Tag Archives: Suzanne McIntosh

Property and my SMSF

Property and my SMSF

Directly held property makes up approximately 19% of all SMSF assets, indicating that many SMSF trustees consider it’s an important and significant part of a diversified portfolio.  There are numerous strategies and ways for property to form part of an SMSF’s investments and each must be carefully considered.

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Personal Superannuation Contributions – 10% rule repealed

Personal Superannuation Contributions – 10% rule repealed 

With the end of the financial year fast approaching, it is time to start thinking about income tax deductions.

Under the new Government changes to super, effective 1 July 2017, the 10% maximum earnings condition for personal superannuation contributions was removed for the 2017-18 and future financial years.

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Franking credits and your SMSF

You may have noticed significant media coverage recently regarding the Australian Labor Party’s proposed policy to stop SMSFs from receiving tax refunds for the franking credits they receive in conjunction with the dividends paid from Australian companies they own.

First of all, what are franking credits and how do they benefit SMSFs?

Under the Australian tax system companies pay 30 per cent tax on their profits. When these profits are then passed on to their shareholders in the form of dividends, the company also hands the shareholders a credit for the tax the company has already paid (the “franking credit”). The individual shareholder then pays tax on the profit they received from the company less the credit for the tax the company has already paid.  The franking credit ensures that the company profits are taxed at a shareholder’s marginal tax rate.

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Property and my SMSF

The directly held property makes up approximately 19% of all SMSF assets, indicating that many SMSF trustees consider it’s an important and significant part of a diversified portfolio. There are numerous strategies and ways for property to form part of an SMSF’s investments and each must be carefully considered.
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Shield Wealth and Stellar Super, in conjunction with Paul Salinas, from Campbell & Co Lawyers are hosting boardroom sessions in March.

Estate planning is a subject that we don’t like to think about but in its simplest form, it is just about ensuring peace of mind. It is about making sure that the investments you make now are passed on to your family or beneficiaries in the most effective way.

Developing an effective estate plan will ensure that:

• Any tax payable is minimised

• The ownership of assets passes to the right beneficiaries

• The assets are protected if any beneficiary has any legal issues

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Investment Strategy

Always Keep Your Investment Strategy in Your Mind

You have made it through the financial year and navigated the new superannuation laws that took effect on 1 July 2017 but there is one thing you should always think about and that is your investment strategy. Additionally, there is no better time than right after a financial year end where you can review your SMSF investment strategy and its performance.

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CGT Relief

From 1 July 2017 a cap of $1.6m will be introduced on the amount a person can transfer into the tax free retirement phase. Anyone with a total retirement phase balance in excess of $1.6m will generally be required to either commute the excess amount back to accumulation phase or withdraw the excess from superannuation altogether. Further, transition to retirement (TRIS) pensions will not be treated as retirement phase income streams from 1 July 2017.

Overview

Earnings on assets supporting retirement phase income streams are eligible for an exemption from income tax. To compensate those who will need to transfer assets out of retirement phase in order to comply with the new rules will have access to Capital Gains Tax (CGT) relief on the impacted assets. This CGT relief will allow the Trustee to elect to reset an asset’s cost base in 2016-17. This effectively locks in the capital gains tax treatment of the assets up to 30 June 2017 prior to the new rules applying from 1 July 2017. How this relief applies is different depending on several factors.

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Mortgages

Time to Review your Mortgages

According to Galaxy research, that iSelect arranged, one third of mortgagors have not reviewed their mortgage options in the last five years and over 80% of Australians do not know their mortgage rate.

If you could pay less in interest rates, grow your superannuation benefits faster or just pay less in fees is it not worth knowing about?

There is a misconception that moving lenders is costly and a hassling event, this is not always the case. The potential saving gains that can occur, when switching a loan to one with a lower interest rate, can sometimes be underestimated.

This year we will be encouraging our clients to do an annual home loan check, both outside of their SMSF and within for the Limited Recourse Borrowing Arrangement (LRBA’s) in place.


Beware

*BEWARE* Low Cost Providers

We have had several discussions with clients, and other professionals within the self-managed superannuation fund (SMSF) industry, about low cost providers of accounting and audit work. The ATO have commenced targeting low cost auditors and suppliers.

Kasey Macfarlane, the ATO SMSF Segment Assistant Commissioner said during theinterview with the SMSF Association that low-cost audit problems discovered included the failure to confirm fund assets and not reviewing the terms and structures of Limited Recourse Borrowing Arrangements. Kasey continues “In another case, there was an auditor who failed to retain documentation in accordance with the auditing standards and had failed to identify and report two material real contraventions that the ATO had required.[1]

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