Liam Shorte

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All posts tagged Account Based Pension

Stamp Duty Requirements on Change of SMSF Trustees

Don’t you just love dealing with different sets of State and Territories legislation when dealing with property. I recently went through a whole strategy with a client before they told me that the property was in a different state and I had to start again as the rules were different in that state.

As someone who highly recommends the use of a Corporate Trustee for SMSFs I thought it would be handy to provide a guide to the various state and territory stamp duty provisions when changing trustees.

The following tables set out the contact details for the stamp duty offices and provisions of the relevant legislation in each State and Territory. Please make sure to check that they are still current with your legal and tax advisers before changing trustees. I remind you yet again that this is General Information only.

In summary the amount of duty payable on the appointment of a new trustee and resignation of a current trustee is:

NSW: Duty of $50 payable

VIC: No duty payable

WA: Duty of $20 payable

SA: No duty payable

QLD: No duty payable

TAS: Duty of $50 payable

ACT: Duty of $20 payable

NT: No duty payable

DETAIL

NSW	Change of trustees
Duty payable	$50
Relevant provisions	Section 54 (2A) NSW Duties Act 1997
General description of legislation	Duty is charged in respect of a transfer of dutiable property to a trustee of a self managed superannuation fund as a consequence of the retirement of a trustee or the appointment of a new trustee.
Documentation	No form required. Cover letter including background to the transaction and return address.Client identification required: Individuals – certified copy of document proving date of birth. Companies – ABN/ACN
Legislation	Duties Act 1997 (NSW)
Legislation website	http://www.osr.nsw.gov.au
Office	Office of State Revenue
Website	http://www.osr.nsw.gov.au

VIC	Change of trustees
Duty payable	Not dutiable
Relevant provisions	Section 33 Vic Duties Act 2000
General description of legislation	No duty is chargeable in respect of a transfer of dutiable property to a trustee of a complying super fund solely because of the retirement of a trustee or the appointment of a new trustee.
Documentation	Refer to ‘Evidentiary Requirements for Dutiable and Exempt Transactions’ on SRO Website.
Legislation	Duties Act 2000 (VIC)
Legislation website	http://www.legislation.vic.gov.au
Office	State Revenue Office (SRO)
Website	http://www.sro.vic.gov.au

WA	Change in trustees
Duty payable	$20
Relevant provisions	Section 119 WA Duties Act 2008
General description of legislation	Nominal duty is chargeable on a transfer of dutiable property to a trustee as a consequence of the retirement of a trustee or the appointment of a new trustee (if the transfer does not confer an interest in trust property to any other person to the detriment of the beneficial interest of any person).
Documentation	Refer to ‘Duties Information Requirements’ – change of trustee.
Legislation	Duties Act 2008
Legislation website	http://www.slp.wa.gov.au/legislation/statutes.nsf/default.html
Office	Office of State Revenue
Website	http://www.finance.wa.gov.au/cms/section.aspx?id=209

SA	Change in trustees
Duty payable	Not dutiable
Relevant provisions	Section 71(5)(d) SA Duties Act 1923
General description of legislation	A conveyance of property for the purpose of effecting the retirement of a trustee or the appointment of a new trustee is exempt from duty, where the beneficial interest of any beneficiaries of the trust has not changed.
Documentation	Application for Opinion form and document that conveys land to new trustee (is stamped as exempt).
Legislation	Stamp Duties Act 1923 (SA)
Legislation website	http://www.revenuesa.sa.gov.au/services-and-information/legislation.html
Office	Revenue SA
Website	http://www.revenuesa.sa.gov.au

QLD	Change of trustees
Duty payable	Not dutiable
Relevant provisions	Section 117
General description of legislation	Transfer duty is not imposed on a dutiable transaction for the sole purpose of giving effect to a change of trustee (where the interests of beneficiaries do not change and transfer duty has been paid on all trust acquisitions for which transfer duty is imposed for the trust before the transaction).
Documentation	Must be stamped. Lodgement form and statutory declaration required.
Legislation	Duties Act 2001 (QLD)
Legislation website	http://www.legislation.qld.gov.au/OQPChome.htm
Office	Office of State Revenue
Website	http://www.osr.qld.gov.au/duties/index.shtml

TAS	Change in trustees
Duty payable	$50
Relevant provisions	Section 37 TAS Duties Act 2001
General description of legislation	Duty of $50 is charged in respect of a transfer of dutiable property to a special trustee as a consequence of the retirement of a trustee or the appointment of a new trustee. Special trustee includes the trustees of a superannuation fund.
Documentation	See ‘Documentary Evidence Requirements Guideline’
Legislation	Duties Act 2001 (TAS)
Legislation website	http://www.thelaw.tas.gov.au
Office	State Revenue Office
Website	http://www.sro.tas.gov.au

ACT	Change in trustees
Duty payable	$20
Relevant provisions	Section 54(4)
General description of legislation	Nominal duty is charged for the transfer of dutiable property to a person as a consequence of the retirement of a trustee or the appointment of a new trustee for a self managed superannuation fund.
Documentation	 Conveyance lodgement form Memorandum of transfer – Form52T Change of trustee deed Evidence that the property was purchased by the fund
Legislation	Duties Act 1999 (ACT)
Legislation website	http://www.revenue.act.gov.au/legislation/
Office	ACT Revenue Office
Website	http://www.revenue.act.gov.au

NT	Change in trustees
Duty payable	Not dutiable
Relevant provisions	Schedule 2, Exemption 6
General description of legislation	A conveyance that is made solely for the purpose of effecting the appointment of a new trustee on the retirement of a trustee or as an additional trustee if – no beneficial interest passes in the property conveyed; and no change of beneficial interest occurs as a result of the transaction; and the property conveyed was acquired by the retiring trustee or existing trustee in the capacity of trustee by virtue of an instrument that was stamped or was exempt from duty. (This rewritten stamp duty provision refers to ‘a discretionary trust’ however the application of the provision remains the same as Item 9A of the repealed Stamp duty Act – which referred to a trust.)
Documentation	Refer to ‘Stamp Duty Lodgement Guide’
Legislation	Stamp Duty Act (NT)
Legislation website	http://www.treasury.nt.gov.au
Office	Territory Revenue Office
Website	http://www.treasury.nt.gov.au

IMPORTANT

This information is current as at the date of publication but may be subject to change. This article is general in nature and has been prepared without taking into account a potential your objectives, financial situation or needs. Before making a recommendation based on this article, seek personal legal and tax advice and consider its appropriateness based on the your objectives, financial situation and needs.

