Buying New Zealand Property Through Your SMSF


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SONAS WEALTH  |  THE SMSF COACH

SMSF TRUSTEE EDUCATION SERIES

What Every Australian SMSF Trustee Must Know Before Crossing the Tasman

By Liam Shorte  |  Fellow SMSF Specialist Advisor™  |  Financial Planner

⚖️  General Advice Disclaimer
This article is general information only and does not constitute personal financial, legal or tax advice. The rules governing SMSF investments in overseas property are complex and the tax laws of two countries apply simultaneously. You should obtain advice from a licensed financial adviser and a specialist international tax adviser before acting on anything in this article. The author holds AFSL authorisation through Sonas Wealth Pty Ltd corporate authorised representative of Viridian Advisory

Introduction

Australia and New Zealand share more than just the Tasman Sea. We share currency conversations, sporting rivalries, and — for many Australians with family ties, holiday-home dreams, or investment instincts — a temptation to buy property across the ditch. The question I receive more frequently than you might expect is: “Can my SMSF buy a property in New Zealand?”

The short answer is technically yes — but the path is lined with regulatory hurdles, dual-country tax complexity, and structural constraints that make this one of the most challenging overseas investments an SMSF can attempt. It is not a strategy to pursue without specialist advice, and in many situations the practical obstacles mean it simply is not worth the effort.

This article breaks down everything Australian SMSF trustees need to understand before they consider buying a New Zealand property inside their fund.

1.  Can an SMSF Legally Own Overseas Property?

First, the baseline: the Superannuation Industry (Supervision) Act 1993 (SIS Act) does not expressly prohibit an SMSF from investing in overseas property. There is no geographic restriction on the asset classes an SMSF may hold, provided every investment decision satisfies the fund’s governing rules and the overarching compliance framework.

In practice, however, several conditions must be satisfied simultaneously for an overseas property purchase to be compliant:

  • Sole Purpose Test — the acquisition must be made solely to provide retirement benefits to fund members. There can be no present-day benefit to any member or related party.
  • Investment Strategy — the fund’s documented investment strategy must contemplate overseas property. The trustee must also be able to demonstrate that the holding is consistent with the fund’s risk profile, return objectives, liquidity needs, and diversification requirements.
  • Trust Deed — the fund’s trust deed must permit investment in overseas or foreign assets. Some older deeds contain geographic restrictions that rule out non-Australian holdings without a deed amendment. Read the Deed!
  • Arm’s Length Dealings — the property must be purchased from, and (if applicable) leased to, entirely unrelated parties at market rates. No member, relative of a member, or entity connected to a member may acquire a benefit from the property.
  • Related Party Rules — as with Australian property in an SMSF, residential property cannot be rented to any related party under any circumstances.
  • In-House Asset Limits — if any arrangement with a related party is involved, the 5% in-house asset limit applies.
  • Annual Valuation — the fund must obtain an annual market valuation of the property as at 30 June each year, supported by comparative sales evidence in the local market.
🔑  Key ATO Position on Overseas Property
The ATO does not publish a specific prohibition on overseas property. However, it has consistently highlighted that overseas investments create significant compliance risks, including: difficulty verifying tenancy arrangements, currency conversion complexity, title recognition issues, and the inability of the SMSF to be confirmed as the legal owner in jurisdictions that do not recognise the SMSF trust structure.
Notably, some SMSF administration platforms (including major providers) flatly prohibit their clients from holding overseas property, citing the ATO’s concerns about ownership verification and the risk that trustees inadvertently access preserved benefits by purchasing in their personal name with SMSF funds.

2.  New Zealand: A Special Case for Australians

New Zealand sits in a favourable position compared to most other countries for Australian SMSF trustees. Unlike the United States (which requires LLC structures), or many European or Asian jurisdictions (which do not recognise foreign trusts as property owners), New Zealand generally permits property to be purchased directly in the name of the SMSF trustee. This means the SMSF can appear on the title as legal owner — a critical requirement for the ATO to accept that the asset belongs to the fund, not to the individual trustee personally.

However, that advantage comes with a significant counterweight: New Zealand’s Overseas Investment Act.

2.1  The Overseas Investment Act — The Biggest Hurdle

In October 2018, the New Zealand Government introduced sweeping restrictions on the purchase of residential property by overseas persons. Under the Overseas Investment Amendment Act 2018, most overseas buyers — including Australian entities — were prohibited from acquiring existing residential land in New Zealand.

An SMSF is a trust structure controlled by Australian-resident trustees. Under the Overseas Investment Act, a trust is treated as an ‘overseas person’ if 25% or more of its trustees are overseas persons. Because an SMSF’s individual trustees are Australian residents, the fund is almost certainly classified as an overseas person for the purposes of New Zealand law.

This has major practical consequences:

  • Residential property (houses, units, lifestyle blocks classified as residential under the District Valuation Roll) — an SMSF cannot purchase existing residential land in New Zealand without OIO (Overseas Investment Office) consent, and consent is very difficult to obtain for a standard SMSF purchasing an investment property.
  • Attempting to ‘get around’ the rules via company or trust structures is explicitly prohibited — and heavily penalised. In early 2025, an Auckland solicitor was fined $275,000 and their client was ordered to pay $1.7 million in pecuniary penalties for using a complex structure to circumvent the rules.
  • Commercial property — the Overseas Investment Act restrictions on residential land do not automatically extend to commercial property, though non-urban land over five hectares and other “sensitive” categories still require OIO consent.
  • New developments — there is a limited exemption allowing overseas persons to purchase off-the-plan apartments from developers who hold an OIO exemption certificate, provided the buyer does not occupy the apartment. This is the most viable residential pathway for most SMSF investors.
  • Hotel units — overseas persons can invest in hotel units subject to leaseback arrangements limiting personal use to 30 days per year. Those 30 days would breach the Superannuation Sole Purpose Test and make your fund Non-Complying if used by you or any related party.
📋  2025–26 Update: Investor Visa Amendment
In December 2025, the NZ Government passed amendments allowing overseas holders of Active Investor Plus (AIP), Investor 1, and Investor 2 resident visas to purchase residential property valued at NZ$5 million or more, subject to OIO consent.
This change is unlikely to assist most SMSF investors. It is designed for ultra-high-net-worth individuals with qualifying investor visa status — not for SMSF trustees investing their retirement savings. The NZ$5 million threshold and the visa eligibility requirements place this firmly outside the reach of most Australian SMSF strategies.

2.2  The Bright-Line Test

New Zealand does not have a comprehensive capital gains tax, but it does have the bright-line test — a targeted provision that taxes gains on residential property sold within a prescribed period of acquisition, regardless of the seller’s intention.

As of 1 July 2024, the bright-line period was reduced from 10 years back to two years, simplifying the rule considerably. Key points for SMSF trustees:

  • Any residential property sold within two years of purchase will have the gain included in taxable income in New Zealand.
  • The two-year test applies from the date of acquisition to the date of sale — not from the contract date.
  • Property held for more than two years generally falls outside the bright-line regime (subject to the land being used for the “main home” or other standard exemptions — none of which would apply to an SMSF).
  • Gains derived from property held under a tax-avoidance scheme, or where a profit-making purpose can be inferred, remain taxable regardless of the holding period.

For an SMSF holding a long-term investment property in New Zealand, the bright-line test is less likely to be triggered — but trustees must track holding periods carefully from a New Zealand tax compliance perspective.

3.  The Dual-Country Tax Problem

This is where New Zealand property investment becomes genuinely complicated for an SMSF. The fund must comply with the tax laws of both Australia and New Zealand simultaneously. The two systems do not perfectly align, and managing both creates meaningful ongoing cost and complexity.

3.1  Tax in New Zealand — IRD Obligations

Under New Zealand tax law, income derived from a property situated in New Zealand is taxable in New Zealand, regardless of where the owner is located. This means an SMSF owning a NZ property must:

  • Register with Inland Revenue (IRD) and obtain an IRD number for the SMSF.
  • Lodge annual New Zealand tax returns reporting rental income and allowable deductions.
  • Pay New Zealand income tax on any net rental profit.

The tax rate applied depends on how the SMSF is characterised under New Zealand law:

NZ Classification of the SMSFApplicable NZ Tax RateNotes
Treated as a trust33%Default treatment for most SMSFs; applies to net profit distributed/retained
Treated as a unit trust (corporate)28%May apply depending on trust deed drafting; lower headline rate but additional complexity when profits are distributed
No net profit after deductions0%No tax if expenses eliminate profit; losses can be carried forward

Note: Unlike Australian tax rules, New Zealand does not permit depreciation claims on buildings. This removes a significant deduction that many property investors rely on in Australia and can make the NZ rental income more likely to produce a taxable profit.

3.2  Tax in Australia — ATO Obligations

Despite paying tax in New Zealand, the SMSF must also declare the New Zealand rental income in its Australian tax return. The fund’s trustee reports the gross foreign income, converts it to Australian dollars at the applicable exchange rate, and includes it in the fund’s assessable income.

In Australia:

  • Rental income in an SMSF is taxed at 15% during the accumulation phase (or 0% if assets are entirely in pension phase supporting an account-based pension).
  • If the SMSF pays NZ income tax, it can claim a Foreign Income Tax Offset (FITO) in the Australian return to reduce the Australian tax liability by the amount of NZ tax paid.
  • The FITO cannot exceed the Australian tax applicable to that income — in most cases the NZ rate (28–33%) will exceed the Australian SMSF rate (15%), meaning the Australian tax on that income is effectively reduced to nil, but the excess NZ tax cannot be refunded or offset against other Australian income.
⚠️  Tax Inefficiency Warning
The structural mismatch between New Zealand’s tax rates (28–33%) and the Australian SMSF rate (15%) means the SMSF will typically pay significantly more tax on New Zealand rental income than it would on equivalent Australian rental income.
While the double tax agreement between Australia and New Zealand prevents the income from being taxed twice in full, it does not bring the effective rate down to the Australian SMSF rate. The excess NZ tax is a real economic cost — not a credit that can be used elsewhere.
In the pension phase, where Australian super fund income is taxed at 0%, this problem is even more pronounced: the fund pays NZ tax but receives no Australian tax credit for it.

3.3  The Australia–New Zealand Double Tax Agreement (DTA)

Australia and New Zealand have a long-standing Double Tax Agreement (DTA) that provides a framework for allocating taxing rights between the two countries and preventing outright double taxation. Key provisions relevant to SMSF property investors:

  • Rental income — New Zealand retains the primary taxing right on rental income from NZ-situated property. Australia taxes the same income but grants a credit (FITO) for NZ tax paid.
  • Capital gains — the DTA provides that gains from real property situated in New Zealand can be taxed in New Zealand. Australia will also tax the capital gain but applies the FITO offset.
  • SMSF as trust — the DTA applies to the SMSF in its capacity as an Australian entity. However, the characterisation of the SMSF as a trust under NZ law affects which NZ tax rate applies and how distributions are treated.
  • Currency conversion — all income and expenses must be converted to AUD for the Australian return. Fluctuations in the AUD/NZD exchange rate add an additional layer of complexity and potential gain or loss.

4.  Structural and Compliance Hurdles

4.1  LRBA Borrowing — Possible But Highly Complex

If an SMSF wishes to borrow to purchase the New Zealand property, it must do so through a Limited Recourse Borrowing Arrangement (LRBA) as required by the SIS Act. This requires a bare (custodian) trust to hold the legal title to the property while the SMSF holds the beneficial interest.

In Australia, LRBA structures are well-understood by specialist lenders and legal practitioners. In New Zealand, the position is considerably more complex:

  • A New Zealand bare trust (or custodian arrangement) must be established before signing a purchase contract — the structure cannot be retrofitted after exchange.
  • Australian SMSF lenders do not typically lend against New Zealand property. Arranging finance for an SMSF LRBA secured over a NZ property requires specialist cross-border lending knowledge and may require engagement with a NZ-based lender, adding further cost and complexity.
  • The bare trust arrangement must be recognised under New Zealand property law — not just Australian super law. Legal advice from a NZ property solicitor is essential.
  • The ATO has strict requirements around LRBA documentation, including signed loan agreements and correct naming conventions. Any structural defect can invalidate the borrowing and create a compliance breach.

Given the additional complexity, most SMSF advisers recommend that if a NZ property acquisition is to proceed, the fund should purchase outright for cash rather than attempting to introduce borrowing.

The other option which is tough to implement us a Related Party Borrowing where the members might arrange funding in their own names against equity in their own properties and then on-lend that to the SMSF. There are very struct rules for such strategies outlined in our article here ATO guidance on related party SMSF loans (LRBAs) – Update 2025-26

4.2  Property Title and Ownership Verification

The ATO requires that overseas property held by an SMSF is clearly owned by the SMSF trustee or Bare Trustee if under an LRBA and that this can be verified each year. The property title in New Zealand must be in the name of the SMSF’s corporate trustee / or individual trustees in their trustee capacity or Bare Trustee when under an LRBA). The trustee must obtain and retain:

  • A copy of the New Zealand Certificate of Title confirming SMSF trustee /Bare Trustee ownership.
  • Annual independent valuations of the property expressed in NZD and converted to AUD at the 30 June exchange rate.
  • Evidence of arm’s length tenancy arrangements, including tenancy agreements and rent receipts.
  • Receipts for all property-related expenses incurred in New Zealand.

4.3  Currency Conversion and Record-Keeping

All NZ income, expenses, and asset valuations must be converted to AUD for Australian fund reporting purposes. Trustees must:

  • Apply a consistent, defensible exchange rate methodology (typically the spot rate on the date of each transaction, or the 30 June rate for valuation purposes).
  • Maintain records of every NZ transaction in both NZD and AUD.
  • Ensure the fund’s accountant and auditor have access to NZ tax returns, IRD correspondence, and NZ property management records.
  • Be aware that exchange rate movements can produce AUD-denominated gains or losses on the asset valuation that are distinct from any NZD-denominated capital movement in the NZ property market.

4.4  Annual Audit and Compliance Costs

Owning a NZ property inside an SMSF materially increases the fund’s annual compliance cost. Trustees should budget for:

Cost ComponentTypical Range (AUD)Frequency
NZ property management fees$1,500 – $3,500Annual
NZ tax return preparation (IRD)$1,500 – $3,000Annual
NZ independent property valuation$500 – $1,200Annual (30 June)
Australian SMSF accounts & audit (uplift for overseas asset)$1,250 – $3,500Annual
Legal/structuring costs (initial setup)$3,000 – $8,000+One-off
NZ solicitor fees (conveyancing)$2,000 – $4,000One-off
Currency conversion transaction costsVariableOngoing

These costs must be weighed against the investment return. For a smaller SMSF, the compliance overhead may consume a disproportionate share of the fund’s rental income.

5.  Pros and Cons — The Balanced Assessment

✅  Potential Benefits⚠️  Key Risks & Drawbacks
Geographic diversification — exposure to a different property market can reduce concentration risk in an all-Australian portfolio.Overseas Investment Act restrictions — an SMSF is almost certainly classified as an ‘overseas person’ and cannot purchase most existing NZ residential property without OIO consent.
NZ title recognition — NZ generally recognises SMSF trustee ownership on title, avoiding the structural complexity of US LLC or other wrapper arrangements.NZ tax rates exceed SMSF rates — the SMSF may pay 28–33% NZ tax on rental income vs 15% in Australia, with no ability to recover the excess via FITO.
No NZ CGT (generally) — NZ does not have a comprehensive capital gains tax; gains are typically only taxable under the bright-line rule (2-year period from 1 July 2024) or where profit-making intent exists.Pension phase tax trap — fund assets in pension phase pay 0% Australian tax; NZ still charges 28–33% on rental income with no Australian offset available.
NZ depreciation not permitted, but deductions available — interest, rates, insurance, management fees, and repairs remain deductible against NZ rental income.LRBA is extremely complex — cross-border LRBA structures are rarely used in practice; cash purchase is the more practical option, but requires greater fund liquidity.
Long-term hold may minimise NZ tax — if the property is held for more than 2 years, NZ capital gains are typically not taxable, and a long-term hold in pension phase may minimise the effective Australian CGT rate.No building depreciation in NZ — deductions are more limited than under Australian tax rules, increasing the likelihood of a taxable NZ profit.
Trans-Tasman relationship — the AUS–NZ DTA reduces the risk of full double taxation on income.Ongoing dual compliance cost — two tax returns, NZ IRD registration, NZ valuations, NZ property management, and additional Australian audit costs materially reduce net returns.
Potentially attractive yields — certain NZ regional markets offer rental yields that compare favourably with comparable Australian markets.Currency risk — AUD/NZD movements affect both the reported value of the asset and the AUD equivalent of NZ rental income.
 Liquidity risk — property is illiquid; an SMSF that begins paying member benefits may struggle to meet cash flow needs if a significant portion of assets is locked in NZ real estate.
 Auditor scrutiny — overseas property attracts heightened scrutiny from SMSF auditors and the ATO, particularly in verifying tenancy arrangements and market valuations.

6.  Viable Pathways — What Actually Works

Given the restrictions under the Overseas Investment Act, the most viable options for SMSF investors seeking New Zealand property exposure are:

6.1  Off-the-Plan Apartments — OIO Exemption Certificate Pathway

Developers of large multi-unit residential developments can apply to the Overseas Investment Office for an exemption certificate that permits them to sell up to 60% of the units to overseas persons. This is the most commonly used pathway for Australian investors (SMSF or otherwise) to hold NZ residential property.

  • The investor cannot occupy the apartment — it must be held as a pure investment.
  • The apartment must be purchased off the plans from a developer holding a current exemption certificate; the list of eligible developments is published on the OIO website.
  • All SMSF compliance requirements (sole purpose test, investment strategy, arm’s length tenancy) still apply.
  • NZ and Australian dual tax filing obligations remain in force.

6.2  Commercial Property

Commercial property (offices, retail, industrial, warehouses) is not classified as ‘residential land’ under the Overseas Investment Act and is generally available for purchase by overseas persons without the same restrictions. This makes commercial property a more accessible option for SMSF investors in New Zealand.

Key considerations for NZ commercial property in an SMSF:

  • The business real property rules under the SIS Act that permit a related party to lease commercial property from an SMSF (at arm’s length, commercial rates) apply to Australian business real property. There is no equivalent provision that extends this treatment to foreign commercial property — the related party prohibition still applies.
  • NZ commercial yields can be attractive, particularly in industrial and logistics sectors.
  • All dual-tax compliance obligations remain in full force.

6.3  NZ-Listed Property Funds and REITs

Rather than direct NZ property ownership, many SMSF trustees achieve New Zealand and broader international property exposure through:

  • NZX-listed property trusts (such as Precinct Properties, Goodman Property Trust, or Investore Property) — these are traded securities, not real property, and do not trigger the Overseas Investment Act.
  • Australian-listed funds with NZ property exposure — several ASX-listed REITs and unlisted property funds hold diversified portfolios that include New Zealand assets.
  • These indirect structures provide NZ property market exposure without the regulatory complexity, dual-country tax filing obligations, or illiquidity associated with direct ownership.

