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ATO to monitor high-risk LRBAs and TBARs within SMSFs

Posted on March 25, 2019 by admin

The ATO is focusing on risky Limited Recourse Borrowing Arrangements (LRBAs) and failures in Transfer Balance Account Reporting (TBAR) in SMSFs this year. They have announced plans to contact trustees with high concentration risks in their funds and to crack down on misreporting. Limited Recourse Borrowing Arrangements:LRBAs allow a superannuation fund to borrow under strict conditions. The existing population of SMSFs that have entered into LRBAs, potentially on the basis of poor or conflicting advice, is a key area of concern for the ATO and has been rated a medium to high-risk. In 2017, approximately 95% of the LRBAs were for the purpose of purchasing property. Due to this prevalence, the ATO has concerns about the risk of members’ retirement savings in the event of a property decline. Transfer Balance Account Reporting:TBAR is used to advise the ATO when a transfer balance account event occurs within an SMSF, enabling an individual’s transfer balance cap and total superannuation balance to be recorded and tracked. One area of TBAR arrangements the ATO will be monitoring is the reporting of capped defined benefit income streams. In 2018, approximately 86% of SMSFs reporting a capped defined benefit stream had failed in their reporting obligations. […]

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Income stream within an SMSF

Posted on March 18, 2019 by admin

One of the best ways to ensure regular, flexible and tax-effective income as a pensioner is through an income stream from your SMSF. As a member, you can receive an income stream in a reoccurring series of benefit payments from your super fund. Income streams from an SMSF are usually account-based, which means that the amount allocated to the pension comes directly from a member’s account. Once an account-based pension commences, there is an ongoing requirement for the trustees of the superannuation fund to ensure the pension standards and laws are met. Standards that must be met in order for SMSFs to pay income stream pensions include: The minimum amount must be paid at least once a year. Once the pension has started, the capital supporting the pension cannot be increased by using contributions or rollover amounts. When a member dies, their pension can only be transferred to a dependent beneficiary if they have any. SMSF trustees may need to amend fund trust deeds to meet the minimum pension standards. For more information on how to do this, you should consult a legal adviser. Records must be kept of pension value at commencement, taxable elements of the pension at commencement, […]

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Superannuation guide for retirement planning

Posted on March 8, 2019 by admin

As the time comes for you to consider leaving the workforce, it is necessary to plan how to make the most of your superannuation in order to strengthen the chances of a financially secure retirement. Careful planning can significantly boost your super and make a big difference to your future lifestyle. Identify your dependants and non-dependants:When it comes to planning your retirement and how your super will be used, ensure that you have clear plans about what happens to your super benefits and other assets in the event of your death. Identifying who will receive your super benefits becomes more important if you plan to leave them to a non-dependant for tax purposes, such as financially independent adult children. Combine your accounts:Consolidating your super funds could possibly save you thousands of dollars in fees. Other benefits include reducing your paperwork and making it easier to keep track of your super. You could also end up with more superannuation than you realise, as research has found that if all super fund members were to consolidate their multiple accounts, the average Australian account balance would increase by 79%. Do a financial stocktake:Another important step when it comes to planning your retirement is […]

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SMSF areas being monitored by the ATO

Posted on March 1, 2019 by admin

Self-managed super funds are closely monitored by the ATO to ensure regulations are being met across all areas. As SMSF are run by members, it is their responsibility to comply with all related super and tax laws. The independent nature of an SMSF creates an environment that people are confused by or can attempt to exploit. One area of concern for the ATO regarding SMSFs is that these types of funds are being used to gain access to super before preservation age. Preservation age is dictated by the year in which you were born, super cannot legally be accessed before you reach this age. A growing number of investors in their 30s, far off from their preservation age, are moving their super into an SMSF in an attempt to gain access to their super early. The ATO has noticed an increase in this strategy in the last five years. If found to be doing this, penalties can include funds being wound up, a 45% tax impost being applied, administrative penalties which have a cost attached, or being disqualified from running a fund. The ATO is also looking into possible problem areas in relation to SMSF contraventions. Loans to SMSF members, […]

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Do you know where your super is?

