Life Insurance protects families.
“If I had it my way, I would write the word insure over the door of every house, because I’m convinced, for sacrifices that are inconceivably small, families can be secured against catastrophes which otherwise would smash them up forever”
“It is the duty to arrest the ghastly waste, not merely of human happiness, but national health and strength, which follows when, through the death of the breadwinner, the frail boat in which the family are embarked, founders and the women and children and the estates are left to struggle in the dark waters of a friendless world.”
Winston Churchill,s great quote about the need for every family to insure the bread winners life.
Winston Churchill certainly was great leader and he certainly understood the precarious nature of family finance when he made this statement about the benefits of Life Insurance.
Friends Provident International have released their latest Attitudes Report which shows UAE residents are not taking financial advice and are vastly under-insured.
Commenting on this Matthew Waterfield General Manager Middle East and Africa of Friends Provident International said: “It is alarming that almost half the respondents have no life and/or critical illness cover in place, but not really surprising based on the responses to the previous question which shows that 44% of respondents have never taken advice from a UAE based adviser. Putting aside religious or cultural objections, protection policies form a cornerstone of any holistic financial planning. Again, I would urge everyone to take independent financial advice and to ensure that adequate life and/or critical illness cover is in place to protect their family or business should the unthinkable happen.”
In the report Matthew Waterfield was also quoted as saying: “I would urge anyone, regardless of their level of household income, to take expert advice and to acquaint themselves with the opportunities available to them to make their money work harder. This in turn will help them to maximise the potential return on their savings and/or investments.”
Iain McIntyre is a Senior Consultant with LifePlus Insurance Brokers LLC and can be contacted on iain.mcintyre@lifeplusuae.com
Tax avoidance or Tax evasion?
Jimmy Carr
Take That
Comedian Jimmy Carr has apologised for using a legal tax avoidance scheme which enabled him to pay as little as 1% tax on his earnings. Further revelations that Take That stars Gary Barlow, Howard Donald, Mark Owen and their manager Jonathan Wild ploughed £26million into a partnership which enables them to cut their tax liability dramatically.
People have been trending this issue relentlessly on twitter, but let’s be honest who wants to pay too much tax(if any) the common denominator is they have all taken expert financial advice.
Tax evasion Definition
Unlawful attempt to minimise tax liability through fraudulent techniques to circumvent or frustrate tax laws, such as deliberate under-statement of taxable income or wilful non-payment of due taxes.
examples
The tax-man loses out again.
- Being a permanent resident in a country but not declaring income to the tax authorities
- Not declaring income from property letting
- Not declaring gross paid interest on offshore accounts
- Wilful refusal to pay tax
- Pension schemes are legitimate and avoid tax
- The legitimate use of ‘loopholes’ created by poorly drafted legislation or statutory instruments
- The legitimate use of offshore trusts to hold assets
- Phasing the sale of assets over a period of time long enough to effect maximum exemption from capital gains tax(CGT)
- Pension schemes are legitimate ways of mitigating taxation, if you are or intending to be a non-resident then a QROPS pension transfer may offer you even greater tax efficiency.
- Saving either with lump sums or regular savings into an offshore insurance bond can mitigate taxation when drawing income.
- Review your existing last will and testament to make sure it provides relative succession planning to your circumstances.
Australian Private Health Insurance Rebate
Today I would like to share the following important Australian Tax information with you from our friends at Wards Accounting
As of 1 July 2012, if you are a single with income over $84,000 or a family with income over $168,000 you will no longer be eligible for the 30% government reduction on your private health insurance premiums.
Retain your current rebate for longer – advance pay your premium by 27 June 2012:
Members may elect to pay their health insurance premiums in advance. High income earners whose Federal Government 30% rebate may be affected by the new rules, may elect to pay their health insurance premiums before the income testing of the Private Health Insurance Rebate comes into effect on 1 July 2012.
To retain your current rebate for the full 2012/13 financial year the advance premium must cover the full 2012/13 financial year.
Your subsequent (actual) premium payment should be made after 1 July 2013 as any premium payments made in 2012/13 would fall within the scope of income testing for 2012/13. Payment of this subsequent premium and the following premiums will be subject to the Rebate Income Testing rules.
Please note: the above information is based on the understanding of the legislation and the related ATO administrative procedures at the time of writing this email. Members are strongly advised to seek independent advice from their private health insurance provider before proceeding with this payment option.
