GPL Financial Group GPL Partners

June 2016

Ransomware – BEWARE!

 

In our role as a domain hosting company we see much of the dark side of the Internet including hacking, viruses and server attacks.  Of these, Ransomware is one of the worst and most insidious.

However, if attacked and if you’re quick to shut down your computer (even pull the power cord out if need be) then you may be able to avoid issues even if the ransomware encrytion process has started.     

                 

To most of us an e-mail, with an attachment or a link, that’s supposedly from a credible source such as the Australian Federal Police (AFP), ATO or Australia Post (a popular faux-sender because of the levels of online shopping) appears like something that should be opened.   Unfortunately, too many think this and every day more computers are being taken-over and people extorted (see Symantec’s example below).  Be very careful.  
 
A test: If something seems important but comes from a source that seems wrong (the AFP notifying you of a traffic fine) then just delete the e-mail immediately.   However, this is being made more difficult as some organisations are increasingly using e-mails to send documents as a way to cut mailing costs, and most don’t advise of this change.  At the moment, scam e-mails claiming to come from Australia Post are being clicked on way too often.  If unsure you can always check the ‘sender’s’ website (the AFP site, for example, mentions the e-mail scam that relates to them) or give them a call. 
 
If you are hit then there is little time to act but you have a chance if you’re quick.  Also if you’re on a network and the other computers have shared files and folders then they too will be infected instantly.  All such computers need action taken immediately as well.  Tip:  Ensure what's ‘shared’ between computers is minimised as much as possible.
 
Firstly, your security software should react immediately when it detects the fact you’ve just unleashed some malware and display a pop up message.  Often these displays are quick so be vigilant, and if you can set them to display for longer, then do so. 
 
Secondly, if there is ANY indication of Malware/Ransomware THEN SHUT YOUR COMPUTER DOWN IMMEDITELY.  Ransomware needs a bit of time to encrypt/lock files, etc and only shutting your computer down will stop it.  Ransomware is usually an executable file so when restarting your computer, in most cases, it should not restart the malware itself.  
 
Finally, scan the computer using your security software such as Microsoft Security Essentials or Norton. But equally important is to run specialist malware software as well.  If you don’t have such software then a good option is Malwarebytes Anti-Malware software.  Go to their site, install the free software (you can upgrade later if you want) and scan again.  When done and all malware is removed then re-boot your computer again.  With any luck you will be able to continue.
 
Preventive maintenance: 
1.      Make sure your security software is always up to date, this usually happens automatically.
2.      Updated system and application software helps also.    
3.      Scan regularly.
4.      Back-up your data regularly, even if only your personal files, to an external/cloud drive or a flash drive.
 
It’s not uncommon to receive 3-4 Ransomware e-mails a day, so be careful.  Ransomware can also be downloaded by visiting malicious or compromised websites, so be careful there too.
 
A bit of history:
 
Ransomware first emerged in Russia and Eastern Europe in 2009 and is largely run by professional cybergangs.  
 
An example of why criminals do this sort of thing as investigated and documented by Symantec:  
 
$33,600 in one day!!
 
Symantec experts analysed how criminals monetise the scheme.  In the month-long period the experts studied one specific attack in more detail and 2.9 per cent of compromised users paid out. This may seem like a small percentage, but it pays off for the criminals:
 
•        During the month 68,000 computers were infected: the equivalent of 5,700 every day.
•        Ransomware typically charges between US$60 to US$200 to unlock the computer.
•        On a single day, 2.9 per cent or 168 users paid the ransomware, permitting the criminals to potentially earn US$33,600; which means the criminals can make up to $394,000 in one month.  There are many types of Ransomware.
 
NB:  Be careful of this also:  Another version of Malware is FAKEAV.  Instead of capturing the infected system or encrypting files, FAKEAV coax users into purchasing their bogus anti-malware software by showing fake anti-malware scanning results.  

Beware!  Beware!  Beware!  
 

Peter Graham

AcctWeb / PlannerWeb

No Change to Super Fund Borrowing Rules (yet)

 

The federal government has announced it does not agree with the Financial System Inquiry’s (FS) recommendation ….

