Are you planning for retirement in 2024? Knowing how your property, super, and high-value assets (like boats or cars) affect your finances is important. The ATO is checking to make sure everything matches your tax returns. Regarding your super, you have flexible options like turning it into a regular income. Read our October newsletter, we can help you make sense of these rules and ensure you’re prepared for a comfortable retirement.
Property and ‘lifestyle’ assets
Do you own an investment property or an expensive lifestyle asset like a boat or aircraft? The ATO is examining these assets to see if what you declare in tax returns matches up.
Investment property
The ATO is paying close attention to what investment property owners report in their tax returns. From 2018 to 2026, they are collecting information from property management software, including details about property owners, their rental properties, and the money going in and out, like rent and expenses. This information helps the ATO make sure landlords are reporting everything correctly.
The ATO is especially concerned about landlords who don’t submit the right rental information, don’t report all their rental income or expenses, or make mistakes with capital gains tax (CGT) when selling a property. By checking this data, the ATO aims to ensure landlords follow the rules and pay the correct amount of tax.
Lifestyle Assets
The ATO uses data from insurance companies to check ownership of expensive lifestyle items. These include caravans, motorhomes, cars, motorcycles, and thoroughbred horses worth $65,000 or more, fine art worth $100,000 or more, marine vessels worth $100,000 or more, and aircraft worth $150,000 or more. The information collected includes the owner’s personal details, the asset’s value, and how it’s being used.
The ATO targets people who aren’t reporting these valuable assets in their tax returns, selling assets without declaring the income or capital gains, wrongly claiming GST credits, or not correctly reporting fringe benefits tax (FBT) when businesses own the assets but use them for personal reasons.
Convert your super into retirement income
For superannuation, retirement means meeting a criterion allowing you to access your super with no restrictions. The main qualifying criteria are turning 65, being at least 60 and permanently retired, or leaving a job after your 60th birthday, even if you plan to return to work. Once you meet these criteria, you can access your super in any amount or form you choose.
When you have met these qualifying criteria, you have four options for your super, which are:
- You can convert it into a pension (retirement income stream)
- Take a lump sum
- Leave it in your super account, or;
- Combine any of these options. This gives flexibility in how you manage your super in retirement.
Pensions in retirement
A super pension provides you with a regular income to live on in retirement to help replace the income you previously received from work. The most common type in the Australian market is an account-based pension, but there are also lifetime and fixed-term pension options. The maximum amount you may transfer into pension accounts for retirement is currently $1.9 million per person – this is called the transfer balance cap.
When the goal is generating retirement income, it’s hard to go past a pension product. Investment earnings are tax free (except in the case of transition-to-retirement pensions) and a pension account can provide sustainable retirement income by continuing to invest your savings while making regular payments to you.
How much super should I have at my age?
When you start to think about how much super you should have, you might wonder how your balance compares to other people your age.
Statistics from March 2024 reveal the following average super balances for members of funds regulated by APRA. It excludes members of self-managed funds (SMSFs) because they are regulated by the ATO.
| Age | Average balance |
| Under 25 | $7,000 |
| 25–29 | $22,900 |
| 30–34 | $45,600 |
| 35–39 | $73,600 |
| 40–44 | $101,300 |
| 45–49 | $130,300 |
| 50–54 | $163,400 |
| 55–59 | $203,500 |
| 60–64 | $234,400 |
| 65–69 | $263,700 |
| 70–74 | $282,500 |
Members of SMSFs tend to have much higher balances, with the latest available averages (from June 2021) shown below.
| Age | Average balance |
| Under 25 | $73,539 |
| 25–34 | $116,183 |
| 35–44 | $206,396 |
| 45–49 | $309,263 |
| 50–54 | $435,698 |
| 55–59 | $650,432 |
| 60–64 | $951,687 |
| 65–69 | $1,155,463 |
| 70–74 | $1,270,681 |
Comparing your balance to other people your age is interesting, but the comparison alone can’t tell you whether you’re on track to achieve the retirement you want. A balance that is plenty for one person could be far too small for another because we all have different ideas about the lifestyle we want in retirement and when we plan to retire.