(Normal) Medicare Levy Surcharge:
To remain exempt from the Medicare Levy Surcharge for 2012/13, you must have an appropriate hospital cover for you and all your dependants (as defined in the tax legislation) for the full 365 days.
Please remember that if you’re affected and wish to retain your Federal Government 30% rebate for 2012/13:
| • | Now is the time to pre-pay your health insurance premium | |
| • | Make your pre-payment by 27 June 2012 | |
| • | Payment to 31 July 2013 is recommended, taking you into the 2013/14 financial year. |
OTHER END OF YEAR INFORMATION
Superannuation: From 1 July 2012 all taxpayers, regardless of age, will have their concessional contributions capped at $25,000. Accordingly, the 2011–12 financial year is the last year that an individual taxpayer aged 50 or over may make eligible superannuation concessional contributions of up to $50,000 under the current rules.
The Australian Government’s superannuation co-contribution limit will also drop from $1000 to $500 from 1 July 2012. This cut will adversely affect many low-income earners, who should consider making after-tax contributions to obtain the maximum superannuation co-contribution before the window closes on 1 July 2012.
Medical expenses: The medical expenses offset will be means tested for those whose income exceeds the Medicare levy surcharge next year. They will only be able to claim a 10 per cent tax refund for net medical expenses exceeding $5000 in the 2012–13 financial year. Hence, where practicable, it may be best to bring forward eligible medical expenses before 30 June.
Deferring income and accelerate deductions: The decrease in income tax rates for middle and low-income earners next year may make it desirable for individuals to defer income or bring forward deductions.
Iain McIntyre is a Senior Consultant with LifePlus Insurance Brokers LLC
The benefits of regular savings plans.
Today`s post covers a crucial area of financial planning and highlights the benefits of saving on a regular basis.
A popular way for Expatriates and International Workers to save is through a regular savings plan. Savingsplan will work with you to help you select and arrange offshore savings plans for your medium to long-term savings objectives. Offshore savings plans provide a very flexible way for expatriates to save on a regular basis for future events such as children’s education and retirement.
“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value” Warren Buffett
If you decided to save $1000(3680aed) per month for 25 years for example the return with a 10% average compound growth would be $1,000,000 so if you would like to be a millionaire start saving today.
If you are thinking of saving some of your tax-free earnings Savingsplan can provide conventional, Shariah compliant or Takaful products to meet your personal requirements.
Savingsplan offers access to a wide range of well-known offshore savings plans through a number of major financial institutions in highly regulated offshore centres providing client protection and confidentiality.
Offshore regular savings plans also benefit from the following,
- Tax Efficiency.
- Investment flexibility.
- The ability to take income.
- Available in multiple currencies.
- Flexibility of payments.
We research the marketplace to help you find and select a suitable savings plan for your particular requirements, making sure the plan we recommend will give you the best value for money taking into account the plans features, terms and charges.
If you would like to start saving for you and your families future, please feel free to contact us for a free financial health check.
Iain McIntyre is a Senior Consultant with LifePlus Insurance Brokers LLC
How will the Tax Man find my offshore assets?
The Tax Man’s most common source of information
According to Rav Parmar from Sovereign Corporate Services in Abu Dhabi, the Tax Man doesn’t need spy techniques or subterfuge. He simply has to talk to some people. In the vast majority of cases, information about your offshore assets is going to reach the ears of the Tax Man right from the lips of another person. Some examples might include:
- The ex-wife who’s angry that you didn’t split the assets you have offshore with her in the divorce.
- The ex-girlfriend who is crazy enough to think that turning you in to the Tax Man will make you want to take her back.
- An ex-partner who is jealous of the success you’ve enjoyed since the split.
- A competitor who’s managed to figure out how your business is structured, and wants to get you out of the marketplace because he’s scared.
- A disgruntled customer who’s looking for any and every way possible to shut you down.
The fact is that it’s people – the people you see in your life every day – that present the biggest threat when it comes to the Tax Man.
Sometimes, it’s just stupidity
Discretion is the name of the game when you have offshore assets. Sometimes, you don’t even need someone else to tip-off the Tax Man – you wind up doing it yourself. For example, driving that brand new Ferrari to apply for unemployment benefits, or wearing a $2,000 designer Italian suit when you go to pick up your welfare check. If you’re going to protect those offshore assets, you need to not stand out.
