NEWS – Possible reduction in Annual auditing for SMSFs? – Budget 2018

Possible reduction in Annual auditing for SMSFs? – Budget 2018

Business editor, Ian Verrender of ABC News online, allerted us to a less-known Budget proposal, to reduce SMSF annual auditing requirements. He writes –

The details are sparse, the mention brief. But there at the top of page 41 in budget paper number two it sits.

“The Government will change the annual audit requirement to a three-yearly requirement for self-managed superannuation funds with a history of good record keeping and compliance,” it states.

According to the budget papers, it’s all about reducing red tape for the trustees of self-managed funds.

A seemingly minor detail among hundreds of pages dripping with billion-dollar policy shifts, it was a change that escaped the army of commentators assembled in Parliament House last Tuesday to grill Treasurer Scott Morrison on the details of his third federal budget.

It was an odd decision for two reasons. For a start, big, professionally run funds still must be audited every year.

The tax trap

Large, professionally run superannuation funds are overseen by the banking regulator, the Australian Prudential Regulatory Authority.

Self-managed funds, by contrast, are regulated by the Australian Tax Office. While many funds outsource the administration, the fund trustees — usually the beneficiaries — make the investment decisions.

Until now, self-managed funds have been required to have their affairs audited by an independent auditor. It’s not just for financial transactions. The audit also monitors compliance issues.

Given the enormous tax concessions superannuation enjoys, independent auditors have been required to ensure beneficiaries or trustees are not attempting to game the system, to ensure the government isn’t being dudded on tax.

With audits required in only one in three years, some self-managed retirees could succumb to the temptation to manipulate asset values or not properly record cash injections so they stay under the cap and avoid tax.

Those yet to retire may be tempted to withdraw funds temporarily for personal use and repay the cash before the third year when the audit is done.

Retirees at risk

There’s also the potential for self-managed retirees to become prey to an industry that has rewritten the definition of scandal.

In 2009, thousands of self-managed super funds were fleeced by Trio Capital which collapsed owing $176 million, after cash was funnelled offshore. Financial advisers from Wollongong to Port Augusta tipped around 6,000 super fund trustees into the Astarra Capital fund.

While APRA-regulated funds — bank, industry and government funds — cover anyone who has suffered a loss from fraud or theft via levy that is imposed on the funds, no such protection exists for self-managed funds.

A joint parliamentary inquiry into the Trio collapse in 2012 reinforced that distinction. While the government forked out $55 million to those who lost out through APRA-monitored funds, it recommended self-managed super investors receive nothing.

Given the litany of atrocities within the financial services industry, and its scant disregard for its own clients, it seems odd to be scaling back oversight of almost a third of Australia’s $2.6 trillion superannuation industry.

A little bit of red tape can go a long way.

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also!

No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and You – Top right hand side above.

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NEWS – Australian Federal Budget 2018 highlights

Australian Federal Budget 2018 highlights

Here is a summary of the Budget offered this week –

Here’s a quick guide to what’s been announced – and finally some good news for Super!

Superannuation will give you less headaches

Do you have superannuation payments sitting in multiple accounts? If you do, the Australian Tax Office will be given powers to find it for you and send it to your active account.

They’ll also ban exit fees. That means superannuation providers won’t be able charge you when you want to move to a better provider.

If you’re young or not earning a lot of money, superannuation companies won’t be able to force you to pay life insurance policies if you don’t want them.

You’re getting a tax cut

This will be done in three ways over seven years.

The first is simple but be patient — you won’t get it until your tax return next year. If you’re a low or middle-income earner, you can expect up to $530 a year — or just over $10 a week.

The second is a tweak to tax brackets. Right now, you pay more when your salary goes north of $87,000. That’s going to change. You won’t start paying more until you earn $90,000.

The last is more drastic — a flattening of the tax system. By 2024, everyone earning between $41,000 and $200,000 will pay 32.5 per cent tax. That means a big tax cut for those earning more than $90,000 who would have paid 37 per cent, but it’s a long way down the track.

Plenty can happen in one year of politics — let alone seven years — so there’s no guarantee Mr Morrison’s sweeping vision will become a reality.

But what about that surplus?

If all goes to plan, the budget will return to surplus a year earlier than planned in 2019-20. But it will only be $2.2 billion in the black — just 0.1 per cent of GDP — so a small change in fortunes and it’s gone.

