NEWS – ATO proposes to include SMSFs in Real-Time reporting

NEWS – ATO proposes to include SMSFs in Real-Time reporting

NEWS – ATO proposes to include SMSFs in Real-Time reporting

As SMSF trustees who run their Self-Managed Super Fund (SMSF) we need to keep up with new developments to stay up to date and be prepared and proactive. With the moves towards integrity and accuracy in the superannuation industry in general, then real-time reporting is likely to become the new norm.

Reporting at smsmagazine.com.au, Tharshini Ashokan writes –

The move by the ATO towards real-time reporting by the superannuation industry will inevitably include SMSFs in the future and trustees need to adapt in order to meet changes to fund regulation requirements, according to an SMSF expert.

SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca said the inclusion of small businesses in the single touch payroll (STP) reporting cycle signalled a need for the SMSF sector to move towards real-time reporting.

“As part of the push for integrity and accuracy for the wider superannuation system, somehow SMSFs will need to be brought into the fold,” La Greca said in a blog post on the SuperConcepts website.

“This can either be by a blanket requirement for more frequent electronic reporting to the ATO (probably via the SuperStream gateways) or a more targeted approach where electronic reporting becomes a mandatory requirement of any superannuation fund wishing to accept superannuation guarantee (SG) contributions or pay a retirement income stream.”

He highlighted the need for trustees and advisers to ensure “future–proofed support” was in place for their funds in order to meet regulatory needs.

“This involves a combination of software with automation and data feeds, and administration capabilities that allow real-time reporting to the ATO for when the spotlight is eventually turned to the SMSF sector,” he said.

“Either way, the days of annual reporting in arrears seem numbered as SMSFs will need to advance towards providing reporting mechanisms in line with ATO requirements.”

In a recent presentation to the Australian Institute of Superannuation Trustees, ATO superannuation and employer obligations deputy commissioner James O’Halloran said the SMSF regulator would be contacting employers that appeared to have paid their SG contributions late during 2018/19.

“It should be noted this is the first direct use of the STP reporting arrangements, based on what your funds report to us relating to SG payments. It’s a tangible action which demonstrates our increasing ability to effectively follow up in relative real-time apparent late or non-payment of SG,” O’Halloran said.

In response to his comments, La Greca pointed out that until SMSFs were included in the move towards real-time reporting by the ATO, it was likely to have an adverse impact on employers.

“Employers will be put between a rock and hard place because they’ve made the contribution to an SMSF, but there’s no matching information at the ATO of the contribution being received by a fund. And this could trigger additional work for the employer in having to respond when they have actually met their SG obligation,” he added.

SuperBenefit works with SMSF trustees to CONNECT them with the advisors they need for a better result. A call is FREE.

If you have any questions, why not give us a call – it’s FREE!

No obligation. 0407 361 596, Paul

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MASTERCLASS Investment – What is PEG ratio in stocks – Price Earning Growth Ratio?

MASTERCLASS Investment – What is PEG ratio in stocks – Price Earning Growth Ratio?

Investment – What is PEG ratio in stocks – Price Earning Growth Ratio?

In our previous Masterclass we covered the PE ratio – Price to Earnings Ratio and how it works.

A variation of PE is the growth of the PE – ie PEG. This takes into account the stock’s value (PE) while considering the company’s earnings per share Growth.

PEG

 

 

PEG is sometimes more popular than the PE price-earnings ratio because it also accounts for growth of earnings.

The similarity to the P/E ratio occurs in that lower the PEG means that the stock is more undervalued.

But keep in mind that the numbers used in the calculation are often considered projected and therefore are only estimates. Also, there are many variations using earnings from different time periods (e.g. one year versus five years) and whether the annual growth is projected (a future prediction) or trailing (past history), so you need to know the exact method and time-frame the source is using.

As an example, consider 2 companies

The first has P/E ratio 20 and annual earnings growth rate 20 = PEG ratio of 20/20 = 1.0

The other has P/E ratio 15 with annual earnings growth rate 10 = PEG ratio of 15/10 = 1.5

Now, comparing the two, the first doesn’t have the growth rate to justify the higher PE and the stock price is considered over-valued.

If you use future earnings figures you are looking at projected PEG.

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

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Centrelink – Travel Voucher Changes for WA and VIC

Centrelink - Travel Voucher Changes for WA and VIC

Centrelink – Travel Voucher Changes for WA and VIC

Have a pension with Centrelink? Then note, you won’t get travel vouchers sent with your Pensioner Concession Card anymore from January 2020 in states of WA and VIC.

The Human Services website explains more –

As a pensioner, you can still get travel discounts. Read more about:

If you have any questions about travel concessions please contact your state transport authority. You don’t need to call us.

Wherever you are in Australia, there are benefits to having a Pensioner Concession Card. You may get discounts when you show your card so it’s a good idea to have it with you.

If you have a smart device you can view a copy of your card in your Digital Wallet. You can read more about how to get the digital wallet on your smart device.

