Firm News

Pros and cons of home reversion

Posted on February 24, 2021 by admin

Super (AU): Pros and cons of home reversion Home reversion is when you sell a share of the future value of your home whilst still living there. You receive a lump sum payment and continue to own the remaining share of your home equity. Pros You are able to continue living in your home after you sell the share You can conduct renovations or maintenance that your home may need with the lump sum payment you receive You can use the lump sum for any urgent needs such as medical treatments The lump sum could help you secure accommodation till your home sells Cons You will own the lower share of the equity in your home Transactions and costs can get complicated and it may be hard to navigate that Your eligibility for Age Pension might also be influenced Your ability to afford aged care could be affected You might end up eating into money that you need for the future – such as for medicare You might be locked into fewer options if your circumstances change If you are the sole owner and someone else lives with you, they may no longer be able to live in the house […]

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What is the transfer balance cap?

Posted on February 17, 2021 by admin

The transfer cap refers to the amount of money that can be transferred from your superannuation account to your tax-free ‘retirement phase’ account. At the moment, the transfer balance cap is $1.6 million and all individuals have a personal transfer balance cap of $1.6 million. Exceeding the personal transfer balance cap means that you have to: Commute the excess from one or more retirement phase income streams. Pay tax on the notional earnings related to that excess The amount in your retirement phase account may grow over time, due to investment earnings. Although this may grow beyond the personal transfer cap, you will not exceed the cap. However, if you have already used all your personal cap, and then your retirement phase account goes down, you cannot ‘top it up’. The rules applied to capped defined benefit income streams are different from other income streams – this is because you can’t usually transfer or commute excess amounts from other streams.

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Choosing investment options in your super

Posted on February 14, 2021 by admin

Many Australians ignore the decision of choosing investments for their super and often end up in the ‘default’ option as they make no effort to choose otherwise. Default options that aim for ‘balanced’ or ‘growth’ investments tend to have 60-80% of funds invested in shares and property. This approach for investment is based on the best-suited strategy for a large number of members across the years they will be investing. However, the default options may not be the best for your financial circumstances and risk profile. Understanding different investment options and how risk assessments work will help you choose better investment options. Further, aim to change investment options over time rather than sticking to the same one. For example, you could consider changing options once you begin receiving a pension.

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SMSF Pensions

Posted on February 3, 2021 by admin

SMSF funds can provide pension or lump sum benefits during retirement. Retirement is a condition of super release if you have reached your preservation age. Depending on your date of birth, your preservation age will be between 55 and 60. The benefits from your super are tax-free once you are over the age of 60. If you plan to start a super pension income stream, then the funds from your accumulation account need to be transferred to your retirement account to fund your pension. Your retirement account has a cap of $1.6 million, so you can transfer that amount as a lump sum but no more. The earnings on these funds are tax-free. Each year, you need to withdraw a minimum percentage of your account balance from the retirement fund. This minimum percentage will depend on your age. Alternatively, you can start your Transition-to-retirement pension if you have reached your preservation age but you are still working. However, unlike the funds that support your super pension once you begin retirement, these are taxed at 15%.

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Calculating how much super you will need when you retire

Posted on January 27, 2021 by admin

Calculating how much super you will need will help you decide whether you should be contributing more to your super. You can utilise salary sacrifice schemes to increase contributions, especially if you are not using your entire salary. There are two main factors that impact the amount of super you will need when you retire: Costs in retirement Consider the major costs that you will need to continue paying during retirement. Examples include: Paying off your mortgage Rent Renovating your income Travel Medical costs Estimate how much money you will be needing for each of the aspects that apply to you. Make sure that your estimations are as realistic as possible. Some things, such as medical costs, may be difficult to accurately estimate, so try to keep a higher margin. The lifestyle you want Think about what sort of lifestyle you want once you retire and consider how much money that will require. The Association of Superannuation Funds of Australia provides an estimation of how much money you will need depending on what sort of lifestyle you want: Single and modest lifestyle: $27,987 a year Single and comfortable lifestyle: $43,901 a year Couple and modest lifestyle: $40,440 a year Couple […]