Posted on February 21, 2019 by admin

If you’re not close to retiring, you may not be thinking about your super or where it is. Even if you are a way off from retiring, you should be keeping track of where your super has gone. $17.5 billion of super was lost in 2017-18, $420 million down from the previous year. If you are not paying attention to your super contributions, accounts and insurances, you may have lost super. You may also have unintentionally lost track of super if you have ever changed your name, address, job or lived overseas. It is not uncommon for people to have multiple super accounts they have acquired over the years of working at different companies. Having multiple unused accounts can result in high fees that drain your untouched super or you could lose track of it completely. It is in your best interest to consolidate all super into one account that suits your retirement goals. When closing unused accounts, you should be mindful of any termination fees, insurance policies, investment options, and ongoing service fees. If you have lost track of your super it may be held by either your super fund as a lost account or as an ATO-held account. […]

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Superannuation tips for each stage of your working life

Posted on February 14, 2019 by admin

A 2018 study revealed that almost 40% of Australians think they won’t have enough money to retire on – and that number is on the rise. Managing your superannuation fund can be confusing but it was found that 50% of us do not consult a financial planner. As we face different financial challenges at different points in our lives, how do you ensure you have enough to retire on? 20s to 30s:It is not uncommon for many people in their 20s and 30s to have multiple superannuation fund accounts accumulated through years of youth part-time work or otherwise. Now is the time to chase up on lost super. With one superannuation account, you not only can save on fees but it may also give you better investment returns. When combining and comparing your active accounts, be mindful of any termination fees, insurance policies, investment options, and ongoing service fees. 40s to 50s:You may find yourself earning more than you’ve ever earned before, but it is also a time where you may be juggling more living costs – from your mortgage to your growing family’s fees. Experts advise against decreasing your mortgage payments and encourage voluntary payments to your superannuation fund. […]

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Didn’t pay your employees’ super on time?

Posted on February 7, 2019 by admin

How to reduce the hassle of missing your employee’s super payment. The Super Guarantee Charge (SGC):The SGC may apply to employers who do not pay the minimum super guarantee (SG) to their employee’s designated superannuation fund by the required date. The non-tax-deductible charge includes the SG shortfall amounts with interest and a $20 administration fee for each employee. You will need to lodge your SGC statement within a couple of months of the respective quarter. While employers are able to apply for an extension to lodge and pay the SGC, the nominal interest will still accumulate until the extension is lodged. From this point, the general interest charge will apply until the SGC is paid off. What you can do to reduce your SGC:The nominal interest and SGC shortfall can be offset or carried forward by late contributions against the SGC in certain conditions. This excludes the administration fees, certain types of interest and other penalties. The late contribution is also not tax-deductible, nor is it able to be used as a prepayment for current or future contributions. However, you are able to carry it forward if the payment is for the same employee and is for a quarter within […]

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How to get out of a SMSF

Posted on January 31, 2019 by admin

Sometimes a self-managed super fund (SMSF) isn’t for you. While that is ok, getting out of an SMSF can be a tricky and complicated process. Every individual involved in an SMSF is responsible for their part. No decision can be made on their behalf or outsourced to another member or industry professional. Once deciding to leave your SMSF, you must approach carefully to avoid penalties and damages or disruptions to the remaining member funds. To successfully remove yourself you will need to: Notify the ATO within 28 days Remove all assets from the fund, whether paid out or transferred to a new account, leaving it empty Have a final audit of your fund Complete your reporting

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SuperStream to be extended to SMSF rollovers

Posted on January 24, 2019 by admin

First introduced in 2015, SuperStream is a government standard for processing superannuation payments electronically in a streamlined manner. Currently, SuperStream can only process rollovers between two APRA funds electronically but a change coming into effect on 30 November 2019 will now see this process extend to self-managed super funds (SMSF). This means rollovers between an APRA fund and an SMSF can be processed through SuperStream later this year, and the time taken could even be reduced to three days. The streamlining of the rollover process between all funds aims to increase efficiency and reduce compliance costs. An example of this is the removal of the requirement to draw a cheque when rollovers are made from an SMSF to an APRA fund. Further, direct transfers between funds will give greater confidence when tracking the whereabouts of your money. For a fund to receive a rollover, trustees will have to provide the ATO with the fund’s requested information – such as ABN, bank account details and internet protocol address – at least 10 business days before the fund receives the rollover.

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Superannuation for Women

Posted on January 18, 2019 by admin

It’s no secret that the median super balance for Australian women at the time of retirement is significantly lower than that of their male counterparts. The Australian Commission & Investments Commission (ASIC) have reported that men retire with about twice the amount as women. The discrepancy is reportedly even higher between Mums and Dads. Between lower wages and a higher likelihood of having an interrupted working life for women, women also tend to live longer and thus require more super to cover more years. Unfortunately, between personal finances, business financial capabilities, and governmental policies, actions to close this gap can be limited. Where viable, private companies can consider: continuing paying superannuation to staff during parental leave. paying full-time super benefits to part-time parents. This has already been implemented by Viva Energy (a Shell subsidiary). From the ABS, women are much more likely to be working part-time than men. increasing the percentage of base salary put toward their employees’ super accounts.

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