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

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 jscreationzs at FreeDigitalPhotos.net

4 Comments

by SMSF Coach - Liam Shorte on March 9, 2015 • Permalink

Posted in SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on March 9, 2015

https://smsfcoach.com.au/2015/03/09/stamp-duty-requirements-on-change-of-smsf-trustees-as-of-01-jan-2015/

6 Key Considerations for your SMSF Investment Strategy

So your SMSF Administrator/Accountant is now having to use an Independent Auditor and suddenly you are being asked for more than just the 1 page SMSF Investment Strategy template provided by the Accountant that you used to sign without filling in the blanks and without considering its purpose.

The reason an Investment strategy is required by an SMSF and also required to be reviewed regularly is that personal circumstances changes as do markets and economies. You need to consider your investment portfolio in the light of these changes and this is a way of prompting you to do so as part of the annual review.

Each year we experience a lot of market and political volatility with differing views on where the economy is headed, leading to a subsequent impact on share and property markets.

As an investor is can be easy to get caught up in the short-term noise and lose focus. The SMSF Investment strategy requirement is a way of prompting you, the Trustee(s), to really consider what objectives you are trying to achieve and the strategies and asset allocation that you need to follow to achieve them.

Having a well thought out SMSF investment strategy is a key element in helping you achieve a smooth transition in to and through retirement.

Here are 6 important considerations in establishing your SMSF investment strategy.

Liquidity Needs: What life stage are each of the members in?
The members’ personal circumstances and life-stage will have the most important impact on your SMSF investment strategy. If you are all 20 years out from retirement, you may choose to invest for growth and ride with volatility of the share and property markets to benefit from the risk/return premium attributed to those sectors which are less liquid than cash and bonds. If however one or more of the members is approaching retirement or using a Transition to Retirement Pension strategy you may choose a more cautious approach to ensure sufficient income is available for pensions regardless of market ups and downs. That requires more active management to maintain some liquidity still seek a decent return through a diversified portfolio. For example we always recommend 12-36 months pensions are retained in cash or fixed interest to avoid selling assets in a downturn and reducing your capital value.
What’s the members’ risk tolerance
The ability of all involved to sleep comfortably at night without worrying about their investments should always be taken into consideration regardless of your age. If you or another member have no experience or confidence in certain market sectors, then short-term your investment strategy should be tailored accordingly. But you should then seek more information, education and guidance to build your knowledge and then your confidence in those missing sectors so that you can adopt a well diversified strategy long-term. It is generally accepted that the greater the risk of an asset, the greater the potential returns but this risk abates as time passes so riskier assets can pay off handsomely over time with less risk than perceived short-term. A portfolio designed to reduce your concerns while not providing optimal returns provides THE SLEEP FACTOR!
Asset allocation
Investing in the right asset classes is a major factor in the returns you will receive. Aussie Equities and Cash are not a full solution long-term. Cash and TD rates are currently low and our share market had a poor year last year and our economy is struggling while international equities, property and infrastructure are benefiting from improving economies, low interest rates and the dropping Aussie dollar. Your asset allocation should be reviewed annually and rebalanced to account for the returns from various asset classes and their future forecast. We are not saying make dramatic changes but do take tilts to certain sectors that will benefit from the current economic climate.
Avoid sector bias
The Big 4 Banks, Woolworths and Telstra do not make a diversified portfolio! Once you have decided which asset classes to invest in, it is important to diversify within those asset classes. Frequently I see investment portfolios with a narrow range of large Australian companies just like mentioned above providing very poor diversification – and leaving the overall investment portfolio heavily reliant on the fortunes of one or two sectors. Self Managed Superannuation Funds (SMSF) set up for the benefit of control without the willingness to take advice or learn about portfolio design, frequently lack diversification with an over reliance on one property, Australian shares and/or cash. With Control comes responsibility to learn and adapt.
Tax efficiency
Often the spur to look at complex and structured investments near June 30^th is the tax consideration. The amount of tax you pay on investment has a major impact on your SMSF investment strategy. Here is the tax basics for SMSFs:

15% tax on earnings and capital gains on assets held for less than 12 months in accumulation phase
10% tax on Capital Gains on assets held for greater than 12 months in accumulation phase
0% tax on earnings and capital gains on assets sold in pension phase

For example, if you were lucky enough to have bought 1000 CBA shares during the GFC at $30 and sell them now at $90 in accumulation phase you will pay $6,000 in tax with a net profit of $54,000. While if you were lucky to move in to pension phase you receive the full $60,000 tax-free. Tax is an important consideration and an understanding of the tax impacts which you purchase your asset in, and the tax payable when you dispose of the asset, are very important but should not be the sole driver of your Self Managed Superannuation Fund investment strategy.

Insurance Needs of the Members

Trustees of SMSFs now have to consider, as part of its Investment strategy “whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.”

This is a significant addition to the previous provisions, and has been prompted by the Super System Review panel noting that less than 13% of SMSFs have insurance. This is a subject on its own so please refer to my earlier article for guidance Self Managed Super Funds must include an Insurance Needs Analysis as part of the fund’s SMSF Investment Strategy.

It is important to update your investment strategy on an annual basis or more often if making large contribution or large investments to make sure you are maximising the probability of achieving your financial goals whilst reducing the risk of capital losses.

You can seek professional advice to help with your investment strategy, but remember: as trustee, you are still ultimately responsible for your fund’s investment decisions so next time you sign off a template provided by your administrator remember it is you that are responsible not them.

Please contact us on 02 9894 1844 or Liam@verante.com.au if you would like to review your current SMSF investment strategy, or need assistance in preparing an SMSF investment strategy that matches your members’ needs.

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.

