Liam Shorte

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All posts in category Trustee

Time to step up and be heard at the Franking Credits Inquiry

Throughout the last year as I have gone through the 30 June 2018 SMSF financials with clients and pointed out to them the amount of franking credits they had earned in their fund and the value of them to their retirement income, many have been alarmed to hear of Labor’s proposal to deny them the refund of any excess franking credits.

There has been a lot written in the press about this matter and much of it amounts to bashing self-funded retirees for carefully using the system to develop portfolios that would deliver the best return for their capital in a way that suited their risk tolerance and bias towards Australian assets.

Well the Labor proposal now puts much of that hard work at risk and while we do not really know if their will be consequences for the economy of companies in which we invest, what we do know is that it will affect SMSFs that do not have at least one member who is currently receiving an age pension. This is very inequitable that one sector of society should be targeted by these measures

Time to Step Up and have your Say

The House of Representatives Standing Committee on Economics will hold public hearings in numerous locations in New South Wales and Queensland for its inquiry into the implications of removing refundable franking credits. I strongly urge you to consider going along to one of the hearings and voicing your opinion or support others who are going to speak but need some back-up.

From the Media Release:

The Chair of the committee, Mr Tim Wilson MP, said ‘the committee is examining how the removal of refundable franking credits would affect investors, in particular older Australians who have planned for their retirement under the existing rules and whose financial security could be compromised.’

Mr Wilson said ‘the committee has received well over 1000 submissions, including many from retires who are concerned they will be forced on to the aged pension if the ability to claim a refund on their franking credits is removed.’ ‘These hearings will provide an opportunity for Australians impacted by a change to refundable franking credits to address the committee directly with a three-minute statement, and we welcome their contributions and participation’. Mr Wilson said.

Public hearing details:

NSW

Merimbula, 9.00am to 10.30am, Monday, 4 February 2019, Merimbula RSL, 52-54 Main St, Merimbula, NSW

Chatswood, 9.00am to 10.30am, Friday, 8 February 2019, The Chatswood Club, Level One, G11 Help Street, Chatswood, NSW

Bondi Junction, 2.00pm to 3.30pm, Friday, 8 February 2019, Bondi Junction RSL, 1/9 Gray St, Bondi Junction, NSW

Queensland

Townsville, 2.00pm to 3.30pm, Tuesday, 29 January 2019, Pandora Room, Hotel Grand Chancellor, 334 Flinders St, Townsville City, Queensland

Alexandra Headland, 9.00am to 10.30am, Wednesday, 30 January 2019, The Bluff Function Room, Alexandra Headland Surf Life Saving Club, 167 Alexandra Parade, Alexandra Headland, Queensland

Paddington, 2.30pm to 4.00pm, Wednesday, 30 January 2019, Presentation Room, The Lavalla Centre, 58 Fernberg Rd, Paddington, Queensland

Eight Mile Plains, 9.00am to 10.30am, Thursday, 31 January 2019, Central Auditorium, Brisbane Technology Park Conference Centre, 1 Clunies Ross Ct, Eight
Mile Plains, Queensland

Upper Coomera, 2.00pm to 3.30pm, Thursday, 31 January 2019, Upper Coomera Centre, 90 Reserve Rd, Upper Coomera, Queensland

Further public hearings will be announced as the inquiry progresses. The hearings will be webcast live (audio only). A number of submissions have been received and are available on the committee’s webpage at: http://www.aph.gov.au/economics.

A number of submissions are currently being processed and will be published over the coming months. Submissions can be made online or by emailing economics.reps@aph.gov.au.

Media enquiries: Mr Tim Wilson MP—Electorate: 03 9557 4644; Parliament: 02 6277 2392

For background information:

House of Representatives Standing Committee on Economics Phone: 02 6277 4587;

Email: economics.reps@aph.gov.au;

Website: http://www.aph.gov.au/economics

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. 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™

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.

Image courtesy of kittijaroon at FreeDigitalPhotos.net

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by SMSF Coach - Liam Shorte on January 23, 2019 • Permalink

Posted in Franking Credits, Income Protection, News & Stats, Pension Strategies, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on January 23, 2019

https://smsfcoach.com.au/2019/01/23/time-to-step-up-and-be-heard-at-the-franking-credits-inquiry/

Who will be affected by the denial of cash franking credit refunds?

Sometimes you can’t sit back and accept policy changes by governments. You have to step up to stop bad policy regardless of your political persuasion.

I see that Geoff Wilson from Wilson Asset Management is leading a charge against the Labor proposed policy to deny a refund of excess franking credits. You can read more about his efforts in this article here and sign his petition here

The problem is that many people don’t understand the imputation system so when I sit with clients and we talk about what it means for them we have to put it in terms they understand. For many of my self funded retirees it will mean $5000 to $20,000 loss in income per year going forward if past in to legislation. So they may still be able to meet their basic living expenses but it is the little extras that they worked hard to save for that they will lose and it feels like they are been punished for trying to fund their retirement.

It means cutting out the holiday, the presents for the grandkids, the renos on the bathroom or any other little things they had saved hard to be able to afford. So once alerted to the potential loss of income most are angry but too few have been made aware of it by their tax agents and advisors.

I thought it I would help out in the education of trustees by highlighting the great fact sheet available from the The Alliance for a Fairer Retirement System

I have included below a link to their latest version of the fact sheet and would encourage you to visit their website, share with clients, friends and colleagues and sign up to their newsletters here.

ALLIANCE FACT SHEET

Lets get the word out there so people understand what they will be losing

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

SMSF&ACCOUNTING_Winner__SMSF and Accounting Professional of the Year - Metropolitan

SMSF&ACCOUNTING_Winner__SMSF Adviser Excellence Award

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

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by SMSF Coach - Liam Shorte on September 26, 2018 • Permalink

Posted in News & Stats, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on September 26, 2018

https://smsfcoach.com.au/2018/09/26/who-will-be-affected-by-the-denial-of-cash-franking-credit-refunds/

How much does it cost to change an SMSF from Individuals to Corporate Trustee Structure

One of my most popular long term blogs is Why Self Managed Super Funds Should Have A Corporate Trustee and thankfully most new SMSFs are finally being set up with a corporate trustee from the outset. But that leaves many existing SMSFs with Individual Trustees and I get numerous questions about the cost of the transfer process. If you are considering an SMSF the I would encourage you to read through that article and feel free to pass it on to your friends, family or advisors.

