Scott Morrison has delivered his second Budget, aimed at boosting growth and the government’s flagging poll rating, declaring there are “better days ahead”. Here is a a quick recap of some of the key announcements that affect the individual.
To find out more, read our “Government delivers stability in 2017-18 Federal Budget” post or contact the team here at Superfund Partners.
Following the budget, The Association of Superannuation Funds of Australia (ASFA) has said while not as substantial as the landmark reforms in last year’s Budget, this year’s package of superannuation-related measures announced by the government will nonetheless have a wide-ranging impact.
ASFA CEO Dr Martin Fahy said ASFA has advocated for the extension of capital gains tax (CGT) rollover relief announced in tonight’s Budget, because it should help support super fund mergers.
The government will extend current tax relief for merging super funds until 1 July 2020.
“Mergers of funds are one means by which they can realise scale efficiencies, so removing this significant barrier is welcome in a competitive superannuation industry that is continuously improving its efficiency and productivity,” he said.
Dr Fahy said a new dispute resolution framework would include an Australian Financial Complaints Authority (AFCA) dealing with all financial disputes including super disputes.
“We will be seeking to have active input into any transition arrangements to ensure consumer protections are preserved and existing Superannuation Complaints Tribunal (SCT) cases are efficiently and equitably dealt with,” he said.
The lease at 195 Vulture Street South Brisbane has expired and due to the uncertainty around redevelopment plans for this office, we have decided to relocate to Eight Mile Plains.
The very modern Eight Mile Plains office has recently undergone renovations to allow for this relocation and is only a short drive from our previous South Brisbane location. There is also ample visitor parking at the front door of the building.
An added bonus is that clients will find our new office easier to navigate to and it is right near the highway.
We look forward to welcoming you to our new office in the very near future.
Here is the address for the Eight Mile Plains office
Building 22 Garden City Office Park 2404 Logan Rd, Eight Mile Plains QLD 4113
Stability and confidence for superannuation is the good news coming out of the 2017-18 Federal Budget. With SMSF members still working through the wide-reaching and complex superannuation changes of the last Budget which take effect from 1 July 2017, this Budget’s minimal changes will result in a period for members to ensure they have the correct strategies in place.
The main change impacting superannuation involves allowing people aged 65 and over to downsize their home and gain exemptions to superannuation caps, a First Home Super Saver Scheme and the rounding up of minor technical changes already announced.
The key changes proposed for superannuation are:
Downsizing exemption to superannuation caps
From 1 July 2018, individuals aged 65 and over will be able to downsize their family home and place proceeds up to $300,000 per member into their superannuation fund without breaching any of the current superannuation caps, work test and age test. The measure will apply to a principal place of residence held for a minimum of 10 years.
Over the last few months, many of our clients have been asking us what they need to do – if anything – following the raft of super changes that were made law in November that come into effect 1 July 2017.
Before I explain our approach for working with SMSF trustees impacted by the changes, I need to provide some context around the magnitude of these new laws.
Sustainable means less tax breaks
These changes will impact SMSF members more than the general population. By our calculation, at least 48% of our clients are directly impacted by the changes. Of this 48% the people MOST impacted and who have the biggest advice need are those SMSF members with pension balances over $1.6m – this equates to approximately 10% of the clients we work with.
The changes fall under a piece of legislation called the “Fair and Sustainable Superannuation Act 2016”.
The ATO is currently reviewing arrangements where individuals (at, or approaching, retirement age) purport to divert their personal services income to an SMSF, so that the income is taxed concessionally (or exempt from tax) in the fund, rather than being subject to tax at the individual’s marginal tax rate. These arrangements normally involve the individual’s income being paid to another entity (e.g., a company) which then makes distributions to the SMSF as a ‘return on investment’ (e.g., dividends, where the SMSF holds shares in the relevant company).
WHAT TO DO
The ATO advises any people that have entered into such an arrangement to contact the ATO by 30 April 2017, so they can work with them to resolve any issues in a timely manner, and minimise the impact on the individual and the fund.
Please Note: Individuals and trustees who are not currently subject to ATO compliance action, and who come forward will have administrative penalties remitted in full (although interest may still be payable on any tax collected later than it should have been).
Concessional contributions are those made with pre-tax income and can come in many forms, most commonly as
- Superannuation Guarantee contributions made by your employer,
- Salary sacrificed contributions made on your behalf, or
- Tax-deductible contributions if you are self-employed.
Below, we’ve summarised a few important considerations regarding the cap changes that became law on 29 November 2016.
A lower cap will apply from 1 July 2017
As part of the 2016 Federal Budget, the Coalition government announced plans to reduce the annual concessional contribution cap to $25,000 from 1 July 2017. The new cap will now apply to everyone regardless of age.
This will see the lowering of both the over-50s concessional (before-tax) contributions cap of $35,000 and the general concessional contributions cap (for under-50s) of $30,000. However, it’s important to note that the $35,000 and $30,000 caps still apply for the current (2016/2017) financial year.
Finance related professionals are often described as analytical, detail focused and often good with numbers. Historically, people assume this is because their brain is geared more towards using the “left side”, the side of the brain that is apparently responsible for logical tasks. Neuroscientists, however, have long proclaimed that this view of “right and left” is, in fact, a myth.
By default, the right side of the brain is creative, artistic and perhaps free spirited. Apparently, as the myth goes, it’s got to do with which side of the brain is more active.
What do the experts say?
Recent research by The University of Utah has found no evidence that people preferentially use their left or right side of the brain. The University undertook an analysis of 1000 brains and found that each person used their entire brain equally.
Further still, the team found that all brain regions enable people to be both creative and analytical,
From all of us here at Superfund Partners, we’d like to take the opportunity to thank you for your support and for being a part of our 2016 journey. It has been a great year for us and we have enjoyed working with you all. We will be closed from Thursday 22 December 2016 and reopening on Monday 9 January 2017.
Wishing you all a Merry Christmas and Happy New Year!
Whether it’s for diversifying the investment pool or even for the trustees fearing the next financial ‘doomsday’ event, a common question we get asked at Superfund Partners is “can an SMSF buy gold? And are there any rules we need to be aware of?”.
In short, yes and yes!
The first thing to consider is what type of gold we are analysing; are they collectable gold coins or bullion bars? For the purpose of our blog, we look at bullion bars. Please refer to ‘collectable rules’ via the ATO website for more details on collectables.
Gold bullion bars
Since they are not defined as a collectable, when an SMSF buys bullion bars, the key issues to consider are as follows;
Where will it be stored?
- Whilst there are no specific rules around this, it’s the trustee’s responsibility to make sure the gold assets are securely protected.