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.

ATO letter – participation in a franking credits arrangement

You may have received a letter from the ATO entitled “Your participation in a franking credits arrangement” and wondering whether it applies to you and whether you need to do anything – such as amend your SMSF annual returns.

This letter has been prompted by the the previous Labor Government’s intention to close a loophole which enable an investor (via the assistance of their broker) to effectively obtain twice the amount of franking credits on the same parcel of shares.

How cheap advice can cost SMSF trustees big dollars

The following story from Superfund Partners director and SMSF specialist Mark Beveridge is unfortunately all too common.  He has been contacted by someone who tried to save a few hundred dollars a year,  but it ending up costing this guy more.  A lot more.  $108,000 more in fact.

ATO letter re SuperStream

You may have received a letter from the ATO entitled “Changes to how your SMSF receives employer contributions”.  We have a solution regarding what you need to do.

When SMSF estate planning goes wrong – a case study

A recent West Australian case (Ioppolo & Hesford V Conti 2013 WASC 389 has highlighted the importance of having a valid SMSF estate plan to ensure benefits held in an SMSF go to the intended beneficiaries. 

SMSFs under attack – setting the record straight

Self managed super funds have been under attack lately from a number of angles.

In this article Superfund Partners director Mark Beveridge looks beyond the headlines at the real issues.