Masterclass SMSF – Last few days! End of Year review all is in order

Masterclass SMSF – Last few days! End of Year review all is in order

SMSF – Last few days! End of Year review all is in order

Only a few days of the Financial Year left – have a final review all is in order and all papers documenting all transactions during the year, are in hand and ready for auditor and accountant verification. Here are some other tips to consider –

1.       1 Contribution Caps

The concessional contribution (tax deductible / employer) cap for 2014/15 is $30,000. For members who were aged 59 years or over on 30 June 2013, and 49 or over at 30 June 2014, these members are able to contribute concessional contributions of up to $35,000 for the 2014/15 financial year. If you had more than one fund, all concessional contributions made to all your funds are added together and counted towards the one cap. This cap was not indexed. MORE HERE

2.     Minimum Pension taken

If there are members in the pension phase, ensure that you have received the required minimum pension amount by 30 June 2015. Failure can result in the investment income derived from your assets supporting that pension no longer being exempt from tax and other penalties could apply.

3.     Claim Tax Deductions for Personal Contributions (Non-Concessional)

If you are claiming a tax deduction for your superannuation contributions, make sure you are eligible to claim the tax deduction – seek advice if you’re unsure. An error in over-contributing or claiming a tax deduction for personal superannuation contributions could have excess tax consequences.

4.     Off-Market Transfers

You are still eligible to conduct in specie contributions of shares to your fund for the 2014/15 financial year. Listed stock held in your personal name can be transferred to your fund as non-concessional or concessional contributions (if eligible) to your SMSF. Consideration should be given to capital gains tax, contribution caps and the off market transfer procedures.

5.     Government Co-Contribution

Remember to take advantage of the Government co-contribution by making a non-concessional (after tax) super contribution before the end of the financial year. For every dollar of eligible contributions, the Government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500. The maximum government co-contribution is payable for individuals on incomes at or below $33,516 and reduces by 3.33 cents for each dollar above this, cutting out completely once an individual’s total income for the year exceeds $48,516.

6.     Investment Strategy was followed

Review your investment strategy and ensure all investments have been made in accordance with it, and the SMSF trust deed. Also, make sure your investment strategy has been updated to include consideration of insurances for members.

7.     Insurance Policies

From 1 July 2014, new rules come into effect that will prohibit superannuation fund trustees from providing an “insured benefit” in relation to a member unless the insured event is entirely consistent with a superannuation condition of release. This means that trauma policies and own occupation Total and Permanent Disability (TPD) policies will not be permitted. However, it is important to note these new rules will not apply to policies taken out prior to 1 July 2014.

8.     In-House Assets

If your fund has any investments in in-house assets you must make sure that at all times the market value of these investments is less than 5% of the value of the fund. Do not take this rule lightly as the new SMSF penalty powers will make it easier for the ATO to apply administrative penalties (fines) for smaller misdemeanors ranging from $820 to $10,200 per breach.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and YouTop right hand side above.

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

No obligation. 0407 361 596, Paul.

 

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NEWS – Superannuation contributes to Australian Economic stability (ASFA)

NEWS – Superannuation contributes to Australian Economic stability (ASFA)

Superannuation contributes to Australian Economic stability (ASFA)

Superannuation is contributing to the economic stability and growth of the country, according to a report by the Association of Superannuation Funds of Australia (ASFA).

The report found compulsory superannuation has:

1.       Reduced the cost of the Age Pension on the Budget;

2.       Substantially diversified assets Australians hold;

3.       Reduced risk; and

4.       Increased returns for people.

The growing superannuation pool has contributed to Australia having a high savings rate and is reducing Australia’s reliance on foreign capital, reducing both the risk and the cost of investment in Australia, the report said.

ASFA chief executive, Pauline Vamos, said as other countries had difficulty finding funding during the global financial crisis, super funds were an important source of capital for Australian companies to refinance.

Vamos noted that compulsory and voluntary superannuation has transformed the assets Australians hold.

“In 1990, Australians’ savings consisted almost entirely of real estate and cash. Today, through their superannuation, Australians are investing in a diversified range of assets, including domestic and overseas equities, fixed interest, infrastructure, and commercial property,” she said.