For most SMSF trustees, indirect exposure via listed funds is the more practical, cost-effective, and compliant pathway to New Zealand property investment.

7.  Pre-Investment Checklist

If, after considering all of the above, you remain committed to pursuing direct NZ property ownership inside your SMSF, work through each of the following before executing:

#Checklist ItemStatus
1Trust deed reviewed and permits overseas property investment☐
2Investment strategy updated to include overseas property and foreign currency exposure☐
3Australian licensed financial adviser has confirmed the investment is in the fund’s best interests (SIS s.52B)☐
4NZ specialist tax adviser engaged — IRD registration understood☐
5OIO classification confirmed — fund is or is not an ‘overseas person’☐
6Property identified as eligible for SMSF purchase (commercial, OIO-exempt development, or other permitted category)☐
7Bare trust structure established in NZ before signing any contract (if LRBA is intended)☐
8Title will be registered in name of SMSF corporate trustee (confirmed with NZ conveyancer)☐
9No related party will occupy, use, or lease the property☐
10Annual compliance budget modelled — costs confirmed as viable relative to expected yield☐
11Currency conversion policy documented for fund record-keeping☐
12Property management arrangement confirmed as arm’s length☐
13SMSF auditor briefed on overseas asset — additional requirements confirmed☐
14Tax inefficiency of NZ rates vs SMSF rates modelled and accepted☐
15Liquidity analysis completed — fund can meet all obligations without forced sale☐

8.  My View as The SMSF Coach

I have seen the appeal of New Zealand property — the proximity, the familiarity, the lifestyle quality of Queenstown, Auckland’s waterfront suburbs, or the Bay of Islands. But from a pure SMSF strategy perspective, the numbers rarely stack up.

The combination of the Overseas Investment Act (which blocks most standard residential property purchases by SMSF entities), the NZ tax rate mismatch (which erodes the main advantage of the SMSF tax environment), and the ongoing dual-country compliance burden (which adds thousands of dollars to your annual fund costs) creates a set of headwinds that most investment returns cannot overcome.

If your goal is genuine property market exposure in New Zealand, an NZX-listed property trust or a diversified Australian REIT with trans-Tasman holdings is almost certainly a more cost-effective and compliant approach.

If you have a specific, well-considered reason to pursue direct NZ property — a unique commercial property opportunity, an off-the-plan development with OIO exemption, or a scenario where the fund has the scale to absorb the compliance overhead — then go in with eyes open, engage specialist advisers in both jurisdictions, and build the dual-compliance model before you sign anything.

The Tasman is not as wide as it used to be. But the regulatory and tax gap between Australian super rules and New Zealand property law is still significant enough to give most SMSF trustees pause.

📌  Key Takeaways
✅  SMSFs can legally own NZ property if all SIS Act and investment strategy requirements are met, and if the property is held in the name of the SMSF trustee.
🚫  The Overseas Investment Act 2018 (as amended) treats most SMSFs as ‘overseas persons’ and prohibits the purchase of existing NZ residential land in most circumstances.
💰  NZ rental income is taxed in NZ at 28–33%, which exceeds the 15% SMSF rate. Foreign income tax offset relief partially mitigates but does not eliminate this differential.
⚠️  In pension phase, the problem is worse: 0% Australian tax means no FITO relief is available, making the NZ tax an unrecoverable cost.
📋  Off-the-plan apartments (from OIO-exempt developers) and NZ commercial property are the most viable direct investment pathways.
📊  NZX-listed property trusts and Australian REITs with NZ exposure are the most practical route for most SMSF investors seeking NZ property market access.
💡  Always obtain specialist advice from a licensed SMSF adviser and a NZ international tax specialist before proceeding.

About the Author

Liam Shorte is the Managing Director of Sonas Wealth leading a team of 3 SMSF Specialist Advisors™,  and is known professionally as The SMSF Coach. He is a Financial Planner and Fellow SMSF Specialist Advisor™, multi-award-winning SMSF Adviser of the Year, and a member of ASIC’s Financial Advisers Consultative Panel. Liam provides specialist SMSF advice to trustees across Australia and makes regular media appearances on ausbiz TV and other media and podcasts covering SMSF and retirement topics.

Website: http://www.sonaswealth.com.au   

Blog:  http://www.smsfcoach.com.au   | LinkedIn: linkedin.com/in/liamshorte

Always make sure that you’re your strategy complies with relevant superannuation and tax regulations before implementation

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why not contact us at our Castle Hill or Windsor office in North West Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

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Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
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This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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How is my Transfer Balance Cap Calculated


Stay informed, seek advice and adjust strategies accordingly!

One of the most common questions we get asked is “How is my Personal TBC affected by the increase in the General TBC from $2m to $2.1 on 1 July 2026?

Your Personal Transfer Balance Cap (TBC) is calculated by the Australian Taxation Office (ATO) based on the highest ever balance in your Transfer Balance Account (TBA). It tracks, in reasonably real-time (if you or your accountant have reported correctly quarterly via a TBAR – transfer balance cap report), the amount of super transferred into retirement phase (credits) minus any voluntary commutations (debits), typically starting at $1.6M to $2.0M+ depending on when you first started a pension. Note from 01 July 2026 the General Transfer Balance Cap will rise to $2.1m for those starting their first pension after that date.

How the TBC Calculation Works 

  • Initial Cap: The General TBC ($2M in 2025–26 and rising to $2.1m for 2026-2027) is your personal cap if you start a pension for the first time on or after 1 July of each tax year.
  • Highest Ever Balance: If you had a pension before 1 July 2025, your TBC is proportional to the highest amount you ever had in retirement phase.
  • Indexation Calculation: If the general cap increases, and you have unused cap space, your personal cap increases proportionately based on your highest ever balance.
    • Example: If you used 60% of your cap in 2024-25, you are only eligible for 40% of any new indexation increase. So if General Transfer Balance Cap rises by $100,000 your TBC has only risen by $40,000 to $1,940,000 in 2025-26

Key Components 

  • Credits: Starting a retirement pension, structured settlement contributions.
  • Debits: Commuting a pension (moving money back to accumulation phase), death benefit payments.
  • Defined Benefits: How the Special Value is Calculated
    • Lifetime Pensions/Annuities: The formula is AnnualPensionPayment×16.
    • First Payment Basis: The credit is calculated based on the first payment you are entitled to receive, annualized by the fund.
    • Indexation: If your pension increases (indexed) over time, this generally does not trigger a new, separate reportable TBC credit

Worked Example by ATO

Example: highest ever balance below $1.6 million before indexation with credits

Nina started a retirement phase income stream with a value of $1.2 million on 1 October 2018 and her cap was $1.6 million.

The general transfer balance cap indexed by $100,000 to $1.7 million from 1 July 2021.

There were no more events in Nina’s transfer balance account before indexation. The highest ever balance in her transfer balance account is $1.2 million.

Nina’s unused cap percentage is 25% of $1.6 million.

Nina’s personal transfer balance cap was indexed by 25% of $100,000 (increment amount) when indexation started on 1 July 2021, increasing her personal transfer balance cap to $1.625 million.

The general transfer balance cap was indexed by $200,000 to $1.9 million from 1 July 2023. Nina’s personal transfer balance cap is increased to $1,675,000 (25% of the $200,000 increase to the general transfer balance cap).

Nina started a $400,000 retirement phase income stream on 1 October 2023. This increased the balance of her transfer balance account to $1.6 million. This is a credit event in Nina’s transfer balance account before indexation.

Nina’s highest ever transfer balance is $1.6 million.

Nina’s new unused cap percentage is calculated as follows:

  • 0.95522 being $1.6 million (highest ever balance of her transfer balance account) divided by $1.675 million (transfer balance cap on the first day she had that balance)
  • 95% expressed as a percentage, rounded down to the nearest whole number
  • subtract 95 from 100 = 5%.

The general transfer balance cap was indexed by $100,000 to $2 million from 1 July 2025.

Nina’s personal transfer balance cap is indexed by 5% of $100,000 on 1 July 2025, increasing it by $5,000 to $1.68 million.

Important Notes 1

Excess TBC: If you exceed your personal cap, you must remove the excess, any associated earnings and also pay tax on those earnings from the tax-free retirement phase to avoid ongoing penalties.

Key Actions to Rectify Excess TBC:

  • Commute the Excess: You must “commute” the excess amount, which means transferring it from your retirement phase income stream (pension) back into an accumulation account or withdrawing it as a lump sum from the super system.
  • Act Quickly: Excess transfer balance tax is calculated on notional earnings that accrue daily until the excess is removed.
  • Voluntary vs. Compulsory: You can initiate a voluntary commutation directly with your super fund as soon as you are aware of the excess. If you do not, the ATO will issue an “excess transfer balance determination” and a “commutation authority” to your fund, requiring them to remove the excess.
  • Calculate Earnings: If you act before an ATO determination, you must calculate the earnings on the excess amount yourself and remove them as well.
  • Death Benefits: If the excess arises from a death benefit income stream, the excess must be withdrawn from the super system as a lump sum; it cannot be rolled back into an accumulation account. 

Important Notes 2

No Re-calculation: There is no recalculation of the TBC based on your Pensions growth in value and Pension payments do not reduce your cap, nor do investment losses.

So what does reduce your TBC? Well here are the key events that reduce your TBC (create a TBC debit):

  • Commutations (Partial or Full): This is the most common method. When you transfer money out of a retirement phase income stream (pension) and move it back into an accumulation account, it creates a debit in your TBC.
  • Lump Sum Withdrawals: If you withdraw a lump sum directly from your retirement phase pension, this is considered a commutation and reduces your TBC.
  • Structured Settlement Contributions: If you make a contribution to your super fund due to a personal injury (structured settlement), and this is later rolled into a super income stream, it creates a debit.
  • Death Benefit Income Streams: If you are a beneficiary receiving a death benefit income stream, specific rules apply to how it is counted, and a debit can occur when this pension is fully or partially commuted.
  • Family Law Payment Splits: A reduction in your TBC may occur if your pension is divided due to a relationship breakdown.
  • Loss Due to Fraud or Bankruptcy: A debit can occur if your super interest is lost due to fraudulent activity or bankruptcy.
  • Pension Ceasing to Comply: If a super income stream stops meeting the required standards, a debit may occur. Not something you want to test!

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact us at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment
by SMSF Coach - Liam Shorte on February 10, 2026  •  Permalink
Posted in Audit, Binding Death Nominations, downsizing, education, Estate Planning, Financial Planning, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, SMSF, SMSF Management, Tax Planning, Trustee
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on February 10, 2026

https://smsfcoach.com.au/2026/02/10/how-is-my-transfer-balance-cap/

The Ultimate SMSF End of Financial Year Checklist 2025


Here we go again. We have only a short time left to the end of the 2025 financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.

It’s been another busy year and I have not had as much time to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.

Warning before we begin,

You need to check your personal super balances, contribution limits, caps and tax position before implementing any of these strategies as your own particular circumstances may warrant alternative options.

  1. It’s all about timing

If you are making a contribution, the funds must hit the super fund’s bank account by the close of business on 30 June. Some clearing houses hold on to money for up to 14 days before presenting them to the super fund. Some Retail and Industry funds are asking for funds at least to be contributed by the 18th-20th June!

In addition, pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY. There must have been sufficient funds in the bank account to support the payment of the cheques on 30 June but a cheque should only be your very last-minute option! You can also ask your adviser or administrator about a Promissory Note if time is against you but funds are ready.

So, for SMSFs get your payments in the fund by Monday 23rd  June or earlier to be sure (yes I’m Irish) as the 30th is a Monday this year. This is even more important if using a clearing house for contributions.

  1. Review your Concessional Contributions (CC) options including Unused Carry Forward Limits

The government changed the contribution cap from 1 July 2024 to $30,000 and remember that you have the ability to make concessional contributions up to age 67 even if not working and to 75 if you meet the Work Test . This is important for those who have retired but may have sold a property or shares and triggered a large capital gain during the year. Do not not exceed your limit unless you have Unused Carried Forward Concessional limits and Total Super Balance under $500K as of last 01 July 2024.

Check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super paid by employers, as they are all included in the limit.

This current 5 year period for Unused Concessional Contributions applies from 2019-20 so effectively, this means an individual can make up to $162,500 of CCs in a single financial year by utilising unapplied unused CC caps since 1 July 2019 and this years limit. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here. ..  

This is the last year to use the 2019/20 unused Carried Forward Concessional Caps as they fall outside the 5 year rolling period from 30 June 2025.

Beware that once your Income including Salary, Investment income, Employer SGC, Personal Concessional Contributions goes over $250,000 you will be subject to Div 293 Tax

From 1 July 2025 the Super Guarantee also rises to 12%. Re-evaluate your contribution plans for 2025-26

  • Review plans for Non-Concessional Contributions (NCC) options

From 1 July 2022 the NCC contribution rules changed and currently the age limit of 75 (28 days after the end of the month your turn 75) applies to NCCs (that is, from after-tax money) without meeting the work test. Check out ATO superannuation contribution guidance.

NCCs are an opportunity to move investments into super and out of a personal, company or trust names.

For those couples where one has a higher balance that may be affected by the proposed Division 296 Tax, it is important to review you option to even-up spouse balances and maximise super in pension phase up to age 75. For couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation or above $3m, they are able to withdraw from the higher balance and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment and may help minimise Div 296 Tax.

If you have considerable additional funds to add to contribution then maybe contribute up to $120,000 before June 30 and then you may be able to contribute up to $360,000 after 1 July to maximise contributions.

From 1 July 2024 the Non-Concessional Cap rose to $120,000 per year or $360,000 under the 3 Year Bring Forward Rule.

  • RECONTRIBUTION STRATEGIES

Consider doing the drawdown before 30 June 2025 so that your Transfer Balance Cap and Total Super Balance on 1 July 2025 gets some additional space with the rise in the TBAR and TSB full limits to $1.2m. Note that if you had and existing pension(s) at 30 June 2024 your current limit will be anywhere between $1.6m and $2M after 1 July (Frustrating for Advisers!)

You can also make your tax components more tax free by using recontribution strategies. SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. From 1 July 2022 you can do this until they turn age 75 (contribution to be made with 28 days after the end of the month you turn 75).

  1. Downsizer contributions

If you have sold your home in the last year and you are over 55, consider eligibility for downsizer contributions of up to $300,000 for each member.

From 1 jan 2023, the eligibility age to make downsizer contributions into superannuation was reduced from 60 to 55 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The $300,000 downsizer limit (or $600,000 for a couple) and the $360,000 bring forward NCC cap allow up to $660,000 in one year contributions for a single person and $1,320,000 for a couple subject to their contributions caps.

PLEASE BE CAREFUL AS THE DOWNSIZER IS A ONCE ONLY STRATEGY AND IF YOU WOULD BENEFIT MORE IN OLDER YEARS USING THE STRATEGY THEN MAXIMISE NCCs FIRST.

  1. Calculate co-contributions

Check your eligibility for the co-contribution, it’s a good way to boost your super. The amounts differ based on your income and personal super contributions, so use the super co-contribution calculator.

  1. Examine spouse contributions

If your spouse has assessable income plus reportable fringe benefits totalling less than $37,000 for the full $540 tax offset or up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here.

You can implement this strategy up to age 75 as a Spouse Contribution is treated as a NCC in their account (and therefore counted towards your spouse’s NCC cap).

  1. Give notice of intent to claim a deduction for contributions

If you are planning to claim a tax deduction for personal concessional contributions, you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121).

A notice must be made before you commence the pension. Many people like to start pension in June and avoid having to take a minimum pension in that financial year but make sure you have claimed your tax deduction first. The same notice requirement applies if you plan to take a lump sum withdrawal from your fund.

  1. Consider contributions splitting to your spouse

Consider splitting contributions with your spouse, especially if:

  • your family has one main income earner with a substantially higher balance or
  • if there is an age difference where you can get funds into pension phase earlier or
  • if you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.

This is a simple no-cost strategy I recommend for everyone here.

Remember, any spouse contribution is counted towards your spouse’s NCC cap.

  1. Act early on off-market share transfers

If you want to move any personal shareholdings into super (as a contribution) you should act early. The contract is only valid once the broker receives a fully-valid transfer form so timing in June is critical. There are likely to be brokerage costs involved.

  1. Review options on pension payments

Ensure you take the standard minimum pension at your age-based rate. If a pension member has already taken pension payments of equal to or greater than the the minimum amount, they are not required to take any further pension payments before 30 June 2025. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

Minimum annual payments for pensions for 2024/25 financial year onwards.

Age at 1 July2024 –  Standard  Minimum % withdrawal 
Under 654%
65–745%
75–796%
80–847% 
85–899%
90–9411%
95 or older14%

If a pension member has already taken a minimum pension for the year, they cannot change the payment but they can get organised for 2025/26. No, you can’t sneak a payment back into the SMSF bank account unless you treat to as a new contribution!

If you need more than the minimum pension payments for living expenses then it may be a good strategy for amounts above the minimum to be treated as either:

  • a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension member’s Transfer Balance Account (TBA). Please discuss this with your accountant and adviser first as all funds now have to report these quarterly to the ATO.
  • for those with both pension and accumulation accounts, take the excess as a lump sum from the accumulation account to preserve as much in tax-exempt pension phase as possible.
  1. Check your documents on reversionary pensions

A reversionary pension to your spouse will provide them with up to 12 months to get their financial affairs organised before making a final decision on how to manage your death benefit. In NSW this may avoid issues with Binding Death Nominations and the Notional Estate (see Benz v Armstrong; Benz v Armstrong; Benz v Armstrong – 2022 NSWSC)

You should review your pension documentation and check if you have nominated a reversionary pension in the context of your family situation. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children.

The reversionary pension has become more important with the application of the $1.6-$2m million Transfer Balance Cap (TBC) limit to pension phase.

Tip: If you have opted for a nomination instead then check the existing Binding Death Benefit Nominations (many expire after 3 years in older deeds) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check your Deed allows for this first.

  1. Review Capital Gains Tax on each investment

Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase, then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to legislation changes.

  1. Collate records of all asset movements and decisions

Ensure all the fund’s activities have been appropriately documented with minutes, and that all copies of all statements, valuations and schedules are on file for your accountant, administrator and auditor.

The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all investments have been made in accordance with it and the SMSF Trust Deed, including insurances for members. See my article on this subject here.

  1. Arrange market valuations (beware of the proposed Div 296 Tax Sting)

Regulations now require assets to be valued at market value each year, including property and collectibles. For more information refer to ATO’s publication Valuation guidelines for SMSFs.

On collectibles, play by the new rules that came into place on 1 July 2016 or remove collectibles from your SMSF.

Tip: The ATO is targeting audit compliance this year on Property Valuations in SMSFs as we approach the implementation of the proposed Division 296 Tax from 1 July 2025.

Tip 2:  It would be better to ensure your properties truly match the market value on 1 July 2025 than to have a large rise in value recorded in future years that will trigger higher Div 296 Tax.

  1. Check the ownership of all investments.

Make sure the assets of the fund are held in the name of the trustees (including a corporate trustee) on behalf of the fund. Carefully check any online accounts and ensure all SMSF assets are separate from your other assets.