Watch ATO guidance here – SMSF trustees – individual or corporate

The basic costs depend on your current legal document deed provider or the new provider chosen to implement the changes. But here is a guideline

Cost of Sole Purpose Corporate Trustee would usually be around $660-$880 of which $506 is the ASIC registration fee
Trust Deed Amendment to Retire the current Individual trustees and Appoint the new Corporate Trustee is about $200-$375
Then all assets need to be moved in to new Accounts in the name of the new Trustee company.
- Shares/ETFs/Hybrids usually cost $55 per share (you can bargain a discount with your broker) but a new Account application is also required
- Wrap Platforms – depends on the provider but usually you will have to set up a new Account and they will in-specie transfer them across.
- Managed funds may have stamp duty costs depending on the state. A new application for is required before the transfer
- Bank account providers just usually require a request in writing, copy of the Company Certificate of Registration and copy of the signed Trust Deed Amendment
- Property will depend on the State but some have an exemption or concessional stamp duty and only a small fee for changing the trustee on the title. See more detail here Stamp Duty Requirements on Change of SMSF Trustees – I will try to get this update shortly.
- Bullion/Coins – just usually require a request in writing, copy of the Company Certificate of Registration and copy of the Trust Deed Amendment

Ongoing Costs

Costs should not be a deterrent as a sole Purpose Trustee company ASIC review fee is only $55 per year and you can lock that in and get a discount for up to 10 years. See here for more detail on that discount.

Don’t feel like trying to do all this yourself? How much do we charge for guiding you through the process

If you require assistance and advice on making the changes our advice fee starts from $4,400 as it is a time consuming process. This includes:

Review of your current circumstances and portfolio to see what needs to be done
Advice on the change of trustee and process
Preparation of all documentation for signature
Assistance with implementation of asset transfers

Finally if you are considering trying to save some costs by using the same company as your Business or Family Discretionary Trust then I would recommend you read this article first: Trading Company as SMSF Trustee or Sole Purpose SMSF Trustee Company?

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

2 Comments

by SMSF Coach - Liam Shorte on September 12, 2018 • Permalink

Posted in News & Stats, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on September 12, 2018

https://smsfcoach.com.au/2018/09/12/how-much-does-it-cost-to-change-an-smsf-from-individuals-to-corporate-trustee-structure/

Retail property Armageddon: Fear versus reality

Many SMSF investors have listed and unlisted exposure to commercial property in their portfolios and much of that is retail exposure so I was looking for some up to-date guidance on the Australian retail property sector specifically for a client and decided to share this article that I found from APN Funds Management This is neither a recommendation nor a paid advertisement from APN, just me passing on what I felt was a good analysis of the current state of play in Australian retail property. So here goes:

Everyone shops on the Internet these days, don’t they? That’s why Armageddon looms for retailers and therefore investors in retail property.

If you’re looking for a reason why the share price of Retail AREITs in the ASX 300 are down 2.3% over the last two years, there’s your answer. You may also think these falls are justified. If so, we’d suggest you do three things.

The first is to take heed of the last 12 months performance. The retail sector is up 14% (even outperforming the overall AREIT market) as investors realise the value that has been created by the over selling of the sector.

The second is to visit your local super regional shopping centre, maybe Chadstone in Melbourne, Bondi Junction in Sydney or Carindale in Brisbane. On arrival, take a look around. It’s busy isn’t it? And how about those families, maybe three generations wide, engaging in an activity that is as much social as it is commercial?

These small groups are simply doing something together in a clean, convenient, climate controlled, secure and accessible environment. For them, shopping is not a chore. This is not something they want to substitute for online shopping, huddling around a mobile phone, looking at pictures of shoes.

Both activities might lead to a sale but there is a world of difference in the social activity and environment that precedes it.

The third suggestion is to consider the view of experienced investors that study shopping centre assets for a living and get their take on retail Armageddon.

Yes, there are such people, and APN Property employs quite a few of them. Between us, we have 84 years of commercial property investing experience.

We dig deep into the demand and supply dynamics that drive local retail property markets, analysing everything from personal income growth, population data and economic growth indicators to individual shopping centre performance, vacancy rates and rental growth.

For us, this is the only way to establish the attractiveness or otherwise of a retail property. If, for example, a particular property market has excess supply, low population growth, weak “buying power” (lower income levels) and low economic growth – it is best avoided.

It is our view that not only is Armageddon highly unlikely, the prevalence of the belief that it is, offers an opportunity.

Let me explain why. Our AREIT valuation process includes a property-by-property risk analysis, drawing on pertinent local market data, ABS and Census data for specific areas and property specific information. We also seek to understand Australia’s high level retail property market dynamics.

This approach delivers a very different picture from the narrative seeping into the mainstream media, foretelling empty shopping centres, declining retail brands and the end of shopping as a social activity.

This is what our research tells us about Australia’s current retail property markets:

The Melbourne regional shopping centre market is typified by low per capita supply, driven by the strongest population growth and Gross State Product (GSP). It is also enjoying below average new supply across all retail sectors. This is an attractive market ripe with investment opportunities.
The same cannot be said of south east Queensland, a market typified by an excess supply of all categories of retail property, especially in the vulnerable sub-regional centre category. The region also suffers from below average GSP and only average population growth. The current supply phase is well in excess of national averages across most sectors and will likely compound return weakness in the region.
In Perth, a large pipeline of new retail space is in development, a “catch up” following years of oppressive town planning restrictions and retail trading laws stifling the market. As a consequence, a number of existing centres are experiencing major extensions, including Mandurah Forum, Westfield Carousel, Midland Gate Shopping Centre, Booragoon and Karinyup. This new supply looks excessive but being aware of the historic context makes us more comfortable.
In Sydney, the market has elevated levels of new Neighbourhood and Large Format space being built. But compared with the rest of Australia there appears to be less of the weak sub-regional shopping centre space and less new supply looming. And Sydney’s higher than average regional space provision appears consistent with the population’s superior spending power.

It hardly sounds like Armageddon, does it? In Australian retail property, overall growth is broadly positive, current supply is not excessive (in an absolute sense – relative to other developed, comparable markets around the world) and neither is new supply excessive.

South east Queensland has some challenges and Melbourne is fundamentally strong but overall Australia’s retail property market is well positioned for slow and steady growth. Armageddon appears unlikely.

Retail property is not dead. We are, however, witnessing a cyclical slowdown. Different to past cycles, it has been confused by less experienced investors as a structural issue.

It’s this kind of measured, fact-based analysis that you won’t read about in the media. Instead, Amazon’s arrival has led to a kind of scaremongering that defies reality. Professional investors like us enjoy and aim to profit from the disparity, as we hope will investors in APN’s AREIT Fund. The headlines point one way, the facts quite another. Personally, I prefer facts.