I’ll leave the last word or should I say video to the ATO

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　96993693, Mobile: 0413 936 299

PO Box 6002, NORWEST NSW 2153. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 41 621 447 345, AFSL 476223

Image courtesy of pakorn at FreeDigitalPhotos.net

4 Comments

by SMSF Coach - Liam Shorte on March 4, 2015 • Permalink

Posted in Audit, Investment Strategies

Posted by SMSF Coach - Liam Shorte on March 4, 2015

https://smsfcoach.com.au/2015/03/04/6-key-considerations-for-your-smsf-investment-strategy/

Multiple SMSFs may be a Smart Strategy for Property Investors

More than one fund! Am I kidding you? No I’m not as there are very valid reasons for using more than one SMSF for your investment needs.

To minimise Land Tax issues as detail further below but subject to State provisions;
To allocate certain assets for estate planning purposes to specific beneficiaries;
To keep a blended family superannuation interests separate;
To keep higher risk assets separate from other SMSF assets. (Retail shop with increased public liability risk);
To cater for separate risk tolerances for member of a family rather than running segregated accounts

So more on uses of multiple SMSFs by property investors

Land tax is a form of taxation applied to the value of any land that an individual or entity may own. For an individual their primary place of residence is normally exempt from Land Tax. Depending on your state or territory, land is a very broad term that encompasses vacant blocks of land, commercial and residential properties. I will be talking about NSW in this article.

Facts on NSW Land tax 2024

The Tax Year Threshold Rate for 2024 is $1,075,000

Tax on land value above the threshold $100 plus 1.6% up to the premium threshold.

Premium Threshold is $6,571,000

Tax on land value above the threshold is $88,036 for the first $6,571,000 then 2% over that

Strategy to manage land tax:

Land tax can be minimised by taking advantage of land tax thresholds that apply per entity not in aggregation. So Land tax can be controlled through the use of a separate Self Managed Super Funds (SMSF) for additional properties once you reach the exempt threshold ; .

Currently the Land Tax Free threshold sits at a land value of $1,075,000. Therefore any land value that exceeds this can be taxed at a rate as high as 2%. However, each SMSF is treated as a separate entity meaning each SMSF has its own $1,075,000 threshold. This allows property investors to hold their land across multiple SMSF’s in order to never exceed the threshold in any of these funds and in effect become exempt from land tax.

Example:

Sharon and Robert through their Love Property Superannuation Fund own an investment property in Castle Hill with land valued at $802,000 as part of a diversified strategy of their Self Managed Super Fund. Intent on expanding their property empire the couple has recently received pre-approval for an investment loan to purchase an additional property in Rouse Hill with land valued at $813,000. With this purchase the Love Property SMSF would have a combined Taxable land value of $1,615,000 obligating them to $8,740 in land tax.

However on speaking to their “SMSF Association Accredited SMSF Specialist Adviser“ (Yes you guessed ME!), Sharon and Robert set up a second Self-Managed Super Fund, Love More Property SMSF to purchase the second property. This means the land owned in their first SMSF is below the tax threshold and the land in their second SMSF is valued at below the tax threshold which effectively exempts Sharon and Robert from land tax. Running a second fund can be done for less than $2,000 per annum so a net saving of $6,740 per year or at least $67,400 over a 10 year property buy and hold strategy.

So you can see that multiple SMSFs are an effective tool to boost the returns of your property investment.

Be care of State Land Stax Legislation or Provisions

Strategy may not work in if there are grouping provisions. So please seek specialist tax advice.

https://www.sro.vic.gov.au/legislation/grouping

If you want to know see more about property in a Self Managed Super fund the go to the page https://smsfcoach.com.au/property-in-a-smsf/ for articles that cover most of the strategies and questions on this subject including Tips and Traps to be aware of in advance.

Feel you are falling behind? Then read 10 Tips For Salvaging Your Retirement Plans and then contact me for personal advice.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98993693, Mobile: 0413 936 299

PO Box 6002 NORWEST NSW 2153

40/8 Victoria Ave. Castle Hill NSW 2154

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

Image courtesy of cooldesign at FreeDigitalPhotos.net

1 Comment

by SMSF Coach - Liam Shorte on February 27, 2015 • Permalink

Posted in Property, Tax Planning

Posted by SMSF Coach - Liam Shorte on February 27, 2015

https://smsfcoach.com.au/2015/02/27/multiple-smsfs-may-be-a-smart-strategy-for-property-investors/

SMSF Sector Maturing as Services Improving from Industry and Regulator

We are finally seeing the SMSF sector being recognised as the retirement option of preference for engaged investors. Fees and costs are constantly being addressed but what trustees and members need is more confidence in running their funds and that comes through informative content and education.

The industry and the regulator have stepped up a notch in terms of engagement and producing news and educational content for people who want to be active in controlling their future and open to learning more about managing their finances.

Just look at the new content provided by the ATO this year:

For Trustees :

The ATO released 22 short, educational, and entertaining videos, to help you navigate a wide range of events including retirement planning, investment decisions and running an SMSF. We will release more videos next year, covering new topics to help you run your SMSF smoothly and better understand your obligations.
To help people search their website for relevant SMSF information they launched SMSF assist External Link . To use SMSF assist, type in a question or select a topic to get specific information in an instant. SMSF assist and other SMSF services have been added to the ATO app.
News articles, practical case studies and Q&As are now published as they become available and can be accessed anytime through ‘News’ on the left-hand side menu of the SMSF home page.
The ATO quarterly FREE subscription service ‘SMSF News’ has a fresh look and feel, and from 2015 will be issued on a bi-monthly basis.
They will run webinars in 2015 covering different topics for trustees and professionals.

For professionals (in addition to the above services):

The ATO began engaging with SMSF professionals through a live LinkedIn question and answer event hosted by Deputy Commissioner Alison Lendon. The event created dialogue with participants, and we answered SMSF-related questions during the forum.
Building on the success of the LinkedIn forum, they embarked on a series of webinars aimed at SMSF professionals. The webinars highlighted current issues facing the industry and provided an opportunity for participants to ask questions.

Other New Initiatives:

SMSF Association: FREE SMSF TRUSTEE EDUCATION PROGRAM

To help you better understand your role as a SMSF trustee the SMSF Association has launched a free online resource.

By completing this course, you will have learnt;

The basic facts about Superannuation and Self-Managed Superannuation Funds
How an SMSF works
The investment rules for SMSFs
The administration process to keep your SMSF healthy.