The most important safety measure
The bottom line is this: if you want to protect your offshore assets from the Tax Man, you need to be smart. Be very careful about discussing your offshore assets from anyone, and don’t do stupid things that will make the Tax Man take a second look. Even though you might be operating in a legal way, when it comes to taxes you’re almost always guilty until you can prove your innocence.
The answer is?
Take advice from a global company like Sovereign Corporate Services who can look after your assets anywhere in the World, giving you the correct platform to maximise your assets privacy, security and tax efficiency.
Iain McIntyre is a senior consultant with LifePlus Insurance Brokers
This blog covers the complex issue of UK pensions for Expatriates or UK residents considering permanently moving abroad so I will try to keep it a simple as possible. Over recent years larger numbers of UK nationals are choosing to work and retire abroad what impact does this have on their pension entitlement? There are three options for you to consider for your existing pension schemes.
- Do nothing and leave it where it is.
- Transfer to a SIPP (Self Invested Personal Pension)
- Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme)
The first thing to do is clarify the two terms (QROPS and SIPPS). QROPS are not a product, HMRC recognises an overseas pension which is approved and regulated in the jurisdiction in which it is based. The jusidiction (eg. Isle of Man) then applies to HMRC for recognition as a QROPS arrangement solely to enable it to accept transfers…
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The benefits of Estate Planning and Wills
I though this time out i would blog about a subject that expats here in the UAE have incredible apathy towards; that is the subject of Wills/Estate Planning/Asset Protection you can call it whatever you want, the basic fact is that very few people protect what they own.
So why do people not have a properly written Will, upon your death here are some reasons why you should have a will in the UAE,
- Visas are cancelled.
- Bank accounts are frozen.
- Home country is informed of your death.
- Shariah law may/will apply to your estate.
- Partners if not married will receive nothing.
- Business assets could be lost.
Tax benefits for Australians
I thought for this blog I would share with you a tax break for Australians, I was looking for some tax information to assist a client who was interested in investing in a portfolio bond and came across the following information so I thought I would share it with you.
If you are Australian then your tax situation is as follows,
“Individual Australian residents are subject to tax on their worldwide income. Non-residents are subject to Australian tax on Australian source income only. A Portfolio Bond policyholder will have no Australian tax liability whilst they are non-resident.”
In general a resident is a person who resides in Australia and falls under the following categories,
- The person is domiciled in Australia, unless the tax authorities are satisfied that the persons permanent place of abode is outside Australia; or
- The person has actually been in Australia continuously or intermittently for more than half of the tax year, unless the tax authorities are satisfied that the persons usual abode is outside Australia and that the person does not intend to reside in Australia.
- Investment choice;Invest in a near limitless range of worldwide assets from cash, government securities, structured notes to hedge funds.
- flexibility; Invest in a combination of up to 50 assets at any time, hold your assets in a variety of different currencies.
- expertise; Appoint a personal Discretionary Fund Manager
- Access to capital; Access up to 90% of your capital from day one, take regular withdrawals, one-off withdrawals or cash in your policy at any time.
- Effective tax and succession planning; Potential for tax efficient investing, comprehensive range of trust options and the facility to add up to 6 lives assured.
UK pensions SIPPS V QROPS
This blog covers the complex issue of UK pensions for Expatriates or UK residents considering permanently moving abroad so I will try to keep it a simple as possible. Over recent years larger numbers of UK nationals are choosing to work and retire abroad what impact does this have on their pension entitlement? There are three options for you to consider for your existing pension schemes.
- Do nothing and leave it where it is.
- Transfer to a SIPP (Self Invested Personal Pension)
- Transfer to a QROPS (Qualifying Recognised Overseas Pension Scheme)
The first thing to do is clarify the two terms (QROPS and SIPPS). QROPS are not a product, HMRC recognises an overseas pension which is approved and regulated in the jurisdiction in which it is based. The jusidiction (eg. Isle of Man) then applies to HMRC for recognition as a QROPS arrangement solely to enable it to accept transfers from UK authorised and approved pension scheme which consist of UK tax relieved funds. In effect an offshore pension is a SIPP which conforms to HMRCs QROPS legislation.
