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A deductions guide specifically for ADF members is available on the ATO website.
Most ADF members are in a defined benefit super fund, such as MSBS, that have very generous retirement benefits.
If you are under the new arrangement and have a choice of super fund, you can elect to have your super paid into any complying superanuation fund.
Consider how you want your money invested and then choose a fund based on fees and expected returns, for the investment option you are likely to choose. For example, there’s no point comparing funds based on a ‘balanced’ investment option if you intend to invest in growth assets. Look for a low-cost fund that performs well consistently as last year’s winner may not be this year’s winner.
Comparison websites can help you compare available funds.
The investments which are appropriate for you depend on a range of factors including what your goals are, your attitude to risk, your investing timeframe and the other investments you already hold. A lot to consider. See our Investing money guide for more information.
You should only trust financial advice from a licenced financial adviser who has experience and is licenced to give the type of advice you need. You can find out if the adviser is licensed by searching ASIC’s financial advisers register. We also suggest that you are likely to get advice that is in your interests where your adviser works on a genuine fee for service basis.
Start with a budgeting tool like the MoneySmart budget planner. Enter in all of your income and expenses for a set period, such as a calender or financial year, and the amount left over is the amount you have available to save. We suggest using bank and credit card statements to make sure you capture all expenses, particularly those that are paid less frequently such as utility bills, car rego and insurances.
Use a comparison website to see what’s available in the market. Check more than one as each website is unlikely to cover the whole market. Read the terms and conditions to make sure an account suits your needs. When you’ve identified a suitable account you can usually apply to open an account online. To find comparison websites, enter ‘compare savings accounts’ into your browser’s search function.
Saving protects you from unexpected life events and helps you achieve your longer term goals. You are forgoing spending now so you have resources in the future. Having 3-6 months worth of cash in savings is likely to reduce your stress and allow you to focus on what’s important.
Yes, you should be able to under some circumstances. Under the Australian Consumer Law (ACL), if you buy something from a business in Australia (rather than say from an overseas online trader or in a private sale) you may be able to get a refund, replacement or repair if the goods suffer from what the ACL defines as a ‘major’ problem. For more information see the ACL your shopping rights guide
The Defence Home Ownership Assistance Scheme (DHOAS) assists current and former Australian Defence Force (ADF) members and their families to achieve home ownership. DHOAS is administered by the Department of Veterans’ Affairs. To work out whether DHOAS is a good idea for you, you will need to compare the net benefit of a DHOAS loan, that is your repayment amount less the DHOAS subsidy, with repayments on other loans available in the market. Make sure you are comparing loans with the same repayment timeframe and with similar features. Visit dhoas.gov.au for more information.
If your bill or loan reayment is late by 14 days or more, the information can be listed on your credit report and is likely to have a negative impact on your credit score. Partial payments are considered missed payments for credit reporting purposes. Credit reporting agencies record the date your credit payments were due, whether or not you made the payments in full by the due date, and the dates you made any missed payments (but not the amounts that were missed). This information is recorded for any credit products held in the last 2 years.
If you don’t make payment on a debt, your credit provider may refer your debt to a debt collector and/or report your debt to a credit reporting agency and ask them to record the default on your credit report. This may include defaults on your utility and phone bills. The credit provider must notify you that they may lodge a report about the overdue payment, before they do so. Usually, your credit contract or service agreement will explain when your creditor may make a report about you to a credit reporting agency.
Using a credit card and paying the balance in full each month is one way to build your credit rating, however you need to be very disciplined with your money and not be tempted to overspend. A safer option is to simply pay your bills such as internet, phone and utilities, in full, on time, every time.
It can take time to build up or improve your credit score. You can improve your credit score by:
Your credit rating, or credit score, is a number, allocated to you by a credit reporting agency, that expresses your perceived creditworthiness. Your credit score is dynamic, which means it changes constantly as new information about you is received. You can get a free credit score from a number of online providers. The results may vary depending on which credit reporting agency is used.
The following websites offer a free credit rating:
You may need to check with more than one ratings agency to get a consistent and reliable measure of your credit rating.
Your credit rating (or credit score) is what lenders (or credit providers) use to decide whether to give you credit and on what terms. Credit ratings are created by and maintained by ratings agencies, using information about you given to them by credit providers. For example, loans applied for and payments missed.