We recommend a corporate trustee to all clients. This might be a good time to change, as explained in this article on Why SMSFs should have a corporate trustee. If you have previously moved to a Corporate Trustee ten double check all accounts/investments were changed to the name of this trustee.  

  1. Review Estate Planning and loss of mental capacity strategies

Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid, consider Non-Lapsing Nominations and check the wording matches that required by the Trust Deed. Ensure it still accords with your wishes.

Also ensure you have appropriate Enduring Powers of Attorney (EPOA) in place to allow someone to step into your place as trustee in the event of illness, mental incapacity or death.

Check your Trust Deed and the details of the rules. For example, did you know you cannot leave money to stepchildren via a BDBN if their birth-parent has pre-deceased you?

  1. Review any SMSF loan arrangements

Have you provided special terms (low or no interest rates, capitalisation of interest etc) on a related party loan? Review your loan agreement and see if you need to amend your loan.

Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low?

Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue? For Related Party LRBA’s the Variable interest rate is currently 9.35% (will be updated for 2026FY in late May)

  1. Ensure SuperStream obligations are met

For super funds that receive employer contributions, the ATO is gradually introducing SuperStream, a system whereby super contributions data is made electronically.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details.

  1. Ensure you are meeting your Quarterly TBAR Reporting deadlines

From 1 July 2023 you need to be checking in with your accountant/administrator Quarterly

All SMSFs are required to report quarterly, even if the members total super balance is less than $1 million. This means you must report the event that affects the members transfer balance within 28 days after the end of the quarter in which the event occurs.

Example: All unreported events that occurred between 1 April and 30 June 2024 must be reported by 28 October 2023. This means you cannot report at the same time as your SMSF annual return (SAR) for the 2023-24 income year. More info here

  • ASIC fee increased from 1 July 2023

ASIC is increasing fees by $2 for the annual review of a special purpose SMSF trustee company $63 to $65. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years. Before 30 June, for $452 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form linked here.

  • Legacy retirement product conversions (Seek Expert Advice)

On 6 December 2024, regulations were released to allow the commutation of legacy pensions for a limited 5-year period. There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.

The regulations allow a five-year timeframe for lifetime or life expectancy pensions and MLIS to be commuted.

You have the following options:

▪ withdraw the funds from superannuation (all these clients have previously met a condition of release) ▪ rollover the amount to accumulation phase, or

▪ use the funds to commence an account based pension (if transfer balance cap space is available).

Under this measure, if a lifetime or life expectancy pension is commuted, any reserve supporting that income stream is also added to the commutation value. However, no amount from the reserve is counted tow

  • HAS NOT PASSED: Relaxing residency requirements for SMSFs– Labor Government has failed to move on this issue.

SMSFs and small APRA funds still do not have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years as the LNP government failed to pass it before the last election and Labor have put it on the backburner. The active member test was also to be removed, allowing members who are temporarily absent to continue to contribute to their SMSF.

  • Improving the Home Equity Access Scheme – Social security benefits for you or your mum and/or dad

The Home Equity Access Scheme formerly called The Pension Loan Scheme is now up and running. The Government introduced a No Negative Equity Guarantee for HEAS loans and allow people access to a capped advance lump sum payment.

  • No negative equity guarantee – Borrowers under the HEAS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued HEAS debt exceeds their property value. This brings the HEAS in line with private sector reverse mortgages.
  • Immediate access to lump sums under the HEAS – Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently maximums are  $14,937 for singles and $22,518.60 for couples).
  • Careful if replacing Income Protection or TPD Insurance (Total Permanent Disability)

Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago. So be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.

There were major changes to Income Protection insurance in 2021 so be very careful about switching insurer unless costs have blown out as new cover is often vastly inferior to current covers. Read more here before switching cover.

  • Large one-off Personal income or gain – Bring forward Concessional Contributions

For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year by bringing some or all of your 2026FY limit forward to this year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call is an Allocated Contributions Holding Account. See my article on this strategy here.

  • Providing Proof of Crypto Currency Holdings as of 30 June.

You should be using an exchange that is set up for SMSF accounts. They should provide a Tax Summary but it may cost extra. Some exchanges are now partnering with Specialised services that are experts in Australian to  offer tax reports that meet Australian Audit requirements.

The auditor will also want to verify holdings by checking:

  • An exchange account is set up in the name of the fund
  • Wallet purchased using funds from the SMSFs cash account

Cold Wallet Audit management extra step: For annual audit purposes, take a screenshot of the assets held in your Ledger wallet (e.g. via the Ledger ‘Live’ App or similar) on 30 June 2023 and also on the day you submit your paperwork and email this to the tax agent at tax time.

29. NALE/NALI applies in the 2025 year (in the sense the ATO are going to enforce it) – please ensure that if members perform services for their SMSF which is their ‘day job’ (ie. Accounting work for Accountants, Building and repair work for tradies, etc) that these are charged at the appropriate commercial rate that they charge their clients. A good article explaining this in more detail here from ASF Audits

Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.

Some for 1 July 2025

  •  Check your Salary Sacrifice or Concessional Contributions as SG rises to 12%

The superannuation guarantee (SG) rate will increase from 11% to 11.5% on 1 July 2024. You’ll need to use the new rate to calculate how much of your $30,000 concessional cap will be available to salary sacrifice or make personal deductible contributions.

  • Div 296 Tax – valuations of all assets on 1 July 2025 will be crucial.

For those with balances over or close to $3m and used to using low end of property valuations for your asset value, you may need to rethink this strategy as you do not want a large increase in value in future years or it will be caught under the “unrealised gains” sting in the proposed Division 296 Tax.

Warning before you jump into implementation of any strategy without checking your personal circumstances.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment
by SMSF Coach - Liam Shorte on May 21, 2025  •  Permalink
Posted in Binding Death Nominations, Centrelink, Checklists, downsizing, education, Estate Planning, Financial Planning, In Specie transfers, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on May 21, 2025

https://smsfcoach.com.au/2025/05/21/the-ultimate-smsf-end-of-financial-year-checklist-2025/

SMSF Business Real Property: It’s not what type of property that counts, it’s the use that matters.


The decision to purchase property through an SMSF requires careful consideration. This is perhaps why, in September 2024, the Australian Tax Office (ATO) reported that of the total estimated value of non-residential property assets held by the 621,809 SMSFs, only makes up about 13%.

One of the most common queries we get is “can our SMSF acquire a residential property from us personally”

Talk to an accountant or financial adviser about whether you can buy a residential property from a related party or rent one to your family and often the answer is a simple one; “you cannot acquire a residential property from a related party or lease it to a member or related party” But is this true in all cases?

An SMSF Specialist Advisor (SSA) will often dig deeper to explore the proposed strategy in more detail because it is not about the nature of the property, whether it is a residential property or a commercial office or industrial unit, but rather it is about the actual use of that property at the time of acquisition or when entering the lease.

We often see a residential property in suburbs or regional towns where a Doctor, Dentist, Accoutnant or other professional is using a residential property 100% for their business with no one living in the property. In this case the residential property is actually a Business Real Property and can be acquired from your fund.

Who is the property being acquired from and how is that property being used at the time of the purchase?

The exemption in s66 for business real property is tested at acquisition, so if it is currently not 100% Business Real Property as per s66(5) of the SIS Act, it cannot be acquired from a related party. But there is another chink in this rule, in that it does not have to be exactly 100% as in the case of a Farm where the use of the farmhouse for residential is incidental and therefore allowed. Another example would be the managers quarters in a Motel. So you can se that it pays to look deeper in to the exact details of a property’s use.

Tip on Scenario: Can an SMSF acquire a residential property and repurpose it as a business property so it can be let back to related party business?

– If the property will be used WHOLLY AND EXCLUSIVELY for the business at the time of acquisition, then YES. If not, then is the non-business use incidental? If not, then No

What if some portion of property is used for personal storage?

– Then the property is not used WHOLLY AND EXCLUSIVELY for business, so NO.

One solution maybe to change the nature of the residential property before purchase with the cooperation of the vendor and lease the premises properly from them. This might involve fitting out the rooms as offices/treatment rooms etc. Then when you go to acquire/move the property in to the SMSF it meets the Business Real Property definition. Please don’t try to bend rules, the ATO and your auditor will be looking to see that the changes are long term and with a serious intention for the property to remain as a business real property.

To help is is good to refer to the ATO definition of Business Real Property “Business real property generally means land and buildings used wholly and exclusively in a business.”

For more detailed information on what qualifies as Business Real Property see the ATO self-managed superannuation funds ruling SMSFR 2009/1: business real property for more information.

Other Tips and Traps

Minor Personal Use: In terms of using a small part of a property for personal use such as storage then refer specifically to paragraph 215 : “215. It is the Commissioner’s view that the de minimus principle of statutory interpretation will apply to the ‘wholly and exclusively’ threshold in the business real property definition. This principle will accommodate non-business use of the property that is relatively minor or trifling.”

Changing use of property while under an LRBA: you cannot change nature of the property while under an LRBA. It would be a breach of the rules by changing a residential property in to a commercial property while under a LRBA.

Warning before you jump into implementation of any strategy without checking your personal circumstances and the specifics of the property you are considering.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then, why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation (after 1 July 2025 due to our waiting list). Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756


Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment
by SMSF Coach - Liam Shorte on February 19, 2025  •  Permalink
Posted in Contributions, education, Financial Planning, Retirement Planning, Salary Sacrifice, SMSF, SMSF Management, Superannuation, Superannuation Splitting, Tax Planning, TBAR reporting
Tagged , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on February 19, 2025

https://smsfcoach.com.au/2025/02/19/smsf-business-real-property-its-not-what-type-of-property-that-counts-its-the-use-that-matters/

The Ultimate SMSF End of Financial Year Checklist 2024


OK, yet again we have only a short time left to the end of the 2024 financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.

It’s been another busy year and I have not had as much time to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.

Warning before we begin,

Before we start, just a warning as in the rush to take advantage of new strategies you may have forgotten about how good you have it already Be careful not to allow your accountant, administrator or financial planner to reset any pension that has been grandfathered under the pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences resulting in the pension being subject to current deeming rates if you lose the grandfathering. Point them to this document

  1. It’s all about timing

If you are making a contribution, the funds must hit the super fund’s bank account by the close of business on 30 June. Some clearing houses hold on to money for up to 14 days before presenting them to the super fund. Some Retail and Industry funds are asking for funds at least 7 days before the end of the financial year!

In addition, pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY. There must have been sufficient funds in the bank account to support the payment of the cheques on 30 June but a cheque should only be your very last-minute option! You can also ask your adviser or administrator about a Promissory Note if time is against you but funds are ready.

So, for SMSFs get your payments in the fund by Monday 24th June or earlier to be sure (yes I’m Irish) as the 30th is a Sunday this year. This is even more important if using a clearing house for contributions.

  1. Review your Concessional Contributions (CC) options and new rules

The government changed the contribution rules from 1 July 2020 to extend the ability to make contributions from age 65 up to age 67. Read more here. Maximise contributions up to CC cap of $27,500 but do not exceed your limit unless you have Unused Carried Forward Concessional limits and Total Super Balance under $500K as of last 01 July 2022. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here

Some of the sting has been taken out of excess contributions tax but you really don’t need the additional paperwork to sort out the problem. Check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

  1. Consider using the ‘Unused Carry Forward Concessional Contribution” limits

Broadly, the carry forward rule allows individuals to make additional CC in a financial year by utilising unused CC cap amounts from up to five previous financial years. Eligibility requires a total superannuation balance just before the start of that financial year of less than $500,000 (across all your super accounts).

This measure applies from 2018-19 so effectively, this means an individual can make up to $132,500 of CCs in a single financial year by utilising unapplied unused CC caps since 1 July 2018. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here

This is the last year to use the 2018/19 unused Carried Forward Concessional Caps as they fall outside the 5 year rolling period from 30 June 2024.

Beware that once your Income including Salary, Investment income, Employer SGC, Personal Concessional Contributions goes over $250,000 you will be subject to Div 293 Tax

From 1 July 2024 the Concessional Cap rises to $30,000 per year. Super Guarnatee also rises to 11.5%. Re-evaluate your contribution plans for 2024-25

  1. Review plans for Non-Concessional Contributions (NCC) options

From 1 July 2022 the NCC contribution rules changed and currently the age limit of 75 (28 days after the end of the month your turn 75) applies to NCCs (that is, from after-tax money) without meeting the work test. Check out ATO superannuation contribution guidance.

NCCs are an opportunity to move investments into super and out of a personal, company or trust names.

Even-up spouse balances and maximise super in pension phase up to age 75. For couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation are able to withdraw from the higher balance and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment.

Make your tax components more tax free by using recontribution strategies. SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. From 1 July 2022 you can do this until they turn age 75 (contribution to be made with 28 days after the end of the month you turn 75).

From 1 July 2024 the Non-Concessional Cap rises to $120,000 per year or $360,000 under the 3 Year Bring Forward Rule. Re-evaluate your contribution plans for 2024-25

RECONTRIBUTION STRATEGIES

Consider doing the drawdown before 30 June 2023 so that your Transfer Balance Cap and Total Super Balance on 1 July 2024 gets some additional space with the rise in the TBAR and TSB full limits to $1.9m. Note that if you had and existing pension(s) at 30 June 2023 your current limit will be anywhere between $1.6m and $1.9M (Frustrating for Advisers!)

If you have additional funds to add to the withdrawal then maybe take up to $330,000 before June 30 and then you may be able to contribute up to $360,000 using the new Non-Concessional Cap.

  1. Downsizer contributions

If you have sold your home in the last year and you are over 55, consider eligibility for downsizer contributions of up to $300,000 for each member.

From 1 jan 2023, the eligibility age to make downsizer contributions into superannuation was reduced from 60 to 65 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The $300,000 downsizer limit (or $600,000 for a couple) and the $330,000 bring forward NCC cap allow up to $630,000 in one year contributions for a single person and $1,260,000 for a couple subject to their contributions caps. That rises on 1 July 2024 to $660,000 for a single person and $1,320,000 for a couple subject to their contributions caps

PLEASE BE CAREFUL AS THIS IS A ONCE ONLY STRATEGY AND IF YOU WOULD BENEFIT MORE IN OLDER YEARS USING THE STRATEGT THE MAXIMISE NCCs FIRST.

  1. Calculate co-contributions

Check your eligibility for the co-contribution, it’s a good way to boost your super. The amounts differ based on your income and personal super contributions, so use the super co-contribution calculator.

  1. Examine spouse contributions

If your spouse has assessable income plus reportable fringe benefits totalling less than $37,000 for the full $540 tax offset or up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here.

You can implement this strategy up to age 75 as a Spouse Contribution is treated as a NCC in their account (and therefore counted towards your spouse’s NCC cap).

  1. Give notice of intent to claim a deduction for contributions

If you are planning to claim a tax deduction for personal concessional contributions, you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121).

A notice must be made before you commence the pension. Many people like to start pension in June and avoid having to take a minimum pension in that financial year but make sure you have claimed your tax deduction first. The same notice requirement applies if you plan to take a lump sum withdrawal from your fund.

  1. Consider contributions splitting to your spouse

Consider splitting contributions with your spouse, especially if:

  • your family has one main income earner with a substantially higher balance or
  • if there is an age difference where you can get funds into pension phase earlier or
  • if you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.

This is a simple no-cost strategy I recommend for everyone here. Remember, any spouse contribution is counted towards your spouse’s NCC cap.

  1. Act early on off-market share transfers

If you want to move any personal shareholdings into super (as a contribution) you should act early. The contract is only valid once the broker receives a fully-valid transfer form so timing in June is critical. There are likely to be brokerage costs involved.

  1. Review options on pension payments

The government has not extended the Temporary Reduction in Minimum Pensions as part of the COVID-19 response. Ensure you take the standard minimum pension at your age-based rate. If a pension member has already taken pension payments of equal to or greater than the the minimum amount, they are not required to take any further pension payments before 30 June 2024. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

Minimum annual payments for pensions for 2023/24 financial year onwards.

OK we are back to normal rates from 01/07/2023, no more COVID reductions.

Age at 1 July2023-24 Back to Standard  Minimum % withdrawal 
Under 654%
65–745%
75–796%
80–847% 
85–899%
90–9411%
95 or older14%
Minimum Pension Standards

If a pension member has already taken a minimum pension for the year, they cannot change the payment but they can get organised for 2024/-25. So, no you can’t sneak a payment back into the SMSF bank account!

If you need more than the minimum pension payments for living expenses then it may be a good strategy for amounts above the minimum to be treated as either:

  • a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension member’s Transfer Balance Account (TBA). Please discuss this with your accountant and adviser first as all funds now have to report this quarterly to the ATO.
  • for those with both pension and accumulation accounts, take the excess as a lump sum from the accumulation account to preserve as much in tax-exempt pension phase as possible.
  1. Check your documents on reversionary pensions

A reversionary pension to your spouse will provide them with up to 12 months to get their financial affairs organised before making a final decision on how to manage your death benefit. In NSW this may avoid issues with Binding Death Nominations and the Notional Estate (see Benz v Armstrong; Benz v Armstrong; Benz v Armstrong – 2022 NSWSC)

You should review your pension documentation and check if you have nominated a reversionary pension in the context of your family situation. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children.

The reversionary pension has become more important with the application of the $1.6-$1.9 million Transfer Balance Cap (TBC) limit to pension phase from 01/07/2023.

Tip: If you have opted for a nomination instead then check the existing Binding Death Benefit Nominations (many expire after 3 years) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check your Deed allows for this first.

  1. Review Capital Gains Tax on each investment

Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase, then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to legislation changes.

  1. Collate records of all asset movements and decisions

Ensure all the fund’s activities have been appropriately documented with minutes, and that all copies of all statements, valuations and schedules are on file for your accountant, administrator and auditor.

The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all investments have been made in accordance with it and the SMSF Trust Deed, including insurances for members. See my article on this subject here.

  1. Arrange market valuations

Regulations now require assets to be valued at market value each year, including property and collectibles. For more information refer to ATO’s publication Valuation guidelines for SMSFs.

On collectibles, play by the new rules that came into place on 1 July 2016 or remove collectibles from your SMSF.

Tip: The ATO is targeting audit compliance this year on Property Valuations in SMSFs as we approach the implementation of the Division 293 Tax from 1 July 2025.

  1. Check the ownership of all investments.

Make sure the assets of the fund are held in the name of the trustees (including a corporate trustee) on behalf of the fund. Carefully check any online accounts and ensure all SMSF assets are separate from your other assets.

We recommend a corporate trustee to all clients. This might be a good time to change, as explained in this article on Why SMSFs should have a corporate trustee.

  1. Review Estate Planning and loss of mental capacity strategies

Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid, and check the wording matches that required by the Trust Deed. Ensure it still accords with your wishes.

Also ensure you have appropriate Enduring Powers of Attorney (EPOA) in place to allow someone to step into your place as trustee in the event of illness, mental incapacity or death.

