Am I taxed on an insurance payout?

Australia has had its fair share of disasters over the last few years

Drought, bushfires and floods have ramped up the volume of insurance claims. 

floodMost people would assume that if and when they need to claim on their insurance, the insurance payout covers the damage and is not income assessed for tax purposes - but this is not always the case.

Insurance payouts for damaged or destroyed personal items are generally not taxed. For example, any insurance payout you receive for your family home won't necessarily be taxed. But, the rules are different if you have used your home to produce an income, for example, you have used part of your home as a home business or you have rented out part of your home.

The rules are also different if the item is a personal asset costing more than $10,000 or if the asset is a collectible that cost more than $500. Where the insurance proceeds exceed the original cost of the asset, that is, the asset appreciated in value, then capital gains tax might apply.

Read more…

Personal finance New Year’s resolutions

As we start a new calendar year, take time to pause and reflect

This tends to be the moment when we also make new resolutions for the year ahead.

new year financial resolutionFor context, a resolution is a firm decision to do or not to do something. And, the making of a resolution can often be sparked by our need or want, upon reflection, to seek positive change in an area of our life.

This may be especially the case when reflecting on the 2020 calendar year.

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Power of Attorney

The different types of powers of attorney

For some of us, in terms of estate planning and the management of our affairs, our main focus can often be on drafting a will-and putting arrangements in place for assets (e.g. super) that may not be covered by our will.

intergenerational couplesThese matters primarily centre on how we would like our affairs managed in the event of our passing. Importantly, thought should also be given to the management of our affairs while we are still alive.

With this in mind, below is a brief overview of powers of attorney, and the different types that may be available and their benefits.

Please note: Laws governing powers of attorney may vary in each state and territory. Please consider seeking professional advice to better understand how they may relate to your personal circumstances.  Read more…

Transition to retirement income streams

Retirement can mean different things to different people

However, when it comes to retirement and retirement intentions, there can be common threads. 

retirees with house plansFor example, according to 2018-2019 ATO data*:

  1. The average age of retirement was 55.4 years.
  2. The top three reasons retirees left their last job included: they reached retirement age or became eligible for super; they experienced sickness, injury or disability; or they were retrenched, dismissed or no work was available for them.
  3. The main factor influencing a person's decision about when to retire was financial security.
  4. For people who were intending to retire, the average age they planned to retire was 65.5 years.
  5. The Government's Age Pension remains the main source of income for most retirees, followed by super.

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Home loan repayments

Key home loan repayment considerations

When it comes to home-ownership, for most of us this is achieved through saving a deposit and funding the balance via a home loan from a lending institution (e.g. bank, building society or credit union).

key handoverImportantly, while the loan can help us with entering the housing market, it's vital to remember that this will most likely be the largest, and most time/cashflow-consuming, debt that we pay off in our lifetime.

According to Australian Bureau of Statistics (ABS) data analysed by CommSec*, in December 2019, for an owner-occupier, the average new home loan to buy an existing dwelling was $497,900 in Australia.

Here is a further breakdown on this with regards to individual states and territories:  Read more…

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