Firm News

What to consider when consolidating your super

Posted on August 26, 2020 by admin

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of. Before consolidating your super, it is important to do the following: Research your funds’ policyCompare your active super accounts so you can make the right choice about which one you should close. Things to assess include: Exit fees Insurance policies Investment options Ongoing service fees Performance of the funds Check employer contributionsChanging funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or […]

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What is an SMSF auditor and what do they do?

Posted on August 19, 2020 by admin

Self-managed super fund (SMSF) trustees are required to appoint an ATO-approved SMSF auditor no later than 45 days before lodging their SMSF annual return. An SMSF auditor is a professional who assesses your fund’s compliance with superannuation law and examines your fund’s financial statements. SMSF auditor eligible requirements Your SMSF auditor must be: Independent. SMSF auditors cannot audit a fund that they hold financial interest in, or have a close personal or business relationship with the SMSF members or trustees. Registered with ASIC (Australian Securities & Investments Commission) and holds an SMSF auditor number for you to provide on your annual return. What will your SMSF auditor do? An SMSF auditor provides you with an independent opinion on the existing assets in your SMSF and whether or not your fund complies with the rules outlined in the Superannuation Industry (Supervision) Act 1993. When preparing for an audit, an SMSF auditor will issue a Terms of Engagement Letter to the trustee(s) of the fund, which includes the roles and responsibilities for parties involved in the audit as well as the range of the audit. In the case that your SMSF auditor’s primary contact is your accountant, your accountant will be issued […]

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Buying property through your SMSF

Posted on August 12, 2020 by admin

Using SMSFs to buy property has become increasingly popular among Australians in recent years, particularly since it became possible for SMSFs to borrow money to fund a direct property purchase. Residential property A residential property owned by an SMSF has some limitations as to who it can be leased to. To buy property through your SMSF, the property must meet the following requirements: It meets the ‘sole purpose test’ of solely providing retirement benefits to members of the fund. It is not acquired from a related party of a fund member. It is not to be lived in or rented by a fund member or a party related to a fund member. Commercial property A commercial property owned by an SMSF can be leased to a wider range of tenants than residential properties. Commercial property purchased for business purposes can be purchased from a member of the SMSF or a related entity. This allows small business owners to use their SMSF to purchase the premises from which their own business is run, enabling them to pay rent directly to their fund. This can be preferable to paying rent to an alternate landlord. However, keep in mind that rent must be […]

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How to select a default fund for your business

Posted on August 7, 2020 by admin

Business owners might be required to select a default fund for employees when they do not want to nominate their own superannuation funds. Funds should meet specific requirements that are stated as per super law, so it is important to select a complying fund. However, there are other factors that you may have to think about before selecting a default fund to make sure that you and your employees get the most out of it. PricingNaturally, one of the main considerations while selecting a super fund should be pricing. Funds that have a lower fee may not cover extras, and this requires careful analysis to see what extras have been left out. Coverage for extras like being able to track down missing super is a key feature that employees will prefer your default fund has. Employee preferencesEmployees are likely to prefer funds that allow flexibility with their investment options and have essential features like insurance policies covering death, total and permanent disability (TPD), and income protection. You may want to consider options that give your employees a comprehensive cover while keeping an eye out for any exclusions that might affect you. Industry fundChecking industry funds may help reveal awards that […]

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How to avoid SMSF disputes

Posted on July 29, 2020 by admin

Self-managed super funds (SMSF) can be vulnerable to disputes, especially when family members are involved. SMSF disputes may be caused by a number of reasons such as relationship breakdowns, (common in funds where parents and siblings are in a member and trustee relationship) and fundamental differences in opinions. Other common triggers for SMSF disputes include: investment strategy disagreements, differences in opinions over the payment of benefits, especially in SMSFs involving both parents and their children, payment of death benefit disputes, and disagreements on the distribution of SMSF death benefit payments between surviving members. Consider the following methods to avoid SMSF disputes. Clear decision-making proceduresDisagreements are bound to occur when it comes to money, so it is important to include concise decision-making provisions to keep things fair for all parties involved. For example, trustee decisions can be made by a simple majority rather than unanimously, and a particular trustee may be provided a casting vote in the case that a deadlock occurs. Provisions could also include voting rights that are based on the value of a member’s account balance within the SMSF to avoid situations where a member with minority interest out-votes a member with a large fund account balance. Updating […]

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What circumstances permit early access to your super?

