An SMSF friendly budget is good news coming out of the 2018-19 Federal Budget. With SMSF members still working through the wide-reaching and complex superannuation changes which took effect from 1 July 2017, this Federal Budget will provide much-needed stability while looking to reduce costs for SMSFs and prove additional flexibility.
From 1 July 2017, superannuation fund members are subject to a $1.6 million transfer balance cap (TBC) which limits the tax exemption for assets funding superannuation pensions.
The TBC encompasses a significant amount of monitoring for an individual. This monitoring is to be facilitated by the Australian Taxation Office’s (ATO) event-based reporting framework.
Event-based reporting is a significant shift in SMSF administration processes. Therefore, it is essential SMSF trustees understand the event-based reporting framework and get it right.
Brooke Hepburn-Rogers and Stellar Super Pty Ltd have been shortlisted for the prestigious Accountants Daily Australian Accounting Awards 2018.
Personal Superannuation Contributions – 10% rule repealed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.
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.
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
This is an area that is becoming increasingly discussed within the self-managed superannuation fund (SMSF) environment and we encourage those that are interested in this type of investment contact us first to discuss the implications as there is no ‘one size’ fits all.
Some areas of compliance to review but not limited to, are:
Please note that there are taxation rulings and determinations issue by the Australian Taxation Office (ATO) and capital gains tax rules may apply to the disposal of the asset.
At Stellar Super we are passionate about helping our clients get the most from their Self-Managed Super Funds (SMSF’s) – what we deliver is confidence in the Super Advisory process.
We are offering an “audit only” service for financial providers who like to offer independent, third-party audits for their clients, as well as for SMSF Trustees that prepare their year-end work.
Our fee for this service will be a flat-rate, no matter the size of the SMSF, and you can be assured of privacy for your firm and your clients.
Our ASIC registered SMSF Auditors have extensive knowledge in this area and will be able to ensure a high quality and professional experience for your clients.
If you would like additional information about our services, please contact us at our office.
Trust deeds in the new SMSF world – Benefit payments and estate planning
The superannuation trust deed, along with the superannuation laws, form the governing rules that a self-managed super fund (SMSF) need to operate by. The introduction of the $1.6 million transfer balance cap (TBC) and new transition to retirement income stream (TRIS) rules are a ‘game changer’ for SMSFs when discussing benefit payments and estate planning. With the new super rules in effect as of 1 July 2017, now is the right time to review if your trust deed needs to be enhanced or amended to deal with the new approaches and strategies you may need to implement.
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.