This article has been prepared by APN Funds Management Limited (ACN 080 674 479, AFSL No. 237500) for general information purposes only and without taking your objectives, financial situation or needs into account. You should consider these matters and read the product disclosure statement (PDS) for each of the funds described in this article in its entirety before you make an investment decision. The PDS contains important information about risks, costs and fees associated with an investment in the relevant fund. For a copy of the PDS and more details about a fund and its performance,

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™

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

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by SMSF Coach - Liam Shorte on September 4, 2018 • Permalink

Posted in Binding Death Nominations, Estate Planning, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on September 4, 2018

https://smsfcoach.com.au/2018/09/04/retail-property-armageddon-fear-versus-reality/

Phew! SCOMO delivers an SMSF friendly 2018-19 Federal Budget

Self-funded retirees have felt like punching bags for the last few years with hit after hit chipping away at their ability to fend for themselves within the rules they had relied upon in making their savings plans over the last 30 years. Combine the changing of goal posts with low interest rates and blue-chip underperformance from the banks, telcos and utilities and they are not to be blamed for thinking a hex had been put on them.

So an SMSF friendly budget is the welcome news coming out of the 2018-19 Federal Budget. With many of us SMSF Specialists and you the SMSF members still working through the wide-reaching and complex superannuation changes which took effect from 1 July 2017, this Federal Budget will provide much needed stability while looking to reduce costs for SMSFs and prove additional flexibility.

The key changes proposed for SMSFs and superannuation are:

Three-yearly audit cycle for some self-managed superannuation funds.

The Government will change the annual SMSF audit requirement to a three yearly requirement for SMSFs with a history of good record keeping and compliance. The measure will start on 1 July 2019 for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.

One concern I have is if trustees make a mistake in year 1 that is not discovered until year 3, will they face 3 years interest charges on the penalties.

Expanding the SMSF member limit from four to six

As already announced, the Federal Government confirmed its decision to expand the number of members allowed in an SMSF from four to six. Expanding the definition of an SMSF to a fund with a maximum of six members will provide greater flexibility in how funds can be structured.

Whilst there are some concerns over making decisions I like this move where as mum and dad in their later years want to reduce their involvement but they want help rather with the fund rather than moving to separate retail funds. It may help prevent elder Financial abuse where instead of one child assuming control of the SMSF, more of the family could be involved. Temptation and inheritance impatience is always there for one person but add a few others in to the decision making and the risk of financial abuse reduces considerably.

Also 6 members of a family small business allows for later drawdown from the parents accounts and recontribution for younger family members to retain business real property in the fund after death of the older generation.

Note; you will need to ensure your trust deed allows more than 4 members and it most likely won’t so you will need to update the trust deed first before accepting new members. READ THE DEED

Over 65, 1 additional year Work test exemption

The Government will provide more time for Australians aged 65 to 74 to boost their retirement savings, by introducing an exemption from the superannuation work test.This exemption will apply where an individual’s total superannuation balance is below $300,000 and will permit voluntary superannuation contributions in the first year that they do not meet the work test requirements.

This is good but limited in its scope as more and More people have reached the $300k level because of Super Guarantee Contributions for most since 1992 or before for some. But it is a female friendly move as they are most likely to have lower balances

Life insurance cover in super to be opt-in for individuals under 25 years of age.

The Government will legislate that life insurance cover in superannuation will be opt-in for those individuals under 25 years of age or with account balances under $6000 to ensure that unnecessary fees do not erode smaller balances.

Life insurance cover will also cease where no contributions have been made for a period of 13 months.

If you have kept a retail or industry fund open with small balances to retain insurances you may need to put a small annual contribution in place (I would recommend $100 per half year just in case) to ensure it does not get tagged as dormant.

Older Australian package

The Government introduced the following measures to enhance the standard of living older Australians:

• Increase to the Pension Work Bonus from $250 to $300 per fortnight.

• Amendments to the pension means test rules to encourage the take up of lifetime retirement income products.

• Expansion of the Pensions Loan Scheme to allow more Australians to use the equity in their homes to increase their incomes.

I think this will be a major bonus for those with a lumpy asset or shareholding’s they wish to retain but need more cashflow. At a current rate of 5.25% the Pensions Loan Scheme is a very decent rate and security that you are borrowing from a bank or predatory lender based on a brokers conflicted commissions.

Personal income tax bracket changes (take most these with a pinch of salt!)

The Government has provided personal income tax relief to lower and middle income earners. A Low and Middle Income Tax Offset will now be available for individuals with incomes of up to $125,333.

The $87,000 income threshold, above which a 37 per cent tax rate applies, will increase to $90,000.

Other changes

• A surplus of $2.2 billion is expected in 2019-20, one year ahead of schedule.

• The Government’s planned increase in the Medicare levy from 2 per cent to 2.5 per cent, to fund the National Disability Insurance Scheme, will now not go ahead due to increased tax revenues.

How can we help?

Some of these measures may open up strategy options for you and your family.

If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2018-19 Federal Budget, please feel free to give me a call or email to arrange a time to meet or talk by phone so that we can discuss your particular requirements in more detail.

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™

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

4 Comments

by SMSF Coach - Liam Shorte on May 9, 2018 • Permalink

Posted in Contribution Strategies, Financial Planning, Retirement Planning, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on May 9, 2018

https://smsfcoach.com.au/2018/05/09/phew-scomo-delivers-an-smsf-friendly-2018-19-federal-budget/

Issues we cover before helping you set up an SMSF

Here are some of the key issues we will discuss with you to get a better understanding on whether an SMSF is suitable to meet your objectives and circumstances. They have been developed to address concerns about people being pushed or rushing in to a SMSF. We want to protect access to the SMSF option for the long-term.

