All posts in category Contribution Strategies

Using superannuation contribution splitting in a SMSF


One of the clear benefits of having a SMSF is the ability to implement strategies across member accounts without affecting current investments or dealing with multiple super fund administrators and their cumbersome paperwork.Super Splitting Super Splitting is also another way that an SMSF Specialist Advisor™ can show clients the advantage of using a professional for advice.

Superannuation splitting is an opportunity to look forward and plan for the future and have you family superannuation next egg prepared for legislative or tax changes while also taking advantage of any age differences to maximise Centrelink support and/or minimise tax legally. Each government attempts to address the matter of funding future retirement costs and to date they have predominantly sought to make enhancements via the superannuation system and these have involved making the superannuation system more flexible, adaptable and appealing to the population as a whole (although the GFC has seen them pull back on contribution limits and co-contribution support)

One of the most significant changes to the system was the introduction of superannuation contributions splitting from 1 January 2006, which allows superannuation contributions to be split or shared with a spouse. This does assist couples to maximise the benefits available in super and provide an avenue for spouses to share in super benefits or equalise balances. It is of most benefit to low-income or non-working spouses by allowing them to control their own super and have their own income in retirement.

Paying insurance premiums for a non-contributing spouse You can use contribution splitting to help pay your spouse’s personal life, TPD and Income Protection insurance premiums through super, so both you and your partner may be able to afford the right level of cover. Especially useful is one spouse self-employed and still getting a business off the ground and so cannot afford to contribute to continue cover.

However it is also a great tool for those couples that have an age difference and can benefit in 2 ways:

Increasing your age pension entitlements An older spouse may qualify for a higher age pension by splitting super to a younger spouse to exempt assets from Assets Testing at 67. This means you may qualify for a higher age pension entitlement until the younger spouse attains pension age. Assets held in superannuation accumulation phase by pensioners and those on other allowances who are under age pension age are exempt under both the Income and Assets Test.

Access tax free income from age 60, sooner A  couple with a spouse who is aged 60 or over may access tax free payments earlier to fund earlier retirement. Improve after tax income and/or reduce debt earlier. In the case of a couple with one partner aged 60 or more, splitting contributions to the older spouse may enable earlier access to tax free income. This is because effective from 1 July 2007 super benefits have been paid tax free after a person attains the age of 60 and retires. (They can also take up to 10% of their balance while remaining at work via a Transition to Retirement Pension) This strategy can help increase the total income a couple is living off simply through splitting their contributions to the older spouse. The younger spouse splits their contributions with their older partner who once attaining the age of 60 is able to access these additional contributions earlier and tax free. This may benefit the couple by effectively reducing their overall assessable income. This is something to be thinking about now even if you are in your 30’s and 40’s as think of the tax and interest saved on being able to access tax free income or pay down a lump sum off your mortgage a few or more years earlier.

FUTURE PROOFING – Protect against legislative change: I believe that the concession for tax free pensions after age 60 will become too costly to maintain long-term and that some government in the future (they will have to be brave as soon 25% of the population will be over 60) will have to introduce tax on new pensions or limit the tax free lump sums available to pensioners. So whether you get funds into pension phase before changes or you have funds evenly spread across both spouse accounts to allow for both members to access any imposed limit to the max, it costs very little to put these strategies in place and they do not affect your investment mix. Implementation: The following types of contributions can be split:

  • Superannuation guarantee (SG)
  • Salary sacrifice
  • Deductible personal contributions (Self Employed & Self Funded Investors)
  • Voluntary employer contributions.

Generally, you can split contributions with your partner if:

  • you are married, or
  • in a de facto relationship – including same-sex couples, or
  • registered under a state or territory law, and
  • your partner is under their preservation age, or
  • if they are between their preservation age and age 65, have not retired under superannuation law.

You can split-off up to 85% of your concessional contributions to your spouse, which includes your SG and salary sacrifice contributions and up to the concessional contributions cap. You have until 30 June of each year to split contributions for the previous financial year. This means you have until 30 June 2023 to choose to split a contribution made in the 2022 financial year. You can also split contributions for the present financial year even if your entire benefit is to be rolled over, transferred or withdrawn.

If you are making a personal deductible contribution then make sure you have submitted the notice to claim a deduction before the Super Splitting request. A Superannuation Splitting request can be made to an SMSF by simply submitting a letter to the Trustee in writing stating the amount you wish to split to your spouse’s account. I recommend the Trustees minute the request and approve it with advice to the administrators to implement the split when completing the financials.

It is recommended that you seek expert advice from your financial adviser (SMSF Specialist Advisor™) before deciding if this strategy is right for you. As always I welcome and yes crave feedback! Also appreciate those who re-tweet educational material for the benefit of all in the sector. We have offices in Windsor and Castle Hill and are always happy to meet new clients for a one on one chat either face to face, by phone or on Teams/Zoom. Just view my Calendy Diary to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™  

SMSF016_Fellow_Logo_CMYK

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Tel: 02　9899 3693, Mobile: 0413 936 299

PO Box 6002 NORWEST, NSW 2153

40/8 Victoria Ave , CASTLE HILL NSW 2154

Suite 4/1 Dight St, Windsor NSW 2765

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.