Check your Trust Deed and the details of the rules. For example, did you know you cannot leave money to stepchildren via a BDBN if their birth-parent has pre-deceased you?

  1. Review any SMSF loan arrangements

Have you provided special terms (low or no interest rates, capitalisation of interest etc) on a related party loan? Review your loan agreement and see if you need to amend your loan.

Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low?

Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue? For Related Party LRBA’s the Variable interest rate is currently 8.85%

  1. Ensure SuperStream obligations are met

For super funds that receive employer contributions, the ATO is gradually introducing SuperStream, a system whereby super contributions data is made electronically.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details.

  1. Ensure you are meeting your Quarterly TBAR Reporting deadlines

From 1 July 2023 you need tio be checking in with your accountant/administrator Quarterly

All SMSFs are required to report quarterly, even if the members total super balance is less than $1 million. This means you must report the event that affects the members transfer balance within 28 days after the end of the quarter in which the event occurs.

Example: All unreported events that occurred between 1 April and 30 June 2024 must be reported by 28 October 2023. This means you cannot report at the same time as your SMSF annual return (SAR) for the 2023-24 income year. More info here

  1. ASIC fee increased from 1 July 2023

ASIC is increasing fees by $4 for the annual review of a special purpose SMSF trustee company $59 to $63. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years. Before 30 June, for $407 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form linked here.

  1. HAS NOT PASSED: Relaxing residency requirements for SMSFs– Labor Government has failed to move on this issue.

SMSFs and small APRA funds still do not have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years as the LNP government failed to pass it before the last election and Labor have put it on the backburner. The active member test was also to be removed, allowing members who are temporarily absent to continue to contribute to their SMSF.

  1. HAS NOT PASSED: Legacy retirement product conversions (Under Review STILL by Government)

Individuals were to be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period but the legislation was not passed and is now to be reviewed by the new Government. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap.

There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.

  1. Improving the Home Equity Access Scheme – Social security benefits for you or your mum and/or dad

The Home Equity Access Scheme formerly called The Pension Loan Scheme is now up and running. The Government introduced a No Negative Equity Guarantee for HEAS loans and allow people access to a capped advance lump sum payment.

  • No negative equity guarantee – Borrowers under the HEAS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued HEAS debt exceeds their property value. This brings the HEAS in line with private sector reverse mortgages.
  • Immediate access to lump sums under the HEAS – Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently $14,511.90 for singles and $21,876.40 for couples).
  1. Careful if replacing Income Protection or TPD Insurance (Total Permanent Disability)

Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago so be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.

There were major changes to Income Protection insurance in 2021 so be very careful about switching insurer unless costs have blown out as new cover is often vastly inferior to current covers. Read more here before switching cover.

  1. Large one-off Personal income or gain – Bring forward Concessional Contributions

For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call is an Allocated Contributions Holding Account. See my article on this strategy here.

  1. Providing Proof of Crypto Currency Holdings as of 30 June.

You should be using an exchange that is set up for SMSF accounts. They should provide a Tax Summary but it may cost extra. Independent Reserve provides one audited by KPMG for $50. COINSPOT also offer tax reports that meet Australian Audit requirements.

The auditor will also want to verify holdings by checking:

  • An exchange account is set up in the name of the fund
  • Wallet purchased using funds from the SMSFs cash account

Cold Wallet Audit management extra step: For annual audit purposes, take a screenshot of the assets held in your Ledger wallet (e.g. via the Ledger ‘Live’ App or similar) on 30 June 2023 and also on the day you submit your paperwork and email this to the tax agent at tax time.

29. NALE/NALI applies in the 2024 year (in the sense the ATO are going to enforce it) – please ensure that if members perform services for their SMSF which is their ‘day job’ (ie. Accounting work for Accountants, Building and repair work for tradies, etc) that these are charged at the appropriate commercial rate that they charge their clients. A good article explaining this in more detail here from ASF Audits

Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.


One for I July 2024 Check your Salary Sacrifice or Concessional Contributions as SG rises to 11.5%

So busy, I forgot the superannuation guarantee (SG) rate will increase from 11% to 11.5% on 1 July 2024. You’ll need to use the new rate to calculate how much of your new indexed limit of $30,000 concessional cap will be available to salary sacrifice or make personal deductible contributions.

Warning before you jump into implementation of any strategy without checking your personal circumstances.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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by SMSF Coach - Liam Shorte on April 30, 2024  •  Permalink
Posted in Binding Death Nominations, Centrelink, Checklists, downsizing, education, Estate Planning, Financial Planning, In Specie transfers, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
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Posted by SMSF Coach - Liam Shorte on April 30, 2024

https://smsfcoach.com.au/2024/04/30/the-ultimate-smsf-end-of-financial-year-checklist-2024/

How to check your Superannuation data via myGov online


The ATO online services site, accessible through myGov, has now become a very useful tool for individuals in managing their superannuation and accessing superannuation information. Unfortunately, their financial planners cannot still access this information so they will often ask you to access this information for them.

You can look up your superannuation information such as contributions for the year to date, carry forward unused concessional contributions, total superannuation balance or transfer balance cap transactions, saving valuable time and minimising the risk of missing important information and making the wrong contributions.

NAVIGATING THE MYGOV WEBSITE

It is relatively easy to find the superannuation data on myGov, and access has improved over time.

If you do not have a myGov account, you need to create one at my.gov.au

Here is the ATO video on how to set it up How to create a myGov account and link to ATO service

Once logged in they need to scroll down to “Link a Service” and follow the steps to link to the ATO.


Those who already have a myGov account which is linked to the ATO, need to click on Australian Taxation Office (ATO) under Your Linked Services.

Information you need to link your myGov account to ATO online services

You will need at least 2 of the following:

  • Your Bank Account Details where a tax refund paid to or has earned interest in last 2 years
  • PAYG Payment Summary within last 2 years
  • Centrelink Payment Summary from last 2 years
  • Notice of Assessment within last 5 years
  • Dividend Statement within last 2 years
  • Superannuation account statement from last 5 years

More detailed information on each option is available here

INFORMATION

Once you have accessed your online ATO account, go to the Super tab, select Information and follow the links:

The information that appears here comes via the ATO from various reporting that superannuation funds and employers are obliged to do as well as from the individual’s income tax return.


It is important to remember that whilst myGov is a useful resource, it may not always be up to date, especially early in a financial year when super funds and individuals have not yet lodged income tax returns for the previous year.


In addition, those who use self-managed super funds (SMSFs) may find their information is not up to date as SMSFs do not have the same reporting frequency as retail and industry funds.

TOTAL SUPERANNUATION BALANCE (TSB)

This tab indicates an individual’s TSB on the most recent 30 June as well as historic TSBs going back to the 2016/17 financial year.


TSB is used to determine if an individual qualifies for several super-related measures the following financial year including the ability to make non-concessional contributions or use carry forward concessional contributions.


TSB is not always as simple as the member’s account balance on 30 June, so being able to look it up on myGov is invaluable.  

BRING FORWARD ARRANGEMENT

This section advises you whether or not you are in a bring-forward arrangement.

CONCESSIONAL CONTRIBUTIONS

Here you can find out the total concessional contributions you made each year and how you compare with your own concessional contributions cap. Remember that current year contributions may not all be showing up, so should be cross checked. For example, contributions to SMSFs such as personal contributions and related employer contributions, or personal contributions where a tax deduction hasn’t been successfully claimed.

CARRY-FORWARD CONCESSIONAL CONTRIBUTIONS

The carry-forward concessional contribution tab shows the total unused concessional contributions available to carry forward from previous years. It also links the you directly through to the TSB tab to check your eligibility to use the carry-forward amounts available (ie to check that TSB on the previous 30 June was under $500,000).

TRANSFER BALANCE CAP

If you already had a retirement phase income stream at 1 July 2017, or you commenced a retirement phase income stream since 1 July 2017, you can check the balance of your Transfer Balance Account, your personal transfer balance cap and any available cap space.

EMPLOYER CONTRIBUTIONS

This section is handy if you are looking to make personal deductible contributions and aren’t sure how much your employer has already contributed on your behalf as well as to check that an employer has been making Super Guarantee or salary sacrifice contributions.

MANAGE

Under the “Manage” tab, the following functions are available:

  • request a transfer of super between funds
  • withdraw any ATO-held super
  • make an excess non-concessional contribution election (ie release the excess or retain in the fund)
  • make a Division 293 election
  • apply for a release of super on compassionate grounds
  • apply for a First Home Super Saver Determination

NB: It appears that the Transfer Super, Withdraw ATO-held super and the Non-concessional election tabs only appear if these options are available to you. That is, if you have at least two super funds (for the Transfer super tab), or amounts held by the ATO (for Withdraw ATO–held super) or an excess non-concessional determination (Non-concessional election).

Warning before you jump into implementation of any strategy without checking your personal circumstances.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then, why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation (after 1 February 2023 due to our waiting list). Just click the Schedule Now button up on the left to find the appointment options.
Thank you to the industry tech experts who prepare much of this useful information for advisers but let me amend it to meet the needs of SMSF trustees. They do the heavy lifting for which I am eternally grateful.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

      

Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756


Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment
by SMSF Coach - Liam Shorte on November 13, 2023  •  Permalink
Posted in Contributions, education, Financial Planning, Retirement Planning, Salary Sacrifice, SMSF, SMSF Management, Superannuation, Superannuation Splitting, Tax Planning, TBAR reporting
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on November 13, 2023

https://smsfcoach.com.au/2023/11/13/how-to-check-your-superannuation-data-via-mygov-online/

The Ultimate SMSF End of Financial Year Checklist 2023


OK, yet again we are with only a few weeks left to the end of the financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.

It’s been another busy year and I have not had as much time to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.

Warning before we begin,

Before we start, just a warning as in the rush to take advantage of new strategies you may have forgotten about how good you have it already Be careful not to allow your accountant, administrator or financial planner to reset any pension that has been grandfathered under the pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences resulting in the pension being subject to current deeming rates if you lose the grandfathering. Point them to this document

  1. It’s all about timing

If you are making a contribution, the funds must hit the super fund’s bank account by the close of business on 30 June. Some clearing houses hold on to money before presenting them to the super fund.

In addition, pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY. There must have been sufficient funds in the bank account to support the payment of the cheques on 30 June but a cheque should be your very last-minute preference!

Get your payments in by Friday 23rd June or earlier to be sure (yes I’m Irish). This is even more important if using a clearing house for contributions.

  1. Review your Concessional Contributions (CC) options and new rules

The government changed the contribution rules from 1 July 2020 to extend the ability to make contributions from age 65 up to age 67. Read more here. Maximise contributions up to CC cap of $27,500 but do not exceed your limit unless you have Unused Carried Forward Concessional limits and Total Super Balance under $500K as of last 01 July 2022. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here

Some of the sting has been taken out of excess contributions tax but you really don’t need the additional paperwork to sort out the problem. Check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

  1. Consider using the ‘Unsed Carry Forward Concessional Contribution” limits

Broadly, the carry forward rule allows individuals to make additional CC in a financial year by utilising unused CC cap amounts from up to five previous financial years. Eligibility requires a total superannuation balance just before the start of that financial year of less than $500,000 (across all your super accounts).

This measure applies from 2018-19 so effectively, this means an individual can make up to $130,000 of CCs in a single financial year by utilising unapplied unused CC caps since 1 July 2018. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here

Beware that once your Income including Salary, Investment income, Employer SGC, Personal Concessional Contributions goes over $250,000 you will be subject to Div 293 Tax

  1. Review plans for Non-Concessional Contributions (NCC) options

From 1 July 2022 the NCC contribution rules changed and currently the age limit of 75 (28 days after the end of the month your turn 75) applies to NCCs (that is, from after-tax money) without meeting the work test. Check out ATO superannuation contribution guidance.

NCCs are an opportunity to move investments into super and out of a personal, company or trust names.

Even-up spouse balances and maximise super in pension phase up to age 75. For couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation are able to withdraw from the higher balance and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment.

Make your tax components more tax free by using recontribution strategies. SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. From 1 July 2022 you can do this until they turn age 75 (contribution to be made within 28 days after the end of the month you turn 75).

The Bring Forward Rule for 2022-23 compared to after 1 July 2023

Maximum NCC capCurrentFrom 1 July 2023
$330,000< $1.48M< $1.68M
$220,000$1.48 – $1.59M$1.68 – $1.79M
$110,000$1.59 – $1.7M$1.79 – $1.9M
NIL> $1.7M> $1.9M
Bring Forward Limits affected by TSB

RECONTRIBUTION STRATEGIES

Consider doing the drawdown before 30 June 2023 so that your Transfer Balance Cap and Total Super Balance on 1 July 2023 gets some additional space with the rise in the TBAR and TSB full limits to $1.9m. Note that if you have existing pensions you new limit will be anywhere between $1.6m and $1.9M (Frustrating for Advisers!)

  1. Downsizer contributions

If you have sold your home in the last year and you are over 55, consider eligibility for downsizer contributions of up to $300,000 for each member.

From 1 jan 2023, the eligibility age to make downsizer contributions into superannuation will be reduced from 60 to 55 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The $300,000 downsizer limit (or $600,000 for a couple) and the $330,000 bring forward NCC cap allow up to $630,000 in one year contributions for a single person and $1,260,000 for a couple subject to their contributions caps.

PLEASE BE CAREFUL AS THIS IS A ONCE ONLY STRATEGY AND IF YOU WOULD BENEFIT MORE IN LATER YEARS USING THE STRATEGY THEN MAXIMISE NCCs FIRST.

  1. Calculate co-contributions

Check your eligibility for the co-contribution, it’s a good way to boost your super. The amounts differ based on your income and personal super contributions, so use the super co-contribution calculator.

  1. Examine spouse contributions

If your spouse has assessable income plus reportable fringe benefits totalling less than $37,000 for the full $540 tax offset or up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here.

From 1 July 2022 you can implement this strategy up to age 75 as a Spouse Contribution is treated as a NCC in their account (and therefore counted towards your spouse’s NCC cap).

  1. Give notice of intent to claim a deduction for contributions

If you are planning to claim a tax deduction for personal concessional contributions, you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121).

A notice must be made before you commence the pension. Many people like to start pension in June and avoid having to take a minimum pension in that financial year but make sure you have claimed your tax deduction first. The same notice requirement applies if you plan to take a lump sum withdrawal from your fund.

  1. Consider contributions splitting to your spouse

Consider splitting contributions with your spouse, especially if:

  • your family has one main income earner with a substantially higher balance or
  • if there is an age difference where you can get funds into pension phase earlier or
  • if you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.

This is a simple no-cost strategy I recommend for everyone here. Remember, any spouse contribution is counted towards your spouse’s NCC cap.

  1. Act early on off-market share transfers

If you want to move any personal shareholdings into super (as a contribution) you should act early. The contract is only valid once the broker receives a fully-valid transfer form so timing in June is critical. There are likely to be brokerage costs involved.

  1. Review options on pension payments

The government has extended the Temporary Reduction in Minimum Pensions as part of the COVID-19 response. Ensure you take the new minimum pension of at least 50% of your age-based rate below. If a pension member has already taken pension payments of equal to or greater than the 50% reduced minimum amount, they are not required to take any further pension payments before 30 June 2023. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

Minimum annual payments for pensions for 2022/23 and 2023/24 financial years.

OK we are back to normal rates from 01/07/2023

Age at 1 July2023-24 Back to Standard 

 

Minimum % withdrawal 

2022-23 50% reduced

 

minimum pension

Under 654%2%
65–745%2.5%
75–796%3%
80–847% 3.5%
85–899%4.5%
90–9411%5.5%
95 or older14%7%

If a pension member has already taken a minimum pension for the year, they cannot change the payment but they can get organised for 2023/24. So, no, you can’t sneak a payment back into the SMSF bank account!

If you still need pension payments for living expenses but have already taken the 50% minimum then it may be a good strategy for amounts above the 50% reduced minimum to be treated as either:

  1. a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension members transfer balance account (TBA). Please discuss this with your accountant and adviser asap as some funds will have to report this quarterly and others on an annual basis.
  2. for those with both pension and accumulation accounts, take the excess as a lump sum from the accumulation account to preserve as much in tax-exempt pension phase as possible.
  3. Check your documents on reversionary pensions

A reversionary pension to your spouse will provide them with up to 12 months to get their financial affairs organised before making a final decision on how to manage your death benefit. In NSW this may avoid issues with Binding Death Nominations and the Notional Estate (see Benz v Armstrong; Benz v Armstrong – 2022 NSWSC)

You should review your pension documentation and check if you have nominated a reversionary pension in the context of your family situation. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children.

The reversionary pension has become more important with the application of the $1.6-$1.9 million Transfer Balance Cap (TBC) limit to pension phase from 01/07/2023.

Tip: If you have opted for a nomination instead then check the existing Binding Death Benefit Nominations (many expire after 3 years) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check your Deed allows for this first.

  1. Review Capital Gains Tax on each investment

Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase, then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to legislation changes.

  1. Collate records of all asset movements and decisions

Ensure all the fund’s activities have been appropriately documented with minutes, and that all copies of all statements and schedules are on file for your accountant, administrator and auditor.

The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all investments have been made in accordance with it and the SMSF Trust Deed, including insurances for members. See my article on this subject here.

  1. Arrange market valuations

Regulations now require assets to be valued at market value each year, including property and collectibles. For more information refer to ATO’s publication Valuation guidelines for SMSFs.

On collectibles, play by the new rules that came into place on 1 July 2016 or remove collectibles from your SMSF.

  1. Check the ownership of all investments

Make sure the assets of the fund are held in the name of the trustees (including a corporate trustee) on behalf of the fund. Check carefully any online accounts and ensure all SMSF assets are separate from your other assets.

We recommend a corporate trustee to all clients. This might be a good time to change, as explained in this article on Why SMSFs should have a corporate trustee.

  1. Review Estate Planning and loss of mental capacity strategies

Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid, and check the wording matches that required by the Trust Deed. Ensure it still accords with your wishes.

Also ensure you have appropriate Enduring Powers of Attorney (EPOA) in place to allow someone to step into your place as trustee in the event of illness, mental incapacity or death.

Check your Trust Deed and the details of the rules. For example, did you know you cannot leave money to stepchildren via a BDBN if their birth-parent has pre-deceased you?

  1. Review any SMSF loan arrangements

Have you provided special terms (low or no interest rates, capitalisation of interest etc) on a related party loan? Review your loan agreement and see if you need to amend your loan.

Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low? Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue.

  1. Ensure SuperStream obligations are met

For super funds that receive employer contributions, the ATO is gradually introducing SuperStream, a system whereby super contributions data is made electronically.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details.

  1. Ensure you are ready for Quarterly TBAR Reporting

From 1 July 2023

All SMSFs will be required to report quarterly, even if the members total super balance is less than $1 million. This means you must report the event that affects the members transfer balance within 28 days after the end of the quarter in which the event occurs.