Your credit report contains information about your credit history. You are entitled to a free copy once a year from one (or all) of these agencies:
For more information including information on how to get your credit report online visit the MoneySmart website.
Read our guide on managing personal debt. Speak to a Chaplain or contact the National Debt Helpline on 1800 007 007 to talk to a free financial counsellor.
Before you start looking for a loan you’ll need to decide on some key features, such as a redraw or offset facility, or the ability to repay early without penalty. A comparison website can then help you compare loans based on terms, interest rates and the features you want. Go direct to lenders websites as well to get a good idea of what’s available in the market. Make a shortlist and then choose your loan.
Financial advisers are typically paid on a genuine fee for service or a percentage of assets under management basis. Genuine fee for service means they charge a set fee for the work they do for you (for example on an hourly basis). If you need further advice in the future, you will have to pay for it. Advisers who charge percentage based fees often charge a set up-front fee and then ongoing fees for managing your investments and reviewing your financial plan. The ongoing fees are determined as a percentage of the assets you have invested. This means the larger your investment balance, the higher the adviser’s fees. It may also mean that if you have substantial investments you are from time to time paying relatively high fees.
Your child support is calculated as a percentage of your gross (rather than taxable) income, this includes deployment income and allowances. Contact the Child Support Agency for more information.
You must notify child suport of changes to your income if you want to avoid incurring a child support debt.
You can ask your financial adviser about budgeting, investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. If you are trying to assess whether an adviser is a good fit for you, you could ask them about their qualifications and experience, how long they have been providing financial advice and whether they have helped other clients who have similar needs to you.
Your accountant can only give you financial advice on investments if they hold an Australian Financial Services (AFS) licence, or are an authorised representative of an AFS licence holder. ASIC’s financial advisers register can tell you where a financial adviser has worked, their qualifications, training, memberships of professional bodies and what products they can advise on.
A financial counsellor can help you if you get into financial difficulty by helping you sort out your finances and putting strategies in place to help you better manage your money. Financial counselling is free. A financial adviser, or financial planner, can help you with things like wealth creation strategies, choosing investments and retirement planning, for a (often substantial) fee.
If you are not sure where to go for help contact us with a brief description of what you would like help with.
Our website! More specifically: For information on financial advice, read the Getting Financial Advice Money Guide. For information on investing, read the Investing Money Guide. For general financial information, visit the MoneySmart website. For information on investing in the share market or other ‘listed’ (i.e. able to be bought or sold on the stock exchange) investments, go to the Education section of the ASX website.
You may not need a financial adviser. The majority of Australians do not pay for financial advice. Arguably, unless you have significant assets, you may not be an attractive client to many advisers. Particularly those which receive fees based on the funds they manage for you. However, if you feel that you would like help with achieving your financial goals and with some or all of the things outlined ‘What does a financial adviser do?’ you may wish to consider paying for advice.
Financial planners are typically paid either on a genuine fee for service or on a percentage of assets under management basis. Some may also receive commissions for insurance sold to clients or volume and other bonuses for products sold. We recommend choosing an adviser that works on a genuine fee for service basis because we think you are more likely to get advice that is in your best interests. The cost of advice varies widely between advisers, however you should expect to pay at least $3,000 – $5,000 for comprehensive advice. Many planners are reluctant to provide limited advice on a single issue.
A good financial adviser can help you develop realistic financial goals and put strategies in place to achieve them. A financial adviser, also known as a financial planner, can help you:
Our view is that you are more likely to get financial advice that is in your best interests if you choose a genuine fee for service adviser. Someone who simply gets paid on an hourly basis or a fixed fee for a piece of work and is free from remuneration based conflicts of interest (for example percentage fees on funds under management, insurance commissions or volume bonuses). You may wish to use ADF Financial Advice Referral Program to find an adviser. The program provides a list of advisers who have given undertakings to Defence that they will provide genuine fee for service advice to ADF members and their families.
You need insurance for anything you could not afford to replace if it was damaged, lost or stolen. For example it is common to take out insurance for your home, contents and motor vehicle. Personal insurance covers events such as death, invalidity and loss of income. Health insurance covers health related costs and travel insurance covers you for unexpected events before, during, and after you travel. For more information read the Insurance and Personal Insurance money guides.