…. to prohibit limited recourse borrowing arrangements (LRBA) by superannuation funds.
 

                 

 

At this time there is not enough evidence to justify a major policy change.

What was the mischief?

What is the loss of revenue, if any?

Many advisers of SMSF struggled to find any justification for this perceived problem and it seems that the Government agreed.  Therefore, trustees and financiers can continue with structures that include SMSF borrowing.

The government does recommend the monitoring of LRBAs by the Council of Financial Regulators and the Australian Taxation Office will review any risk associated with LRBAs, and report back in three years.

 

AcctWeb

Property to remain at top of ATO’s hit list

 

One national accounting network has tipped that SMSF property investment will be a big-ticket item on the compliance agenda in 2016.

             

Given the growth in the SMSF sector and the increasing popularity of strategies such as limited recourse borrowing arrangements (LRBAs), H&R Block predicts that property will remain a top priority for the ATO’s compliance work in the sector this year.

“I know the ATO always keeps a close eye on property investment and especially LRBAs,” director of tax communications at H&R Block, Mark Chapman, told SMSF Adviser.

The ATO foreshadowed in an announcement late last year that LRBAs could be an increased area of focus in 2016.

This particularly applies to related party borrowings which may currently be structured on non-commercial terms, with the deadline to have these structures rectified being June 30 this year.

Speaking more broadly, Mr Chapman believes the ATO will continue to insist on monitoring compliance regarding rental property income and deductions, following the 2015 campaign which saw 500 postcodes issued with warnings that urged holiday home owners to ensure deductions were not made during periods in which a property was not available for rental.

“With property rental a valuable source of extra income for millions of taxpayers, it can be expected that the ATO will follow up with some targeted reviews and audits this year,” Mr Chapman said.

He also noted that the ATO will up the ante in a crackdown and investigation of the ‘sharing economy’, “driven in part by the high levels of non-compliance amongst those driving for Uber or renting rooms through Airbnb”.

“The ATO was caught unawares by the growth of the sharing economy and has had to play catch-up to avoid being left behind in terms of tax collections and voluntary participation,” noted Mr Chapman.

They’ll now want to make up for lost time and make their presence felt.”

Small businesses are also set to find themselves in the tax office's sights, with Mr Chapman warning those businesses that are currently stretching their entitlements and utilising ‘creative’ financial measures regarding their $20,000 small business tax write-off.

“As taxpayers start to submit tax returns including claims under the instant asset write-off rules, we reckon these deductions will be closely scrutinised by the ATO and there is likely to be high-profile audit action against those who are stretching or breaking the rules,” he said.

 

Written by Katarina Taurian
​Friday, 29 January 2016
smsfadviseronline.com.au

Turnbull stands firm amid SG freeze speculation

 

Prime Minister Malcolm Turnbull has attempted to dispel talks that the government is looking to freeze the superannuation guarantee (SG) rate …..

.. ….. indefinitely at 9.5 per cent in an attempt to boost the federal budget.

           

On Friday last week, The Australian reported that the federal government is preparing to “permanently halt” any further rises to the SG.

The newspaper reported that the halt to further increases to the SG would “recoup billions of dollars for the federal budget” and help fund income tax cuts in a reform package to be taken to the next election.
Later that day, Mr Turnbull said the government had “no plans to change the rise in compulsory super”.

“We are having a very lively debate about tax and economic reform, and so all sorts of proposals are swirling around and […] we are considering all of those things,” he said, speaking to reporters in Canberra.

The Association of Superannuation Funds of Australia (ASFA) said the SG is scheduled to increase from 9.5 per cent to 10 per cent in 2021, and then incrementally up to 12 per cent by 2025.

Keeping the SG rate at 9.5 per cent instead, ASFA said, would only reduce the retirement incomes of the majority of older Australians.

ASFA chief executive Pauline Vamos said that due to the ageing population, Australia will need to deal with a larger proportion of retirees and greater expenditure on health and aged care in the coming years.