As reported by Jassmyn Goh at Money Management

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar  or call us 0407 361 596.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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Basics about Super – Federal Budget didn’t tinker with super

Federal Budget didn’t tinker with super

Federal Budget didn’t tinker with super

So good news that the Federal Government didn’t make any major changes to super, especially Self-Managed Super (SMSF). The Federal Treasurer, Joe Hockey said that at a time of low interest rates and when superannuation fund members were looking for policy certainty, the Government would not be looking to change the settings.

However the Treasurer also said that superannuation savings were not intended to be a vehicle to boost family inheritances but, rather, were intended to produce income during retirement. (Money Management)

There are some key issues around super including –

1.     No changes or new taxes to super / SMSFs but there are submissions being invited to a general tax review which includes super taxes. See Tax Discussion Paper and  http://bettertax.gov.au/publications/discussion-paper/

2.     No change to annual levy for SMSFs, only large APRA super funds

3.     Accessing Super for Terminally Ill now means not having to wait until a person has only 12 months to live to be able to access super, but doubles to 24 months and verification by doctors of expected time to live, as well as access being tax-free.

4.     The Government has proposed extending the deferral of the increase in the superannuation guarantee from the current 9.25% to 12% by a further year. This is to be achieved by pausing the rate at 9.5% between 2014–15 and 2018–19 and then increasing the rate incrementally by 0.5 percentage points each year to reach 12% in 2022–23. See more HERE

SG Proposed Delay

5.     Excess Contributions Tax (ECT) – Included in the 2014–15 Budget is a measure to allow individuals the option to avoid ECT on non-concessional contributions by withdrawing superannuation contributions in excess of the cap made from 1 July 2013 and any associated earnings and have these taxed at their marginal rate. This implements a pre-election commitment to ‘develop an appropriate process that addresses all inadvertent breaches of the contribution caps where an individual can show that their mistake was genuine and the error would result in a disproportionate penalty’.

Non-concessional contributions are generally those made to a superannuation fund from after-tax income. An annual cap of $150,000 applies to non-concessional contributions, although a ‘bring forward’ arrangement also applies. This allows certain individuals to bring forward two years’ worth of entitlements to make three years’ non-concessional contributions in one year. As the earnings of a superannuation fund are concessionally taxed, this cap (in conjunction with a cap on concessional contributions) limits the amount of funds that can be shifted into superannuation each year. Under current arrangements, breaches of the cap excess are taxed at the Excess Contributions Tax (ECT) rate of at 46.5% (the rate increases to 47% from 2014–15). From Aust Parliament

For a lively overview and discussion of the 2015 Budget, see Trish Powell at Super Guide.

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month  Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar  or call us 0407 361 596.

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SMSF Basics – What is involved in Running your SMSF (Self-Managed Super Fund)

SMSF Basics – What is involved in Running your SMSF (Self-Managed Super Fund)

What is involved in Running your SMSF (Self-Managed Super Fund)

After setting up your Self-Managed Super Fund, there is quite a list of on-going tasks involved in running your SMSF, covering administration, investment strategy and implementing it, compliance, insurance and pension stage responsibilities.

(a)   Administration tasks

Some of the many tasks to keep up with including paying expenses and keeping documents for proof at year end, recording minutes and resolutions of meetings for significant decisions and preparing the annual tax and regulatory return NAT 712266. It is also required that an Operating Statement and Statement of Financial Position be prepared. An independent auditor (not the accountant/tax agent) must be appointed to review the fund is complying, and once a report is given, the income tax and regulatory return can be lodged. A supervisory levy is paid when lodging – over $250.

By law, keep all records including accounting records, statements, annual returns for a minimum of five years. Where-as you must keep records such as minutes of meetings, change of trustee, reports to members and trustee consents, for a minimum 10 years.

(b)   Investment Strategy and Limitations

The law governing all super (SIS Act) at Section 52 requires a written investment strategy be formulated and given effect or put into action. This is to encourage a serious and professional approach. The overall guiding principle is the Sole Purpose Testthat funds are maintained for the sole purpose of providing retirement benefits. This is why some restrictions apply in order to avoid risk, and both the SIS Act and the trust deed need to be consulted. Restrictions include general prohibition from acquiring assets from members and related parties, keeping assets separate from personal and business affairs, limited borrowing rules, personal use of assets, careful use of derivatives and no lending to members.

(c) Compliance, Trustee Responsibilities, Disputes

To stay compliant, Trustees must regularly consult the trust deed to follow it, as well as consider changes in superannuation, taxation and other laws (an update Trust Deed if required), and keep aware of the circumstances of the members. A breach of the trust deed as considered a breach of the superannuation law. In all dealings, the Sole Purpose Test is the key requirement – to maintain the fund solely for the core purpose to provide retirement benefits.

