Monthly Archives: September 2014

Tougher times ahead for self-managed funds?

When the global financial crisis savaged retirement savings in 2008, many self-managed super funds escaped the devastation better than other super funds.

What’s behind this better performance?

There’s nothing inherently better about DIY funds – but a likely reason was their asset allocation strategy.

ATO launches trustee educational videos

The ATO has recently launched a series of education videos for existing and potential SMSF trustees. The topics covered include areas such as administrative requirements, paying a pension, choice of trustee and the sole purpose test.

15 things for SMSF trustees to consider before 30 June 2014

With 30 June hitting on Monday, there are a plethora of  things that you as a trustee of your SMSF should consider to squeeze the maximum possible benefit from your SMSF.  Here are just 15 things to consider before the year is up:

1. Valuation of your SMSF’s assets

It is a requirement under the superannuation law that the assets in your SMSF be valued each financial year.  This is so that we can record the market value of the assets in the SMSF’s 2013/14 financial statements for income tax purposes and our SMSF auditor can verify that you have not contravened various provisions of the income tax and superannuation laws.   The superannuation law does not require that you use a qualified independent valuer, as long as the valuation that you have arrived at is based on objective and supportive data. The ATO has published two documents on its website – “Valuation guidelines for SMSFs” and “

ASIC fee increases from 1 July 2014

Each year ASIC increases its company lodgement fees and has just released their updated fees for commonly lodged documents that will apply from 1 July 2014.
The ASIC fee increases include:

New ATO Penalty Regime from 1 July 2014

The ATO has introduced new penalty powers which it can impose on you if your fund breaks certain superannuation rules.

The new rules apply from 1 July 2014 and allow the ATO to fine you and require you to rectify the mistake that has been made.  They can also direct you to take further education on self-managed superannuation funds if they are not satisfied you understand your role as trustee of your self-managed fund.

There are three types of new penalties that can be imposed:

  • A direction to undertake, at your expense, an education course to improve your knowledge of self-managed superannuation funds,
  • Rectify any breaches of the superannuation rules that your fund has not complied with, and
  • An administrative penalty for breaching the superannuation rules (see below).

The fines range from $850 for minor administrative matters through to $10,200 for more serious matters such as breaches of the rules about the fund’s investments.

Binding Death Benefit Nominations – more than just filling in a form


Estate Planning is a crucial component to the management of your superannuation assets. In light of this, attention to Binding Death Benefit Nominations (BDBNs) should surpass ‘just filling in a form’.

Like a Will for your assets outside of super, a BDBN is a formal declaration by a member indicating in, accordance with the fund’s rules, to the trustee, who they would like their member benefit to be paid to upon death.

End of financial year action list

In just over four weeks will be in a new financial year.  Understanding what you could do before and after 30 June 2014 can provide the icing on the cake for employees, investors and those in small business.  Such things as bringing forward tax deductions or delaying the receipt of income within the rules can mean less tax this year.  When it comes to superannuation, make sure you maximise the tax deduction this year or salary sacrifice the right amount so you get the best possible outcome and don’t end up with tax penalties.

2014/15 Budget Summary

2014 Budget Summary

Superfund Partners Director and wordsmith Mark Beveridge has distilled the government spin doctoring down into a few pages of need to know information.  It doesn’t cover every dollar saved or spent, but it will help answer your most common questions.

Taxation

The government claim is that it will collect less in tax than would have been the case if Labor was re-elected. Here are a few of the changes.
Temporary Budget Repair Levy (TPBR) New 2% levy on income over $180,000 starting from 1 July 2014, ending 30 June 2017. You will be $400 worse off if you are earning $200,000 and $2400 worse off if you earn $300,000.

Nil interest related party loan rulings

There has been a flurry ATO activity recently – with the latest target being the release of details of a private binding ruling around the provision of nil interest loan to an SMSF by a related party.

Since 2007 SMSFs have been allowed to borrow to purchase assets using instalment warrant or limited recourse borrowing arrangements.  There is no restriction on who the lender can be with these arrangements – so it is possible for a related party (including members of the SMSF) to lend money to their own SMSF, however the private ruling issued by the ATO recently is an extreme case.

Changes to Centrelink treatment of SMSF pensions

Starting on 1 January 2015 Centrelink will apply a different income assessment to account based pensions (sometimes also called allocated pensions). Previously the income counted for the Centrelink income test was calculated by the formula ‘Purchase Price/Life Expectancy = annual exempt income’. So an account based pension of $300,000, commenced by a person with 15 years life expectancy, resulted in the first $20,000 per annum of drawings being exempted from the Centrelink income test.

The new test will simply apply the same deeming rates that currently apply to other financial assets such as money in the bank. The ‘deeming’ test applies a notional interest rate to your financial assets in two tiers. For a couple, the first tier of $0 to $77,400 is deemed to be earning 2.00% and all financial assets above that level are deemed to be earning 3.50%. These tiers are subject to change from time to time according to the market level of interest rates.