13 Comments
by SMSF Coach - Liam Shorte on April 12, 2013  •  Permalink
Posted in Contribution Strategies, Superannuation Splitting
Tagged , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 12, 2013

https://smsfcoach.com.au/2013/04/12/using-superannuation-contribution-splitting-in-a-smsf-self-managed-superannuation-fund/

Super changes will hit saving strategies


Please find a link below to an article on the Macro Business blog website about the expected and unexpected effects of the proposed Super changes.  No More Tax Free

http://www.macrobusiness.com.au/2013/04/super-changes-will-hit-saving-strategies/

Macro Business has an excellent engaged readership and as always the comments tend to be very valuable at exploring the details of any subject just that little bit further.

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.

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 April 9, 2013  •  Permalink
Posted in Asset Allocation, Borrowing, Financial Planning, Loans, LRBA, Property, SMSF, Superannuation, Tax Planning, Trustee
Tagged , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 9, 2013

https://smsfcoach.com.au/2013/04/09/super-changes-will-hit-saving-strategies/

New changes to Superannuation in summary for SMSF Trustees


Firstly nothing to scary but some stings in the tail.    Tax Reform

Mr Swan and Superannuation Minister Bill Shorten fronted announced a tax exemption on superannuation earnings supporting pensions and annuities will be capped at $100,000, and anything above that level taxed at a rate of 15 per cent from 01/07/2014.

Based on a 5% earnings rate that would only impact on those with super assets of more than $2 million. Remember this is per account so for a couple each of them could have $2,000,000 without paying tax on their pension

The $100,000 threshold will be indexed to the Consumer Price Index (CPI), and will increase in $10,000 increments.

Special Treatment for Capital gains on Assets purchased before 01/07/2014 ( Did not proceed)

-　 For existing assets (such as property or shares) that were purchased before 5 April 2013, the reform will only apply to capital gains that accrue after 1 July 2024;

-　 For new assets that are purchased from 5 April 2013 to 30 June 2014, individuals will have the choice of applying the reform to the entire capital gain, or only that part that accrues after 1 July 2014; and

-　 For new assets that are purchased after 1 July 2014, the new limits will apply to the entire capital gain.

Higher concessional cap for people aged 60 and over brought forward

Accordingly, the government will bring forward the start date for the new higher concessional cap of $35,000  to July 1 for people aged 60 and over. Concessional includes employer SGC (9-12%) and Salary Sacrifice.

Individuals aged 50 and over will be able to access the higher concessional cap of $35,000 from the current planned start date of 1 July 2014.

The general concessional cap is expected to reach $35,000 from 1 July 2018 for those under 50.

Excess contributions tax to be reformed

Mr Shorten said the government will reform the system of excess contributions tax (ECT) that was introduced by the former government in 2007, to make it fairer and give individuals greater choice.

Under the current arrangements, concessional contributions that are in excess of the annual cap are effectively taxed at the top marginal tax rate (46.5 per cent) rather than the normal rate of 15 per cent.

Now you will pay tax on the excess contribution to match what you would have paid at your marginal tax rate. for example if you are on the 37% tax bracket you would pay ECT at 22% rather than 30% if you had to pay it on the top marginal rate of 45% (plus Medicare).

Income Streams will be Deemed like non-superannuation assets

Under the change announced today, standard pension deeming arrangements will apply to new superannuation account-based income streams assessed under the pension income test rules after 1 January 2015.

Instead of the concessional treatment of Account Based Pensions currently for those accessing an Aged Pension, they will be deemed like normal assets. This will affect those on the borderline of $55K income for a single person and $80K for a couple who previously benefited from deductible amounts on their account based or allocated pensions.

Extending concessional tax treatment to deferred lifetime annuities

The Government will encourage the take-up of deferred lifetime annuities (DLAs), by providing these products with the same concessional tax treatment that superannuation assets supporting income streams receive. This reform will apply from 1 July 2014.

Mr Swan also announced the Gillard government will establish a Council of Superannuation Custodians to ensure that any future changes are consistent with an agreed Charter of Superannuation Adequacy and Sustainability.

Here is the link to the full press release “A fairer superannuation system”

As always please contact me if you want to look at your own particular situation and we will break it down in plain English for you. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

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.

6 Comments
by SMSF Coach - Liam Shorte on April 4, 2013  •  Permalink
Posted in Age Pension, Contributions, Financial Planning, Pensions, SMSF, Tax Planning
Tagged , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 4, 2013

https://smsfcoach.com.au/2013/04/04/new-changes-to-superannuation-in-summary-for-smsf-trustees/

Using Beer To Explain How Tax Concessions Work


Let’s put tax concessions for superannuation in terms everyone can understand.

