My Personal Finance Blog

1st July 2010 starts a new financial year in Australia. With the new year, a new reduced rates of income tax is has been implemented by the Government. The following savings are a sample of what can be expected, the major beneficiaries are the middle income earners as you can see from the amounts below.

$600 per week the savings are $2.00

$900 per week the savings are $8.00

$1,200 per week the savings are $7.00

For the low income earners the low income tax offset has increase to $1,350 from $1,200, this means that the taxpayer can have extra earnings of $1,000 with out effecting their tax payable.

The new tax brackets are set out below for the 2011 financial year.

Taxable income Tax on this income

$1 – $6,000 Nil
$6,001 – $37,000 15c for each $1 over $6,000
$37,001 – $80,000 $4,650 plus 30c for each $1 over $37,000
$80,001 – $180,000 $17,550 plus 37c for each $1 over $80,000
$180,001 and over $54,550 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy of 1.5%, which is subject to income thresholds. Nor does it include any income tax offsets, these apply to the taxpayers individual circumstances.

There is a common misconception that as you move into a higher tax bracket, all of your earnings are taxed at the higher tax rate, thankfully this is not the case, only the income above the tax bracket is taxed at that rate.

Using the chart above if your income was $85,000, only $5k would be taxed at 37% not the full $85k.

When a person moves or transfers his or her assets and funds from one retirement plan account to another retirement account, that process of transferring or relocating his or her saved assets or funds is known as direct transfer.

Direct transfer is a phenomenon that has changed with the growth in technology. It is done mainly with the help of computerized systems today, but the process still takes a few days or more to complete. When a person leaves his or her job for a new one, it is very much possible that the person’s new employer follows the same or similar retirement plan as the person’s earlier employer did. In such a case, the person can easily transfer his or her funds from their previous to his or her new retirement account which is offered by the person’s current employer. Under such circumstances, the person does not have to pay extra taxes on his or her assets and funds that have been transferred because the transaction made counts as a direct roll over. A direct transfer can be offered to you by many different countries such as the United States of America or the United Kingdom.

With such new age methods, more and more people can take advantage of retirement plans that offer a higher rate of interest or any other form of benefit that will help them to construct or accumulate more assets or funds in the person’s plans over a chosen period of time. Retirement accounts should be very secured and reassuring for the person. The moment he or she thinks that their current retirement plan account is not secure or not as secure as another retirement plan account that the person might have come across, he or she should immediately change his or her account to a more reassuring one.

One element of the divorce process is to decide how any finances and property will be divided between the couple involved. When you are married, any assets that you might have will be shared equally amongst you and your partner. Even if it is your name on the paperwork, the asset will still be split equally.

Along with this, any debts that either partner has incurred will also be split amongst each partner equally. There is an exception to this which is if one partner has personally driven up a large debt as a result of a gambling habit or something similar. In circumstances such as this, the debt will be owned solely by the partner that accumulated it.

If the relationship between you and your partner is still good, you may want to consider an amicable agreement as opposed to having to go through the courts. If you decide to come to an agreement this way you should try and ensure that any children involved in the separation are put first. You may also wish to decide on how any outstanding debts you have with your partner will be paid off. If you own any property with your partner you will need to decide on who will live in the property or if the property will get sold and the equity divided. You should also consider your pension and how much you and your partner earn.

You can either make negotiations on your own or get a solicitor involved but once you have both come to an agreement, you will have to have a solicitor write up a Consent Order which will need to be stamped by a judge to make it official. The judge will only stamp the Consent Order if they believe that the agreement is fair, if they believe that it isn’t fair, the couple may be summoned to discuss matter further.

If you and your partner can’t come up with an agreement, the court will make one for you, based on what they believe is fair for both parties. There are different types of court order depending on people’s circumstances, including paying maintenance for your spouse or dividing up property.

