Tag Archives: superannuation

Small Contraventions that can cause large SMSF compliance problems

There are a couple of small audit contraventions, that can easily and unknowingly occur, that can cause BIG headaches:

1. Not getting back to the auditor on time S.35C(2)

Trustees must ensure that requested relevant documents are given to the auditor within 14 days of the request being made. S.35C(2) is one of the regulatory requirements which includes a statutory time. If the contravention is a breach of a statutory time by more than 14 days, then the contravention must be reported. In other words, it is a reportable breach if it takes a trustee more than 28 days to provide documents requested by the auditor.

So, when we are requesting documents off you, please respond in a timely manner.

2. Bank overdraft S.67

Generally, SMSFs are prohibited from borrowing money. There are only limited circumstances in which SMSFs can borrow money, such as when borrowing to settle securities (where borrowing is less than 7 days and 10% of the value of the fund’s assets) and borrowing to pay beneficiaries (where the borrowing is for less than 90 days and 10% of the value of the fund’s assets).

When the balance of an SMSF’s transaction bank account is running low, the bank account may go into overdraft.

Regardless of the amount of overdraft, the contravention rules still apply. If the amount is small, it is not reportable in the first year, but if the bank account is overdrawn for two years in a row, it must be reported to the ATO.

Steps for Trustees:

  1. Please reply to our auditor queries within 14 days of us requesting information; and
  2. Please ensure that there is sufficient funds within the SMSF bank account for all expenses or transfers.

Superannuation Death Benefit Limitations

As an SMSF trustee, you need to take special care when paying death benefits as you are responsible for ensuring that the payment rules are met. Strict rules apply, affecting who can receive a death benefit, the form in which the death benefit can be paid and the timing of such a payment.

Firstly, death benefits can only be paid either to dependants of the deceased member or the estate of the deceased.

Second, the law limits the group of dependants who are eligible to receive a pension on the death of the deceased member.

Finally, trustees must pay a death benefit as soon as possible after the death of the member. Additionally, each death benefit interest can only be paid to each dependant as either:

  • a maximum of two lump sums (an interim and final lump sum), or
  • a pension or pensions in retirement phase, or
  • a combination of both.

It is the limit of a maximum of two death benefit lump sums per dependant that trustees need to keep track of to ensure that the cashing rules are not inadvertently breached, especially where the death benefit is being paid as a pension.

Given the account-based nature of death benefit pensions that can be paid by an SMSF trustee, an SMSF member is generally afforded the flexibility to nominate to convert a death benefit pension into a lump sum payment. This process is generally referred to as the commutation of a pension although may be subject to specific restrictions found in a trust deed.

A partial commutation is where the beneficiary requests to withdraw a lump sum amount less than their total pension entitlement, allowing their death benefit pension to continue. This is common where members withdraw their required minimum drawdown as a pension with any additional income needs met by accessing multiple lump sums from their pension account. This strategy allows the death benefit pension to continue without breaching the superannuation death benefit rules, despite payments in excess of the maximum two lump sum limit.

A full commutation will result in the death benefit pension ceasing at the time the member decides to withdraw their entire pension entitlement as a lump sum. Despite the number of lump sum death benefits previously received, the law allows the beneficiary to roll over the lump sum resulting from a full commutation to another superannuation fund for immediate cashing as a new death benefit pension.

However, where a lump sum resulting from the full commutation of a death benefit pension is paid out of the superannuation system, further clarity is being sought from the ATO to ascertain whether or not this will be treated as an additional lump sum death benefit that would count towards the maximum two lump sum cashing limit. Until further clarity is provided by the ATO, caution needs to be exercised before a death benefit pension is fully commuted and paid to the dependant, especially where the dependant has previously received a lump sum death benefit.  

As an SMSF trustee you need to be aware of the restrictions placed on the payment of death benefits to eligible dependants of a deceased member. Trustees who ignore these limitations risk breaching superannuation standards and potentially being liable to be fined by the Regulator.


2020 Superannuation Specialist Accountant of the Year – Australian Accounting Awards

Stellar Super  enjoyed a great night at the Australian Accounting Awards, hosted by Vince Sorrenti. Stellar Super was excited and proud to take home the 2020 Superannuation Specialist Accountant of the Year award for Brooke Hepburn-Rogers, our Director.

The Australian Accounting Awards is regarded as the industry’s most prestigious accolades recognising excellence across the entire accounting industry. The awards pinpoint professional development and innovation, showcasing both the individuals and firms which are leading the way in the industry.

https://www.accountantsdaily.com.au/australian-accounting-awards/about


Brooke Hepburn-Rogers has been shortlisted for the Australian Accounting Awards 2020

Accountants Daily’s Australian Accounting Awards showcases the industry’s most prestigious accolades recognising excellence across the entire accounting industry. The awards pinpoint professional development and innovation, showcasing both the individuals and firms which are leading the way in the industry.

Award recipients represent a true cross section of the accounting industry, recognising the contributions of the profession’s most senior ranks through to its rising stars.

The finalists which are announced over several weeks beginning on 11 May 2020, features over 260  high-achieving accounting professionals across 33 submission-based categories. Continue reading


COVID-19 – The Government’s economic stimulus packages explained

Over the past two weeks the Government has announced two economic stimulus packages to cushion the economic impact of the Coronavirus.

A total of $189 billion is being injected into the economy by all arms of Government in order to keep Australians in work and businesses in business.

This includes $17.6 billion for the Government’s first economic stimulus package, $90 billion from the RBA and $15 billion from the Government to deliver easier access to finance, and $66.1 billion in yesterday’s economic support package.

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Superannuation death benefit limitations

As an SMSF trustee, you need to take special care when paying death benefits as you are responsible for ensuring that the payment rules are met. Strict rules apply, affecting who can receive a death benefit, the form in which the death benefit can be paid and the timing of such a payment.

Continue reading


Superannuation death benefits – review succession plans

Regardless of the size of your superannuation benefits, it is vital that you sort out your estate plans to ensure that you have a well prepared estate plan so that the right assets go to the right beneficiaries.  You need to make sure that you get holistic estate planning advice and have arrangements in place to review your estate plans regularly. Estate plans are not to be set and forgotten.

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Superannuation death benefit limitations

As an SMSF trustee, you need to take special care when paying death benefits as you are responsible to ensure that the payment rules are met. Strict rules apply, affecting who can receive a death benefit, the form in which the death benefit can be paid and the timing of such a payment.

Continue reading


Member Profile – Brooke Hepburn-Rogers

Graduate Certificate of SMSF – University of Adelaide

Graduating from The University of Adelaide, for the second time, with the Graduate Certificate of SMSF is an accomplishment that I am proud of.

I was first made aware of the Professional Certificate of SMSF whilst attending the SMSF Association’s Annual National Conference several years ago. The idea of having further education that was specific to my industry was incredibly interesting, particularly in how beneficial it would potentially be for me to grow as an Industry Professional.

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