If want a source of constantly updated new on what is relevant to SMSFs then you can get subscribe free to The #SMSF News which picks up most relevant SMSF articles across the web daily. Also if you are on Twitter make sure to follow us as @SMSFCoach and subscribe to this blog up on the left hand column.

Liam Shorte B.Bus SSA™ AFP

SMSF Specialist Advisor™ & Financial Planner

Tel: 02　8853 6833, Mobile: 0413 936 299

liam@verante.com.au

PO Box 6002 BHBC, Baulkham Hills NSW 2153

Liam Shorte is a partner in VERANTE Financial Planning, Corporate Authorised Representative of Genesys Wealth Advisers Limited, Licence No 232686, Genesys Wealth Advisers Limited ABN 20 060 778 216 • AFSL No.232686

Important information :

The information in this article is provided for illustrative purposes only and does not take into consideration your personal circumstances. You are encouraged to seek financial advice suitable to your circumstances to avoid a decision that is not appropriate. Any reference to your actual circumstances is coincidental. Genesys and its representatives receive fees and brokerage from the provision of financial advice or placement of financial products.

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

Image courtesy of cooldesign at FreeDigitalPhotos.net

Leave a comment

by SMSF Coach - Liam Shorte on December 15, 2014 • Permalink

Posted in News & Stats, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on December 15, 2014

https://smsfcoach.com.au/2014/12/15/smsf-sector-maturing-as-services-improving-from-industry-and-regulator/

SMSF Coaching: Busting the Seven Key Myths About Bonds

Many SMSF investors are confident with shares, property and term deposits but when it comes to bonds they are feel like they hit a brick wall when they look for solid reasons to consider this sector.

I found this series of articles from Elizabeth Moran that looks at some of the myths around bonds and addresses them in detail. The series addresses the key concerns that SMSF investors mention to me when suggest a potential investment in a bond issue or bond fund. Most of the concerns are based on misinformation on the web and false rules of thumb. So, if you would like to learn more about bonds, this series of articles which looks at the “Seven Key Myths” is a good starting point.

Myth #1 My portfolio consists of shares and cash and I don’t need a bond exposure

Myth #2 It’s a bad idea to invest in bonds when interest rates or inflation are rising

Myth #3 Bonds are too risky

Myth #4. Fixed Income returns are low and will be a drag on my portfolio’s performance

Myth #5. You need a lot of money to buy bonds directly so go for a managed fund instead

Myth #6. There is too long to wait until maturity

Myth #7 I own hybrids so I already have an allocation to fixed income

Subscribe to keep updated

Subscribe to the SMSF Coach blog on the left hand column so that you don’t miss out educational articles like this.

As a thank you to FIIG I will also add a link to their SMSF Solutions page (Not a paid endorsement just a recognition of a good effort)

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

Join Us Image courtesy of Stuart Miles at FreeDigitalPhotos.net

1 Comment

by SMSF Coach - Liam Shorte on November 27, 2014 • Permalink

Posted in Bonds, Hybrids, Investment Strategies, Retirement Planning

Posted by SMSF Coach - Liam Shorte on November 27, 2014

https://smsfcoach.com.au/2014/11/27/smsf-coaching-busting-the-seven-key-myths-about-bonds/

ATO Rules Out Cross-Insurance Arrangements within SMSF Borrowing Strategies

The Australian Taxation Office (ATO) on the 17th November 2014 confirmed that new regulations which came into effect on 1 July 2014 do not permit new insurance products acquired on or after 1 July 2014 to be used as part of a cross-insurance arrangement. This was a common strategy used to protect SMSFs engaging in Limited Recourse Borrowing Arrangements from being forced to sell a property if a member of the fund died or became disabled.

Insurance strategy rejected

The ATO confirmed that these types of arrangements are not permitted under the new rules as “the insured benefit will not be consistent with a condition of release in respect of the member receiving the benefit”.

Impact on SMSFs with existing cross-insurance arrangements

Where a trustee acquired insurance products prior to 1 July 2014 to implement a cross-insurance strategy, the ATO’s announcement seems to imply that those arrangements will continue to be permitted as those policies would be grandfathered and therefore exempt from the new regulations.

According to Colonial First State’s FirstTech team, where a trustee acquired a new policy to implement a cross-insurance strategy on or after 1 July 2014, the new rules will apply and the trustee will need to restructure their fund’s insurance arrangements in consequence of the ATO’s announcement. In this case, trustees may wish to contact the fund’s auditor or seek legal advice to confirm their options.

SMSF Trustees may wish to seek SMSF specific advice from the ATO before proceeding with any other debt reduction and liquidity strategies

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

Image courtesy of cooldesign at FreeDigitalPhotos.net

Leave a comment

by SMSF Coach - Liam Shorte on November 19, 2014 • Permalink

Posted in Retirement Planning

Posted by SMSF Coach - Liam Shorte on November 19, 2014

https://smsfcoach.com.au/2014/11/19/ato-rules-out-cross-insurance-arrangements-within-smsf-borrowing-strategies/

Pay SMSF Corporate Trustee ASIC Fees 10 years in Advance – Save on Fees and Fines

I have made it very clear for many years that I believe that it’s much better for a self-managed super fund to use a corporate trustee rather than individual trustees. Yes there is an initial set up fee of between $600 to $850 including and ASIC charge of $576 but that is a one-off and I would hope that ASIC in a move to promote use of Sole Purpose Corporate Trustees might reduce that fee. (wishful thinking maybe).

Tips for Trustees

ASIC also charges these companies annual fees. They have two different charges for proprietary limited companies. One applies to companies that only perform a special purpose and another charge applies to all other companies.

Special-purpose companies include those whose sole function is to be the trustee of a super fund regulated under the laws. These types of super funds would include SMSFs.

Special-purpose companies are only charged an annual fee of $67 (up $18 in 5 years – inflation!).

The annual fee for all other proprietary limited companies is $329 (2025-26). As an example, this higher fee applies to companies that at are a trustee of an SMSF and also trustee of your family’s discretionary trust.

Because people often use their Accountant or Administrator as a mailing address it can be easy for these annual fees to be missed or a delay to occur in notifying people to pay them . So for people who are a bit lax about checking emails or opening snail mail from their fund administrator it’s very easy to miss the deadline to pay these annual ASIC fees.

