does not mean that you will receive either a guarantee or a loan from a participating lender.

Click here to view the price threshold tool.

Fact Sheets

Please click here to download a Fact Sheet

Please click here to download some FAQs

If you have any questions or require further information please contact us on |PHONE|.

Source:

https://www.nhfic.gov.au/what-we-do/fhlds/

Brett Dickinson

Brett Dickinson

Director of Global Property at United Global Capital
LREA, DipFinServ
Brett is a Licensed Real Estate Agent and manages United Global Capital’s property projects and client acquisitions.
Brett Dickinson

Latest posts by Brett Dickinson (see all)

Property investment usually focuses on capital growth for wealth creation: the increased value of the property between its purchase and the sale. However, a rental yield can contribute to cash flow
and ensuring the debt on an investment property can be easily serviced.

Rental yield has been described as “a measure of how much cash an income generating asset produces each year as a percentage of that asset’s value.” To calculate the gross yield, divide the annual total rent by the purchase price. (The net yield includes ongoing costs as well). A gross yield of around 5% is considered a good figure.

With that in mind, CoreLogic’s 2019 Top Rental Performers Report on the ‘100 best rentals in Australia’ has revealed that suburbs in Queensland provide 42 of the top 100 best locations, based primarily in regional areas with links to mining. This is a result of a combination of the job market and the duration of the population moving through.

CoreLogic Research Analyst, Cameron Kusher noted that “to make the grade as a ‘top renter’ for this report a suburb needed to have a solid gross rental yield of least 5% for units or houses, plus consistent rental growth.”

The report stated that Central Queensland coal mining town, Blackwater, has a median property value of around $122,000, a median rent of $260 a week and an estimated gross yield of 11.7%. That yield rate matched second place holder, Broken Hill in NSW.

Houses offered higher yields than units, but while country areas provided higher yields than metropolitan areas, regional Australia didn’t provide the highest capital growth.

Property investment for the rental income versus for the capital growth/capital gain each as pros and cons. The former can require a lot more regular attention to detail to ensure the property remains occupied with good tenants; the latter is a long term proposition which may require a lot more research and an ability to accurately assess market trends.

Either way, seek some expert advice before making your move. You can contact United Global Capital today on 03 8657 7640 or email info@ugc.net.au for a no cost, no obligation consultation and learn how you can position yourself for success.

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