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Basics of SMSF investing

Posted on January 20, 2021 by admin

Setting up an SMSF fund is the simplest step. Establishing a fund which delivers you consistent returns from your investments is much more difficult. Investing successfully involves determining precise goals and picking investments which will effectively achieve those goals. The advantage of SMSFs is that you can build a portfolio which reflects your short-term and long-term goals in response to changing market conditions. In an SMSF fund, your investment options are: Australian and international shares (listed and unlisted) Residential or commercial property Cash and term deposits Fixed income products Physical commodities Property Collectibles Before you begin investing, consider what might be the best way to diversify your portfolio. How you portion your investments will depend on your funds, the market, and your goals. Regardless of what your plan is, diversification should be a priority. Choosing an SMSF as opposed to an industry or retail super fund provides you with more flexibility, but also with more responsibility. Researching before investing is key if you want the best out of your SMSF.

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Protecting yourself from super scams

Posted on January 13, 2021 by admin

Superannuation is an attractive target for scammers as a significant volume of funds are placed into super funds by Australians. There are some straightforward steps you can take to protect yourself from super scams. Know the rules Becoming familiar with the rules surrounding superannuation will alert you against scams which make false claims e.g. offering early access to your super Keep up to date with the relevant authorities and so that you don’t put in your personal information into the wrong websites – always check that relevant institutions have verified their authenticity! Check your balance and contact details Check what your super balance is on a regular basis – if you notice something that doesn’t quite look right then immediately get into contact with your super fund and ask them about what could have happened. Every once in a while, check that your super fund has the right postal address, email address and mobile number – this will help them get in touch with you if they spot any suspicious activity. Stop identity theft Taking the steps to stop identity theft will also help protect your super This does not have to be all too complicated e.g. shred important documents, […]

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Finding your lost super

Posted on January 6, 2021 by admin

Changing of name, address or job can mean that you lose track of some of your super. This means that there is money that belongs to you that is not currently in your super fund. Finding your super will collate your previous lost funds with your current account. It is likely that your lost super is held by the ATO. Create an account on myGov and link it to the ATO and select ‘Super’. Once you have done this, you will be able to see the details of all of your past and current super accounts including any lost or forgotten ones. You will also be able to find funds which have been held by the ATO on your behalf. Further, you will be able to consolidate your super funds into a single fund. Once you have found your lost super, remember to conduct research about which fund is providing you with the best returns before you choose which fund to consolidate with.

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Life insurance through your super

Posted on December 16, 2020 by admin

Over 70% of Australians have life insurance through their super fund. This acts as a financial safety net through your super if something unexpected happens. There are 3 main types of life insurance that super funds usually provide: Life cover: Also known as death cover, this type of insurance pays a lump sum or income stream to beneficiaries when you die or have a terminal illness. TDP (total and permanent disability) insurance: If you become disabled or it is unlikely that you will be able to work again then this insurance will pay you a benefit. Income protection insurance: Also known as salary continuance cover, pays a regular income for a specified period (length of time or up to a certain age) if you are unable to work due to temporary disability or illness. Pros of life insurance through super Cheaper premiums: Super fund buys insurance policies in bulk so it is cheaper for their customers Easy to pay: Automatically deducted from super’s balance Fewer health checks: Super funds accept default level of cover without health checks – particularly useful if you have a high-risk job or health conditions. But, remember that you should check the product disclosure statement (PDS) […]

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Conditions to accessing your super

Posted on December 9, 2020 by admin

You may find that accessing your super is the best way to meet your financial needs in a given situation, for example in the early stages of the pandemic. Individuals are able to legally access the funds in their super earlier but there are conditions of release. Common conditions of lease: Reaching your preservation age and retiring (preservation age is between 55 and 60, depending on the individual’s date of birth) Reaching preservation age and starting a transition to retirement income stream (TRIS) Ceasing employment once you are 60 or over (even if you don’t retire) Being 65 or over (even if you don’t retire) Death There are more conditions of release that allow individuals to access their super early: Suffering from financial hardship (more resources due to Covid-19) Compassionate grounds Diagnosed with a terminal medical condition Temporarily/Permanently incapacitated First Home Super Saver Scheme Temporary resident departing Australia If you terminate gainful employment with less than $200 in your super account

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