Fund members must live in Australia, so be aware that relocation overseas for can affect compliance.

Outside Dispute resolution between members and trustees is not available via the Superannuation Complaints Tribunal, so Trustees must mediate themselves or resolve via the court system.

(d)   Insurance in your SMSF

The SIS law and Regulations require Trustees to consider and seek advice about member insurance needs. What if…? Ensure that your fund applies for cover that is appropriate – life, total and permanent disability (TPD) and/or disability income insurance (income protection). There are advantages to hold these in an SMSF – for example the premiums are tax deductible for the SMSF. Other considerations may include some circumstances where access to super benefits may be restricted such as disability payments.

(e)   Paying Benefits & Income Streams (Pension)

Contributions by employers (concessional) and members (non-concessional) as well as fund earnings are generally classified as “preserved benefits” and cannot be accessed by members until a condition of release is met. A condition includes meeting preservation age, which are dates determined by member date of birth, as well as officially retiring from work.

Preservation Age

When a member generally meets the age of 60, and has elected to convert super to pension/income stream, the lump sum or income stream payments are tax free. If a member is under 60 and paid a benefit PAYG tax will need to be paid and reported to the member and ATO on a payment summary. The amount withheld is reported to the ATO annually or quarterly.

Other conditions of release include reaching 65 YO, restricted access at preservation age via transition to retirement, death, permanent incapacity, terminal illness.

See ATO publications (number is the ATO Nat number eg NAT11032)

11032    Running a self-managed super fund

71454    How your self-managed super fund is regulated

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses, run every month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar or our other seminars above – Share Workshop and Property Boost (every few months) in the menu above or call us 0407 361 596

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CASE STUDY – Chris & Heather liked how SMSF gave the chance for control of investment their OWN super

CASE STUDY – Chris & Heather liked how SMSF gave the chance for control of investment their OWN super

Chris & Heather liked how SMSF gave the chance for control of investment their OWN super

WHERE they were at – Both Chris & Heather liked how SMSF gave them the chance for control of investing their OWN super. Having had short but successful careers in Government and hospitality, and then spent a decade in their own business, they had been through several accountants and some incorrect advice that had set them back years ago. Not only having had bad tax advice and having to pay a huge tax bill one year over several months, as well as working for themselves as sole traders before becoming a company years ago, this meant putting aside super was not possible due to legislation, back then. With children grown up and marrying and themselves aged into late 40’s, they didn’t need the big house any more.

They did the sums and researched renting returns in their suburb and surrounds. They found it would work to rent out the large 5 bedroom home of $470k to a family, rather than the costs to sell and re-purchase. They would then move to a smaller home. Refinancing was too tight at the moment due to recent broken work patterns for personal reasons, so they would rent cheaply and re-sort work and finances for 12-18 months and re-finance then.

The $80k super they had, could work better with the knowledge research of investment and particularly shares that Chris had made over the years, both Chris and Heather were keen to manage their super and invest it themselves.

What they WANTED to have – They knew they needed to catch up if they would have any sort of retirement, and calculated that $40,000 would be comfortable for the living standard they required. Travel would be nice but was not a priority, as being with family and helping with community and charity work was their passion.

What they would NEEDTo be safe, if a conservative investment return of 5% is used, (one 20th of 100%) this meant requiring at least 20 times the income goal – that rounded to approx. $800,000 in assets. They should be able to get another 3 bedroom home by re-financing in 12 months but that would not produce income. Their super totaled $80,000, and they would have an investment property worth $470,000, so we had $550k in income producing assets, and a further $250K to build up to. There was 15-20 years until retirement to get this together – in asset growth, share returns and saving in super – $16k pa over 15 yrs and $13k pa over 20yrs. They had an achievable plan in place.

What to do NOW After advice and review by the financial planner and their own accountant, as well as the research and seminars they had attended over 18 months – including SuperBenefit’s SMSF, share  and property events, they were feeling more confident about the chance of achieving a good return in their own SMSF. They prepared the family home to rent and found a nice extended family who were keen to move out of their small rental into a more suitable family home! Family helped them move to a small rental for 1-2 years.