“Future governments need to have the flexibility to ensure that the most vulnerable are adequately cared for and as many as possible are funding their retirement needs,” she said.

“The SG is a crucial pillar of the retirement incomes system, as it enables a significant proportion of Australians to predominantly self-fund their retirement, reducing reliance on the Age Pension. However, the system is still maturing and we have not yet seen the full scope of these benefits.”

According to estimates by ASFA, retaining the SG rate at 9.5 per cent would result in around 40 per cent of retirees relying on the full age pension by 2050.

“If we are looking to the system to supplement or replace the Age Pension, and to ensure that as many Australians as possible are able to achieve a comfortable retirement, then the scheduled increase in SG is a material factor in allowing the system to meet its goals,” said Ms Vamos.

Australian Institute of Superannuation Trustees chief Tom Garcia also agreed that “leaving the SG rate at 9.5 per cent will not deliver an adequate retirement income for many working Australians, with middle-income earners and women – who currently retire with about half the super of men – particularly vulnerable”.

Mr Garcia said any further delays to reaching 12 per cent by 2025 would create unnecessary uncertainty for workers and employers alike.

He also noted the widespread benefits of superannuation for the economy, including funding much-needed infrastructure development and reducing long-term pressure on the federal budget.

“Australia’s compulsory retirement savings system is the envy of other countries, who are now battling to support unfunded pensions, such as what we’ve seen occurring in Greece,” said Mr Garcia.

“Lifting the super rate to 12 per cent is about taking the right steps now for the long-term benefit of Australia.”
 

Written by Tim Stewart
​Monday, 08 February 2016
smsfadviseronline.com.au

Tax breaks, education and access to advice key to successful transition to retirement

 

As pressure grows for the Federal Government to scrap the superannuation tax concessions, ….

…. an international survey found most respondents believed tax breaks on long-term savings and retirement products would encourage them to save more for retirement.

           

The Aegon Center for Longevity and Retirement, Retirement Readiness Survey 2015 revealed a further 18 per cent felt that better financial education would improve their ability to plan for their retirement, while another 17 per cent believed improved access to advice would be crucial to securing a successful transition to retirement.

“Given the current pressures on public finances in many countries, it is crucial that governments maintain a commitment to tax incentivized long-term savings,” the report said.

“Across many of the countries in our survey, governments recognize their role in promoting access to information and advice, but there is still much progress to make.”

The survey found that just 14 per cent of Australians aged 55 or older believed they would retire before reaching 65, compared with the global average of 26 per cent.

However, 77 per cent of Australians envisioned that they would have a flexible transition to retirement, while only 55 per cent of respondents internationally believed they would be able to follow that path.

The survey also found that Australian workers over 55-years-old were more likely to be offered retraining or reskilling opportunities (12 per cent) than their peers around the world (nine per cent).

Australian workers were also more likely to be offered the chance to more from full-time to part-time employment (38 per cent) than those overseas (27 per cent).

 

By Nicholas O'Donoghue 
29 January 2016
accountantsdaily.com.au
 

Dying Without a Will

 

Many will be surprised (possibly unpleasantly) by the formula prescribed in various states legislation, if a person dies without a valid will.

                 

Each state has a formula prescribing the proportions that spouses and children will receive.  They often prescribe that a spouse will receive the first $100,000, and half to one-third of the balance.  The children may receive half to the other two thirds.  In Tasmania and New South Wales, the spouse often receives everything.

This may give an answer that is acceptable in simple circumstances, but if you have separated and not divorced or blended families with children from different relationships, the answer may be very much contrary to what would generally be deserved or expected.

The only way to avoid the uncertainty is to make a will.

Having made a will, it is then important to ensure that it is up to date and deals with changed circumstances.  It can also be impossible to change a will if the person loses capacity – this is generally a result of dementia.

 

AcctWeb

 

Mortgages, personal debt and retirement

 

Ideally, we would enter retirement with our home mortgages paid off and completely free of any other kind of debt.

           

That would give us the capability to use our retirement savings to finance (or help) finance our standard of living in retirement.