Tax consequences of sharing your home
Where family members or friends who stay in your home pay board and lodging to cover their food and accommodation, this is generally considered a “domestic arrangement” rather than a rental one, so the payments don’t need to be declared as assessable income. Because of this, you also can’t claim tax deductions for expenses related to having the friend or family member staying in your home.
Take care, though: if you have an arrangement with friends or family where you intend to make a profit, or that’s otherwise generally consistent with an ordinary commercial tenancy agreement, simply calling the payments “board and lodging” isn’t enough to avoid the tax implications of receiving rental income. It’s best to seek professional advice if you’re not sure how the ATO might view your particular situation. Eclipse Advisory can help guide you in this situation. Do not hesitate to contact us at admin@eclipseadvisory.com.au for your concerns.
Understanding Australia’s Property Prices
Over the past few decades, the property market has seen tremendous growth, turning real estate into one of the most sought-after investments.
The first step in understanding the market is recognizing regional variations in housing prices. For example, as of 2024, Sydney maintains its position as the most expensive city, with a median house price of approximately AUD 1.2 million, while Melbourne follows closely at AUD 900,000. Other cities show a more moderate price range, such as Brisbane at AUD 800,000 and Adelaide at AUD 750,000. Meanwhile, Hobart, historically a smaller player in the housing market, has seen significant growth in recent years, with median prices now around AUD 700,000. These figures illustrate how certain regions continue to experience price growth, while others have plateaued or even declined, indicating the highly localized nature of the housing market.
Factors Driving Property Price Changes
Understanding why property prices move requires dissecting the various economic and social forces at play. Three core factors significantly influence house prices:
- Interest rates impact housing affordability. When the Reserve Bank of Australia (RBA) lowers rates, borrowing is cheaper, increasing property demand. Higher rates make mortgages more expensive, reducing demand. The RBA cut rates to 0.10% in 2020, sparking a housing boom, but raised them to 4.1% by mid-2024, slowing the market.
- Economic growth. A strong economy usually leads to higher property prices. In 2022, Australia’s GDP grew by 3.6%, boosting housing demand. However, with global uncertainty and rising inflation, growth is expected to slow to 2.2% in 2024, raising concerns about continued price increases. Low unemployment at 3.5% supports demand, but job losses could weaken the housing market.
- Government policies impact the housing market through stamp duty exemptions, first-home buyer incentives, and rules on negative gearing. The 2020 First Home Loan Deposit Scheme allowed buyers to enter with a 5% deposit, fueling the housing boom. However, removing negative gearing tax benefits could change investor behaviour and affect future prices.
In conclusion, Australia’s property market is driven by regional price differences, interest rates, economic growth, and government policies. While cities like Sydney and Melbourne remain expensive, other areas vary. These factors shape current trends and will continue to impact future prices.
Consumer protection challenge in Aged Care
Aged care consumers are vulnerable due to their age, health issues, and limited understanding of financial matters. The aged care system is complex, involving decisions about financial products, care contracts, and government benefits. Many rely on financial advisers, but this creates risks when advisers lack proper knowledge or have conflicts of interest.
Key concerns include a lack of transparency in aged care financial products, with fees and conditions that are hard to understand. The complexity of the system makes it difficult for advisers to provide clear, helpful advice, and there is a risk that vulnerable clients may be sold unsuitable products that benefit the adviser instead.
Middle-income Australians are increasingly struggling with the rising costs of aged care, making good financial advice even more important. However, gaps in the current regulations mean that consumers may still receive biased or inadequate advice. Strengthening protections is essential to ensure fair and accurate guidance.
As the aged care sector continues to evolve, consumers and advisers alike must remain vigilant and proactive to ensure that they are adequately protected. By understanding the key changes and taking steps to navigate the new landscape, aged care clients can ensure they receive the best possible advice and support in their later years.