All unreported events that occurred before 30 September 2023 must be reported by 28 October 2023. This means you cannot report at the same time as your SMSF annual return (SAR) for the 2022–23 income year. More info here

  1. ASIC fee increases from 1 July 2021

ASIC is increasing fees by $4 for the annual review of a special purpose SMSF trustee company $59 to $63. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years. Before 30 June for $407 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form linked here.

  1. HAS NOT PASSED: Relaxing residency requirements for SMSFs– new Government to review.

SMSFs and small APRA funds still do not have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years as the LNP government failed to pass it before the election. The active member test was also to be removed, allowing members who are temporarily absent to continue to contribute to their SMSF.

  1. HAS NOT PASSED: Legacy retirement product conversions (Under Review By New Government)

Individuals were to be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period but the legislation was not passed and is now to be reviewed by the new Government. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap.

There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.

  1. Improving the Home Equity Access Scheme – Social security benefits for you or your mum and/or dad

The Home Equity Access Scheme formerly called The Pension Loan Scheme is now up and running. The Government introduced a No Negative Equity Guarantee for HEAS loans and allow people access to a capped advance lump sum payment.

  • No negative equity guarantee – Borrowers under the HEAS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued HEAS debt exceeds their property value. This brings the HEAS in line with private sector reverse mortgages.
  • Immediate access to lump sums under the HEAS – Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently $13,882 for singles and $20,852 for couples).
  1. Careful if replacing Income Protection or TPD Insurance (Total Permanent Disability)

Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago so be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.

There were major changes to Income Protection insurance in 2021 so be very careful about switching insurer unless costs have blown out as new cover is often vastly inferior to current covers. Read more here before switching cover.

  1. Large one-off Personal income or gain – Bring forward Concessional Contributions

For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call it an Allocated Contributions Holding Account. See my article on this strategy here.

  1. Providing Proof of Crypto Currency Holdings as of 30 June.

You should be using an exchange that is set up for SMSF accounts. They should provide a Tax Summary but it may cost extra. Independent Reserve provides one audited by KPMG for $50. COINSPOT also offer tax reports that meet Australian Audit requirements.

The auditor will also want to verify holdings by checking:

  • An exchange account is set up in the name of the fund
  • Wallet purchased using funds from the SMSFs cash account

Cold Wallet Audit management extra step: For annual audit purposes, take a screenshot of the assets held in your Ledger wallet (e.g.via the Ledger ‘Live’ App or similar) on 30 June 2023 and also on the day you submit your paperwork and email this to the tax agent at tax time.

Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.


One for 1 July 2023 Check your Salary Sacrifice or Concessional Contributions as SG rises to 11%

So busy, I forgot the superannuation guarantee (SG) rate will increase from 10.5% to 11% on 1 July 2023. You’ll need to use the new rate to calculate how much of your $27,500 concessional limit will be available to salary sacrifice or make personal deductible contributions.

Warning before you jump into implementation of any strategy without checking your personal circumstances.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then, why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation (after 1 February 2023 due to our waiting list). Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser

 

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Tel: 02 9899 3693, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756


Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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by SMSF Coach - Liam Shorte on June 2, 2023  •  Permalink
Posted in Binding Death Nominations, Centrelink, Checklists, downsizing, education, Estate Planning, Financial Planning, In Specie transfers, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
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Posted by SMSF Coach - Liam Shorte on June 2, 2023

https://smsfcoach.com.au/2023/06/02/the-ultimate-smsf-end-of-financial-year-checklist-2023/

So How Much Can I Contribute to my SMSF Using the Bring Forward Rule from 1 July 2025


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3 Year Bring Forward Rule

Previously, the government has announced the revised changes to the age limits for Non-Concessional Contributions from 1 July 2022, allowing them to age 75 without having to meet the work test. Now to explore in more detail the actual workings of the new Non-Concessional contributions rules and the “Bring Forward Rule” which allows lump sums to be contributed by bringing forward 2 future years of the non-concessional contribution cap to the current year.

So this year, if you are under 75, you can still use the bring-forward rule to contribute the full $360,000.  Note that you may also have already triggered that rule in one of the 2 previous financial years and be wondering how much of the cap you have remaining.

So for example;

If an SMSF member triggered the Non-Concessional Cap bring forward rule last financial year 2023-24 with a $200,000 non-concessional contribution, they could only contribute a maximum of $130,000 as a non-concessional contribution across the 2024-25 or 2025-26 financial years. This is because you triggered the bring-forward arrangement when the limit was was $110,000  per year or $330,000 using the bring-forward rule.

So for example;

If an SMSF member triggers the Non-Concessional Cap bring forward rule this financial year 2024-25 with a $200,000 non-concessional contribution, they could contribute a maximum of $160,000 as a non-concessional contribution across the 2025-26 or 2026-27 financial years. This is because you are triggering the bring-forward arrangement when the limit has increased to $120,000  per year or $360,000 using the bring-forward rule.

$1.9 million eligibility threshold and how it affects the 3 bring forward rule for contributions 

From 1 July 2017 another rule has applied that affects NCC contributions. Individuals are unable to make further NCCs where their, now indexed, Total Superannuation Balance (TSB) is $2 million or more (tested at 30 June of the previous financial year) across all Superannuation accounts not just their SMSF. Where an individual’s balance is close to $2 million, they can only make a contribution or use the bring forward to take their balance to $2 million but not beyond.

TSB on 30 June  of prior financial year Contribution and bring-forward available
Less than $1.76m 3 years ($360,000)
$1.76m to < $1.88m 2 years ($240,000)
$1.88m to < $12m 1 year ($120,000, no bring-forward available)
$2m and above Ni

What should you do now

If you are considering making a contribution this year then I strongly recommend that you track your previous 2 years’ contributions by checking your eligibility via your MyGov App -> ATO service -> Super Tab -> Information -> Bring Forward Arrangement and using the above tables to assess how much you have contributed and how much you can now still contribute under the new rules.

Bring Forward Arrangements

I hope this guidance has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, like on Facebook etc to make sure we get the news out there. As always please contact me if you want to look at your own options. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or via Skype. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

 

PO Box 6002, Norwest NSW 2153

40/8 Victoria Ave, Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Leave a comment
by SMSF Coach - Liam Shorte on July 14, 2022  •  Permalink
Posted in Centrelink, Checklists, Financial Planning, News & Stats, Pension Strategies, Pensions, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on July 14, 2022

https://smsfcoach.com.au/2022/07/14/so-how-much-can-i-contribute-to-my-smsf-using-the-bring-forward-rule-2/

Updated Guide to Tax Benefits of Using an SMSF Withdrawal and Re-Contribution Strategy


No More Tax Free

Depending on the tax components of your Superannuation balance you may leave a nasty tax bill for your ultimate beneficiaries on death. Here, we will review the use of withdrawal and re-contribution strategies, to maximise benefits for eventual beneficiaries and offer some protection against future legislation changes. Seek personal advice before implementing any strategy.

What has changed

The withdrawal and re-contribution strategy has been popular from both a retirement and estate planning perspective to manage tax outcomes for retired members and beneficiaries on the death of a member.

The benefit of the withdrawal and re-contribution strategy should now be reassessed as a result of some of the reforms which took effect incrementally since 1 July 2017:

• the Non-Concessional Contribution (NCCs) cap is now $120,000 ($360,000 using 3 year bring forward rule).
• indexation to $2m of the  Total Super Balance cap (TSB) rule to determine eligibility to make NCCs
• partial indexation to between $1.6 and  $2m Transfer Balance Cap (TBC( applicable to existing and new pensions.
• the abolition of anti-detriment payment (sigh of relief from many professionals!), and

From 1 July 2022, the ability for SMSF members over 67 to continue to make Non-Concessional (NCC) contributions up to age 75. This will help you get the maximum benefit available under the re-contribution strategy.

The basic re-contribution strategy

The re-contribution strategy involves withdrawing an amount from an SMSF member’s balance and making a non-concessional contribution (NCC) back into the SMSF in the same or another member’s name. This effectively enables any taxable component of the lump sum withdrawn to be converted into a tax-free component paying nil tax on death benefits.

Before you can use the strategy, the SMSF member needs to have met a full condition of release to be eligible to make lump sum withdrawals. Now, if you are under 75 you do not need to meet the work test eligibility to make NCCs but you do have to ensure that your Total Super Balance contribution cap limit will allow a re-contribution of the funds.

We normally suggest using this strategy after meeting a condition of release after age 60 and before age 75 because if this strategy is implemented by a person who is 60 or over, any withdrawal is received tax-free and not included in assessable income.

The re-contribution strategy may help to:

  • reduce the tax to be paid by non-tax dependant beneficiaries (usually financially independent adult children) on any death benefit lump sum after the member passes away.
  • offer some protection against legislative changes to taxing of pensions as NCCs are after-tax contributions where no tax concession has been received.

Case Study Example

Michael, a widower, (aged 60) has $720,000 in an SMSF account. The tax components of his account are split 50:50, meaning that $360,000 of the account is taxable and $360,000 is tax-free. He has fully retired and therefore has complete access to his super benefits.

Michael has two adult children, his daughter Carmel and son Sebastian (neither of whom are financial dependents). Michael has a valid non-lapsing binding death benefit nomination in place in favour of them equally.

If Michael passed away today, $360,000 of his super benefit which is attributable to the taxable component would be subject to tax at a maximum rate of 15% plus Medicare Levy (if not paid to estate) as Carmel and Sebastian are not tax dependants.

Michael could use the re-contribution strategy which may give a better outcome for the kids from a tax perspective saving up to $61,200 ($360,000 x 17%). In addition, assuming Michael has other taxable passive investment income outside super, if Michael was to start an account-based pension, a concessional contribution strategy could also help him to reduce tax payable on his income using funds from the SMSF pension payments until he reaches age 67 and afterward to age 75 if he meets the work test yearly.

Maximum Total Super Balance for additional contributions

A person will not be eligible to make NCCs if their total super balance (across all super funds) on the prior 30 June is equal to or greater than $1.9m depending on their personal limit. If the total super balance is less than$1.9m but more than $1.68m on 30 June of the prior year, the person will be eligible to contribute some NCCs but cannot fully utilise the 3-year bring-forward of $360,000. In relation to the re-contribution strategy, this means that:

TSB on 30 June  of prior financial year Contribution and bring-forward available
Less than $1.76m 3 years ($360,000)
$1.476m to < $1.88m 2 years ($240,000)
$1.88m to < $2m 1 year ($120,000, no bring-forward available)
$2m and above Nil
  • re-contributions, whereby one member of a couple makes a withdrawal from their SMSF account and contributes into their spouse’s member account, may become attractive to the extent that it would enable them both to maintain a member account balance of less than $1.9m, potentially preserving future eligibility to make NCCs.

$1.9 – $2m Pension transfer balance cap

From 1 July 2024, a transfer balance cap rose to $2m (indexed) but somewhere between $1.6 and $2m for those who already have a pension in place. This measure was introduced in 2017 to limit the maximum amount that an individual can transfer into the retirement phase of superannuation. Any amount in excess of the transfer balance cap needs to

  • remain in accumulation, or
  • use a re-contribution strategy where one spouse makes a lump sum withdrawal and contributes the amount into their spouse’s account may also allow the couple to collectively hold more of their wealth in tax-effective superannuation pensions.

The Traps and interaction with Centrelink strategies

When deciding whether to use a re-contribution strategy, it’s important to consider each member’s personal circumstances, as well as any implications the re-contribution strategy may have on their broader situation.

Moving Funds to a Spouse under Age Pension age
A popular Centrelink strategy involves a person who is of Age Pension age cashing out some of his/her super and having the money contributed in the SMSF member account of their spouse who is below Age Pension age. This strategy can enable the older spouse to get more Age Pension, as super in the accumulation phase is not means-tested when held in the name of a person under Age Pension age. It can also enable taxable money to be converted into tax-free money and may result in a Government co-contribution or spouse tax offset.

I hope this guidance has been helpful and please take the time to comment. Feedback is always appreciated. Please reblog, retweet, like on Facebook, etc to make sure we get the news out there. As always please contact me if you want to look at your own options. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or via Skype. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

    

Color logo with background smaller

Tel: 02　9899 3693, Mobile: 0413 936 299

PO Box 6002 NORWEST NSW 2153

U40/8 Victoria Ave. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

1 Comment
by SMSF Coach - Liam Shorte on July 7, 2022  •  Permalink
Posted in Centrelink, Contribution Strategies, education, Estate Planning, Financial Planning, News & Stats, Pension Strategies, Pensions, SMSF, SMSF Management, Superannuation Splitting, Tax Planning
Tagged , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on July 7, 2022

https://smsfcoach.com.au/2022/07/07/updated-guide-to-tax-benefits-of-using-an-smsf-withdrawal-and-re-contribution-strategy/

The Ultimate SMSF End of Financial Year Checklist 2022


OK, so here we are with only a few weeks left to the end of the financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.

It’s been a busy year and I have not had as much time to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.

Warning before we begin,

Before we start, just a warning as in the rush to take advantage of new strategies you may have forgotten about how good you have it already Be careful not to allow your accountant, administrator or financial planner to reset any pension that has been grandfathered under the pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences resulting in the pension being subject to current deeming rates if you lose the grandfathering. Point them to this document

  1. It’s all about timing

If you are making a contribution, the funds must hit the super fund’s bank account by the close of business on 30 June. Some clearing houses hold on to money before presenting them to the super fund.

In addition, pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY. There must have been sufficient funds in the bank account to support the payment of the cheques on 30 June but a cheque should be your very last-minute preference!

Get your payments in by Friday  24th June or earlier to be sure (yes I’m Irish). This is even more important if using a clearing house for contributions.

  1. Review your Concessional Contributions (CC) options and new rules

The government changed the contribution rules from 1 July 2020 to extend the ability to make contributions from age 65 up to age 67. Read more here. Maximise contributions up to CC cap of $27,500 but do not exceed your limit unless you have Carried Forward Concessional limits and Total Super Balance under $500K as of last 01 July 2021.

The sting has been taken out of excess contributions tax but you don’t need additional paperwork to sort out the problem. Check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

  1. Consider using the ‘carry forward’ CC cap

Broadly, the carry forward rule allows individuals to make additional CC in a financial year by utilising unused CC cap amounts from up to five previous financial years. Eligibility requires a total superannuation balance just before the start of that financial year of less than $500,000 (across all your super accounts).

This measure applies from 2018-19 so effectively, this means an individual can make up to $75,000 of CC in a single financial year by utilising unapplied unused CC caps since 1 July 2018.

  1. Review plans for Non-Concessional Contributions (NCC) options

From 1 July 2022 the NCC contribution rules change but currently the age limit of 67 applies to NCCs (that is, from after-tax money) without meeting the work test (increasing to age 74 from 1 July 2022). You have the option of making $110,000 NCCs per year up to 67 (or 74 from 1 July 2022). Check out ATO superannuation contribution guidance.

NCCs are an opportunity to move investments into super and out of a personal, company or trust names.

Even-up spouse balances and maximise super in pension phase up to age 74. For couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation are able to withdraw from the higher balance and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment.

Make your tax components more tax free by using recontribution strategies. SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. From 1 July 2022 you can do this until they turn age 75 and 28 days.

  1. Downsizer contributions

If you have sold your home in the last year and you are over 65, consider eligibility for downsizer contributions of up to $300,000 for each member.

From 1 July 2022, the eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The $300,000 downsizer limit (or $600,000 for a couple) and the $330,000 bring forward NCC cap allow up to $630,000 in one year contributions for a single person and $1,260,000 for a couple subject to their contributions caps.

 

  1. Calculate co-contributions

Check your eligibility for the co-contribution, it’s a good way to boost your super. The amounts differ based on your income and personal super contributions, so use the super co-contribution calculator.

  1. Examine spouse contributions

If your spouse has assessable income plus reportable fringe benefits totalling less than $37,000 for the full $540 tax offset or up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here.

From 1 July 2022 you may also be able to implement this strategy up to age 75 as a Spouse Contribution is treated as a NCC in their account (and therefore counted towards your spouse’s NCC cap).

  1. Give notice of intent to claim a deduction for contributions

If you are planning to claim a tax deduction for personal concessional contributions, you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121).

A notice must be made before you commence the pension. Many people like to start pension in June and avoid having to take a minimum pension in that financial year but make sure you have claimed your tax deduction first. The same notice requirement applies if you plan to take a lump sum withdrawal from your fund.

  1. Consider contributions splitting to your spouse

Consider splitting contributions with your spouse, especially if:

  • your family has one main income earner with a substantially higher balance or
  • if there is an age difference where you can get funds into pension phase earlier or
  • if you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.

This is a simple no-cost strategy I recommend for everyone here. Remember, any spouse contribution is counted towards your spouse’s NCC cap.

  1. Act early on off-market share transfers

If you want to move any personal shareholdings into super (as a contribution) you should act early. The contract is only valid once the broker receives a fully-valid transfer form so timing in June is critical. There are likely to be brokerage costs involved.

  1. Review options on pension payments

The government has extended the Temporary Reduction in Minimum Pensions as part of the COVID-19 response. Ensure you take the new minimum pension of at least 50% of your age-based rate below. If a pension member has already taken pension payments of equal to or greater than the 50% reduced minimum amount, they are not required to take any further pension payments before 30 June 2022. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

Minimum annual payments for pensions for 2021/22 and 2022/23 financial years.

Age at 1 July Standard 

Minimum % withdrawal 

 50% reduced

minimum pension
Under 65 4% 2%
65–74 5% 2.5%
75–79 6% 3%
80–84 7%  3.5%
85–89 9% 4.5%
90–94 11% 5.5%
95 or older 14% 7%

If a pension member has already taken a minimum pension for the year, they cannot change the payment but they can get organised for 2022/23. So, no, you can’t sneak a payment back into the SMSF bank account!

If you still need pension payments for living expenses but have already taken the 50% minimum then it may be a good strategy for amounts above the 50% reduced minimum to be treated as either:

  1. a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension members transfer balance account (TBA). Please discuss this with your accountant and adviser asap as some funds will have to report this quarterly and others on an annual basis.
  2. for those with both pension and accumulation accounts, take the excess as a lump sum from the accumulation account to preserve as much in tax-exempt pension phase as possible.
  1. Check your documents on reversionary pensions

A reversionary pension to your spouse will provide them with up to 12 months to get their financial affairs organised before making a final decision on how to manage your death benefit. In NSW this may avoid issues with Binding Death Nominations and the Notional Estate (see Benz v Armstrong; Benz v Armstrong; Benz v Armstrong – 2022 NSWSC)

You should review your pension documentation and check if you have nominated a reversionary pension in the context of your family situation. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children.

The reversionary pension has become more important with the application of the $1.6-$1.7 million Transfer Balance Cap (TBC) limit to pension phase.

Tip: If you have opted for a nomination instead then check the existing Binding Death Benefit Nominations (many expire after 3 years) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check your Deed allows for this first.

  1. Review Capital Gains Tax on each investment

Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase, then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to legislation changes.

  1. Collate records of all asset movements and decisions

Ensure all the fund’s activities have been appropriately documented with minutes, and that all copies of all statements and schedules are on file for your accountant, administrator and auditor.