What do you or your family want to achieve by establishing an SMSF . This explores your reasons for investigating this strategy and if it aligns with your short, medium and long-term goals or is it something you have just felt was right for you. We will have no hesitation in suggesting you consider alternatives that may meet your true objectives. We don’t believe an SMSF is right for everyone.
Is contributing more to superannuation the right option for you at your age when we take in to account your financial commitments now and in the future as this money will be locked away until you meet a condition of release most likely in your 60’s. It may be more appropriate for your to concentrate on using excess funds for debt reduction, medium term investing in your name or an insurance bond for tax minimisation while retaining access to the capital. We develop our strategies to suit you!
Is running a strategy via an SMSF suitable for you in terms of your experience, knowledge and available time. There are many busy executives, truck drivers and small business owners that I have had to talk out of running and SMSF when they can’t even find 1 hour in their week to schedule a meeting or even engage via Skype to understand their trustee obligations. Yet they thought they run a $800,000 investment portfolio! I hesitate to mention the one who said he could do his research while driving to work on his mobile! Or the couple who felt they were “property experts” because they had 4 Queensland regional properties, having never once visited any of them or done more than a cursory Google search using the highest valuations found and ignoring recent listings. By the time we analysed the portfolio they were going nowhere, low-income and negative capital growth. On asking for Property Inspection reports we found they were also up for tens of thousands in repairs and maintenance over the coming years. It was agreed that their super was safer in their well diversified existing strategy than another “punt” on property in an SMSF until learned more about property investing from a Buyer’s Agent.
What funds do have to rollover from an existing fund(s). Are you able to move those funds? Some people are in government, military or state funds that cannot be accessed before a certain age like MSBS or Local Govt Super or maybe a Defined Benefit Scheme that’s too sweet to leave! Are you able to redirect future Super Guarantee contributions from your employer as some have a mandated fund under enterprise bargaining agreements etc. Are there high exit fees or underlying investments that are not liquid? Is it the right move for you?
Have insurance needs been adequately identified and addressed for your future protection? We have to look at the current insurances in place and do a needs analysis to see if they should be maintained, altered, replaced or cancelled.
We need to know if you are aware of and clear about trustee responsibility? This blog and other material we point you to will give you the knowledge base you require to run a fund. We may suggest you do this education before committing to setting up the SMSF. Your urgency to set up a fund does not let us abrogate our duties.
We will walk you through the costs of setting up and administering the SMSF annually as well as costs related to specific strategies you want to undertake? This includes fees associated with all related aspects of SMSFs including advice, investments, establishment, legal and administration?
We will explain the pros and cons risks v benefits of establishing an SMSF? We will not necessarily encourage or discourage you but we will ensure you are fully informed and provide support coaching.
We will help you with the development and management of the SMSF investment strategy and ensure it is compliant and will help achieve your objectives. We will ground you in reality (no reasonable investment will provide excessive returns long-term so we might burst a few myths.
If the SMSF is to engage in borrowing or gearing? We will guide you around what is a reasonable level of gearing in your circumstances and to achieve your retirement plans and analyse the affordability of the gearing strategy. We will provide you with a full 3 step guide on the rules, the process and the mistakes to avoid during implementation.

One last warning :

We want you to use the right strategy at the right time for your future financial security.

This may explain why from 2017 to 2025 we have been one of the most recognised among the best of the best SMSF Advisers in a number of professional awards.

(more…)

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by SMSF Coach - Liam Shorte on January 30, 2018 • Permalink

Posted in education, SMSF, SMSF alternatives, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on January 30, 2018

https://smsfcoach.com.au/2018/01/30/issues-we-cover-before-helping-you-set-up-an-smsf/

SMSF Corporate Trustee Structure Finally Outnumbering Individual Trustees.

For the last decade every time I saw the SMSF statistical results issued by the ATO I was dismayed by the number of new SMSF funds being set up with Individual Trustees, often well over 80% each year. I assumed this was people setting up self managed superannuation funds without good advice or reasonable research.

So I was delighted to see the latest stats provided by the ATO for 2015-16 but including some 2016-17 data which has seen a complete turnaround with over 80% of new SMSFs being set up with Corporate Trustees and the overall numbers on existing funds turning in favour of using a company.

SMSF trustee structure

At 30 June 2017, 57% of all SMSFs had a corporate trustee rather than individual trustees.
Of newly registered SMSFs in 2015 to 2017, on average 81% were established with a corporate trustee.

A few times over the last 5 years I have run polls asking professionals in the SMSF industry whether they would recommend individual or corporate trustees. Every time the overwhelming result is in favour of Corporate Trustees.

So over 90% of professionals who deal day in day out with SMSF issues and like myself deal with some of the fallout when approached by grieving widows(ers), recommend a Corporate trustee for an SMSF.

Costs

Costs should not be a deterrent as a sole Purpose Trustee company only costs about $600-$880 to set up and the ASIC review fee is only $48 per year and you can lock that in and get a discount for up to 10 years. See here for more detail on that discount.

I have set out my arguments for a Corporate Trustee in this previous article Why Self Managed Super Funds Should Have A Corporate Trustee. If you are considering an SMSF the I would encourage you to read through that article and feel free to pass it on to your friends, family or advisors.

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™

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

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by SMSF Coach - Liam Shorte on January 23, 2018 • Permalink

Posted in News & Stats, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on January 23, 2018

https://smsfcoach.com.au/2018/01/23/smsf-corporate-trustee-structure-finally-outnumbering-individual-trustees/

Do you have an SMSF Trust Deed that is Signed and Dated

Ok this may seem like a boring question but have you actually checked if you have a copy of your latest SMSF deed on file or that your accountant and financial adviser have one of file? Has it been dated properly and signed and witnessed properly by all parties.

In this era of everyone rushing around and having busy lives, it’s the little things that get missed and that can cause a huge problem later. An unsigned or undated deed may result in your fund being found non-compliant and unable to function or leave major headaches for your beneficiaries. If you are a professional adviser then those disgruntled parties will be looking for someone still alive to blame and pick up the costs.

An SMSF trust deed is a legal document that sets out the rules for establishing and operating your fund. It includes such things as the fund’s objectives, what the fund can invest in, who can be a member and whether benefits can be paid as a lump sum or income stream. The trust deed and super laws together form the fund’s governing rules.

The trust deed must be:

prepared by someone qualified to do so – it’s a legal document
signed and dated by all trustees
properly executed according to state or territory laws
regularly reviewed, and updated as necessary.

I take over management of a lot of funds and we are seeing many cases where the original trust deed was signed correctly and dated but a subsequent update or deed of amendment is sitting on the file unsigned or undated.

It is illegal to sign and backdate documents. As the Trustee of your fund it is your responsibility to ensure that deeds are legally compliant, signed and up to date.

If you are an Accountant, Administrator, Financial Planner or Auditor then you may share in the responsibility to ensure that deeds are compliant and properly completed. Your client may love you but their beneficiaries may come looking for someone to blame if an unsigned deed means a compliance breach with heavy tax or administrative penalties.

So what should you do.

See if you have a SMSF deed in your files and check if it is properly signed, witnessed and dated.
If you don’t have a copy then email your accountant and financial adviser and ask then to confirm if they have a signed and dated original copy on file. If they do then ask for a Certified Copy.
If in checking you see that the deed is dated pre-2012 then ask your Administrator or Accountant if it has been updated and read my previous blog 15 Reasons to update your SMSF Deed for new strategies in 2017
If it has been updated with a Deed of Amendment, has that been signed and dated? Get a copy of all Deeds of Amendment for your records so you can show the full history of your fund. Keep a copy yourself in case you fall out with your professional advisers.

Don’t be the one who leaves a mess behind!