If any company pays its annual ASIC fee more than a month late the late payment fee is $98 and if two months past the deadline date it will have to pay an additional $411.

I have a number of clients who have been caught in this trap and went looking for a solution. To avoid these penalties all annual ASIC fees can be paid 10 years in advance and obtain a decent discount and peace of mind that late fees are avoided.

For example, the fee for 10 years in advance for a super fund trustee company is $463, a discount of $207 on 10 years of the standard $67 annual fee for SMSF trustee companies. This discount is equivalent to a 31% discount per year. Sounds like a good deal for a forgetful, busy or even the prudent trustee.

Bare Trustee Companies

The fee for 10 years in advance for a normal trustee company is $2,438, a discount of $852 on 10 years of the standard $329 annual fee for SMSF trustee companies. This discount is equivalent to a 26% discount per year and avoids future rises.

The relevant instructions on how to pay and the required Remittance form are available here.

Note for Accountants and Administrators:

Best practice treatment of the payment is to amortise over 10 years.

In Class you can set it up as a Custom Holding asset (non-investment) and amortise 1/10th every 30 June (or company review date if that’s your preference).

in BGL SF360, you can use the existing 66000 Prepaid Expenses account in the Chart of Accounts or create a Custom Asset Account e.g. Prepaid ASIC Fees. Then amortise the ASIC fees over the prepaid period i.e 10 years. Users can refer to https://360help.com.au/x/NgNiAQ

In BGL SF360 as an extra time saver, use the SAVE & COPY function in the Journal Screen each year to copy the Journal. SF Desktop clients could use the Standing Journal function.

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

Tel: 02　9899 3693, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

40/8. Castle Hill NSW 2154

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

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by SMSF Coach - Liam Shorte on November 19, 2014 • Permalink

Posted in SMSF Management

Posted by SMSF Coach - Liam Shorte on November 19, 2014

https://smsfcoach.com.au/2014/11/19/pay-smsf-corporate-trustee-asic-fees-10-years-in-advance-save-on-fees-and-fines/

SMSF Coaching: The Complete ATO SMSF Educational Video Collection

The Australian Tax Office (ATO) has launched a great selection of short educational videos dealing on all matters to do with self-managed superannuation funds (SMSFs). The short animated videos are only 2 -3 minutes each and cover topical subjects as well as key responsibilities for SMSF trustees in an easy to understand format.

The headline for each video contains a link that will take you to the appropriate Tax Office web page, which also publishes the full transcript of the contents of each video if you prefer reading.

Thinking about an SMSF

Why do I want an SMSF

Look at these myths and facts about SMSFs before deciding if you want an SMS

What’s involved with an SMSF

Before you decide if an SMSF is right for you, you should have an idea of what’s really involved.

SMSF – Setting up your SMSF
Take a look at the key steps in setting up your SMSF.

You can’t do it all yourself,

This video deals with how SMSFs (or as they used to be known, “do-it-yourself” or DIY super funds) are not really very DIY at all. The video introduces the different people an SMSF trustee will have to work with, or who can help trustees meet their obligations.

SMSF trustees – individual or corporate
Deciding on the type of SMSF trustee is important. This video will help explain the difference between individual trustees and corporate trustees.

SMSF – trustee declaration
A trustee declaration must be completed and kept on file by SMSF trustees. Find out more about it here.

Planning for the unexpected

Life is full of surprises. Plan ahead to help your SMSF deal with unexpected issues such as a relationship breakdown, incapacity or an untimely death.

https://youtu.be/CGwMbVsxxuc

Investments

SMSF sole purpose test

Video currently being updated by ATO
Learn more about the sole purpose test and what it means to your SMSF investments.

Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds. This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement.

Contravening the sole purpose test is very serious. In addition to the fund losing its concessional tax treatment, trustees could face civil and criminal penalties.

It’s likely your fund will not meet the sole purpose test if you or anyone else, directly or indirectly, obtains a financial benefit when making investment decisions and arrangements (other than increasing the return to your fund).

When investing in collectables such as art or wine, you need to make sure that SMSF members don’t have use of, or access to, the assets of the SMSF.

Your fund fails the sole purpose test if it provides a pre-retirement benefit to someone – for example, personal use of a fund asset.

Super contributions cap

Video currently being updated by ATO

What are super contribution caps? Learn about the types and limits on super contributions and SMSF trustee responsibilities.

Click here for written version while video unavailable

SMSF investment strategy
Your SMSF’s investment strategy is the framework that guides your investment decisions. It pays to have a good investment strategy that is regularly reviewed. Learn what factors your SMSF’s investment strategy needs to take into account.

SMSF Borrowing and limited recourse borrowing arrangements

Can your SMSF borrow to buy an asset? Watch these case studies to learn more

SMSF – In-house assets

What are in-house assets and can your SMSF invest in them?

SMSF – Planning for retirement

Plan ahead before making super benefit payments to a member. Make sure your fund has enough cash to make minimum annual payments

SMSF annual obligations

Make sure you meet all your SMSF obligations before lodging your fund’s annual return.

Record keeping in your SMSF

SMSF paying an income stream
Learn about what is involved in paying an income stream to a member.

Being updated by ATO

Paying an income stream part 2

Watch this video to learn how tax applies when you pay benefits from your SMSF.

Being updated by ATO

SMSF – arm’s length
All SMSF transactions must be on an arm’s-length basis. This means that fund assets must be bought and sold at market value, and income on the assets should show a true market rate of return.

SMSF – Separation of assets

SMSF assets must be kept separate from your personal or business assets. Learn more about how to protect your fund’s assets.

SMSF Loans and early access

Here the ATO have focused on SMSF loans and early access, with the perceived problem being that people mistakenly think that an SMSF can provide them with a loan, or that they can access their super savings whenever they like.

SMSF planning for the unexpected (relationship breakdown, incapacity, death)

Your SMSF should prepare for the unexpected, including what to do if a member dies, becomes incapacitated, or there is a relationship breakdown.

SMSF Business real property

What is business real property and can your SMSF invest in it?

What happens if your fund breaches the law

Has your fund breached the super laws? This video shows possible consequences and how you may be able to influence the outcome.