The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all investments have been made in accordance with it and the SMSF Trust Deed, including insurances for members. See my article on this subject here.

  1. Arrange market valuations

Regulations now require assets to be valued at market value each year, including property and collectibles. For more information refer to ATO’s publication Valuation guidelines for SMSFs.

On collectibles, play by the new rules that came into place on 1 July 2016 or remove collectibles from your SMSF.

  1. Understand COVID relief on in-house assets

If your fund has any investments in ‘in-house assets’ you must make sure that at all times the market value of these investments is less than 5% of the value of the fund. Do not take this rule lightly as the current SMSF penalty powers make it easier for the ATO to apply administrative penalties (fines) for smaller misdemeanours ranging from $820 to $10,200 per breach per trustee.

Due to COVID, the ATO will not take action against SMSFs where:

  • at 30 June 2021 the market value of an SMSF’s in-house assets is over 5% because of the downturn in the share market
  • the trustee of the SMSF prepares a rectification plan
  • by 30 June 2022, the rectification plan either cannot be effectively implemented because of market conditions or does not need to be implemented because the market recovers and the 5% test is again satisfied at 30 June 2022.
  1. Get your Director’s ID sorted now!

The deadline for applying for a DIN depends on when you were appointed as a director: If you are already a director on or by 31 October 2021, you must apply by 30 November 2022. If you become a director between 1 November 2021 and 4 April 2022, you must apply within 28 days of your appointment. See my article here for guidance on the process

  1. Check the ownership of all investments

Make sure the assets of the fund are held in the name of the trustees (including a corporate trustee) on behalf of the fund. Check carefully any online accounts and ensure all SMSF assets are separate from your other assets.

We recommend a corporate trustee to all clients. This might be a good time to change, as explained in this article on Why SMSFs should have a corporate trustee.

  1. Review Estate Planning and loss of mental capacity strategies

Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid, and check the wording matches that required by the Trust Deed. Ensure it still accords with your wishes.

Also ensure you have appropriate Enduring Powers of Attorney (EPOA) in place to allow someone to step into your place as trustee in the event of illness, mental incapacity or death.

Check your Trust Deed and the details of the rules. For example, did you know you cannot leave money to stepchildren via a BDBN if their birth-parent has pre-deceased you?

  1. Review any SMSF loan arrangements

Have you provided special terms (low or no interest rates, capitalisation of interest etc) on a related party loan? Review your loan agreement and see if you need to amend your loan.

Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low? Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue.

  1. Ensure SuperStream obligations are met

For super funds that receive employer contributions, the ATO is gradually introducing SuperStream, a system whereby super contributions data is made electronically.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.

If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details.

  1. ASIC fee increases from 1 July 2021

ASIC is increasing fees by $3 for the annual review of a special purpose SMSF trustee company $56 to $59. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years. Before 30 June for $387 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form linked here.

  1. HAS NOT PASSED: Relaxing residency requirements for SMSFs– new Government to review.

SMSFs and small APRA funds still do not have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years as the LNP government failed to pass it before the election. The active member test was also to be removed, allowing members who are temporarily absent to continue to contribute to their SMSF.

  1. HAS NOT PASSED: Legacy retirement product conversions (Under Review By New Government)

Individuals were to be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period but the legislation was not passed and is now to be reviewed by the new Government. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap.

There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.

 

  1. Improving the Home Equity Access Scheme – Social security benefits for you or your mum and/or dad

Proposed: The Home Equity Access Scheme formerly called The Pension Loan Scheme will apply from 1 July 2022. the Government will introduce a No Negative Equity Guarantee for PLS loans and allow people access to a capped advance lump sum payment.

  • No negative equity guarantee – Borrowers under the PLS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued PLS debt exceeds their property value. This brings the PLS in line with private sector reverse mortgages.
  • Immediate access to lump sums under the PLS – Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently $12,385 for singles and $18,670 for couples).
  1. Careful if replacing Income Protection or TPD Insurance (Total Permanent Disability)

Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago so be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.

There were major changes to Income Protection insurance in 2021 so be very careful about switching insurer unless costs have blown out as new cover is often vastly inferior to current covers. Read more here before switching cover.

  1. Large one-off Personal income or gain – Bring forward Concessional Contributions

For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call is an Allocated Contributions Holding Account. See my article on this strategy here.

28. Providing Proof of Crypto Currency Holdings as of 30 June.

You should be using an exchange that is set up for SMSF accounts. They should provide a Tax Summary but it may cost extra. Independent Reserve provides one audited by KPMG for $50.

The auditor will also want to verify holdings by checking:

  • An exchange account is set up in the name of the fund
  • Wallet purchased using funds from the SMSFs cash account

Cold Wallet Audit management extra step: For annual audit purposes, take a screenshot of the assets held in your Ledger wallet (e.g.via the Ledger ‘Live’ App or similar) on 30 June 2022 and also on the day you submit your paperwork and email this to the tax agent at tax time.

Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.


One for I July 2022 Check your Salary Sacrifice or Concessional Contributions as SG rises to 10.5%

So busy, I forgot the superannuation guarantee (SG) rate will increase from 10% to 10.5% on 1 July 2022. You’ll need to use the new rate to calculate how much of your $27,500 concessional limit will be available to salary sacrifice or make personal deductible contributions.

Warning before you jump into implementation of any strategy without checking your personal circumsatances.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation (after 1 August 2022). Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02 9894 1844, Mobile: 0413 936 299

  • PO Box 6002 NORWEST NSW 2153
  • 5/15 Terminus St. Castle Hill NSW 2154
  • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
  • Suite 4, 1 Dight St., Windsor NSW 2756


Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

1 Comment
by SMSF Coach - Liam Shorte on June 9, 2022  •  Permalink
Posted in Centrelink, Checklists, Financial Planning, News & Stats, Pension Strategies, Pensions, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on June 9, 2022

https://smsfcoach.com.au/2022/06/09/the-ultimate-smsf-end-of-financial-year-checklist-2022/

SMSF Trustees; How To Get Your Director Identification Number


Since November 2021 the ATO has implemented new requirements regarding director identification numbers.  The following covers the key changes to be aware of.
 
Every Accountant and SMSF Administrator is currently updating their systems to include director ID’s for their clients and will be in touch with you asking for your Director Identification Number (director ID) within the next 12 months. they can’t provide you with the number so you need to get organised and apply for yours sooner rather than later as for some the process will not be easy.
 
What is a Director Identification Number (director ID)
A director identification number (director ID) is a unique identifier you will keep forever. It will help to prevent the use of false or fraudulent director identities.
 
How director ID works
A director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity with us.
 
A director ID:
·       starts with 036, which is the 3-digit country code for Australia under International Standard ISO 3166
·       ends with an 11-digit number and one ‘check’ digit for error detection.
 
Directors need to apply for their own director ID. It’s free to apply.

Directors will only ever have one director ID. They’ll keep it forever even if they:


·       change companies
·       stop being a director
·       change their name
·       move interstate or overseas.
 
Why do you need a director ID
 
Shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company including SMSF Trustee Companies.

All directors are required by law to verify their identity with us before receiving a director ID. This is important because it will help to:
 
·       prevent the use of false or fraudulent director identities
·       make it easier for external administrators and regulators to trace directors’ relationships with companies over time
·       identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.
 
So in the case of SMSF Corporate Trustees, each Director must apply for a director ID online from the Australian Business Registry Services (ABRS) website and will be required to log in using the myGovID app.
 
A director must complete the application themselves and cannot instruct an authorised agent such as an accountant or financial advisor to apply for a director ID on their behalf. However, you Accountant or Financial Advisor may sit with you and guide you through the process. I did my own application on the first day just to see how the process worked but I deal with Government websites and ID requirements daily so I was well prepared and still I hit a few hurdles along the way.
 
Additional information is available at: https://www.abrs.gov.au/director-identification-number/apply-director-identification-number
 
Applying for a director ID is a 3 step process.
 
Step 1 – Set up myGovID

You will need a myGovID with a Standard or Strong identity strength to apply for your director ID online. If you live outside Australia and can’t get a myGovID with a Standard or Strong identity strength, you will need to apply with a paper form and provide certified copies of your identity documents. If you live in Australia and:
· don’t have a myGovID, you can find information on how to download the app at How to set up myGovID .

You will need a myGovID with a standard or strong identity strength using two Australian identity documents, such as:
‒         Driver’s licence or learner’s permit
‒         Passport
‒         Birth certificate
‒         Visa (using foreign passport providing still in Australia)
‒         Citizenship certificate
‒         ImmiCard
‒         Medicare card

The Hurdles I have seen in setting up myGovID are where historically your name on ID documents differ from one to another or the details on government systems is wrong because of a historic mistake. So be prepared with as many forms of identity as possible

Text Box: myGovID is different from myGov • myGovID is an app. You download the myGovID app to your smart device. It lets you prove who you are and log in to a range of government online services, including myGov. • myGov is an account. Your myGov account lets you link to and access online services provided by the Australian Taxation Office (ATO), Centrelink, Medicare and more. already have a myGovID, you can apply for your director ID now.
 
Step 2 – Gather your documents
You will need to have some information the ATO knows about you when you apply for your director ID:
· your tax file number (TFN)
· your residential address as held by the ATO
· information from two documents to verify your identity.

Examples of the documents you can use to verify your identity include:

· bank account details
· an ATO notice of assessment
· super account details
· a dividend statement
· a Centrelink payment summary
· PAYG payment summary.

To add to the confusion many of these documents can be found on the ATO service via your myGov account. So it’s worth having that service linked before you start the process so you can download items like Notice of Assessments etc.
 
Step 3 – Complete your application
Once you have a myGovID with a Standard or Strong identity strength, and information to verify your identity, you can log in and apply for your director ID. The application process should take less than 5 minutes.

The application process could take less than 10 minutes but for some, I have spoken to, it has already taken half a day due to differences in names on documents and lack of access to supporting documents. For more information on how to apply for a director ID visit: https://www.abrs.gov.au/director-identification-number/apply-director-identification-numb

Can I apply for a director ID if I cannot get a myGovID?
 
If you can’t get a myGovID set up with a standard or strong identity strength, you can apply by phone or with a paper form.
 
You can apply by phone if you have:
‒         An Australian TFN
‒         The information needed to verify your identity (as listed above)
 
The phone number is 13 62 50 and is available between 8:00am and 6:00pm Monday to Friday for directors in Australia. For directors calling from overseas, the number is +61 2 6216 3440.
 
If you can’t apply online or over the phone, you can apply using a downloadable form ‘Application for a director identification number’ (NAT 75329). This is a slower process and you will also need to provide certified copies of your documents to verify your identity. 

Looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends or your tax agent! Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser
Follow SMSFCoach on Twitter
Liam Shorte on Linkedin
Verante on Facebook

Tel: 02　98993693, Mobile: 0413 936 299

PO Box 6002, NORWEST NSW 2153

40/8 Victoria Ave. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042,, AFSL 476223

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

3 Comments
by SMSF Coach - Liam Shorte on November 2, 2021  •  Permalink
Posted in News & Stats, SMSF Management, Trustee
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on November 2, 2021

https://smsfcoach.com.au/2021/11/02/smsf-trustees-how-to-get-your-director-identification-number/

The Ultimate SMSF End of Financial Year Checklist 2021


OK, so here we are with only a few weeks left to the end of the financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.

Its been a busy year and I have not had as much time as usual to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.

Warning before we begin,

Before we start, just a warning as in the rush to take advantage of new strategies you may have forgotten about how good you have it already Be careful not to allow your accountant, administrator or financial planner to reset any pension that has been grandfathered under the pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences resulting in the pension being subject to current deeming rates if you lose the grandfathering. Point them to this document

  1. It’s all about timing!

If you are making a contribution the funds must hit the Superfund’s bank account by the close of business on the 30th June.  Careful of making contributions through Clearing houses as they often hold on to funds before presenting them to the individual’s superannuation fund for 7-30 days and it’s when the fund receives the payment that the contribution is counted except if paid via the government’s Small Business Clearing House. Pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY and there must have been sufficient funds in the bank account to support the payment of the cheques on June 30th. Get you payments in by Friday 25th or earlier to be sure (yes I’m Irish).

  1. Review Your Concessional Contributions options – $25,000 per year up to 67  and $27,500 from 1 July 2021

 The government changed the contribution rules from 1 July 2020 to extend the ability to make contributions from age 65 up to age 67. Read more here. Maximise contributions up to concessional contribution cap but do not exceed your Concession Limit. The sting has been taken out of Excess contributions tax but you don’t need additional paperwork to sort out the problem. So check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

       3.   If your Super balance on 1 July 2020 was under $500,000 Review your previous Concessional Contributions (CC) and consider using the ‘Carry forward’ concessional contributions cap

 Broadly, the carry forward rule allows individuals to make additional CC in a financial year by utilising unused CC cap amounts from up to five previous financial years, providing their total superannuation balance just before the start of that financial year was less than $500,000.

This measure applies from 2018-19 so effectively, this means an individual can already make up to $75,000 of CC (less any Employer or Personal deductible contributons in those years) in a single financial year by utilising unapplied unused CC caps since 1 July 2018 and going forward from up to five previous financial years.

Prior to these amendments, if an individual did not fully utilise their annual CC cap in a financial year, they could not carry forward the unused cap to a later year. But please note the balance refers to $500,000 across all of your Superannuation accounts.

  1. Review plans for Non-Concessional Contributions (NCC) options

From 1 July 2020 the new age limit of 67 applied to Non-Concessional Contributions (NCC) without meeting the work test so you have the option of making $100,000 NCC per year up to turning 67.

Hopefully this month (tabled for June 2020 sitting) the Senate will also pass the long delayed legislation allowing you to also use the “3 year bring forward rule” up to age 67 this year (currently still not legislated).

So people who turned 64 or 65 this year and who planned to use the “3 year bring forward rule” may want to review that strategy as it will have to be a last minute transfer once the legislation passes. But don’t fret! another solution awaits

From 1 July 2022 the new age limit of 74 will apply to Non-Concessional Contributions (NCC) without meeting the work test so you have the option of making $100,000 NCC per year up to age 74 (specifically turning 75 and 28 Days.)

Current Option if turned 65 in 2020-21 FY: NCC of $100,000 or $300,000

Proposed Option: NCC $100,000 2020-21, NCC $100,000 2021-22, NCC $300,000 2022-23

Opportunities:

  • Have you considered making non-concessional contributions to move investments in to super and out of your personal, company or trust name. Maybe you have proceeds from and inheritance or sale of a property sitting in cash.
  • Opportunity to even up spouse balances and maximise superannuation in pension phase up to age 74 – Couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation are able to withdraw and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment.
  • Make your tax components more tax free by using recontribution strategies – SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. They can now do this until they turn age 75 and 28 days.
  1. Co-Contribution

Check your eligibility for the co-contribution and if you are eligible take advantage. Note that the limits have changed and it is “free incentive money to save for your retirement” – grab it if you are eligible.

To calculate the super co-contribution you could be eligible to receive based on your income and personal super contributions, use the Super co-contribution calculator.

  1. Spouse Contribution

If your spouse has assessable income plus reportable fringe benefits and reportable employer super contributions totalling less than $37,000 for the full $540 tax offset and up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here

From 1 July 2022 you may also be able to implement this strategy up to age 75 as Spouse Contribution treated as a NCC in their account. 

 Trap: Any spouse contribution is counted towards your spouse’s NCC cap

  1. Over  67? Do you meet the work test? (The 40 hours in any 30 days rule)

You should review your ability to make contributions as if you if you have reached age 67 you must pass the work test of 40 hours in any 30 day period during the financial year, in order to continue to make concessional contributions to super. Check out ATO superannuation contribution guidance . Again if budget measures pass then from 1 July 2022 you can continue to make salary sacrifice contributions up to age 75 but you will still need to meet the work test to make Personal Deductible contributions. 

  1. Check any payments you may have made on behalf of the fund.

It is important that you check for amounts that may form a superannuation contribution in accordance with TR 2010/1 (ask your advisor), such as expenses paid for on behalf of the fund, debt forgiveness or in-specie contributions, insurance premiums for cover via super paid from outside the fund.

  1. Notice of intent to claim a deduction for contributions

If you are planning on claiming a tax deduction for personal concessional contributions you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121).

If you intend to start a pension this notice must be made before you commence the pension. Many like to start pension in June and avoid having to take a minimum pension but make sure you have claimed your tax deduction first. The same applies if you plan to take a lump sum withdrawal from your fund. GET THE NOTICE OF INTENT IN FIRST

  1. Contributions Splitting to your spouse allowed for longer

Consider splitting contributions with your spouse , especially if:

  • your family has one main income earner with a substantially higher balance or
    • if there is an age difference where you can get funds into pension phase earlier or
    • If you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.

This is a simple no-cost strategy I recommend everyone look at. See my blog about this strategy here.

 Trap: Any spouse contribution is counted towards your spouse’s NCC cap

  1. Off Market Share Transfers (selling shares from your own name to your fund)

If you want to move any personal shareholdings into super you should act early. The contract is only valid once the broker receives a fully valid transfer form not before so timing in June is critical.

 

  1. Pension Payments – so many more options this year  2020-2021 and 2021-2022

If you are in pension phase, the government have extended the Temporary Reduction in Minimum Pensions as part of the Covid-19 response. So please ensure you take the new minimum pension of at least 50% of your age-based rate below. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

The following table shows the minimum percentage factor (indicative only) for each age group.
Minimum annual payments for super income streams for 2020/21 and 2021/22 Financial years.

Age at 1 July Standard 

Minimum % withdrawal 

 50% reduced

minimum pension
Under 65 4% 2%
65–74 5% 2.5%
75–79 6% 3%
80–84 7%  3.5%
85–89 9% 4.5%
90–94 11% 5.5%
95 or older 14% 7%

FINER DETAILS with TIPS and TRAPS

Here is some of the finer detail on how these measures will work, along with some tips and traps to consider when taking withdrawals for the rest of this financial year and the full 2020-21 financial year:

The measures are forward looking so if a pension member has already taken your minimum pension for the year then they cannot change the payment for this year but they can get organised for 2021/22. So, no you can’t try to sneak a payment back in to the SMSF bank account!

If a pension member has already taken pensions payments of equal to or greater than the 50% reduced minimum amount, they are not required to take any further pension payments before 30 June 2021.  For example, many would have taken quarterly or half yearly payments. If they add up to the 50% reduced minimum then you do not need to take anymore payments this financial year.

If you still need your pension payments for living expenses but have already taken the 50% reduced minimum then, it may be a good strategy for amounts above the 50% reduced minimum to be treated as either:

  1. for those with both pension and accumulation accounts to take the excess as a lump sum from the accumulation account balance to preserve as much in tax exempt pension phase as possible going forward to future years.
  2. a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension members transfer balance account (TBA).  Please discuss this with your accountant and adviser asap as some funds will have to report this quarterly and others on an annual basis. OR

See here for a worked example

  1. Sacrificial Lamb

Think about having a sacrificial lamb, a second lower value pension that can sacrificed if minimum not taken. In this way if you pay only a small amount less than the minimum you only have to lose the smaller pensions concession rather than the concession on your full balance. When combined with the ATO relief discussed in the following article “What-happens-if-i-don’t-take-the-minimum-pension” you will have a buffer for mistakes.