Posted on July 22, 2020 by admin

Early access to your superannuation is permitted under a few limited circumstances outlined by the ATO. In the case that you are experiencing financial struggle and would like to withdraw from your super, be aware of the particular circumstances that will allow you to do so. Compassionate grounds: Withdrawing super on compassionate grounds is permitted in the event that you need money to pay for: medical treatment and medical transport for you or your dependant, palliative care for your or your dependant, making a payment on a home loan or council rates so that you don’t lose your home, accommodating a disability for you or your dependant, or expenses associated with the death, funeral or burial of your dependant. Severe financial hardship: You can also be permitted access to your superannuation due to severe financial hardship. However, when requesting withdrawals under severe financial hardship, individuals need to contact their super provider for access rather than the ATO. Both of the following conditions must be met for you to be eligible to withdraw some of your super: you have received eligible government income support payments continuously for 26 weeks, and you are unable to meet reasonable and immediate family living expenses. […]

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Tax-deductible super contributions

Posted on July 15, 2020 by admin

Individuals may be able to claim tax deductions for personal superannuation contributions they make. Personal super contributions are made after-tax, not to be confused with the pre-tax contributions made by employers. This includes contributions made using inheritance money, savings, proceeds from the sale of assets, or from a bank account directly into a super fund. To be eligible, individuals must receive their income from: salary and wages, super, personal businesses, investments, government pensions or allowances, partnership or trust distributions, a foreign source. A valid notice of intent to claim or vary a deduction must be provided to and acknowledged by your super fund before being able to claim a deduction for personal super contributions. A valid notice may be: A Notice of intent to claim or vary a deduction for personal contributions form (NAT71121). A form that your super fund provides. A written statement to your fund explaining your wish to claim a deduction for your personal super contributions. Deductions claimed for a super contribution will result in the contribution being subject to 15% tax in the fund. As well as this, after-tax contributions that have been successfully claimed will not be eligible for a super co-contribution from the government. […]

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Tax on super death benefits for dependants vs non-dependants

Posted on July 8, 2020 by admin

A super death benefit is the super paid after a person’s death, usually to a nominated beneficiary. These benefits are subject to different tax treatments, depending on whether the beneficiaries are dependant or non-dependant. Superannuation death benefits will generally be received tax-free by tax dependants, who are considered to be: A child of the deceased who is under 18 years of age, A spouse or former spouse of the deceased, A person who has an interdependency relationship with the deceased (e.g. if they live together or have a close personal relationship), A financial dependant of the deceased. Dependants will not have to pay tax on the tax-free component of their super in the event that they: Withdraw it as a lump sum, or Receive an account based income stream. However, they will be taxed at their marginal rate if they receive a capped benefit income stream and: The deceased was at least 60 years of age at the time of death The dependent is over 60 years of age and the total of their tax-free component and taxed element exceeds their defined benefit income cap. Not all super death benefits are subject to tax; for non-dependants, there is a taxable […]

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Do you need to lodge a transfer balance account report?

Posted on July 1, 2020 by admin

Self-managed super funds (SMSF) may be required to lodge a transfer balance account (TBA) report by 28 July 2020 in the case of a TBA event. A TBA report will need to be lodged with the ATO in the event that both of the following apply: A TBA event occurred in a member’s SMSF between 1 April and 30 June 2020, Any member of the SMSF has a total super balance greater than $1 million. SMSFs will also need to complete this report when a member needs to correct information about a TBA event that they have previously reported to the ATO or are responding to a commutation authority. According to the ATO, an event is classified as a TBA event if they result in credit or debit in a member’s transfer balance account. Such events include: Super income streams in existence just before 1 July 2017 that both continue to be paid on or after 1 July 2017, or were in retirement phase on or after 1 July 2017, Super income streams that stop being in retirement phase, Limited recourse borrowing arrangements (LRBA) payments entered into on or after 1 July 2017, LRBA payments resulting in an increase in […]

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Carrying on a business in an SMSF

Posted on June 24, 2020 by admin

Self-managed super funds can carry on a business providing the business is allowed under the trust deed and operated for the sole purpose of providing retirement benefits for fund members. Carrying on a business through an SMSF does have restrictions that other businesses do not have, such as entering into credit arrangements or having overdrafts. SMSF trustees that carry on a business through their fund must adhere to the sole purpose test. The ATO looks for cases where: The trustee employs a family member. The ‘business’ is an activity commonly carried out as a hobby or pastime. The business carried on by the fund has links to associated trading entities. There are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties. The same regulatory provisions still apply to funds that carry on a business, i.e, SMSF investments must be made on a commercial ‘arm’s length’ basis, business activities must be conducted in accordance with the SMSF’s investment strategy, collectables and personal use assets cannot be displayed at the business premises and so on. The SMSF cannot be involved in the following business activities: Selling an SMSF asset for less than […]

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