Suppose that every night, ten men go to their favorite bar for a few beers. The tab for all tenBeer Fund
comes to $100. If they paid their bill the way we pay our taxes, it would go something like
this:

  • The first four men (the poorest) would pay nothing.
  • The fifth would pay $1.
  • The sixth would pay $3.
  • The seventh $7.
  • The eighth $12.
  • The ninth $18.
  • The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every night and seemed quite happy with the
arrangement, until one day, the owner threw them a curve ball.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your nightly tab by $20.”

So, now drinks for the ten only cost $80. The group still wanted to pay their tab the way we pay our taxes.  So, the first four men were unaffected. They would still drink for free.

But what about the other six, the paying customers?

How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being ‘PAID‘ to drink beer!

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

  • The fifth man, like the first four, now paid nothing (100% savings).
  • The sixth now paid $2 instead of $3 (33% savings).
  • The seventh now paid $5 instead of $7 (28% savings).
  • The eighth now paid $9 instead of $12 (25% savings).
  • The ninth now paid $14 instead of $18 (22% savings).
  • The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once drunk and outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up at the bar, so the nine sat down and drank without him. But when it came time to pay the tab, they discovered something important. They didn’t have enough money  between all of them for even half of the tab!

And that, ladies and gentlemen, journalists and Mr Freydenberg, Mr Shorten and Mr Morrison and his shadow Mr Bowen, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction or concession like the Superannuation contribution tax rate. Tax them too much, attack them for being wealthy, and they just may not show up to pick up the tab anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

“everyone will worry about the poor people in the wagon and not about the people pulling the wagon, until there are no more people to pull the wagon!”

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible

This article has been adapted to Australian circumstances and is based on what is believed to have originally been a letter to the Chicago Tribune by a Mr Don Dodson in March 2001 (Source SNOPES.com )

As always please contact me if you want to look at your own particular situation as we specialise in plain English strategies. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or via Skype.

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.

5 Comments
by SMSF Coach - Liam Shorte on April 4, 2013  •  Permalink
Posted in Superannuation, Tax Planning
Tagged , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 4, 2013

https://smsfcoach.com.au/2013/04/04/using-beer-to-explain-how-tax-concessions-work/

What are the New Age limits & Work Test Restrictions for Superannuation Contributions from July 2013?


This is crucial for employers, self-employed and anyone considering working past age 65. It is important to understand that it is your age on the date of the contribution that counts. Employees currently do not receive the 9% SG contribution after the age of 70 but that will change on July 1st 2013 so here is an update.

Member’s age at date of contribution Can my SMSF or Superannuation fund accept this contribution?
Under 65 No age limit or work restriction applies
65 but under 75 Mandated Employer Contributions – for example including superannuation guarantee contributions (SGC , usually 9%),                                      orMust have been gainfully employed on at least a part-time basis for at least 40 hours in any one day period during the financial year in which the contributions are made.
75 + Mandated Employer Contributions – including super guarantee contributions (SGC). You cannot make personal voluntary concessional or non-concessional contributions regardless of meeting the work test or not.

 
There is a slight leeway for people to make contributions shortly after their 75th birthday in that the rules allow for a contribution during the period 28 days after the end of the month in which the member turns 75.

Also A regulated superannuation fund may accept contributions in respect of a member if the trustee is reasonably satisfied that a contribution is in respect of a period during which the fund may accept the contribution in respect of that member, even though the contribution is actually made after that period. So if your employer forgot to make a payment and does a catch-up contribution after you have passed an age limit.

Remedy:

If a SMSF or other regulated superannuation fund receives a contribution for a member who does not meet the relevant age and work test it must reject it or return it to the entity making the contribution within 30 days of becoming aware of the breach.

For SMSF trustees the ATO appears to have a more stringent view that the deadline is 30 days from the date of the excess contribution not 30 days from when they become aware of the breach. That is an “ATO view” so not written in to the regulations and subject to challenge.

Tax File Number

The regulated superannuation fund must not accept any member contributions if the member’s tax file number has not been quoted (for superannuation purposes) to the trustee of the fund.

For more information on the existing rules refer to REG 7.04 of the SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994 and for the changes http://www.moresuper.gov.au/content/Content.aspx?doc=faqs.htm

One final note – Increase to SG Contributions

Employers need to ensure they implement the new Superannuation Guarantee (SG) changes which take effect on 1 July 2013. Specifically, the SG rate will increase from 9.0% to 9.25% from that date. Further increases will apply in subsequent years until the rate reaches 12% in 2019/20

For employers; to assess if you need to pay Superannuation guarantee payments for a particular person you can use the ATO’s SG Eligibility Decision Tool

As always please contact me if you want to look at your own particular situation . We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or via Skype.

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.