What happens when a member dies

SMSF – When should I wind up my SMSF

Thinking about winding up your SMSF? Here are some common reasons for winding up and the steps to follow to get it done.

I will keep this list updated as more videos are released

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 Advisory Pty Ltd (ABN 34 605 438 042) (AFSL 476223)

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by SMSF Coach - Liam Shorte on October 1, 2014 • Permalink

Posted in SMSF Management

Posted by SMSF Coach - Liam Shorte on October 1, 2014

https://smsfcoach.com.au/2014/10/01/smsf-coaching-the-complete-ato-smsf-educational-video-collection/

10 Tips For Salvaging Your Retirement Plans

In my last article Why The Next Generation of Retirees Will Find it Harder Than Their Parents I pointed out the roadblocks facing Baby Boomers and Gen X. In this article I offer some tactics on how can you counter these headwinds?

Here are some ways to salvage a decent retirement:

Get back in control of your finances now. The first step is to actually sit down (with your partner if you have one) and list out your assets and liabilities and work out what you are actually saving *or not) at present. Understand how you are financing your current lifestyle and then think about what sort of lifestyle you want in the future. If you are borrowing for todays lifestyle then you have little chance of funding the same standards in retirement.
Get out of debt. One of the hardest things about debt is that it feels so overwhelming. The reality is you can’t ignore it and you know deep down that delaying the inevitable only piles on more trouble. Better just to take on your debt and get through it often starting with the high interest rated debt first. A great place to start is the Managing Debt section of the Money Smart government website.
Look to transition to retirement rather than pulling the plug. See if you can extend your savings by working part-time or doing some contract work during the year. Every dollar you earn means a dollar saved from your retirement fund. More and more people are opting to cut back to 4 then 3 days before finally retiring rather than the traditional retirement strategy of working full-time until the day you retire. ask about using a combined Transition to retirement and Salary Sacrificing strategy to boost your retirement savings.
Find a trusted financial adviser. A fee for service financial planner who is recommended to you by someone you know and trust can help you plan for retirement and make the most of your resources in ways you might not have anticipated. Often using the superannuation , tax and social security systems can add as much value as the return on the investments. you may look at consolidating your superannuation, moving investments in to a lower-income earner’s name, leveraging the equity in your home or investments or taking more control of your future using a Self Managed Super fund or a Member Directed Option in your industry or retail fund.
Don’t dip in to your super.Just because you reach preservation age you should not be tempted to dip into your retirement savings. You can use strategies like Transition to Retirement pensions combined with Salary Sacrifice to actually receive the same take home income but in a more tax effective way and also better after tax returns on your savings.
Think twice before indulging the kids.High property prices , unemployment and career breaks to start a family have made it hard for many in their 20s and 30s to get an independent head start, and many families are getting through tough times by living together. But too many parents are giving adult children financial support for house deposits, new cars, medical and school bills and worse still spending money. This is teaching them nothing about saving and parents need to teach life lessons not be their children’s best mate! This financial assistance without teaching about saving and budgeting may be undermining their children’s ability to ever become independent. It also may be dooming parents’ retirement. The kids have more time than you do to make up financial losses. Get your own retirement funding in order before splashing out on the children. Set rules, limits and targets for them and make a loving, firm plan teaching them how to budget and reduce the siphoning from the bank of Mum and Dad while giving wholehearted support in non-financial ways.
Save more and save smarter. Follow the basic rules for retirement savings, including minimising taxes, working longer, investing regularly and keeping on top of your investments. Boost savings by every cent you can and pre-tax if possible Keep increasing your salary sacrifice contributions to meet your retirement goal. Don’t have a goal? Use the Money Smart retirement planner calculators to decide how much you’ll need and what to save to get there.
Don’t touch the equity in your home unless it is adding income. If your retirement is looking shaky, don’t even consider using home equity for non-essentials like renovations or as new car. Use the equity to build wealth rather than destroying it. Talk to a financial planner for strategies and then your accountant to confirm tax consequences when using the equity in your home to work for your retirement. Educate yourself on the pros and cons of any investment so you are comfortable with the strategies as that provides the Sleep factor!.
Plan for the unforeseen and protect your greatest asset.Plan for the unexpected and don’t wait until you’re in trouble to take action. Insurances are an essential part of any long-term plan and your earning capacity is your biggest asset so protect it. See the warning lights. If you’re struggling with mortgage repayments and debt now, even if you want badly to stay in your home, start right away to figure out a fall back plan if you cannot. Pride can prevent you from taking needed action when you’re in trouble. Don’t spend retirement savings or home equity trying to repay unmanageable debt.

what about number 10? Well that’s up to you , let me know what are you doing to rescue your retirement? Just comment blow, you never know who or how many people your idea may help.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98993693, Mobile: 0413 936 299

PO Box 6002 NORWEST NSW 2153

Suite 40, 8 Victoria Ave. Castle Hill NSW 2154

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

5 Comments

by SMSF Coach - Liam Shorte on September 24, 2014 • Permalink

Posted in Retirement Planning

Posted by SMSF Coach - Liam Shorte on September 24, 2014

https://smsfcoach.com.au/2014/09/24/10-tips-for-salvaging-your-retirement-plans/

Why The Next Generation of Retirees Will Find it Harder Than Their Parents.

Regardless how old you are now, it’s likely you will have a tougher time managing a financially secure retirement than your parents. There is an old saying that “the best time to plant a tree was 20 years ago, the second best time is now!” .

Struggle to Save

Most people just are not putting away enough to fund their retirement or aren’t saving regularly. However the goal posts are also moving and that makes it a bigger task for pre-retirees to plan for and achieve a comfortable lifestyle once they retire

1. We’re living longer.

The proportion of the population aged 65 years or more will increase from around one in seven Australians in 2012 to one in four Australians by 2060, and close to 1 in 3.5 at the turn of the next century[i]

In 1960, a 65-year-old male would live on average another 12 years. Today, according to the Australian Bureau of Statistics (ABS) the average man at 65 can expect to live another 19 years. The average woman will get 22 more years.[ii]

Living an extra 7 years without working takes a lot more savings and better budgeting. Remember these are averages so If there is a history of longevity in your family your retirement savings may need to stretch 30 years or more.