Before reading the above: Be careful not to reset a pension that has been grandfathered under the new deeming of pension rules that came in on Jan 1st 2015 without getting advice.

 

  1. Reversionary Pension is often the preferred option to pass funds to a spouse or dependent child. Review your options

A reversionary pension to you spouse will provide them with up to 12 months to get their financials affairs organised before having to make a final decision on how to manage your death benefit.

You should review your pension documentation and check if you have nominated a reversionary pension. If not, consider your family situation and options to have a reversionary pension.

This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children. T

The reversionary pension has become more important with the application of the  $1.6m Transfer Balance Cap limit to pension phase.

Tip: If you have opted for a nomination instead then check existing Binding Death Benefit Nominations (many expire after 3 years) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check you Deed allows for this first

 

  1. Review Capital Gains Tax Position of each investment

If you have some funds in accumulation then review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset any gains made in this tax year. If in pension phase then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to government changes in legislation like those proposed this year.

  1. Review and Update the Investment Strategy not forgetting to include Insurance of Members

The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all areas are covered and all investments have been made in accordance with it, and the SMSF trust deed. Also, make sure your investment strategy has been updated to include consideration of insurances for members. See my article of this subject here. You should also visit the ATO’s webpage on the topic here which is very educational Don’t know what to do…..call us.

  1. Collate and Document records of all asset movements and decisions

Ensure all the funds activities have been appropriately documented with minutes, and that all copies of all statements and schedules are on file for your accountant/administrator and auditor.

  1. Double Dipping! June Contributions Deductible this year but can be allocated across 2 years.

For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call is an Allocated Contributions Holding Account. Note that as the Concessional Limit is moving to $27,500 on 1 July 2021 you can make a total of up to $52,500 using this strategy this year.

  1. Market Valuations – Now required annually

Regulations now require assets to be valued at market value each year, ensure that you have re-valued assets such as property and collectibles. Here is my article on valuations of SMSF investments in Private Trusts and Private Companies. For more information refer to ATO’s publication Valuation guidelines for SMSFs.

  1. In-House Assets

If your fund has any investments in in-house assets you must make sure that at all times the market value of these investments is less than 5% of the value of the fund. Do not take this rule lightly as the new SMSF penalty powers will make it easier for the ATO to apply administrative penalties (fines) for smaller misdemeanours ranging from $820 to $10,200 per breach pere trustee.

Covid-Relief – The ATO has responded to current market conditions, and has announced it will not take compliance action against SMSFs where:

  • at 30 June 2021 the market value of an SMSF’s in-house assets is over 5% because of the downturn in the share market
  • the trustee of the SMSF prepares a rectification plan
  • by 30 June 2022, the rectification plan either:
      • cannot be effectively implemented because of market conditions
      • does not need to be implemented because the market recovers and the 5% test is again satisfied at 30 June 2022.

For good guidance on this issue https://www.cgw.com.au/publication/what-to-do-if-covid-19-has-ruined-your-smsfs-in-house-asset-ratio-the-atos-no-action-position-for-some-cases/

  1. Is your fund providing Covid-19 Rent Relief to a property tenant whether a related party or not? Get your documentation in place.

If you have provided Rent Relief to a tenant, related or not, then get it documented now before June 30 that you have considered, managed and documented the request, the reasoning behind the Trustee’s decision and the details of the relief provided

The ATO have thankfully provided a non-binding practical approach of broadly not applying resources to this issue for  FY2021. However, this announcement, while positive, should not be relied on given the considerable downside risks.

For detail of what your auditors will most likely require please check Item 3 in this blog https://smsfcoach.com.au/2020/05/22/be-prepared-with-these-9-smsf-audit-tips/

  1. Careful if replacing TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago so be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.

  1. Do you need to update to a Corporate Trustee

We recommend a corporate trustee to all clients. To understand why please read this article on Why SMSFs should have a Corporate Trustee

  1. Check the ownership details of all SMSF Investments

Make sure the assets of the fund are held in the name of the trustees on behalf of the fund and that means all of them. Check carefully any online accounts you may have set up without checking the exact ownership details. You have to ensure all SMSF assets are kept separate from your other assets.

  1. Review Estate Planning and Loss of Mental Capacity Strategies.

Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid (check the wording matches that required by the Trust Deed) and still in accordance with your wishes.  Also ensure you have appropriate Enduring Power of Attorney’s (EPOA) in place allow someone to step in to your place as Trustee in the event of illness, mental incapacity or death. Do you know what your Deed says on the subject? Did you know you cannot leave money to Step-Children via a BDBN if their birth-parent has pre-deceased you?

  1. Review any SMSF Loans

Have you provided special terms (low or no interest rates , capitalisation of interest etc.) on a related party loan? Then you need to review your loan agreement and get advice to see if you need to amend your loan. Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low. Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF Trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue. Please review my blog on the ATO’s Safe Harbour rules for Related Party Loans here 

 

  1. Still have Collectibles in your fund?

Play by the new rules that came into place on the 1st of July 2016 or get them out of your SMSF.

  1. SuperStream obligations must be met

For super funds that receive employer contributions it’s important to take note that since 2014 the ATO has been gradually introducing SuperStream, a system whereby super contributions data is received and made electronically.

All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information. If you are not sure if your fund has an ESA, contact your fund’s administrator, accountant or your bank for assistance.

If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details. Some employers may also ask for your Unique Superfund Identifier (USI) – for SMSFs this is the ABN of the fund.

30. ASIC Fees – Increases from 1 July 2021

As expected, ASIC is increasing fees by $1 for the annual review of a special purpose SMSF trustee company $55 > $56. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years.

For $387 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form here:

31. Reducing the eligibility age for downsizer contributions from 1 July 2022The eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The $300,000 downsizer limit (or $600,000 for a couple) and the $330,000 bring forward NCC cap allow up to $630,000 in one year contributions for a single person and $1,260,000 for a couple subject to their contributions caps.

Tip: Great for people who have smaller  super balances and invested in their business or property to now switch to tax-effective pensions. You don’t need to have funds available from the sale of your home, that is just the trigger to allow the downsizer contribution and you can use other funds to make the contribution even if you have upsized!.

32. Relaxing residency requirements for SMSFs from 1 July 2022

SMSFs and small APRA funds will have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years. The active member test will also be removed, allowing members who are temporarily absent to continue to contribute to their SMSF. The Government expects this measure will have effect from 1 July 2022.

Tip: Probably useful post-COVID for those working or travelling to stay with family or get away from them for extended periods overseas.

33 . Legacy retirement product conversions (probably from 1 July 2022)

Individuals will be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap.

There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.

This measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation.

34. Improving the Pension Loan Scheme – Social security benefits for you or you mum and/or dad

Current

The Pension Loan Scheme (PLS) allows a fortnightly loan of up to 150% of the maximum rate of Age Pension to help boost a person’s retirement income by unlocking capital in their real estate assets. It can be available for self-funded retirees who are Age Pension age but do not receive a social security pension. Interest is compounded fortnightly at 4.50% p.a., and any debt under the scheme is paid back when the property is sold or the person dies.

Proposal

From 1 July 2022, the Government will introduce a No Negative Equity Guarantee for PLS loans and allow people access to a capped advance lump sum payment.

►          No negative equity guarantee

Borrowers under the PLS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued PLS debt exceeds their property value. This brings the PLS in line with private sector reverse mortgages.

►          Immediate access to lump sums under the PLS

Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently $12,385 for singles and $18,670 for couples).

Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.

Warning before you jump in to implementation of any strategy,

Before we start, just a warning as in the rush to take advantage of new strategies you may have forgotten about how good you have it already. Be careful not to allow your accountant, administrator or financial planner to reset an account based pension or exit a legacy pension that has been grandfathered under the pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences resulting in the pension being subject to current deeming rates if you lose the grandfathering. 

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends. Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser 

 Follow SMSFCoach on Twitter Liam Shorte on Linkedin NextGen Wealth on Facebook   

Verante Financial Planning

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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by SMSF Coach - Liam Shorte on June 4, 2021  •  Permalink
Posted in Centrelink, Checklists, Financial Planning, News & Stats, Pension Strategies, Pensions, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
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Posted by SMSF Coach - Liam Shorte on June 4, 2021

https://smsfcoach.com.au/2021/06/04/the-ultimate-smsf-end-of-financial-year-checklist-2021/

Federal Budget 2021 Summary – An SMSF Friendly Budget


http://www.smsfcoach.com.au

We expected this year’s Federal Budget to have a strong emphasis on job growth and improvement of women’s security and ability to get back to work cost effectively. There were pleasant surprises from an SMSF perspective. The key measures that you should be aware of are outlined below with some commentary and tips. I have benefited from the technical input of the SMSF Association, Accurium Technical and conversation with other professionals in preparing this content.

All measures outlined below, other than the proposed changes to legacy retirement products, are expected to commence from 1 July 2022, once they have received Royal Assent.

Repealing the work test for voluntary contributions

Individuals aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions without meeting the work test, subject to existing contribution caps and existing total superannuation balance limits.

TIP: The waiver of the work test will not apply to personal deductible contributions, so individuals aged 67 – 74 wishing to claim a tax deduction for personal contributions will be required to meet the work test (or be eligible to apply the work test exemption).

Individuals aged 65 to 74 will also be able to use the bring forward provisions subject to the available caps and meeting the total super balance criteria. Currently, only those under age 65 on 1 July of a financial year can trigger the bring forward provision in that financial year. The measure that was originally announced in the 2019-20 Federal Budget to extend this age from 65 to 67 effective 1 July 2020 has not been legislated.

The new measures present opportunities for many from 1 July 2022 including:

Opportunity to even up spouse balances and maximise superannuation in pension phase – Couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation are able to withdraw and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment.

Top up retirement savings up to age 74 – Subject to contribution caps, the new rules can help individuals contribute additional funds to super up to age 74, perhaps where they may have received an inheritance or sold an investment property.

Make your tax components more tax free by using recontribution strategies – SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. They can now do this until they turn age 75.

TIP: There is always a cost of making changes so work with your adviser and accountant to time these strategies to minimise additional accounting costs.

Opportunities to make spouse contributions for longer – The new rules can provide you with the opportunity to continue making spouse contributions which can not only help with equalising super between spouses, but may also enable the contributing spouse to benefit from the spouse contribution tax

Reducing the eligibility age for downsizer contributions

The eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age. All other eligibility criteria remains unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000, per person, from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.

The new rules will allow more individuals to contribute more of their sale proceeds to super – under both the $300,000 downsizer limit (or $600,000 for a couple) and the $330,000 bring forward NCC cap each as well. This would allow for up to $630,000 in one year contributions for as single person and $1,260,000 for a couple subject to their contributions caps/

Tip: Great for people who have little super and invested in their business or property to now switch to tax effective pensions.

Relaxing residency requirements for SMSFs

SMSFs and small APRA funds will have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years. The active member test will also be removed, allowing members who are temporarily absent to continue to contribute to their SMSF. The Government expects this measure will have effect from 1 July 2022.

TIP: Probably going to be useful post-covid for those working or traveling extended periods overseas and levels the playing field somewhat with APRA funds.

No change to legislated Super Guarantee increase

The Government will not change the legislated increase in the Super Guarantee (SG) in this year’s Budget. SG will increase to 10% from 1 July 2021 and then gradually increase to 12% as follows:

Table 21: Super guarantee percentage

PeriodGeneral super guarantee (%)
1 July 2020 – 30 June 20219.50
1 July 2021 – 30 June 202210.00
1 July 2022 – 30 June 202310.50
1 July 2023 – 30 June 202411.00
1 July 2024 – 30 June 202511.50
1 July 2025 – 30 June 202612.00
1 July 2026 – 30 June 202712.00
1 July 2027 – 30 June 2028 and onwards12.00

Legacy retirement product conversions

Individuals will be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap.

Some detail provided in respect to the features of this proposed measure include:

  • If a client chooses to commute their legacy pension, the social security and taxation treatment from the legacy product will not be grandfathered. Age Pension clients who currently benefit from a 100% or 50% asset-test exemption on their legacy pension may benefit from continuing their income stream.
  • Exiting a product will not cause re-assessment of prior social security treatment of the product, for example the deprivation rules.
  • Any commuted reserves will be taxed as an assessable contribution of the fund (with a 15% tax rate) but will not count towards the individual’s concessional contribution cap.
  • The existing transfer balance cap valuations for any commencement or commutation continue to apply.
  • Once the commuted amount is in accumulation phase the member can decide what to do with that balance such as take a lump sum, retain in accumulation, or commence a pension (subject to the individual’s transfer balance cap).
  • The measure will not apply to flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

This measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation. 

TRAP: Please seek advice before using this strategy as you do not want to lose Age Pension benefits in this low interest rate environment.

Super and Property for your children or low income partner

Removing the $450 per month threshold for superannuation guarantee eligibility

The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid the superannuation guarantee by their employer.

Great move and will help people get more benefit from super. If you can combine this with a personal contribution yourself or for a low income spouse of $20 per week ($1,000 per annum) then the member may benefit from the Government Co-Contribution of up to $500 per year.

First Home Super Saver Scheme (FHSSS)— increasing the maximum releasable amount to $50,000

The Government will increase the maximum releasable amount of voluntary concessional and non-concessional contributions under the FHSSS from $30,000 to $50,000.

Voluntary contributions made from 1 July 2017 up to the existing limit of $15,000 per year will count towards the total amount able to be released. Subject to passage of legislation, it is expected that this measure will be effective from 1 July 2022.

The Government will further make four technical changes to the legislation underpinning the FHSSS to improve its operation as well as the experience of first home buyers using the scheme.

Tip. This is a great way to show your children the benefit of salary sacrifice and get them used to putting savings away.

Social security (Benefits for you or you mum and/or dad

Improving the Pension Loan Scheme

Current

The Pension Loan Scheme (PLS) allows a fortnightly loan of up to 150% of the maximum rate of Age Pension to help boost a person’s retirement income by unlocking capital in their real estate assets. It can be available for self-funded retirees who are Age Pension age but do not receive a social security pension. Interest is compounded fortnightly at 4.50% p.a., and any debt under the scheme is paid back when the property is sold or the person dies.

Proposal

From 1 July 2022, the Government will introduce a No Negative Equity Guarantee for PLS loans and allow people access to a capped advance lump sum payment.

►          No negative equity guarantee

Borrowers under the PLS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued PLS debt exceeds their property value. This brings the PLS in line with private sector reverse mortgages.

►          Immediate access to lump sums under the PLS

Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently $12,385 for singles and $18,670 for couples).

TAXATION

Low and Middle Income Tax Offset extended another year until 2021-22

The Government announced that it will retain the Low and Middle Income Tax Offset (LMITO) in the 2021-22 financial year. Eligibility for the LMITO:

Low and middle income tax offset
Taxable incomeOffset
$37,000 or less$255
Between $37,001 and $48,000$255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080
Between $48,001 and $90,000$1,080
Between $90,001 and $126,000$1,080 minus 3 cents for every dollar of the amount above $90,000

Increasing the Medicare levy low-income thresholds

The income thresholds at which Medicare levy is payable for singles, families and pensioners will be increased for the 2020-21 financial year as follows:

  • Singles will be increased from $22,801 to $23,226.
  • The family threshold will be increased from $38,474 to $39,167.
  • For single seniors and pensioners, the threshold will be increased from $36,056 to $36,705. The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.

For each dependent child or student, the family income thresholds increase by a further $3,597 instead of the previous amount of $3,533.

Reminder of other changes applying from 1 July 2021.

CHANGING SUPERANNUATION THRESHOLDS FROM 1 JULY 2021 TO 30 JUNE 2022

Transfer Balance Cap$1.7 million but many who have used some of their cap already will have an individual limit betwen $1.6m and $1.7m
Concessional Contribution Cap$27,500
Non-concessional Contribution Cap$110,000 or $330,000 over 3 years using the bring forward rule
Low rate cap for Lump sum withdrawals$225,000
Untaxed Plan cap$1,615,000
Account based pension paymentsReturn to default payment levels (was reduced by 50% for 2020 and 2021
Superannuation Guarantee10%
Maximum Super Contribution Base$58,920 (per quarter)
Government Co-contribution ($500)Lower income threshold – $41,112 Upper income threshold – $56,112

Looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Please consider passing on this article to family or friends or your tax agent! Pay it forward!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF Specialist Adviser
Follow SMSFCoach on Twitter
Liam Shorte on Linkedin
Verante on Facebook
Verante Financial Planning

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002, NORWEST NSW 2153

40/8 Victoria Ave. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

1 Comment
by SMSF Coach - Liam Shorte on May 12, 2021  •  Permalink
Posted in Audit, News & Stats, SMSF Management
Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on May 12, 2021

https://smsfcoach.com.au/2021/05/12/federal-budget-2021-summary-an-smsf-friendly-budget/

Can I Buy A Residential Investment Property From My SMSF?


Make sure to bookmark our Property in an SMSF page for guidance!

buying a residential investment property from your SMSF

So, you have invested in residential property through a Self-Managed Superannuation Fund (SMSF), a popular strategy for Australians looking to gain direct control over their retirement savings. Or, you are proudly a member of the “brinks and mortar brigade” for whom it can be a strategic way to grow your retirement savings in Australia in an asset class they have confidence or experience in themselves.

However, for some reason like the Div 296 Tax or because you want to use the property personally or for your family, you now want to take that property out of the fund. What are your options?

Firstly, note the Australian Taxation Office (ATO) maintains strict compliance rules to ensure these investments are solely for providing retirement benefits.

Core Eligibility:  Yes a member can purchase a property from their own SMSF

    Unlike when an SMSF is purchasing a residential property in the first place, where it cannot acquire it from a related party, there are no such restrictions when it comes time to selling or transferring a property from your SMSF to yourself or another related entity.

    Independent Valuation & Market Value Requirements

      All transactions must be conducted at market value to comply with “arm’s length” requirements.

      Independent Valuations: While not always strictly mandatory for every annual audit, the ATO requires “objective and supportable data”.

      When it is Mandatory: A formal valuation from a qualified independent valuer is required when disposing of an asset to a related party or if the property represents a significant portion of the fund. When selling to yourself it is important that the SMSF Trustees are seen as acting in the best interest of all the fund’s members. So just get an Independent Valuation!

      Purchase at Market Value (onus is on SMSF Trustee(s):

      The investment property must be purchased at the current market value, as determined by the independent valuation. SMSFs are not permitted to sell or dispose of assets to anyone including related parties, such as fund members or their associates, for less than the market value. There are sever penalties for a breach of these rules and regulations.