Get your FREE 5 Easy Steps to Plan Retirement One-Page planner from the Resources

Got questions? If you want experts who have years of helping others, without the hype –

then call for a FREE strategy session today

No obligation call 0407 361 596, Paul

What are your thoughts? Start or continue the conversation here!

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SMSF Basics – What is SMSF (Self Managed Super Fund) and what types are there?

SMSF Basics – What is SMSF (Self Managed Super Fund) and what types are there?

SMSF Basics – What is SMSF (Self Managed Super Fund) and what types are there?

Self-Managed Super Funds (SMSF) are one type of super fund similar to the commercial public funds, in that they are trusts.

Super funds can be in 3 forms –

  • Independent large super funds such as retail, industry, bank and financial institutions (Regulated by APRA – Australian Prudential Regulatory Authority)
  • Retirement Savings Accounts (RSA) banks, institutions (rare now)
  • Own self managed super fund (SMSF) you manage it (Regulated by the ATO)

Under Australian superannuation law, you have the ability to choose to contribute your personal superannuation contributions (and in some cases, direct your employer to pay employer contributions) to a superannuation fund of your choice. All super funds are trusts, as your money is held in trust until you are eligible by law to access it to have money to use in retirement.

The difference between a self-managed superannuation fund and other types of superannuation funds is that members are also trustees, or they can be directors of a corporate (company) trustee. This means they control the investments of the fund, the payment of their benefits and are ultimately responsible for the ongoing compliance of the fund.

SMSF are regulated by an Act of Parliament, have different types or structure, are a special Trust (like the major corporate super funds) and are governed by the Sole Purpose Test, that super funds are kept solely for retirement purposes and not to be used for any benefit of members before a lawful retirement event happens.

An SMSF is created under the “SIS” Act whose full name is – Superannuation Industry (Supervision) Act 1993 (or “SISA”) and can be in two main forms

  • Multiple member SMSF

– 2- 4 members

  • Single member SMSF – 2 possibilities

– 2 trustees (you and one other non-employee)

– Or have a Corporate trustee with you as sole director

NO member can be an employee of another (unless family)

NO Trustee can be paid for services

An important part of the law is to recognize and abide by the “Sole Purpose Test” – that an SMSF is established  to pay Retirement Benefits – the purpose of this is to ensure the super assets/money are preserved and protected for retirement, and in the meantime both managed and invested wisely.

This means there are some restrictions on investments in related party assets, assets that can be acquired from related parties, and restrictions on personal use of fund assets.

There are two main different types of SMSFs, based on structure, that is, whether there will be a corporate (special super company) or individual trustees. Another difference is the number of trustees, single member or multiple, up to four trustees/members.

Corporate Trustee:

  • Four or less members
  • Each member also a director of the company who is the trustee itself
  • No member an employee of another member unless related
  • Corporate trustee, nor any director is paid for services related to the fund

Individual Trustee:

  • Four or less members
  • Each member is a trustee
  • No member an employee of another member unless related
  • No trustee is paid for services related to the fund

Single Member Funds come in Two Forms:

  • With corporate trustee, member must be sole director of the corporate trustee, or one of two directors either related or not an employee of each other
  • Two individual trustees, one a member and the other either related or any other person who does not employ them

See ATO: Setting up a self-managed super fund – or print NAT 71923 Pg 6-7

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 Youtop right hand side above.

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Masterclass SMSF – Non-commutable pension and death of an SMSF member – complex stages

Masterclass SMSF – Non-commutable pension and death of an SMSF member – complex stages

SMSF – Non-commutable pension and death of an SMSF member – complex stages

What happens with an SMSF member account  with a Non-Commutable Pension (which means you cannot take out lump sums or withdraw the full amount) who has recently re-married, is the single-member in her SMSF, with the new husband as the other Trustee and desires 2 stages to occur on her and his death –

1.     have the income distributed to her spouse,

2.     then, on the death of the NEW SPOUSE, would like the capital to go to her son of previous marriage.

How can these events be achieved?

The Trust Deed (SMSF governing rules) will need to be checked to see if we can do the above – rarely can this sort of detail be noted in a trust deed. Then we vary the deed to specify this specific situation, so that on her death, her pension benefits are paid to the dependent spouse, as a non-commutable death benefit pension ( ie it cannot have a lump sum or the full amount withdrawn), and that on his death, the son will get the final capital.

What are the potential Problems?

One potential problem is that on the death of the lady, the new spouse will become a member (Section 10(3) of the Superannuation Industry (Supervision) Act 1993 (Cth). Or SIS act). As a member he must become trustee, (or director if there is a corporate trustee). This really means he now has FULL control of the SMSF and consequently, FULL control of all the assets! If he doesn’t get on with the son he could override the Trust Deed and possibly take all the money and put that in his own member account.

When he dies, his account becomes his death benefit which can ONLY be paid to his dependants or legal personal representatives. Hence the son would miss out. The benefits would need to be paid to the spouse’s estate and the son would need to be specified in the spouse’s will as a beneficiary. Wills can be changed, so the payment to the estate could be halted there. A Mutual Wills agreement may assist to mitigate such risk.