1 Comment
by SMSF Coach - Liam Shorte on March 23, 2013  •  Permalink
Posted in Contribution Strategies, Contributions
Tagged , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on March 23, 2013

https://smsfcoach.com.au/2013/03/23/what-are-the-new-age-limits-work-test-restrictions-for-superannuation-contributions-from-july-2013/

What happens if I don’t take the minimum pension?


The Australian Tax Office (ATO) in January 2013 released guidance on the consequences of trustees not paying minimum amounts from account based pensions, including the loss of tax exempt status. It has issued two documents on starting and stopping a superannuation income stream (pensions) for self-managed superannuation funds. Tax Free

 (more…)
9 Comments
by SMSF Coach - Liam Shorte on January 29, 2013  •  Permalink
Posted in Pensions, SMSF Management, Tax Planning
Tagged , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on January 29, 2013

https://smsfcoach.com.au/2013/01/29/what-happens-if-i-dont-take-the-minimum-pension/

Skeletons in the Cupboards and Tax Man at the Door – Estate Planning Solutions for SMSF members


Here is one solution to a big problem that may become more common with blended families and increased divorce as well as de facto arrangements.     SMSF Estate Planning

Our client , lets call him , Scott (age 78) is a widower in the Hills district and he has a $652,000 account based pension (containing a 100% taxable component to keep it simple). His two adult daughters who are financially independent are noted as 50/50 beneficiaries on his non-lapsing binding death benefit nomination (see here for more details). Any lump sum death benefit they receive will be subject to 17 per cent tax. In dollar terms, this is $110,500 (calculation: $652,000 x 17%) and he wasn’t too happy about this.

Scott was advised by his specialist he has 2-3 years maximum to live due to an aggressive cancer. He threw this curly one at me to come up with a strategy as he wants to maximise his estate for his kids but also retain access to the funds while alive to fund medical and living expenses. Our strategy involves Scott taking a tax-free withdrawal from his account based pension. He then let me know about some skeletons he had in his cupboard!

Scott could retain these funds within a bank account, however the account will form part of his estate upon his death. Even though his estate will be paid predominately to his adult daughters, he is concerned about his estranged son from an affair he had in his late 50’s who might challenge the Will.

We advised that a valid alternative available to Scott is to invest into an investment bond with himself as the owner and the life insured. Since an investment bond is a non-estate asset, upon his death the funds will be paid tax-free to his adult daughters.

Both strategies will avoid the $110,500 of death benefits tax on funds paid to his daughters, however only the investment bond will ensure the funds do not become part of his estate. Scott’s two daughters need only produce a copy of his death certificate to gain access to the funds within the bond. This could also avoid lengthy delays with the administration of the estate and overcome possible estate challenges from his estranged son.

In terms of costs we were looking at foregoing the tax-free status in pension phase for the 2 years but that was far outweighed by the savings in the death benefits tax and we are actually able to wind up the SMSF  to save his children the hassle of dealing with that later.

For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office or choose an appointment option here 

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.

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.

2 Comments
by SMSF Coach - Liam Shorte on September 8, 2012  •  Permalink
Posted in Anti-Detriment, Binding Death Nominations, Estate Planning, Life Insurance, Reversionary Pension, SMSF, Tax Planning
Tagged , , , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on September 8, 2012

https://smsfcoach.com.au/2012/09/08/skeletons-in-the-cupboards-and-tax-man-at-the-door-estate-planning-solutions-for-smsf-members/

Think twice before cancelling insurances as you get older.


Do you know that the average person cancels their personal insurance about 1-2 years before an claimable illness strikes! The average age a person discontinues one or more of three types of living insurance policies – cover for disability, critical illness/trauma and income protection – is 45 years yet the average age for a claim is 46.5 years. (source TAL)

As mentioned in a previous blog the SMSF regulations now require Self Managed Superannuation Fund Trustees to consider Insurance as part of the SMSF Investment Strategy . TheRisk Management following applies to everyone regardless of the type of investor you are or the structure you use to save for retirement.

I see many clients in our Castle Hill and Windsor offices in their late 50’s who have cancelled their life and income protection insurances before they have come to see me. Usually they say it is because they have paid off their mortgage and are debt free so they didn’t feel they needed cover any longer.

Their focus now was on expense reduction and saving via salary sacrifice to superannuation and even some after tax contributions from savings.

While it is great to see them focus on saving for retirement and budgeting, what they don’t realise is that in cancelling insurances it is their retirement lifestyle or that of their spouse they are no longer insuring and not just their current needs.

With 5-15 years of focused savings towards a retirement nest egg they can substantially improve their lifestyle after retirement. However those dreams of a happy retirement can all be taken away with a diagnosis of cancer or a stroke that inhibits them working for a prolonged period.

You don’t just find yourself financing time off work and medical expenses but also lose out on the employer super contributions and salary sacrifice as well or worse for a small business owner, you face the expense of a getting someone to cover for you to keep the business afloat.