2. Older workers lost out in the GFC. While Australia escaped most of the hurt in the GFC, many companies cut back staff and let go older employees who have failed to find new work opportunities and therefore the earning power from men and women in their late 50s and 60s has been stifled.

Investment savings also plummeted, affecting people of all ages but older Australians have less time to make up those losses by making additional savings or share portfolios recovering over time. The ASX 200 is still below 5400 having dropped during the GFC from 6840

3. Age Pensions are coming under pressure. The increase of the pension access age and the change to the indexing of pensions by CPI rather than average wages as well as the reduction in asset test of thresholds mean that access to the part-pension will be tougher in future years meaning using up more of your own capital earlier.

4. Interest rates are low and look to be lower for longer. Retirees in previous generations earned fairly consistent higher interest on savings and low-risk investments. Today’s retirees must take risks in search of income or endure historically 40 year low fixed-income returns. Five years ago you could get Term Deposits paying 7.5% and now you are lucky to get more than 2.5%

5. People are carrying more debt in to retirement. The standard Aussie family always tried to enter retirement without a mortgage on their home. That’s harder to achieve today. It is common now to see older Australian’s dipping into their superannuation to pay off the mortgage on retirement and more are finding they are increasingly accessing credit card debt and personal loans to fund one-off purchases.

6.We’re working longer. Australians’ average age at retirement is creeping up. The ABS advise that the average retirement age for those who retired within the past five years was 63 for men and 59 for women.[iii].

The upward trend in retirement ages is confirmed in the figures measuring the expectations of those aged 45 and older – around two-thirds intend to retire at or over 65 years of age, with 17 per cent expecting to work until they are 70 or older.

A quarter of workers expect to finish work between 60 and 64 years of age, while only 9 per cent expect to retire before they are 60. But poor health, job loss and the need to care for older parents, grandchildren and ill spouses can cut that short.

7. Rise in Grey Divorce means more retirees are single. Divorce is rising among older Australians, and women tend to outlive their husbands. More than half of retired women in Australia are living in households where the annual income is less than $30,000 with divorced and widowed women among the worst off, according to 2011 research – conducted by the Australian Institute of Superannuation Trustees (AIST). It costs more for a single person to support a household than to share overhead.

Have I shattered your dream or jolted you back to reality? there is no use in pointing our the problems without offering some solutions so check out this post where I outline 10 tips for salvaging that retirement dream.

[i] An Ageing Australia: Preparing for the future Nov 2013
[ii] Retirement & Retirement Intentions, Australia,June 2013

[iii] Retirement & Retirement Intentions, Australia,June2013

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

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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by SMSF Coach - Liam Shorte on September 23, 2014 • Permalink

Posted in Retirement Planning

Posted by SMSF Coach - Liam Shorte on September 23, 2014

https://smsfcoach.com.au/2014/09/23/why-the-next-generation-of-retirees-will-find-it-harder-than-their-parents/

Video: Don’t Sign That Trustee Declaration if You are Not Sure of Your Duties

Have you recently or are you currently looking at setting up an SMSF. There will be loads of paperwork to sign and sometimes the importance of some documents are not stressed enough in the process.

The ATO Trustee Declaration is one of those key documents not to be taken lightly:

The declaration aims to ensure that new trustees understand their obligations and responsibilities.

The declaration lists key matters that you must understand in order to effectively manage an SMSF, including information about:

the sole purpose test
trustee duties
investment restrictions
record-keeping, reporting and lodgement obligations

Watch this video from the ATO for a little more detail then read on below.

I recommend that all new Self Managed Superannuation Fund Trustees complete a short FREE online course about their duties before signing this document. the course is available here at www.smsftrustee.com and yes it is really free with no obligations.

You even get a nice little certificate to put on file once completed. It’s not rocket science but it will clarify how important it is to be aware of your obligations as Trustee of your own fund.

Remember you must complete this compulsory declaration if you become a new trustee (or director of a corporate trustee) of:

a new self-managed super fund (SMSF)
an existing SMSF.

You must sign this declaration within 21 days of becoming a trustee or director of a corporate trustee of an SMSF.

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 Advisory Pty Ltd (ABN 34 605 438 042) (AFSL 476223)

1 Comment

by SMSF Coach - Liam Shorte on September 1, 2014 • Permalink

Posted in SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on September 1, 2014

https://smsfcoach.com.au/2014/09/01/video-dont-sign-that-trustee-declaration-if-you-are-not-sure-of-your-duties/

Free ATO Webinars for SMSF Trustees & Professionals

…and those considering an SMSF.

Free SMSF Webinars

Not sure who to trust for information about setting up and running an SMSF. Well I hope after following my blog for a while you will trust me but I know that takes time so your first port of call might be the regulator for self managed super funds , the ATO.

They have lots of webinars that you can attend live, download a recording to listen at your pleasure or if you prefer to read you can download the transcript.

SMSF trustees

Note: there are no live sessions currently scheduled for these webinars.

However, recordings of past webinars are now available here.

Past webinars for SMSF professionals

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

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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by SMSF Coach - Liam Shorte on August 29, 2014 • Permalink

Posted in SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on August 29, 2014

https://smsfcoach.com.au/2014/08/29/free-ato-webinars-for-smsf-trustees/

ATO video: SMSF planning for the unexpected (relationship breakdown, incapacity, death)

Most of us who run SMSFs are optimistic as far as our own capabilities and relationships are concerned and that is why we take control of our own finances and plan for the future of our own family. But life can throw curve balls at us (damn I hate using American euphemisms) and we need to be prepared for many of those factors we cannot control.

Foreseeable but unexpected issues such as a relationship breakdown, incapacity or an untimely death all too often catch us by surprise. for SMSF Trustees these are risks that needs to be managed, planned for and reviewed regularly to ensure our funds can be maintained in the short to medium term allowing for our wealth to go where we want it and tax effectively if possible and without disposing of assets in a fire sale.

The ATO have provided yet another little cracker of an educational video for SMSF trustees on planning for the unexpected (relationship breakdown, incapacity, death).

There are a few things to consider when making your plans.

You need to have a plan for what will happen to the fund if a member leaves. It may mean adding a new SMSF member, changing the type of fund or winding up the fund.

Payments from your SMSF must meet the rules in the SMSF trust deed so make sure it covers situations like incapacity, terminal illness or death of a member.