Typically you, or your family, will receive an indexed pension for life, and possibly a lump sum, should something happen to you. However, every person and every situation is different. Many factors such as your level of injury, who is considered a dependent, the scheme that you are under, your years to retirement, and whether you were in service at the time, will determine the exact amount and type of your benefit. For more information visit the CSC website and read the death and invalidity factsheets for your super fund.
Most ADF members find that their statutory entitlements are adequate to meet their needs, however there may be instances when you don’t think it’s enough, for example if you have a large mortgage you would want paid out if something happened to you. For more information, see our Personal Insurance money guide.
As an ADF member you have statutory (legislated) entitlements that automatically entitle you to military compensation administered by the Department of Veterans Affairs (DVA) and death and invalidity cover through your superannuation (if you are serving full time or in certain other service categories, and/or have preserved superannuation entitlements). For information on your current entitlements, visit www.dva.gov.au/benefits-and-payments and www.csc.gov.au.
An excess is an amount you are required to pay when you make a claim on an insurance policy. You are essentially contributing to the cost of the claim. You won’t have to pay an excess for loss or damage caused by another person if you can identify the person at fault.
Yes, you can. If you can find a cheaper policy for similar cover, most insurers will negotiate the cost of your premium, particularly if you are a good customer. Negotiating terms and conditions may be harder but it never hurts to ask. Just make sure you get any amendments in writing.
First think about what you want covered then use a comparison website to compare features, premium cost and excess. Make sure you look at what isn’t covered (exclusions) as well as what is covered (inclusions).
Yes. Third party property insurance covers you for any damage you may accidently cause to someone else’s property. We consider this to be an absolute minimum requirement when owning a vehicle. It won’t cover any damage to your vehicle so if you can’t afford to replace your vehicle, you should consider taking out comprehensive insurance.
If you cannot afford to lose something then it makes sense to insure it. Insurance is essentially a way that a group of people share and manage risk. For example, where everyone in a community takes out home and contents insurance; in any given year hopefully not too many homes are lost to fire, but if anyone does suffer loss the pool of premiums pay for that person to rebuild.
While both are classified as ‘growth’ investment assets, property and shares are very different. A property is a physical asset, a share is part ownership of the company you invest in. Both have historically good long-term returns, however shares require a much smaller up-front investment and don’t have the high buying and selling costs that a property does. A residential property has the obvious advantage of giving you a roof over your head. You can also invest in either through listed or unlisted managed-style investments, such as managed funds, exchange traded funds (ETFs) and Australian Real Estate Investment Trusts (A-REITs). See our Investing money guide for more information.
It’s very hard to say. All investments carry some risk. Ordinary shareholders in a company will often lose their money if the company fails and goes into liquidation. A common method investors use to reduce the risk of losing their money is to ‘diversify’. A simple example is rather than investing all your money in one company; if you were to invest in ten or twenty the risk of all your investments failing reduces. For further information see our Investing money guide.
No, not necessarily. An adviser can help you make investment decisions if you are not confident going it alone. However, be aware that most advisers have a limited ‘approved product list’ to choose from so they won’t be across the whole market. If you want to invest in individual shares you will probably be better off using a stock broker.
We are not able to recommend shares to invest in. In fact, in our view there are very view if any people who are able to make consistent sound recommendations about particular share investments. There are many ways to invest in shares. If you want to invest directly it may help improve your outcomes to choose shares in a range of companies, across diferent industries, and do your research on the companies before you invest. You can also invest in shares through a managed fund or exchange traded fund (ETF). This is where your money is pooled with that of other investors and a professional fund manager chooses which shares to buy and sell. This gives you access to a broader range of shares at a low cost and will require less ongoing management. See our Investing money guide for more information.
When you hit your lump sum MBL, you will be notified and given the option to reduce or cease the personal contributions you make through your pay (the 5-10% of your post-tax salary that comes out each fortnight). When you reach your pension MBL you will need to cease personal contributions. Salary sacrificed contributions don’t count towards either MBL so you can continue to make these if you wish.
The implications of reaching the MBL will be different for different people and will be affected by factors including how long you are likely to continue serving for and whether or not you are likely to be promoted or receive pay rises before you leave. For this reason, we encourage you to arrange for a personal consultation with the Commonwealth Superannuation Corporation (CSC) to fully understand what the likely effect will be before making any decisions.