To realistically assess if you need to maintain your Life, Trauma or Income Protection insurance, you need to think through the worst-case scenario. If you were unable to work for 3 years due to an illness today, how would you and your loved ones cope financially?

  • Would you be able to meet ongoing living expenses like food, clothing, changing the car, pay for private health insurance premiums, etc? (this assumes mortgage paid off)
  • Would you have the liquid funds to cover additional expenses or loss in income (e.g., gap in your medical fees, time off work for your spouse to take care of you,
  • What would happen to your retirement plans and would you be able to save enough money to see the kids through the final college years or fund your retirement comfortably?
  • What if you were actually permanently disabled and they had all the costs of rearranging the home, medical care and transport options for you.

In all honesty, it is always a struggle when you lose your earning capacity. The last thing you need compounding the situation are financial concerns. Insurance helps make sure that you and the people you care about will be provided for financially, even if you’re not around to care for them yourself.

So whether you’re in retail, industry or a Self Managed Super Fund, take a moment to consider how insurance might fit into your retirement plans. We can look at ways to reduce the cover and costs to keep them affordable and provide that protection for you and your family.

If you think you may need to review your Insurances then you can contact us to offer you advice on your options. As well as offering advice on Insurances, Superannuation and SMSF’s our advisers can also offer you help in many other area’s you may be experiencing problems such as:

  • Financial Planning,
  • Tax Planning,
  • Debt Consolidation,
  • Investment Portfolios,
  • Estate Planning,
  • SMSF Trustee queries.

Have you found this blog helpful? Pass it on. Social media buttons beneath the article.

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.

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.

5 Comments
by SMSF Coach - Liam Shorte on August 24, 2012  •  Permalink
Posted in Insurance Strategies, Life Insurance, Salary Continuance, Superannuation, Tax Planning, Total & Permanent Disability, Trustee
Tagged , , , , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on August 24, 2012

https://smsfcoach.com.au/2012/08/24/think-twice-before-cancelling-insurances-as-you-get-older/

Funding the transfer of the business to the next generation | MYOB Blog


Funding the transfer of the business to the next generation | MYOB Blog.

1 Comment
by SMSF Coach - Liam Shorte on August 17, 2012  •  Permalink
Posted in Financial Planning, Superannuation, Tax Planning

Posted by SMSF Coach - Liam Shorte on August 17, 2012

https://smsfcoach.com.au/2012/08/17/funding-the-transfer-of-the-business-to-the-next-generation-myob-blog/

Trading Company as SMSF Trustee or Sole Purpose SMSF Trustee Company?


 Traditionally the majority of SMSFs steered away from using a company trustee due to the costs associated with it. This has been changing in the last decade as Trustees see the difficulty of adding or removing members or trustees from a fund. The process of replacing a director on the other hand is relatively simple.

The cost to establish a company to act as Trustee for a fund varies from $660 – $1600, depending on who you engage to organise it for you. A SMSF with a corporate trustee can usually be set up within a few days with the ABN and TFN taking up to a month to organise with the ATO and get listed on the Super fund Lookup site http://superfundlookup.gov.au/

The Company is required to prepare and lodge an Annual Review with ASIC each year  and pay an ASIC lodgement fee of $276. (The lodgement fee is reduced from $290 to $59 for companies who are used solely as SMSF Trustee companies commonly now known as a Sole Purpose SMSF Trustee Company).

The problem is people still look to save on costs so occasionally clients ask if they can utilise an existing trading company to act as the SMSF Trustee, to save on “cost”.

The strict answer is yes but just because you can do something, doesn’t mean you should. Using a company for multiple purposes is fraught with risk. You would have to be meticulous about keeping transactions and record keeping of the 2 functions absolutely accurate.

I really recommend against this for a number of reasons:

  • the accounts and bookkeeping for the trustee company inevitably become much more complex, having to account for its trading activities separately from its activities as a trustee. This in turn results in higher accounting fees and risk of mistakes;
  •  SMSF auditors are very delicate individuals who follow rules to the nth degree. There can’t be any overlap between SMSF funds and other company funds. We often get clients calling and advising us that they accidentally used the wrong cheque book or transferred funds by Bpay to or from the wrong account. (This is also a reason I suggest clients use a different bank for the SMSF )Yes it was accident, but the SIS Act and Regulations say this is totally illegal. You can never guarantee that you will never make mistakes. Avoid this hassle and set up a separate sole purpose corporate trustee;
  •  if the company gets into financial difficulty and a receiver or liquidator is appointed – the SMSF fund assets could be at risk. This is because using a trading company may result in you losing control over your SMSF if the company entered some form of administration due to trading difficulties. Even if you have kept clear records the liquidator or receiver may look to freeze those assets while you prove the true ownership which could take months or years if record keeping not perfect;
  • there are potential issues associated with identifying the true owner of the assets. If all of the company/SMSF assets are held in the same company name, how does one distinguish between assets held in capacity of trustee compared with those held beneficially for the company? For example in most States the Land Titles Office will only record the Trustee name not the “ATF XYZ Super Fund”;
  • Introduce some Business Real Property, say a warehouse, leased back to the business and it gets even messier. The company as trustee for the SMSF leases the business premises back to itself in its capacity as the trading company. Now if the trading company gets in difficulty and can’t make lease payments then the same company has an obligation in its capacity as Trustee of the SMSF to chase itself for recovery of the lease payments!;
  • then to the subject of liability. Trustees of funds are generally prohibited from borrowing but nevertheless, liabilities can still arise.  For example, a plumbing contractor engaged to repair a residential investment property might suffer an injury and can sue the trustee for damages.  This could mean that if the SMSF does not have the funds to meet any damages, the assets of the business may now become a target for the lawyers of the victim. Again in time this could be sorted and true ownership proved but could you or your business afford the time arguing the case or funding the defence.
  • The ATO ruling SMSFR 2008/2 further highlights the critical importance of the sole-purpose test for SMSFs, clarifying that SMSF trustees must focus solely on providing retirement benefits to members.

    This ruling is particularly pertinent for SMSFs with a trading company as a trustee, as it raises questions about the company’s ability to maintain the fund’s exclusive retirement focus.

For those who do have a Trading Company as Trustee, then if the company or business is in trading difficulty your first step is go to the ASIC advice for small company directors at http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Directors%20and%20insolvency

NEW UPDATE 2022

In early 2021, the Federal Government amended insolvency legislation to include a new debt restructuring process and a simplified liquidation process. It is available to small companies, and requires the appointment of a restructuring practitioner.

In December 2021, amendments were made to the Superannuation Industry (Supervision) Act (SIS Act) to reflect these changes, introducing a new category of disqualified persons.

This new category applies when a restructuring practitioner is appointed to a corporate trustee, and triggers the disqualification of the corporate trustee from managing a SMSF.

If your SMSF has a corporate trustee, and a “restructuring practitioner” is appointed to that trustee, the company will no longer be able to act as the corporate trustee, as it is disqualified. This is so even though the stated goal of the Corporations Amendments is to assist financially distressed businesses to remain viable and continue trading.

I would also suggest a quick visit to your Adviser to put in place a new Trustee Company in charge of your fund or if you really feel you are going to be in trouble you might opt to become a Small APRA regulated fund where you hand over the running of the fund to an Approved Trustee but you may struggle to find one willing to take over in such circumstances.

What are your thoughts? I would be interested in feedback from lawyers, accountants and advisers and of course auditors on this issue!

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   

Color logo with background smaller

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.

11 Comments
by SMSF Coach - Liam Shorte on August 9, 2012  •  Permalink
Posted in Asset Allocation, Financial Planning, SMSF, Superannuation, Tax Planning
Tagged , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on August 9, 2012

https://smsfcoach.com.au/2012/08/09/trading-company-as-smsf-trustee-or-sole-purpose-smsf-trustee-company/

Merging of Pensioner Tax Offset and Senior Australians Tax Offset to new Seniors and Pensioners Tax Offset (SAPTO)


Don’t you just love another acronym to learn!

The seniors and pensioners tax offset (SAPTO) replaced the senior Australians tax offset (SATO) and the pensioner tax offset from 1 July 2012. This means older Australians who were previously eligible for either SATO or the pensioner tax offset may now be eligible for the SAPTO.

The rebate amount and thresholds are illustrated below:

Seniors and pensioners tax offset (SAPTO)
Family status Maximum tax offset Shade-out threshold Cut-out threshold
Single $2,230 $32,279 $50,119
Couple (each)33 $1,602 $28,974 $41,790
Couple (separated due to illness)33 $2,040 $31,279 $47,599
  1. The shade-out threshold is the maximum rebate income at which individuals will be entitled to the maximum tax offset. The tax offset reduces by 12.5 cents for each dollar of rebate income in excess of the shade-out threshold.
  2. The cut-out threshold is the level of rebate income at which the offset reduces to nil. At or above this level of rebate income, there is no entitlement to the tax offset.
  3. Any unused portion of the tax offset may be transferable to the partner under TR 93/31.

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.

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 NORWEST NSW 2153
  • 5/15 Terminus St. Castle Hill NSW 2154
  • Suite40, 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.

5 Comments
by SMSF Coach - Liam Shorte on July 5, 2012  •  Permalink
Posted in Retirement Planning, SMSF, Tax Planning
Tagged , , , , , ,

Posted by SMSF Coach - Liam Shorte on July 5, 2012

https://smsfcoach.com.au/2012/07/05/merging-of-pensioner-tax-offset-and-senior-australians-tax-offset-to-new-seniors-and-pensioners-tax-offset-sapto/

Last minute planning checklists for everyone from Small Business Owners to SMSF Trustees as well as Personal planning.