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 SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

2 Comments

by SMSF Coach - Liam Shorte on December 7, 2017 • Permalink

Posted in Audit, Deeds, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on December 7, 2017

https://smsfcoach.com.au/2017/12/07/do-you-have-an-smsf-trust-deed-that-is-signed-and-dated/

SMSF Research – BITCOIN, DOLLARS, GOLD: What Is the Future of Money?

I am being inundated by queries from young men aged 20-40 looking to learn more about Bitcoin and then a cohort of traditional SMSF trustees aged 40-70 who have an interest in alternative investments and especially Gold who now want to at least know more about Bitcoin and cryptocurrencies in general. so when I came across this latest paper dealing with both subjects from my good mate Jordan Eliseo, Chief Economist at ABC Bullion I twisted his arm to let me share it to my readers.

The key finding of his paper are:

KEY FINDINGS

Blockchain technology has serious real world applications – it is here to stay
Given valuations in broader financial markets, it can make sense to speculate in the cryptocurrency market with a small portion of one’s wealth
Cryptocurrencies like Bitcoin are money today, but whether that status will endure remains to be seen
Physical gold remains the simplest and most effective hedge against the monetary, market, and macroeconomic risks that investors confront today

I recommend that you read Jordan’s full report here:

BITCOIN, DOLLARS, GOLD: What Is the Future of Money?

Now, if you are determined to go ahead and invest in Bitcoin or other cryptocurrencies then you need to do some serious groundwork.

NOTE: I DO NOT RECOMMEND CRYPTO CURRENCIES AS A SUITABLE INVESTMENT FOR AN SMSF, I AM JUST MAKING SURE THAT THOSE WHO DO INVEST DO IT COMPLIANTLY

How the SMSF regulations affect investing in Bitcoin, Ethereum or other cryptocurrencies

SMSF Professionals and Trustees should be well aware of the restrictions placed on the investment choices of SMSFs by the Superannuation Industry (Supervision) Act 1993 and supporting regulations. The Australian Taxation Office (ATO) is in charge of the administration of these rules and they have issued this guidance on their website:

Tax treatment of crypto-currencies in Australia – specifically bitcoin

Although there are not yet any formal rulings from the ATO clarifying how the rules apply to Bitcoin, there are a number of Tax Determinations that help guide any SMSF Trustees considering investing in bitcoins.

TD 2014/25 Income tax: is bitcoin a ‘foreign currency’ for the purposes of Division 775 of the Income Tax Assessment Act 1997 (ITAA 1997)
TD 2014/26 Income tax: is bitcoin a CGT asset for the purposes of subsection 108-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997)
TD 2014/27 Income tax: is bitcoin trading stock for the purposes of subsection 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997)
GSTR 2014/3 Goods and services tax: the GST implications of transactions involving bitcoin.

Considerations before investing in Bitcoin:

Is it right for your needs and objectives? Consider if an investment in Bitcoin would satisfy the ‘sole purpose test’? – Are you honestly investing in it for your retirement?
In your circumstances does Bitcoin investing suit your risk tolerance (and the other member’s of your SMSF) and have you done enough research to validate your investment decision,
Does you Trust Deed allow for investing in bitcoins or cryptocurrencies. Read your deed and maybe ask the trust deed provider.
Talk to your fund’s auditor before proceeding as they have to sign off on the investment’s validity annually so better to run the strategy by them upfront.

They may ask you to verify the following:

If you wish to proceed with a purchase then have you amended your SMSF’s investment strategy to cater for this investment? Click the link for more details.
Trap: Make sure you know who is in ‘control’ the bitcoins? All assets must be clearly in the name/control of the trustees of the fund
How would the SMSF acquire the bitcoins? Do not acquire them from yourself or a “related party”
How secure is the exchange/wallet you are storing your cryptocurrencies in. Some have been hacked and coins lost.

No matter what it is essential to do you research and not take a gamble with your retirement nest egg unless you have covered all your bases.

Audit Tip:

Auditors and trustees can have access to the single public ledger that records Bitcoin. Websites such as Blockchain, BlockExplorer and Blockonomics allow input of a transaction ID to get detailed data of that Bitcoin transaction. Third party verification for auditors is therefore also possible. You can obtain a transaction list from the SMSF wallet provider and verify each holding. I am sure further tools will become available.

Here is another article worth reading as part of your research:

Bubbles, busts, investor psychology…and bitcoin by Shane Oliver

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

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

2 Comments

by SMSF Coach - Liam Shorte on November 21, 2017 • Permalink

Posted in Asset Allocation, Botcoin, International Investing, Investment Strategies, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on November 21, 2017

https://smsfcoach.com.au/2017/11/21/smsf-research-bitcoin-dollars-gold-what-is-the-future-of-money%ef%bb%bf/

3 SMSF Estate Panning issues clarified in recent Binding Death Benefit Case

It always amazes me that very often when I take an SMSF under my advice that I find that the estate planning and use of Binding Death Benefit Nominations has been haphazard, lacking in essential detail, ignorant of the SMSF deed requirements or just missing. People spend their lives amazing a nestegg only to be lax in ensuring it goes to who they want when they die.

A recent decision has clarified three issues regarding the validity of binding death benefit nominations. I have relied on the following summary from Townsend Law’s Michael Hallinan for interpretation of the decision.

A recent decision of the South Australian Court of Appeal (Cantor Management Services Pty Ltd v Booth [2017]) has passed important comment on no less than three different issues regarding the validity of a binding death benefit nomination (BDBN).

The critical issue was whether a BDBN was valid. If valid, then the death benefit was payable to the estate of the deceased member. If invalid, then the trustee would decide the allocation of the benefit.

The validity turned upon the issue of whether the BDBN had been served on the corporate trustee. The BDBN had been signed by the member and then left in the possession of the accountants of the SMSF at their office which was also the registered office of the corporate trustee.

Issue No 1

The sole director of the corporate trustee had argued that as the BDBN had not been provided to the director nor had the accountants been expressly authorised to accept and hold the BDBN on behalf of the corporate trustee, then the BDBN had not been properly served on the corporate trustee.

The Court did not accept the argument put by the corporate trustee. The Chief Justice held that it was sufficient to constitute service on the corporate trustee for the BDBN to be held by the accountants of the SMSF at the registered office of the corporate trustee. The other justices agreed with the Chief Justice.

Issue No 2

The second issue was that the Court opined that the accountants had a duty to keep the BDBN safe and also had a duty to bring to the attention of the trustee of the SMSF that they held the BDBN. If the Court had held that service had not been properly effected, the defendant may have been able to sue the accountants for their negligence in failing to advise the trustee that they were holding the BDBN. Luckily for them the Court said that service was good anyway.

Issue No 3

The third issue was that Court agreed with the decision of Munro v Munro, which held that SIS regulation 6.17A does not apply to SMSFs (unless the trust deed of the SMSF explicitly or implicitly incorporates the regulation). It is surprising that a few industry die-hards still argue that reg 6.17A might still apply to SMSFs despite the number of times the courts have said otherwise.