The surplus for the year after will be bigger than expected — $16.6 billion — but again that’s all subject to Treasury forecasting.

More on how the Government’s going to pay for all this a bit later.

Aged care is a big focus of this budget

The Government wants more older Australians to get care at home. About 14,000 more people will get home care packages at a cost of $1.6 billion over four years.

A new commissioner responsible for safety and quality care will get a $253 million kickstart over four years. Mental health services in aged care homes will also be bolstered.

More than $30 million will go towards improving palliative care, provided state governments also chip in a similar amount of money.

Prepare for roadworks

As expected, the Government is spending big on roads and rail. There’s $24.5 billion for new projects to ease congestion. Most money is going to Victoria including the biggest item; $5 billion for a rail line to Melbourne airport.

But there is a political fight ahead — for many of the bigger projects, the Commonwealth wants the states to pitch in half the money. If they don’t, those projects won’t go ahead without a battle.

The Coalition wants more doctors in rural areas

There’s money for five new medical schools in the Murray-Darling region so students can complete the majority of their training in the regions.

There will also be a new junior doctor training program and money for another 100 vocational training places.

The Royal Flying Doctor Service will pick up $84 million in funding and for the first time, it will deliver dental and mental health services.

The number of visas set aside for international doctors to help ease a shortage has been revised down, thanks to increasing graduate numbers.

Don’t worry … there’re no nasties to pay for those tax cuts

So how are they paying for it?

The Government is going after illicit tobacco sales in a bid to reclaim $3.6 billion over four years.

The so-called Black Economy Taskforce will target sectors known to avoid paying tax, which should reclaim about $5.3 billion over four years.

It’ll also crack down on money laundering, so payments of more than $10,000 will now become illegal.

Selected parts, based on ABC, 9 May 2018.

What are your Thoughts? Comment below!

Want to know the options and what we need to retire on, the super system in Australia and what is self-managed super? See our FREE slides Super & SMSF for Business owners

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need.

A call is Free. No obligation. 0407 361 596, Paul

MASTERCLASS Investment – Company Reports Part 1 – What are Company Financial Reports?

Investment – Company Reports Part 1 – What are Company Financial Reports?

All companies must report at least Annually – for a small business, the minimum are the Financial Reports, and larger companies such as listed on stock exchanges, will also supply Director Reports on the company activities and future plans and prospects as well as auditor report. Financial reports or statements are crucial for tracking the financial health of a business. They are also important in setting goals, making sound business decisions and obtaining finance.

Financial Statements

The Financial Statements represent a formal record of the financial activities of an entity. These reports  quantify the financial strength, performance and liquidity of a company. Financial Statements reflect the financial effects of business transactions and events on the entity.

There are 3 key main financial reports that are supplied – Profit and Loss, Balance Sheet, Cash Flow Statement. For small business, often just the first 2 are generated.

Profit and Loss or Income Statement – reports the Income (revenue) for the period, the Cost of Sales (stock at cost before sold), where the net of these two is the Gross Profit. Then the Expenses or overheads such as rent, wages, advertising etc, and deducted from the Gross Profit, gives the Net Profit or Earnings (often also called EBIT – Earnings Before Income Tax)

Balance Sheet or Financial Position – reports the Assets and Liabilities and Equity of the company. The Assets are what is owned, such as cash, plant and equipment, debtors (clients who owe the company. The Liabilities are what the company owes to others, such as suppliers on account (creditors), loans, tax and super for employees. Assets less Liabilities gives Equity or what the business is worth.

Cash Flow Statement – the Cash Flow Statement, presents the movement in cash and bank balances over a period. The movement in cash flows is split into the following segments:

• Operating Activities: Represents the cash flow from primary/main activities of a business.
• Investing Activities: Represents cash flow from the purchase and sale of assets other than inventories (e.g. purchase of a factory plant)
• Financing Activities: Represents cash flow generated or spent on raising and repaying share capital and debt together with the payments of interest and dividends.

Other statement reports may also be supplied with bigger companies, such as Statement of change in Equity.

Understanding Financial Reports

The financial reports, including the audit report, are a source of information about the company. Financial reports are used by a wide variety of people to evaluate an company’s financial position, performance and changes during the financial year. Financial Reports help to make better informed decisions in their investment with the company.