Unless you have a reason for having more than one super fund, consolidating your funds will mean you pay less fees and it will make managing and keeping track of your super easier. As one fund is also likely to be achieving better returns than another, consolidating your funds into the best performer will likely increase your overall investment returns. You should also consider whether you need or want to retain any personal insurance policies you may have through your super funds before consolidating.
It depends on your goals and personal circumstances. On the plus side. You may be able to reduce the tax you pay by making before tax (salary sacrifice) contributions. After-tax contributions are not taxed as you will already have paid income tax on the money. Subsequent investment earnings are also taxed at a relatively low rate, so saving for retirement within super is generally a good idea.
Starting voluntary contributions early to benefit from compounding returns over time can mean that small regular contributions can turn into a lot of extra money to play with later in life. There are annual contribution limits so starting early also means you have a greater chance of building a bigger retirment pot.
On the dowside, anything you contribute to super cannot be taken out until you retire and/or meet a condition of release. So don’t contribute money you may want to use for something else before you retire.
Because superannuation is a tax effective retirement savings scheme and could ultimately make the difference between you having a comfortable dignified retirement and not. The younger you are when you take an interest in superannuation, the better off you will be in retirement. Simple steps like consolidating multiple funds, choosing an appropriate investment option and making small additional contributions throughout your working life, can have a significant impact on your retirement income. Starting early allows you to benefit from compounding returns over a longer period of time.
MSBS is a defined benefit fund that gives you access to a lifetime pension, indexed to inflation as well as a lump sum. Your benefit is based largely on your years of service and final average salary; and to a lesser extent the contributions you may make. ADF Super is an accumulation fund. You will simply receive a lump sum at retirement based on contributions and investment returns. You will decide how much income you draw down and you will be responsible for making it last throughout your retirement. Both funds have advantages and disadvantages, however MSBS provides greater certainty when it comes to your retirement benefits. We strongly recommend that if you are an MSBS member you seek independent financial advice and very carefully consider it before deciding to change to ADF Super.
A comparison website will help you compare funds based on fees, performance and other criteria. Look at fees and long-term average performance, net of fees, and choose a fund that has a range of investment options that suit your needs. There are hundreds of funds available so any fund that is consistently in the top say 20 funds is likely to be okay. Always look at long-term performance, over 5-10 years, as last year’s top performer may not be this year’s.
Starting and running an SMSF involves significant time, effort, and responsibility. Most people start an SMSF to have greater control over their retirement funds, however unless you have a lot of money, it can be very expensive. You would also need to be confident choosing investments or pay a professional to help you. Go to the MoneySmart website for more information on what’s involved.
If you are lodging your tax return yourself, you’ll need to lodge it by 31 October each year. If you’re using a registered tax agent you’ll have until 31 March the following year.
If you don’t lodge your tax return on time you can be fined. If you owe the tax office money, you may also have to pay interest on the money your owe.
If you have a defined benefit super fund like MSBS, you will pay tax on some of your pension income. You can find more details in the factsheets for your fund, available on the CSC website.
If you are an accumulation fund member, for example ADF Super, your super pension should be tax free from age 60.
Besides earning less money (which is a self defeating strategy) there are limited means by which you can legitimately reduce the tax you pay. You can reduce your taxable income by applying allowable deductions, this will reduce the amount of tax you have to pay. Only claim genuine deductions for expenses you can prove.
To get an extension to lodge your tax return, either contact the Australian Taxation Office (ATO) directly or use a registered tax agent.
If your tax affairs are fairly simple you can complete your tax return yourself using myGov. If you wait until early August, most of your data will already be pre-filled on your online form. If your tax affairs are more complex, for example you have shares or an investment property, you may choose to use an accountant or registered tax agent.
To find an accountant you could ask friends or family for recommendations or you could use the search functions available on the websites of the peak industry bodies, CPA Australia and Chartered Accountants Australia New Zealand. If you want them to complete your tax return for you, make sure they are also a registered tax agent.
Yes. All Australian taxpayers need to submit a tax return each year. Please watch our short tax time video for more information.
Yes, but a little less than most other employees. ADF members pay tax on ordinary income and allowances, with the exception of some tax-exempt deployment income. ADF members do not pay the Medicare levy, which is an additional 2% paid by other employees.