The original article by Michael Hallinan of Townsends Business & Corporate Lawyers can be found here and you can contact them on (02) 8296 6222. I highly recommend signing up for their newsletter.

Make sure to check your with your own current death benefit arrangements or contact us for a review.

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

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

Leave a comment

by SMSF Coach - Liam Shorte on October 5, 2017 • Permalink

Posted in Binding Death Nominations, Estate Planning, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on October 5, 2017

https://smsfcoach.com.au/2017/10/05/3-smsf-estate-panning-issues-clarified-in-recent-binding-death-benefit-case/

Trust deeds in the new SMSF world – Benefit payments and estate planning

Your superannuation trust deed along with the superannuation laws form the governing rules that self managed super funds (SMSFs) needs to operate by. The introduction of the $1.6 million transfer balance cap (TBC) and new transition to retirement income stream (TRIS) rules are a ‘game changer’ for SMSFs when discussing benefit payments and estate planning. With the new super rules in effect as of 1 July 2017, now is the right time to review if your trust deed needs to be enhanced or amended to deal with the new approaches and strategies you may need to implement.

Read the deed

The first step in reviewing your superannuation trust deed will be to read it. Trust deeds are legal documents which can be complex to read, so you may want help from an advisor with this.

It is likely that most deeds will not result in a breach of any superannuation laws and would provide the trustee with powers to comply with relevant tax and superannuation laws as they change over time.

The next step would be to review the deed in consideration with your own circumstances.

For example, a common scenario may be a restrictive deed that only provides the trustee with a discretion to pay death benefits. Therefore, if a member of that SMSF wanted to create a binding death benefit nomination, it would be irrelevant due to the deed’s governing rules.

In any event, deeds which are clearly out of date will need to be amended as soon as possible.

Deeds post 1 July 2017

Post 1 July 2017, there are many approaches and strategies that will differ from the past and it is essential to ensure that your SMSF deed does not restrict you in anyway. We note the following areas should be considered:

Paying death benefits

The $1.6 million TBC now restricts the amount of money that can be kept in super on the death of a member. This is crucially important as when a member dies, their TBC dies with them. SMSF members should review their estate planning and further review their trust deed for the following:

Does it allow for binding death benefit nominations (BDBN)?
Do BDBNs lapse every 3 years in accordance with the trust deed when the legislation does not prescribe it?
Does it consider the appropriate solution when there is a conflict between a reversionary pension and a BDBN and which will take precedence?

Reversionary pensions

Reversionary pensions are pensions which continue being paid to a dependant after your death. Under the TBC, reversionary pensions will not count towards a member’s TBC until 12 months after the date of the original recipient’s death. Importantly, the transfer of the pension from the deceased to the new recipient will count towards the TBC. The value of the credit to the TBC will be the value of the pension at the date of death, not the value after 12 months. This increases the complexity of reversionary pensions prompting a review of trust deeds to consider:

Does it allow for a reversionary pension to be added to an existing pension or are there restrictions?
Should it automatically ensure that a pension is reversionary so that it is paid to a surviving spouse?

Pensions

The TBC also has implications for strategies in commencing pensions and making benefit payments. Trust deeds may need to be reviewed for:

Ensuring that commutations are able to be moved into accumulation phase rather than being forced as lump sums out of superannuation.
Are there any specific provisions relating to the TBC? There may be value in ensuring that the deed restricts pensions from being commenced with a value greater than the TBC.
Are there provisions which detail where commutations must be sourced from first?
Are there restrictive pension provisions that the trustees must comply with?

Transition to retirement income streams

Tax concessions for TRISs where the recipient does not have unrestricted access to their superannuation savings (known as meeting a condition of release with a nil chasing restriction) have also been removed. Trust deeds may need to be reviewed for:

Does the deed allow for the 10% maximum benefit payment to fall away once a nil condition of release is met?
Does the deed deal with a TRIS’s character when a nil condition of release? (Does it convert into an account based pension?)

How can we help?

SMSF Specialist Advisors can help you understand how the new laws may impact you and partner with a lawyer/Deed provider to review and amend your trust deed as required. Please feel free to give me a call to arrange a time to meet so that we can discuss your particular requirements, especially in regards to issues that may arise out of the latest super laws, in more detail.

For further educational information please subscribe to this blog and also visit the SMSF Association’s Trustee Knowledge Centre (http://trustees.smsfassociation.com/) to keep on top of the latest changes and information to reach your retirement goals and get the most out of your self managed super fund.

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 this the year to get organised or it will be 2028 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™

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

Leave a comment

by SMSF Coach - Liam Shorte on September 29, 2017 • Permalink

Posted in Estate Planning, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on September 29, 2017

https://smsfcoach.com.au/2017/09/29/trust-deeds-in-the-new-smsf-world-benefit-payments-and-estate-planning/

Why do SMSF Trustees need an enduring power of attorney (EPOA)?

Not only do SMSF members need to have an up-to-date will but everyone who is a member of an SMSF needs to also put into place an enduring power of attorney.

The Australian Law Reform Commission’s (ALRC) recommendations in its final report titled “Elder Abuse – A National Legal Response” are positive steps towards helping mitigate the risks that could face ageing self-managed super fund (SMSF) members.

It involves changes to the superannuation laws to ensure that trustees consider planning for the loss of capacity of an SMSF member and estate planning as part of a fund’s investment strategy, and for the ATO to be told when an individual becomes a trustee of an SMSF because of an enduring power of attorney (EPOA).

TRUSTING SOMEONE TO DEAL WITH YOUR FINANCIAL MATTERS IF YOU CAN’T
An enduring power of attorney (EPOA) deals with your finances if you lose capacity or are unable to attend to financial matters personally and/or as a trustee of your SMSF. Your attorney is able to deal with your assets in the same way that you deal with them (subject to any directions or limitations and being appointed as a director of the SMSF Corporate Trustee). This includes signing tax returns and financial statements of the fund, buying and selling real estate or shares, accessing bank accounts and spending money on behalf of yourself personally and on your behalf as trustee of your SMSF.

For an EPOA to take your place as Trustee you must resign and they are appointed in your place. They cannot manage affairs of the SMSF using the EPOA alone, they must be made a trustee or a trustee director.

This is because if a member loses their mental capacity, perhaps through having a stroke or suffering onset of dementia, they will no longer be able to be a trustee of their fund, or a director of the corporate trustee, putting at risk the complying status of the fund.

Another occasion may be if a member departs overseas indefinitely. In this case their enduring attorney in Australia can become the trustee or director of the trustee in their place to avoid fund residency issues under subsection 295-95(2) of the Income Tax Assessment Act 1997.