The son, also, as a third party could challenge the husband’s estate under a testator’s family maintenance claim.

As always, many costs and heartache can be saved by getting advice!

Got questions? Why not give us a call – it’s FREE also!

No obligation. 0407 361 596, Paul.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today

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

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CASE STUDY – David & Kate – Help with Administration

CASE STUDY – David & Kate – Help with Administration

David & Kate – Help with Administration

David and Kate already had set up their Self-Managed Super Fund (SMSF). Over time though, the administration tasks and collecting documents together for the preparation of year-end accounts was not what they found easy to achieve – which is similar to many trustees – administration is not everyone’s love and specialty!

(There are 5 easy steps to planning anything – start where you are at, decide what lifestyle you want to have, what that lifestyle state or position will cost in money (to maintain the living costs) what you need invested to meet that cost of having what you want, and what action we need to take now to get there. Here is how it works with one of our clients.)

(Get the FREE Resource: 5 Easy Steps to Plan your Retirement).

  1. WHERE they were at – Having run their own SMSF for several years, David and Kate had found that the year-end responsibilities were hard to do, because they simply didn’t like paper and administration on top of their busy lives!
  2. WANT to have – The aim was to have self-funded retirement, with enough to be comfortable, but to reduce the administration burden and simplify the process.
  3. COST of that lifestyle Estimated in today’s values, the annual income to retire they desired would be at least $70-80,000. That would be well over the ASFA definition of “Comfortable”, where “comfortable” enables “…an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as: household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.”
  4. NEEDhow much you need invested to cover the income requiredTo be safe, if a conservative investment return of 5% is used, (one 20th of 100%) this means at least 20 times the income goal – which rounds to approx. $1,400,000 – $1,600,000 of income-producing assets other than the family home. They also needed administration help so they didn’t have to be stressed and worried about what they didn’t enjoy.
  5. NOW what to do After researching and talking to several services, they met with Paul the Administration Manager at SuperBenefit who supplied a detailed list of what would be included in the service. Once the structure of the bank and investments was clearly mapped out to ensure all components involved were covered, it was a simple matter to start organising the collection of documents required and have the accounts processed.

What was liked best of all – that the SuperBenefit Programme made it easy – SuperBenefit manages compliance from the  annual documents, storage of records electronically and additionally, has a CONNECT-ASSIST service which provides co-ordination as well as help – with who to talk to for advice and any other help besides the financial advisor.

There was other value in our property investment specialists and private-client share broker, who can supply a list twice a year (after the Australian company reporting seasons) summarising financial data on companies with strong financial health that are likely to perform well.

There is also peace of mind because any queries or compliance issues, could simply be given to the SuperBenefit administrator, who would CONNECT them to the right advisors as required (Connect/Assist Service).

The advisors had put these components in place –

  • Strategyto take control of the retirement plan, and build their super
  • Structure use an SMSF and the SuperBenefit Programme administration
  • Support with resources and all compliance taken care of by SuperBenefit, as well as a team of specialist professionals that the SMSF Connect/Assist service provides, working with the client advisors in unison.

NoteThis is a simplified summary of one client – it is not to be taken as advice, as your specific circumstances are not considered – we recommend asking for a consultation and/or seeking further professional advice with our recommended advisors or your own advisor.

Get the FREE Resource: 5 Easy Steps to Plan your Retirement) 

If you have any questions, why not give us a call – it’s FREE! No obligation.

0407 361 596, Paul

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MASTERCLASS Investment – What is EPS – Earnings Per Share Ratio?

MASTERCLASS Investment – What is EPS – Earnings Per Share Ratio?

Investment – What is EPS – Earnings Per Share Ratio?

Earnings Per Share (EPS) is a measure of the company profit compared to the shares of its common stock. The result serves as an indicator of a company’s profitability. It is common for a company to report EPS that is adjusted for extraordinary items and share dilution – the higher the EPS, the more profitable the company is considered, as investors will pay more for a company with higher profits.

Profit

EPS =   Number of Shares

(Company Profit divided by the number of shares)

EPS shows how much money a company makes for each share of its stock. A higher EPS usually means more value, as investors will pay more for a company with higher profits.

As an example, consider two companies

The first has Net Income $7.6 Billion, shares issued 3.98 Bill, EPS = 7.6/3.98 = $1.91

The other has Net Income $3.05 Bill, shares issued 0.599 Bill, EPS = 3.05/0.599 = $5.09

Comparing these two, the EPS is more valuable when comparing companies in the SAME INDUSTRY.

Also, we need to consider the CAPITAL that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS, but one could do so with fewer net assets; that company would be more efficient at using its capital to generate income and, all other things being equal, could be a “better” company in terms of efficiency. A metric that can be used along with EPS, to identify companies that are more efficient is the return on equity (ROE).

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.

Posted in Investing - Stock Fundamentals, Masterclass Investment, SMSF Investing | Tagged , , , , , , | Leave a comment