Market Wrap Up May 2014

Market News

May seemed to shake the “Sell in May & Go Away” headlines that have dominated the last few years to finish the month flat, but positive, up 3.4 points or 0.06%. This is the first time that May has recorded a positive result since May 2009.

The Australian share market is now trading up 2.56% for the calendar year to date.

Australia did however significantly underperform its global peers with the S&P500 index in the US hitting a succession of new record highs during May to close at 1923.57.

The Banks and Telstra carried the market forward as the search for yield continues to drive these stocks higher. Commonwealth Bank broke through the $80 barrier and continued to rise beyond $82. The best performing sector was Energy which was up 3% due to an increase in the Oil price.

Resource stocks posted the worst results dropping -2.8% during May. The iron ore price slumped from US$105.4 to US$91.80; its lowest level since September 2013.

The Australian dollar again strengthened 0.2% to finish the month at 93.10 US cents.

Interest rates were again left on hold at 2.5% and UBS has stated that this level is “likely to be appropriate for some time”.

End of Financial Year Reminders

Superannuation Contributions

This is a reminder to make your last minute superannuation contributions prior to 30 June 2014.

The 30th June falls on a Monday this year; make sure you organise for your contributions to be made the week before to ensure amounts are captured within the current financial year. The funds are allocated to the year which the superannuation fund actually receives the contribution.

BPAY and Electronic Funds transfers can take 2 business days to process so allow time for this.

The contribution caps for the 2013/2014 financial year are as follows:

Concessional Contributions (Compulsory Employer Contributions & Salary Sacrifice)

• $25,000 for persons aged 58 or under on 30 June 2013
• $35,000 for persons aged 59 or over on 30 June 2013

Non-Concessional Contributions (Personal Contributions)

• $150,000 per annum or a 3 year “Bring Forward” limit of $450,000

Warning – Be careful that you haven’t activated the “Bring Forward provisions” in prior years.

Government Co-Contribution

The Federal Government is giving away money to anyone who earns less than $48,516 (for the 2013/14 financial year) and makes a non-concessional contribution into their superannuation fund.

To be eligible you must earn at least 10% of your income from eligible employment.

If your income is below $33,516 and you contribute $1,000 you will receive a $500 co-contribution payment from the Government. For income levels between $33,516 and $48,516 the amount that you receive reduces. You can calculate your entitlement using the calculator on the ATO website.

Pension Phase

We also remind people drawing a pension that you need to satisfy the minimum pension draw down amount for the 2013/14 before 30 June 2014 otherwise you may find yourself paying tax on the full amount of income and earnings for the fund for the year.

The minimum pension drawdown rates for 2013/14 are as follows:

If you require any last minute planning advice please contact us as soon as possible.