Scenario we handled: Judith’s father was in the UK and had a fall. She flew back to check he was ok but found it was worse than expected and that he would need multiple surgeries and rehab over a protracted period and she would need to be there most of the time to manage the process and care for him. Her son, James, was her EPOA so she resigned as Director of the Trustee Company and James used the Enduring Power of Attorney to allow him to be appointed as director with her 2nd husband for the 3 year period she was away.

If you do not address the situation within the six-month period of grace allowed under section s17A(4) of the Superannuation Industry (Supervision) Act 1993 (SISA), the consequences for the fund and your retirement savings could be very serious indeed and attract severe penalties.

Unlike a general power of attorney, an EPOA continues to operate in the event that you lose capacity.

WHY SHOULD YOU HAVE A TRUSTED ENDURING POWER OF ATTORNEY?

It is important to have an EPOA in place for each fund member because without it, in the event that you lose capacity, your next of kin would have to make an application to the NSW Civil and Administrative Tribunal (or relevant government body in your state) to obtain a financial management order to deal with your assets. This lengthy (often more than the 6 month grace period allowed under the SIS Act) and costly process can be avoided if you have the foresight to establish your EPOA in advance. It can also lead to major friction in the family and especially with blended families and outcomes you did not expect or wish for under any circumstances!

EPOA SHOULD BE SOMEONE YOU TRUST AND CONSIDER APPOINTING SUBSTITUTE ATTORNEYS

We recommend that you seek legal advice and arrange for an EPOA to be prepared covering your personal finances and SMSF role. You may like to appoint your spouse, adult child, accountant, lawyer, business partner or close friend as your attorney in the first instance. Our legal advisers also suggest appointing substitute attorneys in case your primary attorney is unwilling or unable to act. We had one case where father had dementia but son who was EPOA was on secondment to PNG so could not take up the power of attorney

Your nominated attorney should be someone whom you trust and believe would make decisions in your best interests. I often recommend that you leave written details of your preferences for dealing with asset sales, buy backs, dividend reinvestment plans, term deposit maturities, minimum pensions and add clear instructions if they should work with trusted advisers like Financial planners, accountants and auditors before making major decisions.

You should of course consider having reversionary pensions or non-lapsing binding death nominations to ensure as much as possible that your wishes are carried out.

So when next reviewing your wills and powers of attorney just ask your solicitor if they are confident that the EPOA would also cover Superannuation matters or if that should be specifically mentioned.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

3 Comments

by SMSF Coach - Liam Shorte on June 15, 2017 • Permalink

Posted in Binding Death Nominations, Enduring Power of Attorney, Reversionary Pension, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on June 15, 2017

https://smsfcoach.com.au/2017/06/15/why-do-smsf-trustees-need-an-enduring-power-of-attorney-epoa/

Superannuation changes for Self-Managed Super Funds – useful ATO links

The changes to the superannuation system, announced by the Australian Government in the 2016–17 Budget, have now received royal assent and the finer details of how to implement them have been released. While the government claim these changes were designed to improve the sustainability, flexibility and integrity of Australia’s superannuation system, they did not work with industry or the ATO before announcing them and as such it has been a nightmare to try to get your head around what the actual changes are and how strategies need to be implemented to manage them.

As a result we are getting last-minute guidance from the ATO and software providers as well as SMSF, Industry and Retail Super providers. The government have back-flipped on some measures, amended others because of collateral damage and tightened other measures for obscure reasons. With most of these changes commencing from 1 July 2017 I have tried to put some useful links together.

A short video overview of the changes is provided below. I have provided more detailed information links and will update these as they are progressively published to help you understand the changes, how they may affect you, and what you may need to know and do now, or in the future as a trustee of a self-managed super fund (SMSF). Even more detailed information is available to help you understand the changes, including for some topics, law companion guidelines (see below) to provide certainty about how the changes will be administered.

Overview of super changes

Law Companion Guides

For those who wish to dive in to the detail please view the Law Companion Guides below. A law companion guideline is a type of public ruling. It gives the ATO view on how recently enacted law applies. It is usually developed at the same time as the drafting of the Bill.

The ATO normally release a law companion guideline in draft form for comment when the Bill is introduced into Parliament. It is finalised after the Bill receives Royal Assent. It provides early certainty in the application of the new law. Please make sure to look for updates before relying on this information.

LCG 2016/8 – Superannuation reform: transfer balance cap and transition-to-retirement reforms: transitional CGT relief for superannuation funds
LCG 2016/9 – Superannuation reform: transfer balance cap
LCG 2016/D10 – Superannuation reform: defined benefit income streams – non commutable, lifetime pensions and lifetime annuities
LCG 2016/11 – Superannuation reform: concessional contributions – defined benefit interests and constitutionally protected funds
LCG 2016/12 – Superannuation reform: total superannuation balance
LCG 2017/D1 – Superannuation reform: defined benefit income streams – pensions or annuities paid from non-commutable, life expectancy or market-linked products
LCG 2017/D3 – Superannuation reform: Transfer Balance Cap – Superannuation death benefits

Super changes Q&As

The ATO have also released access to answers to some frequently asked questions and they can be found in this document Super Changes Q & As

Example: Q. How are my pensions and annuities valued for transfer balance cap purposes?

ANSWER : You need to contact your fund about the value of your pensions and annuities.

The value of your pension or annuity will generally be the value of your pension account for an account-based pension.

Special rules apply to calculate the value of: • lifetime pensions • lifetime annuities that existed on 30 June 2017, and • life expectancy and market linked pensions and annuities where the income stream existed on 30 June 2017

Lifetime pension and annuities These are valued by multiplying the annual entitlement by a factor of 16.This provides a simple valuation rule based on general actuarial considerations. Your annual entitlement to a superannuation income stream is worked out by reference to the first payment entitlement for the year. The first payment is annualised based on the number of days in the period to which the payment refers. (I.e. the first payment divided by the number of days the payment relates to multiplied by 365).

This means that a lifetime pension that pays $100,000 per annum will have a special value of $1.6 million which counts towards your transfer balance cap in the 2017-18 financial year.

For a lifetime pension or annuity already being paid on 1 July 2017, the special value will be based on annualising the first payment in the 2017-18 financial year. This may include indexation, so may be slightly higher than your current annual lifetime pension payments.

Life expectancy and market linked pensions and annuities being paid on or before 30 June 2017 are valued by multiplying the annual entitlement by the number of years remaining on the term of the product (rounded up to the nearest year).