You don’t have to be an accountant to understand financial data. Take some time to look at your company’s financial statements. Start with simple questions:

1	Is the company consistently profitable or does it swing between profits and losses over years? To find out, we look at the income statements.
2	Do the company’s operations generate surplus cash each year? Does the surplus cash cover the cost of renewing plant and equipment and making new investments? We check the statement of cash flows.
3	How much does the company borrow to support its operations? What percentage of the total assets of the company is made up of borrowed money? We find answers from the balance sheet.

In the next months we look into the detail of what each statement says and how they are constructed.

Want to learn the core issues of share investing?

See our slides SMSF & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what Tools and Ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

Basics about Super – How much do you need to retire?

Basics about Super – How much do you need to retire?

It’s easy to find out – don’t put it off. Be informed and be prepared!

How much do you really need?

Recent research shows that the annual value of Age Pensions paid to those entitled to maximum benefits, amounts to less than half of what a retired single needs to live a comfortable life.

The Association of Superannuation Funds of Australia (ASFA), found that to have a comfortable lifestyle, retired singles who live in their own home need to spend over $43,000 a year and couples over $60,000.

Keeping in mind that the maximum annual Age Pension for singles amounts to just over $23,000  (including the Pension and Energy Supplements) and just over $35,000 for couples, there is a huge shortfall between aspiration and reality, for “comfortable” living.

The news isn’t any better for those single age pensioners around 65 YO who are simply looking for a modest lifestyle compared to comfortable.

For those around 85 YO –

The ASFA Retirement Standard also provides a breakdown by state and territory of how much is needed to support a chosen lifestyle in these areas. 

For up to date details, visit the ASFA – http://www.superannuation.asn.au/ click Resources in the top menu, and click Retirement Standard in the left menu

or this link – http://www.superannuation.asn.au/resources/retirement-standard/

Also look at www.superguru.com.au for tools calculators and information.

Learn more – Learn if your money will last your LIFE Expectancy – do you know the chances of ripe old age? READ HERE

Call for FREE education, or to speak to an advisor about your specific situation. SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need.

A call is FREE. No obligation. 0407 361 596, Paul

MASTERCLASS Investing – Financial Health Part 4 – What is Technical Analysis and how does it work?

Investing – Financial Health Part 4 – What is Technical Analysis and how does it work?

This is Part 4 of our Company Financial Health Series

(click for: Part 1 Determine a Healthy Company

and Part 2 Difference between Fundamental and Technical

and Part 3 What is Fundamental Analysis and how does it work?)

In this final Part 4, we look in detail about Technical Analysis.

Technical analysis

Using the technical analysis means to chart a stock’s share price upward or downward momentum. A technical analyst follows share prices in order to align investors with on-coming positive or negative price action – that is, to forecast/prepare investors to BUY when share-price patterns and volume data are indicating potential sustained rising, and to SELL when charting is indicating a potential meaningful fall in a stock’s (or the market’s) share price/s.

Technical analysis believes that the past trading activity and price changes of a security are better indicators of the security’s likely future price movements, than the intrinsic value of the security. Technical analysis developed from basic concepts taken from Dow Theory (a theory about trading market movements that came from the early writings of Charles Dow). Two basic assumptions of Dow Theory that underlie technical analysis are 1) market price discounts every factor that may influence a security’s price and 2) market price movements are not purely random but move in identifiable patterns and trends that repeat over time.

Technical Analysis – How it is used

Technical analysis attempts to predict the future price movement of shares/stocks and virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures and currency prices. In another way, technical analysis can be viewed as the study of supply and demand forces as reflected in the market price movements of a security. It is most commonly applied to price changes, but some analysts may additionally track numbers other than just price, such as trading volume or open interest figures.

Over many years, numerous technical indicators have been created in attempts to accurately forecast future price movements. Some indicators are focused primarily on identifying the current market trend, such as support and resistance areas, while others are focused on determining the strength of a trend and the likelihood of its continuation. Commonly used technical indicators include trendlines, moving averages and momentum indicators such as the moving average convergence divergence (MACD) indicator.

Technical analysis applies technical indicators to charts of various timeframes. Short-term traders may use charts ranging from one-minute timeframes to hourly or four-hour timeframes, whereas other traders analyse longer-term price movements by scrutinizing daily, weekly or monthly charts.

Assumptions

One assumption, that price discounts everything, means the market price of a security at any given point in time accurately reflects all available information, and therefore represents the true fair value of the security. This assumption is based on the idea the market price always reflects the sum total knowledge of all market participants.

