February 1999 Volume 80 Number 2 "serving the protectors"
Finance

Police Credit Union
Dealing with Financial stress

It’s the time of year again when our spending over the Christmas period may start to catch up with us. The arrival of credit card bills and a lack of spare cash are common scenarios experienced during the post-Christmas interval.

Credit can be very accessible and people can become over-reliant on it, and this ease of access can often cause problems. Often it is the gradual build-up of credit over a period that will lead to a problem and cause financial difficulty. There are two ways of rectifying such a situation: increase your income or reduce your expenses/spending. The solution to avoiding or rectifying financial stress could be as simple as a budget.

One of the easiest ways to budget is to list every dollar of expenditure (including debts) over the period of a month. This gives you a solid indication of where your money is going and where you may be able to make some savings.

Some tips to assist you to decrease your spending include:

• Make your own lunch to take to work instead of buying lunch when you get there.
• Keep an emergency sum of money with you and leave your cards and cheque book at home.
• When at the shops, instead of reaching for the most expensive brand on the shelf, purchase a few no-name (generic) brands.
• Think before you make major purchases. Give yourself a day or two to think about the purchase.
• Is it really necessary to have two cars within the family? The accumulated expenses on registration, petrol, insurance and servicing for two cars can cost a fortune.
• Keep an eye on advertisements displaying prices on a whole range of goods from petrol to food. Significant savings can be made using this approach.

Another approach is to increase your income. It may be possible to work overtime or get a second job. Alternatively, a family member may be able to obtain some casual or part-time employment, or even do some baby-sitting, ironing or gardening for friends.

A consolidation loan may be another solution. This will result in one payment to one creditor and will usually result in lower overall repayments and often a lower rate of interest. If this option is taken it will only be a permanent solution if you have changed your habits. If credit facilities that were paid out with the debt consolidation are used again then you will soon be in a similar or worse situation. Therefore this option should only be used if you do not intend to extend your credit further.

Having to deal with financial difficulty is something that everybody would rather avoid but this is not always possible. Taking the correct approach can make a difficult situation so much easier.

A convenient and easy way to deal with the Christmas debt hangover is to take out a Consolidation Loan from the Police Credit Union. A Consolidation Loan gives you control over your financial situation by giving you only one low interest rate and only one regular repayment to make.

We are currently offering a personal loan rate of 9.25% pa fixed for up to five years (minimum loan amount - $5000, suitable motor vehicle required as security).

If you require a PCU budget planner or would like to enquire about a personal loan call the Police Credit Union on 131844 or 8208 5750 (direct to loans).

Rate of 9.25% applicable as at 15 December 1998. New loans only. Fees and charges apply. Full details of the relevant terms and conditions are available upon application.

Police Super Update
By Michael Hogg
Superannuation Surcharge

The Commonwealth Government has introduced a surcharge tax on the amount of employer superannuation contributions made by employers on behalf of members of superannuation schemes - including the police schemes - since 20 August 1996.

The surcharge is only payable by high-income earners with an “adjusted taxable income” of $70,000 pa or more. “Adjusted taxable income” is a member’s taxable income (as per your tax return), plus employer superannuation contributions.

If your adjusted taxable income is less than $70,000 no surcharge is payable. If your adjusted taxable income is greater than $70,000 then the surcharge is 1% for each $1,000 of adjusted taxable income in excess of $70,000, rising to a maximum of 15% if your adjusted taxable income is $85,000 or over. The adjusted taxable income thresholds of $70,000 and $85,000 are indexed annually to Average Weekly Ordinary Time Earnings ($73,200 and $88,900 for 1997/98).

Example:

Superannuation Salary	$66,319
Employer Contribution:	$11,937 (18% of $66,319)
Taxable Income:	$66,319
Adjusted Taxable Income:	$78,256 ($66,319 + $11,937)
Surcharge Percentage:	8.26% ($78,256 - $70,000)/1000
Surcharge Payable:	$986.00 ($11,937 X 8.26%)

The Australian Taxation Office (ATO) is responsible for the recording and collection of the surcharge. The ATO has been advised of your surchargeable employer contributions for the 1996/97 financial year. You will be advised of the surchargeable employer contribution amount reported to the ATO, for the 1996/97 year, in the near future.

If you are liable for the surcharge tax the ATO will issue an assessment notice to you advising the amount of surcharge tax payable. Upon receiving an assessment notice from the ATO you will have the option to pay the amount of surcharge tax or you can elect to defer payment of the tax until you receive a superannuation benefit from the Police Superannuation Scheme. Where the surcharge debt is deferred, the ATO will maintain a surcharge debt account which will accrue interest based on the Commonwealth Treasury 10-year bond rate. Where the surcharge debt is deferred until a superannuation benefit is payable to you, the maximum amount of surcharge that will be payable is an amount equal to 15% of the employer share of the benefit accrued after 20 August 1996.

If you have not supplied your Taxation File Number to the Police Superannuation Office and your employer contributions are greater than $2,000 a surcharge rate of 15% will apply and you will receive an assessment from the ATO even if your adjusted taxable income is less than $70,000.

The surcharge tax applies to those who were members of superannuation schemes on 20 August 1996. Subsequently members of the Police Superannuation Scheme who have retired since 20 August 1996 may receive a surcharge assessment if their adjusted taxable income exceeded $70,000. Members of the Police Superannuation Scheme who retired prior to 20 August 1996 will not be affected by the surcharge tax.