Payments must also meet tax and super laws. In some cases, you may have to withhold tax before paying a super benefit.

You need to consider the insurance needs of members when you set up your investment strategy.

You should consider making a binding death benefit nomination if you want to say who will get your super benefits when you die. An SMSF adviser or estate planner can help you get this right.

It’s also a good idea to consider what will happen if you become incapable of looking after yourself and your affairs.

You may want to appoint an enduring power of attorney who can act as trustee of your SMSF if it’s ever needed.

If relationships in an SMSF break down, you must be prepared to sort out any issues that arise. You can’t force another member to leave or stay in the SMSF or exclude them from the decision-making process.

It pays to make sure your plans including exit strategies are set from the start so that you are prepared for the unexpected. START THE CONVERSATION NOW!

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

Our copy of our Financial Services guide can be obtained by clicking here or visiting our main www.verante.com.au website.

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by SMSF Coach - Liam Shorte on August 21, 2014 • Permalink

Posted in Estate Planning, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on August 21, 2014

https://smsfcoach.com.au/2014/08/21/ato-video-smsf-planning-for-the-unexpected-relationship-breakdown-incapacity-death/

ATO SMSF Video: SMSF starting to pay a pension

So you have reached that point where you want to access your superannuation or your advisor has told you about the tax effectiveness of starting an income stream or more commonly called a pension. So what are the steps involved?

Once an SMSF moves from the accumulation stage to paying an income stream, there are tax benefits available! Watch this ATO video and learn about the conditions that have to be met in order for you to benefit.

When an SMSF moves from the accumulation stage into paying an income stream to a member — there are tax benefits to be had! But — to be eligible the fund must meet certain conditions.

Steps involved in starting a pension or income stream:

A member needs to make a written request to the trustee to start an income stream including some details on what they require and if the pension is to be reversionary to their spouse or partner.

The member receiving the income stream payment must have met a condition of release, for example turning 65. More details here

The type of income stream being paid must be allowed under the law and your fund’s trust deed. Always check your Deed, it’s the instruction manual for your fund

The Trustees of the fund should acknowledge the request and minute the decision to allow the pension based on a condition of release and provide the member with a Pension Agreement and Product disclosure Statement. (this can often be all processed as part of a Pension Kit so just ask your adviser or administrator)

You need to value fund assets when the income stream starts and on one July each year you continue to make payments.

Make sure the minimum income stream payment is paid to the member each year.

You may have to withhold tax from some income stream payments for members aged 55-59. To do this, you’ll need to register for Pay As You Go withholding and complete some forms which you can get from the ATO website here.

At the end of each tax year if more than one member has a share in the fund assets supporting the income stream — you will need an actuarial certificate to work out the tax implications for your fund which is organised by your accountant or administrator.

Even if all members are receiving an income stream, you still have to meet all of your fund’s obligations including arranging the annual audit and lodging the SMSF annual return.

Planning ahead before you start an income stream — and staying on top of the administrative tasks and record keeping will make it easier for your fund to meet all the conditions and enjoy the tax benefits.

Remember — this is a big step for your fund so if you need help you should contact an SMSF professional to help you get it right!

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

1 Comment

by SMSF Coach - Liam Shorte on August 13, 2014 • Permalink

Posted in Pension Strategies, Reversionary Pension

Posted by SMSF Coach - Liam Shorte on August 13, 2014

https://smsfcoach.com.au/2014/08/13/ato-smsf-video-smsf-starting-to-pay-a-pension/

Explaining a Balanced Lifestyle Using a Mayonnaise Jar and Two Beers

I try to stress with clients that they will be far more successful in reaching their goals if they take a balanced approach to living , saving and building wealth as they move through life.

Here is a great story that helps put that advice into perspective.

A professor stood before his philosophy class and when the class began, he wordlessly picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls.

He then asked the students if the jar was full.

They agreed that it was…

The professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly.

The pebbles rolled into the open areas between the golf balls.

He then asked the students again if the jar was full.

They agreed it was…

The professor next picked up a box of sand and poured it into the jar.

Of course, the sand filled up everything else.

He asked once more if the jar was full.

The students responded with a unanimous ‘yes.’

The professor then produced two Beers from under the table and poured the entire contents into the jar effectively filling the empty space between the sand.

The students laughed…

‘Now,’ said the professor as the laughter subsided, ‘I want you to recognize that this jar represents your life.

The golf balls are the important things–your family, your children, your health, your friends and your favorite passions–and if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, your house and your savings.

The sand is everything else–the small stuff.

‘If you put the sand into the jar first,’ he continued, ‘there is no room for the pebbles or the golf balls.

The same goes for life.

If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.

So pay attention to the things that are critical to your happiness.

Spend time with your children.
Spend time with your parents.
Visit with grandparents.
Take time to get medical checkups.
Take your spouse out to dinner.
Read a book and stimulate your imagination
Put some money away for tomorrow and some for the long term
Then play another 18…

There will always be time to clean the house and do the filing.

Take care of the golf balls first—the things that really matter.

Set your priorities.

The rest is just sand.

One of the students raised her hand and inquired what the Beer represented.

The professor smiled and said, ‘I’m glad you asked.’

The beer just shows you that no matter how full your life may seem, there’s always room for a couple of beers with a friend.

CHEERS!

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 July 27, 2014 • Permalink

Posted in Financial Planning, Retirement Planning

Posted by SMSF Coach - Liam Shorte on July 27, 2014

https://smsfcoach.com.au/2014/07/27/explaining-a-balanced-lifestyle-using-a-mayonnaise-jar-and-two-beers/

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Liam Shorte

IFA 2023 Excellence Awards – SMSF Advisor of the Year – Finalist

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All posts tagged Account Based Pension

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So more on uses of multiple SMSFs by property investors

Facts on NSW Land tax 2024

Strategy to manage land tax:

Example:

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For Trustees :

For professionals (in addition to the above services):

Other New Initiatives:

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Impact on SMSFs with existing cross-insurance arrangements

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Thinking about an SMSF

Investments

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SMSF trustees

Past webinars for SMSF professionals

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Steps involved in starting a pension or income stream:

Remember — this is a big step for your fund so if you need help you should contact an SMSF professional to help you get it right!

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