A second basic assumption underlying technical analysis, is that price changes are not random, leads to the belief that market trends, both short term and long term, can be identified, enabling market traders to profit from investing according to the existing trend.

Want to learn the core issues of share investing?

See our slides SMSF  & Shares Overview to get a quick session where you can learn to easily understand Company Financial Statements, how to find healthy companies, what Tools and Ratios to use, work on examples, and also includes how to get better investment outcomes.

If you have questions, call 0407 361 596

Basics about Super – Super & SMSF for Business Owners

Basics about Super – Super & SMSF for Business Owners

As a Business Owner, if you employ staff, you have a legal obligation to provide Superannuation in most cases.

Learn here about Superannuation in Australia, what we all need to retire comfortably, what we need in super to achieve it, how SMSF works … plus more …

Self-Managed Super Funds have become increasingly popular amongst investors, particularly with small business owners.

Everything a small business owner needs to learn about Super Funds including how to get better outcomes will be covered.

Learn:

• How much do you need to retire;
• Life Expectancy – how many years you need to have a supply of money;
• Overview of what super is and how it works;
• Average Super amounts in Australia;
• SMSF – what it is, structure, pros, cons, investments allowed, invest in property.

Click here for the Slideshow

Simple steps to TAKE ACTION:

• Talk with your financial advisor and tax agent;
• A plan of action is better than NO action:
  • Strategy – to become a controller of your wealth;
  • Structure – maybe a Self-Managed Super fund (SMSF) is the answer; and
  • Support – a service to handle all the set up and compliance such as SuperBenefit.

If you have any questions, please call or email as we would be happy to assist you with further information.

For a FREE no obligation discussion of the options for you, call us to book a time to meet.

0407 361 596 Paul, or info@superbenefit.com.au

Masterclass SMSF –What happens to super when you die?

SMSF –What happens to super when you die?

On the death of a person the law is that a member’s benefits must be cashed as soon as practicable. It is called a death benefit payment. Super does NOT form part of a person’s estate. To do so, a person can elect to include super in their estate by completing a Binding Death Nomination to provide for the distribution of the death benefit in accordance with their will.

In the absence of a binding death benefit, the trustee of the super fund may exercise their discretion and pay the super death benefit to the estate, where it can then be distributed according to the will. There is no legislative definition or APRA interpretation of how long “as soon as Practicable” is. Cashing means the literal payment of the benefit (balance) to a beneficiary and is complete when received by the beneficiary, ie transferred to their bank account or a cheque honoured. If the beneficiary is a dependent, the amount cannot be transferred to their member account by journal entries, it must be a physical movement of money.

How death benefit can be cashed

Benefits can be cashed either by:

• A single lump sum (in cash or in-specie ie transfer the shares, or assets);
• Part and final lump sum;
• One or more pensions (with restrictions – only to a dependent);
• Rollover for the purchase of one or more annuities (with restrictions – only to a dependent).

After 1 July 2007, the restrictions state that if the member’s benefits can ONLY be paid as a pension or annuity to a DEPENDENT such as spouse or partner financially dependent, with restrictions on children. For children that are dependent and of age 18 or over, the child at time of death must be:

1. Financially dependent on the member and less than 25 YO; or
2. Have a disability that is intellectual, psychiatric, sensory or physical or a combination, is permanent, results in substantially reduced capacity for communication, learning or mobility and requires ongoing support services;
3. Otherwise, the death benefit must be paid as a lump sum.

If a pension is paid, unless there is a disability, the pension must be cashed up when the dependent reaches 25YO.

Dependants – who are they?

A dependent is a person who is either a:

• Spouse – married, de facto, and same sex, whether financially dependent or not, but not former spouses for super purposes;
• Child – by birth, step, ex-nuptial or adopted, under 18 (over 18 must be financially dependent even if partial). Over 18 is still defined as a child for super benefit purposes, but not for tax purposes, unless financially dependent in some way;
• Interdependency also applies – evidenced by close personal relationship, living together, financial and domestic support and or personal care above a mere friend or flatmate. It may include a partner that does not meet the definition of a spouse, a close relationship but they may not live together eg working overseas or serving a jail sentence.

The tax definition will determine how a death benefit is taxed (ie as dependent or non-dependent).

For further information see the Australian Tax Office (ATO) website HERE.

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

See the slides SMSF Roadmap Overview.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assists you to find the right expert to answer your question – it’s FREE also!

No obligation. 0407 361 596, Paul.