Yet many retirees are, of course, reaching traditional retirement ages with outstanding mortgages and other debts. And often these retirees may decide to use at least part of their super to fully pay off their debts, reduce debt or to direct part of their super pensions to keep making repayments.

Other debt-reduction options include remaining in the workforce for longer than perhaps intended or “downsizing” to a less-expensive home if possible (keeping in mind the possible impacts on the age pension).

It may be worthwhile seeking advice from a financial planner before taking a new mortgage or extending an existing mortgage if it is unlikely that the debt can be repaid by your intended retirement age. Perhaps you need advice about how to deal with a longstanding mortgage as your retirement nears.

With the ageing of the population and rising house prices in recent years – Sydney and Melbourne being at the forefront – outstanding debt near retirement is apparently becoming more of a mainstream personal finance issue. A large proportion of the debt is accumulated using home equity loans, enabling home owners to increase the size of their mortgages, according to comprehensive research by the Australian Housing and Urban Research Institute at Curtin and RMIT Universities.

Another research paper shows that home mortgages, excluding investment properties, made up almost 30 per cent of debt in 2013-14 of households headed by a person aged 65 or older. This is up from under 20 per cent in 2004.

Further, this paper – Buy now, spend later – Household debt in Australia, published in December by the National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra – reports that home mortgages made up 46 per cent of debt in 2013-14 of households headed by a person aged 50 to 64.

In an examination of median household debt, NATSEM found that 44 per cent of households in 2013-14 headed by a person aged 65 plus had some kind of debt (this figure includes non-mortgage debt) against 38 per cent a decade earlier.

However, it is critical to keep in perspective any concerns about retirees using their super lump sums to repay pre-retirement debt.

Rice Warner Actuaries has found that almost 87 per cent of retirement super accounts in 2013-14 with balances of more than $300,000 were being taken as pensions rather than lump sums. And for retirees with super account balances between $50,000 and $100,000, the split was almost even between lump sums and pensions.

And of the super retirement benefits taken as lump sums, at least a third of the money was transferred into bank deposits with most of the remainder being used to reduce debt.

Perhaps the bottom-line is that retirees with little or no debt upon retirement can direct their retirement savings to financing their retirement lifestyles – not to repaying or simply servicing pre-retirement debt. It is something to think carefully about before taking on a new loan.

 

By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
09 February 2016

Cost of retirement continues to climb

 

The Association of Superannuation Funds of Australia (ASFA) retirement standard for the December quarter shows living costs for retirees have risen once again.

           

The ASFA retirement standard estimates that couples need to spend about $59,236 per year, while singles will need to spend $43,184.

Both categories increased from the previous quarter. The total budgets for older retirees increased by 0.5 per cent at both the comfortable and modest levels.

While there was a modest rise, ASFA CEO Pauline Vamos said the cost of living had not increased substantially, which is positive for current retirees.

“However, many Australians are still retiring with an inadequate amount of superannuation. In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $645,000,” said Ms Vamos.

According to ASFA, the most significant price rises in the December quarter contributing to the increase in the annual budgets were domestic holiday travel and accommodation up 5.9 per cent, and international holiday travel and accommodation up 2.4 per cent.

The most significant offsetting price falls were automotive fuel down 5.7 per cent, fruit which was down 2.6 per cent and communications down 2.4 per cent.

Written by Miranda Brownlee
Thursday, 25 February 2016
SMSFadviser.com.au

Personal finance goes ‘viral’

 

Home videos of animals or babies often seem to go viral on the internet. But have you heard about a list of personal finance tips going viral on the net?

             

Your response is probably: “No way”.

Well, it did happen two years ago. Harold Pollack, a professor in social service administration at the University of Chicago, jotted down on a small index card a straightforward list of things that had personally helped him straighten out his own finances.

Pollack then posted a photo of his handwritten note online; it went viral. And Money Magazine in the US named the listing of his points distilled on a single card as one of the best new money ideas of 2013.