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

2 Comments

by SMSF Coach - Liam Shorte on April 21, 2017 • Permalink

Posted in Checklists, Contribution Strategies, Estate Planning, News & Stats, Pension Strategies, Pensions, Retirement Planning, Salary Sacrifice, Small Business CGT, SMSF, SMSF Management, Superannuation, Superannuation Splitting, Tax Planning, Trustee

Posted by SMSF Coach - Liam Shorte on April 21, 2017

https://smsfcoach.com.au/2017/04/21/superannuation-changes-for-self-managed-super-funds-useful-ato-links/

Using CGT Relief for your Transition to Retirement Pension

This is part of series on the necessary changes to strategies and opportunities that have resulted from the pending 1 July 2017 changes which will see earnings on transition to retirement (TTR) pensions subject to 15% tax in the fund.

I know this has created concerns with many trustees and advisers around the question of should you access the relief and if so how to actually access the CGT relief provisions. People want to know what factors they must take in to consideration.

Some of the concerns have been clarified by the ATO. One concern was that trustees would need to commute their TTR pensions and roll back into accumulation before 1 July to access the CGT relief provisions. Those relief provisions would allow the cost base of all or selected eligible assets to be reset to the current market value on a date chosen by the trustees between now and 30 June. This CGT relief allows trustees to in effect, retain the tax-free status of unrealised capital gains accumulated prior to 30 June 2017.

The newly issued ATO issued Law Companion Guideline (LCG) 2016/8 has provided some excellent clarification. If your SMSF is operating as an unsegregated fund, the LCG states that member will not need to commute back to accumulation phase to be able to elect to reset the cost base of assets the wish to elect to apply the CGT relief.

It is intended that the same basis should be available for segregated funds, but the ATO has indicated is still reviewing options for how to make this work in practice. I will try to keep this blog updated with any guidance from the ATO on this matter but please make sure you adviser/administrator is on top of these matters. An SMSF that only has TTR or account-based pensions (and no accumulation phase) is automatically classified as a segregated fund. However if you put in a new contribution, as many are, this year then that money goes in to accumulation and the fund becomes automatically unsegregated. So look at your contribution intentions.

All is not lost as the fund would still have been segregated until that contribution was made and you may elect for that date to be the new CGT cost base valuation date.

Conversations need to start with YOUR advisers and administrators to check whether:

you should to continue a TTR pension after 1 July 2017 or to commute back to accumulation phase.
you may have already or can trigger a further condition of release such as leaving any one employment position after age 60. To move from Accumulation or TTR to Account Based Pension

Why are TTR pensions still relevant and for whom

The tax advantages of a TTR pension will reduce when the earnings in the fund start to be taxed on 1 July, but advantages may still arise for members who:

Are over age 60 and can draw tax-free income from the TTR
Wish to start accessing super to top-up income or increase income to pay off debts
Want to be able to nominate an automatic reversionary for estate planning purposes
Can use salary sacrifice or personal deductions to contribute a higher net amount into super than they need to withdraw.

If the TTR pension is no longer required, care should be taken with the commutation and timing of the commutation to ensure the CGT relief provisions can be accessed on any assets they wish to claim the relief for.

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

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

5 Comments

by SMSF Coach - Liam Shorte on March 22, 2017 • Permalink

Posted in Pension Strategies, SMSF, Tax Planning, Trustee

Posted by SMSF Coach - Liam Shorte on March 22, 2017

https://smsfcoach.com.au/2017/03/22/using-cgt-relief-for-your-transition-to-retirement-pension/

15 Reasons to update your SMSF Deed for new strategies in 2017

I knew with all the recent changes to Superannuation that many of my clients would need to update their SMSF Trust Deeds and started doing my research for a blog. Then I came across a recent blog from Dr. Brett Davies at Legal Consolidated today and I could not really improve on it. So with his permission, I am re-blogging his content here.

Self-Managed Super Fund (SMSF) Deeds previously required updates in:

– 1999 – ‘Excluded Funds’ became ‘Self-Managed Super Funds’, preservation & in-house assets

– 2007 – ‘Simpler Super’

– 2017 – Legislation passed in 2016, requires the changes below

The 15 changes to SMSF Deeds required after the 2016 Budget are to:

Internally ‘rollback’ pensions to accumulation;
Segregate assets between accumulation and pension phases;
Reject contributions;
Refund contributions;
Deal with excess transfer balance tax and excess non-concessional contributions;
Allow income streams and Account Based Pension (grandfathered);
Specify guardians for incapacity and death;
Identify the Power of Attorney when living overseas for more than 2 years;
Resettle pensions with flexible timing without mingling with accumulation account;
Allow reversionary beneficiary nominations;
Provide for CGT relief;
Deal with segregated and unsegregated assets;
Cease or keep Transition to Retirement Income Streams;
Calculate member balances, across different funds; and
Calculate internal pension rollbacks to accumulation.

These SMSF updates are all required to give maximum flexibility to your accountant and adviser.

Why does my SMSF Specialist Advisor / Accountant want to apply these SMSF updates?

Pre-2012 SMSF Deeds fail to deal with these 10 issues:

Removing clauses requiring the Trustee to do something that is no longer legal or beneficial;
Changing the sections that are ‘regimented’ with unnecessary rules vs being ‘permissive’. There is no point stating mandatory SIS requirements. In fact, it is dangerous to re-state legislation. This is because it dates your deed;
Accounting for an increased concessional contribution cap;
Removing insurance cover where the conditions are out of date;
Incorporating clauses about losing the pension at death or when the minimum payment has not been made;
Allowing for excess concessional contributions taxed at member’s marginal rate (-15% offset);
Updating the Investment Strategy to incorporate the ATO’s new Audit approach;
Changing market valuation clauses to leave the mechanism for the Accountant;
Allowing remuneration for non-trustee duties; and
Allowing non-lapsing Death Benefit Nominations.

Update your Deed to ensure your SMSF is compliant. Then you get the most out of your SMSF.

There is no risk of resettlement

‘Resettlement’ is when you create a new ‘trust estate’ out of an old trust. This applies to SMSFs and causes significant tax implications. However, there is no risk of resettlement under the High Court authority of Commercial Nominees (2010).

Updating your SMSF Deed through Legal Consolidated does not result in the resettlement of your SMSF. We retain the parts of the old Deed that are required by legislation and previous court decisions. But this does not affect a resettlement.

Make sure to check your with your own current deed provider or ask your adviser to check out Legal Consolidated’s offer.

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

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

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

3 Comments

by SMSF Coach - Liam Shorte on March 10, 2017 • Permalink

Posted in SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on March 10, 2017

https://smsfcoach.com.au/2017/03/10/15-reasons-to-update-your-smsf-deed-for-new-strategies-in-2017/

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Self-Managed Super Fund (SMSF) Deeds previously required updates in:

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