We followed instructions and set up the SMSF and applied to the super funds to roll-over to the new SMSF bank account. Then they spoke to the stock broker about the list he had created for SuperBenefit clients, of healthy Aust companies based on the 12 financial health criteria. Since 2010 they have made returns ranging from 8-18%. Conservative estimates showed they were on-track to reach their goal in 16 years – and they were very happy the future was planned and had begun!

They now had the components in place –

Strategyto take control of the retirement plan, build a business and pay-down mortgage;

Structure an SMSF using SuperBenefit administration;

Support with resources and all compliance taken care of by SuperBenefit, as well as a team of specialist professionals to call on.

Note – This is a simplified summary of one client – we recommend asking for a FREE consultation and/or seeking further professional advice with our recommended advisors or your own.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

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

No obligation. 0407 361 596, Paul.

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NEWS – Residential Property is not a Major Asset in SMSFs

NEWS – Residential Property is not a major asset in SMSFs

Residential Property is not a Major Asset in SMSFs

Glenn Freeman writes at Professional Planner

Residential property plays only a minor role in self-managed super fund (SMSF) investment portfolios, according to Graeme Colley, director of technical and professional standards, SMSF Association.

Property is the third-largest asset class of SMSF investment, with the combination of direct investments and real estate investment trusts totalling around 15 per cent of the total pool of SMSF assets.

When it comes to assumptions that residential property equates for a majority of these investments, Colley says, “That’s quite incorrect. In fact, 80 per cent of the investments of SMSFs are in commercial properties.”

“These are not necessarily properties connected to the underlying member of the SMSF or connected entities. They’re also looking at the open market of commercial property and are investing via arm’s length arrangements,” he says.

“SMSFs often get criticised for the proportion of assets invested in those two particular sectors [equities, including property, and cash and fixed term assets] but there’s good reason why people go into it. You want to be really looking at a diversified portfolio.”

“People have this misconception that most of it is invested in domestic property, which is not true. It’s not only in the direct investments of SMSFs, but also indirectly through shareholdings that people might have in equities,” Colley says. READ MORE HERE

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

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

No obligation. 0407 361 596, Paul.

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NEWS – Unpaid Super Means Missing Revenue for Government Revenue

NEWS – Unpaid Super Means Missing Revenue for Government Revenue

Unpaid Super Means Missing Revenue for Government Revenue

The issue of unpaid super by many employers is growing – Katarina Taurian at SMSF Adviser writes As speculation mounts that super tax breaks will be cut, one industry super fund has found the government has lost more than $1 billion in tax due to the non-payment of superannuation guarantee contributions. The losses have accumulated over the past three years, according to Cbus, and the problem of non-payment is continuing to grow. “This problem is getting bigger and is having an increasing impact on workers’ superannuation balances and on government revenues. Most contributions are taxed at 15 per cent which we estimate to be approximately $375 million per year in foregone tax revenue,” said Cbus chief executive David Atkin.

“For workers this impact continues with the loss of compounding interest on the unpaid super. Tria Investments estimate that an average 25-year-old impacted by non-compliance for five years loses 14 per cent of their retirement savings.

Mr Atkin said the tax revenue losses are a “double hit” to the federal Budget, with the government feeling the losses now and also when Australians retire with a lower-than-expected superannuation balance.

“If the government is addressing long-term Budget sustainability then this issue should be a priority for reform. There are some simple but effective steps the government could take,” Mr Atkin said.

“Firstly, investigate aligning payment of the superannuation guarantee with wages…This will reduce the risk of employers failing to contribute and ensure red flags go up early on employers who don’t intend to meet their obligations,” he said.

“Secondly the government should beef up regulatory enforcement and education. Stronger enforcement action will ultimately be the most effective deterrent. Either the ATO needs to be properly resourced to undertake this task or the regulation of the superannuation guarantee should fall to another body such as the Fair Work Ombudsman,” he added.

The ATO is this year targeting its education campaign at employers that have been identified as having a higher risk of not meeting their super obligations, including those in building and child care services, an ATO spokesperson told SMSF Adviser.

The ATO’s audit strategy will include a focus on clothing retailing, management advice and consulting.

“The ATO investigates every employee notification and we keep them informed of our progress for investigating and recovering any unpaid super amounts. We also initiate compliance action on high-risk employers that we identify ourselves,” the spokesperson said… Read More

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar  or call us 0407 361 596.

Got questions? If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and Youtop right hand side above.

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

No obligation. 0407 361 596, Paul.

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