      SMSF penalties for non-arms-length related party transactions are severe and designed to ensure funds are used solely for retirement benefits rather than providing present-day financial assistance to members, relatives, or associated entities. Penalties can range from administrative fines of tens of thousands of dollars to the disqualification of trustees and the loss of tax concessions

      Funding the Purchase: Borrowing to buy from the SMSF

      If the purchaser (you or a family trust for example) does not have enough cash for an outright purchase, they can borrow money through a normal residential investment property loan or against equity in your own home. There is no need for any Limited Recourse Borrowing Arrangements (LRBA).

      Pension Phase: Taking Property Out

      Once a member reaches pension phase (and meets a condition of release, such as turning 65 or leaving any one employer after age 60), they have options for the property.

      Lump Sum Commutation (In-Specie): You can “commute” part of your pension and take the property out of the fund as an in-specie lump sum. This involves transferring the legal title from the SMSF to yourself personally or you can direct the trustees to move it to another entity of your choice.

      Tax Advantages: If the fund is in the retirement (pension) phase, capital gains tax (CGT) on the transfer may be significantly reduced or eliminated.

      Cash Restrictions: Note that regular pension payments must be made in cash; only lump sum payments can be made “in-specie” (as an asset).

      Stamp Duty Costs by State

      An SMSF must pay stamp duty (transfer duty) just like any other buyer. Costs vary significantly across Australia. Below is an estimate of duty for a $800,000 investment property (as of early 2026):

      State/TerritoryEstimated Stamp Duty ($800k Property)
      Queensland (QLD)~$21,850
      ACT~$22,158
      New South Wales (NSW)~$30,412
      Northern Territory (NT)~$39,600

      Note: Rates are progressive; for properties over $1.2m, NSW costs rise to ~$48,412. Check current rates via the Revenue NSW Calculator or State Revenue Office Victoria. It’s important to note that any  residential property transaction through an SMSF involves complex legal and financial considerations. It’s recommended to seek advice from a qualified SMSF Specialist financial advisor or accountant and in this case your SMSF Auditor and your Lawyer/Conveyancer to ensure that you’re your strategy complies with relevant superannuation and tax regulations before implementation

      Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact us at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

      Please consider passing on this article to family or friends. Pay it forward!

      Liam Shorte B.Bus FSSA™ AFP

      Financial Planner & Fellow SMSF Specialist Advisor™

            

      Tel: 02 9899 3693, Mobile: 0413 936 299

      • PO Box 6002 NORWEST NSW 2153
      • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
      • Suite 4, 1 Dight St., Windsor NSW 2756

      Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

      This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

      Leave a comment
      by SMSF Coach - Liam Shorte on March 16, 2026  •  Permalink
      Posted in Audit, downsizing, education, Estate Planning, Financial Planning, In Specie transfers, News & Stats, Pension Strategies, Pensions, Property, Retirement Planning, SMSF, SMSF Management, Tax Planning, Trustee
      Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

      Posted by SMSF Coach - Liam Shorte on March 16, 2026

      https://smsfcoach.com.au/2026/03/16/can-i-buy-a-residential-investment-property-from-my-smsf/

      Age Pension & Deeming Changes September 2025


      Stay informed, seek advice and adjust strategies accordingly!

      From September 20, 2025, several changes will impact the Australian Age Pension. The four key changes are:

      1. an increase in deeming rates,
      2. a boost to the maximum Age Pension amount,
      3. a rise in the cut-off limits for part pensions, and
      4. an increase in the income limit for the Commonwealth Seniors Health Card.

      1. Deeming Rate Changes 📈

      The most significant change is the 50 basis point increase to the deeming rates used in the income means test. Deeming rates are a notional or “assumed” income rate applied to your financial assets. They’re a simple way for the government to calculate your income without needing to track your actual investment returns.

      • Why are they changing? Deeming rates have been frozen for the past five years as part of the COVID-19 response. This increase is an adjustment to reflect current market conditions more accurately, even though interest rates may be declining.
      • What are the new rates? From September 20, 2025, the low deeming rate will increase from 0.25% to 0.75%. The standard (or higher) deeming rate will increase from 2.25% to 2.75%.
      • How do the rates apply? The low rate applies to the first $64,200 of financial assets for a single pensioner and the first $106,300 for a pensioner couple. The higher rate applies to any amount over those thresholds.
      • What’s the effect? An increase in the deeming rate means more income is deemed to have been earned from your financial assets, which will generally lead to a reduction in your Age Pension entitlement. For every $1,000 of financial assets, your fortnightly pension could decrease by $2.50.

      2. Age Pension Increase 💰

      The maximum rate of the Age Pension will increase, providing a boost to all pensioners.

      • The maximum fortnightly pension for a single pensioner will increase by $29.70, bringing the new maximum to $1,178.70.
      • The maximum fortnightly pension for a couple will increase by $44.80, bringing the new combined couples maximum to $1,777.00 ($888.50 each)
      • These increases are automatic and apply from September 20, 2025.

      3. Part Pension Cut-off Limits Rise ⬆️

      The maximum amount of income you can earn before your part pension is cut off will also increase. This is a direct result of the rise in the maximum Age Pension amount.

      • The new fortnightly cut-off limit for a single pensioner will be $2,575.40, an increase of $59.40.
      • The new fortnightly cut-off limit for a couple will be $3,934.00, an increase of $89.60.

      TIP: If you were previously ineligible for an Age Pension due to the income means test but were close to the old cut-off limit, you should reconsider applying.

      4. Commonwealth Seniors Health Card (CSHC) Income Limit Increase ✅

      The income limits for the Commonwealth Seniors Health Card (CSHC) will also rise. The CSHC is a valuable card for self-funded retirees who are not on a Centrelink income support payment, providing access to cheaper medicines and other concessions.

      • The annual income limit for a single person will increase by $2,080 to $101,105.
      • The annual income limit for a couple (combined) will increase by $3,328 to $161,768.

      TIP: If your income was previously just above the old limit, you should consider applying for the CSHC. This card doesn’t have an assets test, making it a good option for those disqualified from the Age Pension by their assets.

      Warning before you jump into implementation of any strategy without checking your personal circumstances.

      Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

      Please consider passing on this article to family or friends. Pay it forward!

      Liam Shorte B.Bus FSSA™ AFP

      Financial Planner & Fellow SMSF Specialist Advisor™

            

      Tel: 02 9899 3693, Mobile: 0413 936 299

      • PO Box 6002 NORWEST NSW 2153
      • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
      • Suite 4, 1 Dight St., Windsor NSW 2756

      Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

      This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

      Leave a comment
      by SMSF Coach - Liam Shorte on September 12, 2025  •  Permalink
      Posted in Audit, Binding Death Nominations, downsizing, education, Estate Planning, Financial Planning, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, SMSF, SMSF Management, Tax Planning, Trustee
      Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

      Posted by SMSF Coach - Liam Shorte on September 12, 2025

      https://smsfcoach.com.au/2025/09/12/age-pension-deeming-changes-september-2025/

      Could an Unsigned Will Be Valid? What about your BDBN in the SMSF?


      Costly litigation from incomplete documentation

      Key Lessons from Kemp v Findlay [2025] NSWCA 46

      When Andrew Findlay passed away, he left behind more than just an estate—he left a ticking time bomb of legal uncertainty. An updated will, detailing his clear wishes, was sitting on his computer. There was just one problem: he had never signed it.

      This oversight sparked a fierce court battle between his former partner and his cousin on behalf of his children, a battle that recently culminated in a significant ruling from the NSW Court of Appeal. The case of Kemp v Findlay serves as a powerful cautionary tale for anyone advising clients on estate planning. It highlights the very real dangers of informal documents and the costly, emotional litigation that can follow. While this case deals with a will, there are countless cases that involve incomplete Binding Death Benefit Nominations in an SMSF and the Succession Act 2006 (or equivalent in your state) may not help as SMSFs rely on the SIS Act and Trust Deed . Also a nomination from an SMSF to a member’s Legal Personal Representative may then lead to a estate challenge.

      So, what are the key takeaways? Let’s break it down.

      A Quick Case Summary

      • The 2015 Will: Mr. Findlay had a formal will leaving his estate to his then-partner, Elizabeth Kemp.
      • The 2019 Document: After separating from Ms. Kemp in 2019, he drafted a new will on his computer. This document left his estate to his three children and appointed his cousin, David Findlay, as executor. Crucially, it was never printed, signed, or witnessed.
      • The Dispute: Upon Mr. Findlay’s death in 2023, both Ms. Kemp (relying on the 2015 Will) and David Findlay (relying on the 2019 document) applied for probate.
      • The Outcome: The Court applied Section 8 of the Succession Act 2006 (NSW), which allows informal documents to be treated as a will if the Court is satisfied the deceased intended it to be their final will. The Court found the 2019 document did reflect Mr. Findlay’s clear intentions and admitted it to probate. Ms. Kemp was also ordered to pay 75% of the children’s legal costs.

      🔑 5 Key Lessons for Advisers and SMSF Trustees from Kemp v Findlay

      1. Never Rely on Section 8 as a Planning Tool

      The big takeaway is not that “unsigned wills are fine.” The takeaway is that Section 8 is a remedial, last-resort solution, not a substitute for proper execution. While the court can validate informal documents, the process is uncertain, expensive, and hinges on convincing a judge of the deceased’s intention. Advise clients that proper signing and witnessing is the only way to guarantee certainty and avoid a fight.

      SMSFs – While Section 8 does not apply to BDBNs directly, a BDBN can be subject to a family provision claim under the Succession Act 2006, where the court can, in certain circumstances, declare a death benefit as part of a notional estate to meet court-ordered provisions. The distribution of a superannuation death benefit is primarily determined by the rules of the superannuation fund and the Superannuation Industry (Supervision) Act 1993 (SIS Act). Section 59(1A) of the SISA, in conjunction with Regulation 6.17A of the SIS Regulations, sets out the strict technical requirements for a BDBN to be valid. 

      As many SMSF members direct their Superannuation to be dealt with via their Wills, this means there is more room for error as the Binding Death Nomination and/or the Will could be challenged.

      2. Document Everything & Communicate Clearly

      Mr. Findlay’s failure to clearly communicate his final intentions to his solicitor and family directly fuelled the dispute. Advise your clients to:

      • Formally instruct their solicitor immediately after a major life event (e.g., separation, marriage, birth of a child).
      • Clearly communicate their wishes to their intended executor and key beneficiaries to prevent surprise and doubt.
      • With a Binding Death Benefit Nomination (BDBN) the member should:
        • Firstly, decide if a BDBN is the preferred option or do you deliberately wish to leave the decision and flexibility to the remaining trustees of the fund?
        • For pension accounts you may opt to use Reversionary Pensions for more certainty.
        • Complete the Binding Death Benefit Nomination (Preferably a Non-Lapsing BDBN) and sign and have it witnessed.
        • Then submit the signed form to the trustees of the SMSF and have the trustees minute the receipt and acceptance of the BDBN.
        • Also ensure that the SMSF Accountant/Administrator is provided a copy and updates the SMSF software they use to display that nomination in the annual financials (in the Member Statements) so that it can trigger a reminder to review them.

      3. Include Regular Estate Plan Reviews

      This case is a textbook example of why wills and BDBNs must be updated. A separation is one of the most critical times to review an estate plan. Proactively schedule reviews in your annual planning review with clients, especially after major life events to ensure their documents reflect their current circumstances and relationships.

      For SMSFs: Review the current nominations and see if strategies like withdrawal and recontributions now mean that funds can be directly left to adult children or others because the taxable component has been reduced. You might leave a Mixed-Tax Components pension to the spouse but allocate Tax-Free Component pensions to others directly or via your estate.

      4. Warn Clients Against “DIY” Drafts (Read the Deed for SMSFs)

      The existence of an unsigned, unofficial document was the catalyst for years of litigation. Counsel your clients strongly against:

      • Creating draft wills or notes without immediate formalisation.
      • Storing important documents haphazardly. An unsigned draft can be misinterpreted as a final will, creating confusion and conflict.
      • For BDBN’s be careful with templates and if you are using one provided by your Trust Deed provider make sure it meets your needs or have your lawyer draft a more personalised one up for you.

      5. Highlight the Staggering Cost of Litigation

      The court’s costs order against Ms. Kemp underscores a harsh reality: estate litigation can quickly erode the value of the estate for everyone involved. Use this case to show clients the tangible financial risk of unclear planning. Comprehensive, professionally-executed estate planning and SMSF documents are an investment in protecting their legacy and their family’s future.

      The Bottom Line

      Kemp v Findlay is a stark reminder that the rules of formal execution exist for a reason: to provide clarity and prevent disputes. While the court’s flexible approach ensured Mr. Findlay’s intentions were ultimately honoured, it came at a significant financial and emotional cost to his family.

      For SMSFs:  The Trust Deed is often the crucial source outlining how formal execution of a BDBN is to be made. Take the time to read it carefully and don’t assume it complies with the SIS Act either.

      As advisers, our role is to steer clients away from this precarious path. By emphasising proper execution, clear communication, and regular reviews, we can help them ensure their wishes are carried out smoothly, preserving their assets and their family’s harmony.

      Have you reviewed your wills and BDBNs recently? This case is the perfect conversation starter for SMSF Trustees to encourage proactive estate planning with your partner or other SMSF member’s. Also a key issue for professionals to raise with their clients and possibly refer to an estate planning specialist.

      Stay informed, seek advice and adjust strategies accordingly!

      Warning before you jump into implementation of any strategy without checking your personal circumstances.

      Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

      Please consider passing on this article to family or friends. Pay it forward!

      Liam Shorte B.Bus FSSA™ AFP

      Financial Planner & Fellow SMSF Specialist Advisor™

            

      Tel: 02 9899 3693, Mobile: 0413 936 299

      • PO Box 6002 NORWEST NSW 2153
      • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
      • Suite 4, 1 Dight St., Windsor NSW 2756

      Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

      This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

      Leave a comment
      by SMSF Coach - Liam Shorte on August 26, 2025  •  Permalink
      Posted in Audit, Binding Death Nominations, downsizing, education, Estate Planning, Financial Planning, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, SMSF, SMSF Management, Tax Planning, Trustee
      Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

      Posted by SMSF Coach - Liam Shorte on August 26, 2025

      https://smsfcoach.com.au/2025/08/26/could-an-unsigned-will-be-valid-what-about-your-bdbn-in-the-smsf/

      Important Changes to Pension Commencement Rules Now in Effect from 1 July 2025


      Reset your Pension
      Pensions are not set in stone.

      Failure to pay minimum pensions just got a lot more costly

      You may need to ensure your accountant, financial planner and your fellow trustees is up to date with the latest rule changes affecting the start and ending of an SMSF pension which mostly affect those that fail to take the minimum pension amounts in a financial year.

      SMSF trustees, accountants and financial advisers should take note of significant changes to pension commencement rules that came into effect on 1 July 2025. These changes impact how pensions are treated for tax purposes if a minimum pension is missed and could have serious implications for retirement planning strategies.

      What’s Changed?

      The Australian Taxation Office (ATO) has revised Tax Ruling 2013/5 (TR 2013/5), which governs when a pension starts and ceases.

      Previously, the rules provided some flexibility with minimal adverse consequences. However, the ATO has now taken a stricter stance, which may have major implications not only for the current and the previous year’s, tax position but also on strategies designed to quarantine pensions with high tax free components from ones with mixed components.

      Key Implications of the Changes

      1. Pension Failures Confirmed to Take Effect at the Start of the Financial Year

      Under the new rules, if a pension fails to pay the minimum pension, it is treated as ceasing at the beginning of the financial year rather than the end. This means:

      • The pension account converts to an accumulation account immediately at 1 July of the relevant tax year.
      • If an existing accumulation balance exists, the two amounts will merge for tax purposes, potentially disrupting carefully planned tax strategies. These strategies often revolve around blended families.

      2. Transfer Balance Cap Complications

      • If a pension fails at the start of the year, the transfer balance cap debit must be applied at the 30 June in the year the pension ceased. Ref: ITAA97 Section 294-80(1) item 6.
        NOTE: In the earlier version of this article we wrongly advised it was a credit to the TBA and immediate when in fact it is a debit and occurs 30 June at end of financial year the pension ceased. Thank you to Mark Ellen of Accurium for picking up on our error.
      • The pension can only restart once the member rectifies any errors (e.g., failing to meet minimum pension draw down requirements), which may take 13 to 22 months from the date the pension has to be commuted under the enforced rules. Why? Because for many people the first they realise that they have not paid the full minimum pension payment is when their accountant or administrator drafts the financial which is often 9 months after the end of the financial year. e.g., 20 June 2025 financials not completed until March 2026 and that’s when mistake found. But then the Pension is deemed to have been commuted on 01 July 2024!
      • During this gap, market growth could lock a portion of the funds out of pension phase due to the Transfer Balance Cap issues, limiting tax efficiency and spoiling estate planning strategies.

      3. Investment Market Risks

      If markets rise while a pension is inactive, the increased account balance may exceed the available transfer balance cap. This means:

      • Some funds could remain stuck in accumulation phase, missing out on tax-free pension earnings.
      • Members may not be able to restore their pension to its original value, reducing retirement income benefits.

      What Should SMSF Trustees, Accountants and Advisers Do?

      Given these changes, it’s crucial to:
      ✔ Review pension compliance to avoid accidental failures. Request a Minimum Pensions Report from your Accountant/Adviser.

      ✔ Do not just rely on the last 30 June Financials as you need to ensure you include any new pensions that began in the current financial year

      ✔ Monitor minimum drawdowns before 30 June each year to prevent unintended cessations. Have someone cross check the payments for you.

      ✔ Beware that Market Linked and Term Allocated Income Streams have different minimum drawdowns


      ✔ Plan for tax implications if pensions lapse and merge with accumulation accounts.
      ✔ Consider timing and market risks when restarting pensions.

      Final Thoughts

      The ATO’s stricter interpretation of pension rules means SMSF trustees, accountants and advisers must be more vigilant than ever to avoid costly tax, estate planning and transfer balance cap issues. Proactive planning can help mitigate risks and ensure retirees maximise their superannuation benefits.

      Stay informed, seek advice and adjust strategies accordingly!

      Warning before you jump into implementation of any strategy without checking your personal circumstances.

      Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.

      Please consider passing on this article to family or friends. Pay it forward!

      Liam Shorte B.Bus FSSA™ AFP

      Financial Planner & Fellow SMSF Specialist Advisor™

            

      Tel: 02 9899 3693, Mobile: 0413 936 299

      • PO Box 6002 NORWEST NSW 2153
      • Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
      • Suite 4, 1 Dight St., Windsor NSW 2756

      Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223

      This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

      Leave a comment
      by SMSF Coach - Liam Shorte on July 3, 2025  •  Permalink
      Posted in Binding Death Nominations, Centrelink, Checklists, downsizing, education, Estate Planning, Financial Planning, In Specie transfers, News & Stats, Pension Strategies, Pensions, Retirement Planning, Reversionary Pension, Salary Sacrifice, SMSF, SMSF Management, Superannuation Splitting, Tax Planning, Trustee
      Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , ,

      Posted by SMSF Coach - Liam Shorte on July 3, 2025

      https://smsfcoach.com.au/2025/07/03/important-changes-to-pension-commencement-rules-now-in-effect-from-1-july-2025/

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