UK SIPP
- Designed for UK tax payers or persons with UK sourced income.
- Benefits cannot be taken till age 55.
- Fund growth is free from taxation.
- Annuity purchase available but not mandatory.
- Tax free lump sum(Pension Commencement Lump Sum) PCLS of 25%, remaining balance must provide an income for life.
- Capped income drawdown(receiving income) is governed by UK GAD (Government Actuarial Department) rates at 100%(of GAD)
- Income is taxed at source.
- Provides tax relief on members contributions.
- 55% Member Payment Charge (tax) on residual fund on death if you are receiving income.
Overseas QROPS personal pension arrangement.
- Designed for UK nationals who are living abroad or have the intention of moving abroad.
- Benefits can be taken from age 50(dependent on jurisdiction)
- Fund growth is free from taxation.
- Income is paid gross (Income would then be declared in your resident country)
- Annuity purchase available but income draw down is generally favoured.
- Greater flexibility of investment choice and currency options.
- Once the you have been non-resident for 5 full complete and consecutive tax years(five-year rule) the benefits are as follows,
- Tax free lump sum (Pension Commencement Lump Sum) PCLS of 30%, remaining balance must provide an income for life.
- No member payment charge on residual fund upon death if you are in income drawdown, the full fund is payable to your beneficiaries.
- No inheritance tax(IHT)
- Capped income drawdown governed by UK GAD rates with 120% (of GAD) available under local pension rules.
As you can see there is no real significant advantage to a QROPS over a SIPP for tax purposes before you start to take benefits. The main benefits kick in once you begin income drawdown(and have completed 5 full complete and consecutive tax years as a non-resident),
- Tax free lump sum (Pension Commencement Lump Sum) PCLS of 30%, remaining balance must provide an income for life.
- No member payment charge of 55% on the residual fund upon death if you are in income drawdown, the full fund is payable to your beneficiaries.
- No inheritance tax(IHT)
- Capped income drawdown governed by UK GAD rates with 120% (of GAD) available under local pension rules.
The old argument that QROPS are more expensive to administer than SIPPS is simply not true any longer and in some case can be cheaper than many UK SIPP providers, LifePlus Insurance Brokers LLC have negotiated very favourable charging structures with many QROPS trustees in a variety of jurisdiction to suit any clients requirements.
It certainly makes a lot of sense to review your current pension arrangements by appointing a suitably experienced Financial Advisor to fully assess what your options are, therefore letting you make an informed choice.
Iain McIntyre is a Senior Consultant with LifePlus Insurance Brokers LLC and can be contacted on the contact form below.
Buildings and Contents Insurance in UAE
I thought this time out I would share some of the many thoughts I have on the subject of Buildings and Contents insurance here in the UAE. I am sure everyone in the UAE has looked on in horror at the second residential building fire in Sharjah, coming so soon after a similar incident in the same Emirate. The subsequent disclosure that non fire resistant cladding has been used on as many as 500 of the towers constructed in the Emirates has only added to that feeling of shock and horror. See the report in the Gulf News.
Equally disturbing was a recent report (detailed in a press release) by Aman Insurance regarding the number of fire related incidents in the UAE, a staggering 3,274. In the press release Aman Insurance highlight the benefits of protecting your personal assets from fire, should the unthinkable happen. You can read the report here, Aman Insurance Press release
My simple call to action would be for every tenant to check the following,
1. Ask your Landlord/Owner if they can
- Provide a block contents policy for your building. (which generally works out cheaper than individual cover)
- Provide a contingency plan for relocation should the building be uninhabitable.
2. Make a list of all you possessions and how much it would cost to replace on a new for old basis.
3. Speak to an Insurance broker who can advise you on what level of cover you require.
I urge consumers to take immediate action to protect their families, and personal belongings, by purchasing a suitable insurance policy from an Insurance broker. They will be able to provide you with a policy to suit your specific needs at a price that is affordable. I also urge socially responsible landlords to fully insure their buildings, and if possible, provide mandatory contents insurance for all of their tenants. LifePlus Insurance Brokers can provide tenants with a contents insurance policy for as little as AED 295 per annum so there really is no reason for anyone to be without basic contents insurance cover.
Iain McIntyre is a Senior Consultant with LifePlus Insurance Brokers LLC and can be contacted on iain.mcintyre@lifeplusuae.com
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