Have you left your financial planning until the last minute?  Go over this checklist with your accountant or financial planner as soon as possible.  Some of these strategies apply every year, while others are specific to this year because of the changes in the tax rate, the end to the flood levy, and some changes to small business write offs in the next year.

Checklists for:

Personal / Family

Small Business Owner:

SMSF Trustee

Investment Property Landlord

See full article: http://myob.com.au/blog/end-of-financial-year-planning-checklists/#ixzz1ysA6ExvQ

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated.

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.

Leave a comment
by SMSF Coach - Liam Shorte on June 26, 2012  •  Permalink
Posted in Asset Allocation, Financial Planning, Franking Credits, Pensions, SMSF, Superannuation, Tax Planning, Trustee
Tagged , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on June 26, 2012

https://smsfcoach.com.au/2012/06/26/last-minute-planning-checklists-for-everyone-from-small-business-owners-to-smsf-trustees-as-well-as-personal-planning/

Consider prepaying next years Private Health Insurance before June 30th – EOFY Money Saving TIP #1


As a result of the introduction of mean testing of the Private Health Insurance Premium Rebate wewant to alert you to a one-off savings possibility in relation to the private health insurance rebate.

If you pre-pay your 2012/13 private health insurance premium before 30 June 2012, you may still be able to access the Government rebate.

As you may be aware, the Government currently provides a non-means tested rebate for private health insurance premiums. The rebate can be claimed directly from the insurer, or as a tax offset when you lodge your income tax return. the majority of clients claim it upfront and if you don’t then you may need to consider doing so this year.

The rebate is currently 30% for those under 65 and rising  from 35% to 40% of the premium depending on the age of the policy holder.

The Government has now passed the required legislation that will apply an income test to the availability of the rebate to any premiums paid on or after 1 July 2012. The more income you earn, the lower the rebate as follows:

Private Health Insurance Incentive Tiers (2011-2012) with effect 1 July 2012

Singles

<$84,000 

$84,001-97,000

$97,001-130,000

>$130,001

Families

<$168,000

$168,001-194,000

$194,001-260,000

>$260,001
Rebate
< age 65 30% 20% 10% 0%
Age 65-69 35% 25% 15% 0%
Age 70+ 40% 30% 20% 0%
Medicare Levy Surcharge
All ages 0.0% 1.0% 1.25% 1.5%

Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

Singles earning $84,000 or less and families earning $168,000 or less will continue to receive the existing 30, 35 and 40 per cent rebate, depending on their age.

Once your ‘adjusted’ income is greater than $130,000 (or $260,000 as a family), no rebate will be available.

For a family with gross premiums of say $2,500, this will result in an increase to the out of pocket premium costs of $750.00

The current rebate applies to a premium ‘paid’ during the income year. Accordingly, it follows that if you prepay your 2012-13 premium on or before 30 June 2012, the current rules should apply and the rebate should be available.

If you are interested in this one-off savings opportunity, we suggest you contact your private health insurer to discuss the possibility of pre-paying next year’s premium and ensure that their is no penalty for prepayment and that their system can cope with the prepayment.

Increase to Medicare Surcharge levy for High Income Earners

For those without Private Health Cover be aware that  the Medicare levy surcharge for people without private health insurance will lift to 1.5 per cent of taxable income for those top earners without private health insurance cover. (see table above)

I hope this guidance  has been helpful and please take the time to comment. Feedback always appreciated.

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.

Leave a comment
by SMSF Coach - Liam Shorte on May 23, 2012  •  Permalink
Posted in Asset Allocation, Financial Planning, Franking Credits, Pensions, SMSF, Superannuation, Tax Planning, Trustee
Tagged , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on May 23, 2012

https://smsfcoach.com.au/2012/05/23/consider-prepaying-next-years-private-health-insurance-before-june-30th-eofy-money-saving-tip-1/

The added value of franking credits in a SMSF Portfolio


 One of the least understood and core benefits of SMSFs are the value of franking credits attached to many blue chip share dividends.  You can tilt your portfolio to enhance the taxation benefits to your fund.

Targeting of imputation credits received predominantly from direct share investment in Australian, and to a lesser extent through managed funds is not that difficult. Franking credits (properly known as Imputation credits) can also be used to offset the tax payable on the taxable income of the fund if still in accumulation stage or refunds can be received from the ATO if in pension phase (don’t you just love receiving money from the ATO!)

The key point to understand around franking credits is the fact that the income tax rate for super funds is only 15% in Accumulation phase and 0% in Pension phase, while imputation credits from fully franked dividends can be as high as 30% of the gross dividend of an Australian share. This means that the franking credit covers the tax payable on the dividend received, and leaves a significant excess to be used to reduce the other tax payable by the fund or to be claimed as a refund

So how does it work in reality ?