It is most common for a husband to pay their wife maintenance as it is usually the woman who gives up work to look after their children and thus becomes financially dependent on their husband. Maintenance will be paid at regular intervals for a set amount of time. If the partner in receipt of maintenance remarries, they will lose their right to continue to get maintenance.

When discussing financial settlements the court may also decide how to divide or transfer the family home. If the wife was financially dependent on her husband and looks after the children, it is likely that the court will make an order to ensure that she and the children can continue to live in the house. If there are no children involved, the court may also order that property is sold and decide on how the proceeds of the sale will be divided.

The new CARD consumer credit protection act takes effect Feb. 22-and, in my mind, not a moment too soon.

The past few months have produced an appalling feeding frenzy by credit card companies raising interest rates through the stratosphere while they still can, cancelling accounts, reducing credit limits-all in anticipation that the brakes will be put on when this new law takes effect.

Now, hopefully, this behavior will now slow down.

One of my companies recently reduced my credit limit from $9,500 to $500 just because I hadn’t used the card for a few months. I decided to vote with my feet since they had initiated a hit to my credit score, I’d just bite the bullet and say goodbye to them.

The new CARD act doesn’t mean that your credit card company can’t still put the screws to you, but there are some limits.

Here’s what you get starting next week:
You must get 45 days notice before interest rates can be raised on future purchases. Interest rates on existing balances can’t be raised unless you’re in default for 60 days. Monthly statements from now on will tell you how many years you’ll be in debt if you only make minimum payments. Annual fees, if any (look out for them) cannot be more than 25% of the card’s limit. If you have more than one interest rate on your account, anything you pay over the minimum balance will be applied to the highest rate first. But beware, if you only pay the minimum, the money will still be applied to the lowest rate first. Teaser rates on new cards must be honored for one year. Credit won’t be extended to people under 21 without a co-signer, except in very specific circumstances.

Getting a tax refund is something that we can look forward to. It’s nice knowing the government owes you money after you’ve paid your taxes, because we may need those extra dollars for perhaps several different reasons. However, there are some cases in which you can lose that tax refund to your creditors.

How is that possible? After all, it’s your money. However, you can lose your tax refund to a bankruptcy trustee if you have filed for bankruptcy.

Because you didn’t have enough money to pay your bills is really the only reason you would file for bankruptcy. If you do file for bankruptcy and are relieved of your obligation to pay your creditors back, there are certain rights you are no longer entitled to when it comes to your tax refund. The bankruptcy trustees may be able to take a fraction or sometimes all of your tax refund, but only under certain circumstances.

Filing Before January 1st if you file for bankruptcy before January first, the bankruptcy trustee can usually only take a portion of your tax return. Still, this sometimes only applies depending on certain circumstances, like which state you live in and other factors like that. Often though, say if you file for bankruptcy around September, that’s 3/4 of the previous year, so they can only take 3/4 of your tax refund. This is called a pro-rata portion of your income tax.

Filing After January 1st Filing for bankruptcy after January first will usually give the trustee the right to take all of your tax return. This usually only applies if you file bankruptcy between the beginning of the year and the time you receive your refund. If you get your refund and then file, the trustee may only be able to take part of your refund.

Filing Jointly If you are married, you may have filed a joint tax return with your spouse. If you filed for bankruptcy afterward, but only one of you filed, the other may still get their share of the tax return, because that spouse does not have to suffer the consequences of bankruptcy. Therefore if you filed for tax returns jointly and only one individual files for bankruptcy, you will still get half of your joint tax return.

Spending Your Tax Return Money If you spend the money you got from your tax return money before you file for bankruptcy, then the bankruptcy trustee will usually not demand it of you. However, what you spent that money on makes a difference in whether or not they will ask the money of you.

If you use your tax return money to pay soemone back, like any kind of creditor, including family and friends that you may have borrowed money from, then the bankruptcy trustee will ask that you pay the amount you received in your tax return. But if you do not spend it to repay someone and spend it on something like getting your roof fixed or repairing your car, they will usually not go after you to get that tax return money.