Now fast forward to 2016. His simple index card has evolved to become the basis of a recently-released 245-page book, The Index Card: Why Personal Finance doesn't have to be complicated. Forbes magazine, among other publications, has given the book, co-written with personal finance writer Helaine Olen, a favourable review.

It should be emphasised that Pollack is not, nor does he claim to be, a personal finance expert but someone who carried out extensive research because of his own candidly-discussed financial challenges. That perhaps adds to the appeal of what he is saying.

In broad terms at least, his key points – which have been revised to a degree for his book – make much commonsense:

  • Try to save a proportion of your income for an emergency fund and to at least partly finance your retirement. (Although Pollack suggests actual percentages, a person's ability to save much depends, of course, on personal circumstances.)
  • Invest in a diversified portfolio of low cost index funds rather than trying to beat the market. (A Vanguard diversified fund was mentioned as an example).
  • Maximise savings in a concessionally-taxed retirement (super) fund.
  • Hold adequate insurance.
  • Buy an affordable home if and when you can.
  • Pay off your credit card in full each month.

With the release of Pollack's index card book, New York Times personal finance writer Ron Lieber has had a look at the handful of current publications featuring simple, should-do personal finance lists.

Lieber says the authors – who include Jonathan Clements, writer of the book Money Guide 2016, which carries a list of 18 personal finance steps – agree on at least four things. These are: create an emergency fund, invest most of your portfolio in index funds, buy your own affordable home if you can, and hold adequate life insurance.

In his article, How should you manage your money? And keep it short, Lieber writes that the “biggest takeaway” from these various simple financial pointers is: “Managing your money should be pretty straightforward but that doesn't make the task all that easy.”

He asked the authors of the personal finance lists why people keep on breaking these four seemingly straightforward rules given that not one is new. However, as their responses indicate, this is no simple answer.

As behavioural economists tell us, we often seem naturally drawn to acting against our own best interests – such as trying to pick winning individual stocks and trying to time the markets. That is why some of the most fundamental and sometimes seemingly obvious principles of sound personal finance management are worth repeating again and again.

Hopefully such published lists will prompt more of us to write down or revise our own list of financial goals given our personal circumstances. (One of Vanguard's Principles for Investing Success is to set clear and appropriate investment goals.)

By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
11 February 2016

ATO warns on poor asset records causing SMSF breaches

 

The ATO has stressed the importance of clearly distinguishing SMSF assets, with some funds losing assets to lenders following personal debts because they were not recorded correctly.

         

Speaking at the SMSF Association’s national conference in Adelaide last week, ATO assistant commissioner Kasey Macfarlane said it is important fund assets are clearly distinguished as such, and that legal ownership of those assets is correctly recorded in the fund’s name.

We have seen real-life cases where that hasn’t occurred, and legal ownership of shares, for example, hasn’t been correctly recorded in the fund’s name, and there’s been personal debts,” said Ms Macfarlane.

“A lender has taken action to recover those personal debts and because the fund assets haven’t been recorded properly, the trustee has been required to sell those fund assets to satisfy the personal debts.”

This not only has an impact on the member’s retirement savings, she explained, but also means a breach of superannuation laws, which also potentially brings with it further financial issues in terms of administrative penalties and other compliance actions.

Ms Macfarlane said while poor records of assets on its own isn’t something the ATO would typically look to take compliance action against, it is important practitioners and their clients think about the broader context and purpose of those particular rules and why they are actually there.

“They are rules that are there not just regulation for the sake of regulation, but they are actually designed to protect the fund’s assets, and effectively protect member’s retirement savings,” she said.

She also cautioned that there are different state and territory laws around recording titles or assets.

“There are also different laws around lenders protecting their security interests and then enforcing those security interests,” she said.

“You need to make sure that you’re comfortable within the context of those broader laws that the way that the asset is actually recorded is going to be sufficient to protect the fund’s assets, because the last thing we want to see is assets being lost out of the fund [because] of something that could have been taken care of relatively easily.”

Miranda Brownlee
Thursday, 25 February 2016
accountantsdaily.com.au

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