So company Widget Ltd makes $1.00 profit and therefore is required to pay company tax at the rate of 30% on this $1 profit. Consequently the taxed $0.30 (30% of $1) will be paid in cash to the tax office and the company then records this $0.30 into their franking account. The franking account is only a record of what was paid and does not contain actual money. The company’s ability to frank its dividend will depend on the balance of this franking account. If the franking credit contains a surplus, the company may declare a fully franked (100% franked) dividend. If the franking account isn’t large enough, perhaps because it pays tax overseas, then the company may declare a partially franked dividend. That is, the dividend received by the SMSF is “grossed up” by the amount of the imputation credit to achieve a grossed up dividend. It is on this amount that tax is then assessed at 15% or 05 depending on the phase of your SMSF. The fund is then entitled to a tax offset for the franking credit.

Example: a worked example below of a SMSF that only holds Telstra shares and ANZ shares:

Dividend Franking Credits Taxable Income Accumulation Phase Taxable Income Accumulation Phase
TLS Shares $1260 $540 $1,800 $1,800
ANZ Shares $840 $360 $1,200 $1,200
Total $2100 $900 $3,000 $3,000
Tax @ 15% $450
Tax @ 0% $0
Less: Franking credits $900 $900
Excess Franking credits $450 $900

In this example, not only will the fund pay no tax on the dividend income of these two shareholdings, but it will have:

  • Accumulation Phase $450 of excess franking credits
  • Pension Phase $900 of excess franking credits ;

Which the SMSF Trustees can use to offset against other tax liabilities of the fund (such as other income, capital gains, and taxable contributions) or if  none exists, then the SMSF fund can receive a refund of this amount. (Love it!)

The 45 day rule

As the examples have shown fully franked dividends and franking credits make investing in Australian shares a very tax effective strategy. However, the ATO realises this and to prevent investors from abusing the system (called dividend stripping) they introduced the 45 day rule. The 45 day rule states that shareholder must hold shares for 45 days (not counting days of purchase or sale) for any franking credits over $5,000.

Beware of blind dividend chasing , you can hit a wall!

A word of warning before you decide to put your life savings into chasing shares with the highest dividends. While some high yielding dividend stocks may look enticing it would be useless if those shares drop in value (falling capital value). Always research the company and look for strong fundamentals, for example what does the company’s dividend history look like? Are the dividends growing year on year in line with the earnings per share? Is there long term potential for this company? Will earnings rise in the near term and are they sustainable.

Want a Superannuation Review or are you just 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. Do it! make 2016 the year to get organised or it will be 2026 before you know it.

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.

5 Comments
by SMSF Coach - Liam Shorte on April 27, 2012  •  Permalink
Posted in Asset Allocation, Financial Planning, Franking Credits, Pensions, SMSF, Superannuation, Tax Planning, Trustee
Tagged , , , , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 27, 2012

https://smsfcoach.com.au/2012/04/27/the-added-value-of-franking-credits-in-a-smsf-portfolio/

Superannuation Guarantee Age Limit to be Abolished in 2013


This change last November has gone under the radar but its needs to be highlighted as it will be especially important to Self Managed Super Fund members who run their own businesses as it will enhance their ability to tax plan and continue contributing to Super tax effectively.

The Government has announced that the 70 year age limit for superannuation contributions required to be made by an employer under the Superannuation Guarantee (Administration) Act, 1992 will be abolished.  Currently, employers are not required to make any SG contributions in respect of employees once they attain age 70.

The Government had originally aimed to increase the age limit to 75 but has subsequently decided to remove the age limit entirely.

This is a win for older working Australians with the House of Representatives passing amendments to the Superannuation Guarantee (Administration) Amendment Bill 2011 that abolish the superannuation guarantee age limit.

From 1 July 2013, eligible employees aged 70 and over will receive the superannuation guarantee for the first time. This increases the coverage of the superannuation guarantee scheme to an additional 51,000 Australians aged 70 and over, who will get the benefit of the superannuation guarantee if they continue working.

“Making superannuation contributions compulsory for these mature-age employees will improve the adequacy and equity of the retirement income system, and provide an incentive to older Australians to remain in the workforce for longer,” Mr Shorten said.

A 1 July 2013 commencement date provides time for employers and older Australians to adjust to the new superannuation arrangements.

The changes will also ensure that employers will be able to claim income tax deductions for superannuation guarantee contributions made to employees aged 70 and over from 1 July 2013.

It ensures employers will not bear a higher cost in employing workers 70 and over compared with other workers.

Feedback always appreciated.

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.

Leave a comment
by SMSF Coach - Liam Shorte on April 26, 2012  •  Permalink
Posted in Financial Planning, Pensions, SMSF, Superannuation, Tax Planning, Trustee
Tagged , , , , , , , , , ,

Posted by SMSF Coach - Liam Shorte on April 26, 2012

https://smsfcoach.com.au/2012/04/26/superannuation-guarantee-age-limit-to-be-abolished-in-2013/

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