Stay informed,seek advice and adjust strategies accordingly!
From September 20, 2025, several changes will impact the Australian Age Pension. The four key changes are:
an increase in deeming rates,
a boost to the maximum Age Pension amount,
a rise in the cut-off limits for part pensions, and
an increase in the income limit for the Commonwealth Seniors Health Card.
1. Deeming Rate Changes 📈
The most significant change is the 50 basis point increase to the deeming rates used in the income means test. Deeming rates are a notional or “assumed” income rate applied to your financial assets. They’re a simple way for the government to calculate your income without needing to track your actual investment returns.
Why are they changing? Deeming rates have been frozen for the past five years as part of the COVID-19 response. This increase is an adjustment to reflect current market conditions more accurately, even though interest rates may be declining.
What are the new rates? From September 20, 2025, the low deeming rate will increase from 0.25% to 0.75%. The standard (or higher) deeming rate will increase from 2.25% to 2.75%.
How do the rates apply? The low rate applies to the first $64,200 of financial assets for a single pensioner and the first $106,300 for a pensioner couple. The higher rate applies to any amount over those thresholds.
What’s the effect? An increase in the deeming rate means more income is deemed to have been earned from your financial assets, which will generally lead to a reduction in your Age Pension entitlement. For every $1,000 of financial assets, your fortnightly pension could decrease by $2.50.
2. Age Pension Increase 💰
The maximum rate of the Age Pension will increase, providing a boost to all pensioners.
The maximum fortnightly pension for a single pensioner will increase by $29.70, bringing the new maximum to $1,178.70.
The maximum fortnightly pension for a couple will increase by $44.80, bringing the new combined couples maximum to $1,777.00 ($888.50 each)
These increases are automatic and apply from September 20, 2025.
3. Part Pension Cut-off Limits Rise ⬆️
The maximum amount of income you can earn before your part pension is cut off will also increase. This is a direct result of the rise in the maximum Age Pension amount.
The new fortnightly cut-off limit for a single pensioner will be $2,575.40, an increase of $59.40.
The new fortnightly cut-off limit for a couple will be $3,934.00, an increase of $89.60.
TIP: If you were previously ineligible for an Age Pension due to the income means test but were close to the old cut-off limit, you should reconsider applying.
4. Commonwealth Seniors Health Card (CSHC) Income Limit Increase ✅
The income limits for the Commonwealth Seniors Health Card (CSHC) will also rise. The CSHC is a valuable card for self-funded retirees who are not on a Centrelink income support payment, providing access to cheaper medicines and other concessions.
The annual income limit for a single person will increase by $2,080 to $101,105.
The annual income limit for a couple (combined) will increase by $3,328 to $161,768.
TIP: If your income was previously just above the old limit, you should consider applying for the CSHC. This card doesn’t have an assets test, making it a good option for those disqualified from the Age Pension by their assets.
Warning before you jump into implementation of any strategy without checking your personal circumstances.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.
Please consider passing on this article to family or friends. Pay it forward!
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
When Andrew Findlay passed away, he left behind more than just an estate—he left a ticking time bomb of legal uncertainty. An updated will, detailing his clear wishes, was sitting on his computer. There was just one problem: he had never signed it.
This oversight sparked a fierce court battle between his former partner and his cousin on behalf of his children, a battle that recently culminated in a significant ruling from the NSW Court of Appeal. The case of Kemp v Findlay serves as a powerful cautionary tale for anyone advising clients on estate planning. It highlights the very real dangers of informal documents and the costly, emotional litigation that can follow. While this case deals with a will, there are countless cases that involve incomplete Binding Death Benefit Nominations in an SMSF and the Succession Act 2006 (or equivalent in your state) may not help as SMSFs rely on the SIS Act and Trust Deed . Also a nomination from an SMSF to a member’s Legal Personal Representative may then lead to a estate challenge.
So, what are the key takeaways? Let’s break it down.
A Quick Case Summary
The 2015 Will: Mr. Findlay had a formal will leaving his estate to his then-partner, Elizabeth Kemp.
The 2019 Document: After separating from Ms. Kemp in 2019, he drafted a new will on his computer. This document left his estate to his three children and appointed his cousin, David Findlay, as executor. Crucially, it was never printed, signed, or witnessed.
The Dispute: Upon Mr. Findlay’s death in 2023, both Ms. Kemp (relying on the 2015 Will) and David Findlay (relying on the 2019 document) applied for probate.
The Outcome: The Court applied Section 8 of the Succession Act 2006 (NSW), which allows informal documents to be treated as a will if the Court is satisfied the deceased intended it to be their final will. The Court found the 2019 document did reflect Mr. Findlay’s clear intentions and admitted it to probate. Ms. Kemp was also ordered to pay 75% of the children’s legal costs.
🔑 5 Key Lessons for Advisers and SMSF Trustees from Kemp v Findlay
1. Never Rely on Section 8 as a Planning Tool
The big takeaway is not that “unsigned wills are fine.” The takeaway is that Section 8 is a remedial, last-resort solution, not a substitute for proper execution. While the court can validate informal documents, the process is uncertain, expensive, and hinges on convincing a judge of the deceased’s intention. Advise clients that proper signing and witnessing is the only way to guarantee certainty and avoid a fight.
SMSFs – While Section 8 does not apply to BDBNs directly, a BDBN can be subject to a family provision claim under the Succession Act 2006, where the court can, in certain circumstances, declare a death benefit as part of a notional estate to meet court-ordered provisions. The distribution of a superannuation death benefit is primarily determined by the rules of the superannuation fund and the Superannuation Industry (Supervision) Act 1993 (SIS Act). Section 59(1A) of the SISA, in conjunction with Regulation 6.17A of the SIS Regulations, sets out the strict technical requirements for a BDBN to be valid.
As many SMSF members direct their Superannuation to be dealt with via their Wills, this means there is more room for error as the Binding Death Nomination and/or the Will could be challenged.
2. Document Everything & Communicate Clearly
Mr. Findlay’s failure to clearly communicate his final intentions to his solicitor and family directly fuelled the dispute. Advise your clients to:
Formally instruct their solicitor immediately after a major life event (e.g., separation, marriage, birth of a child).
Clearly communicate their wishes to their intended executor and key beneficiaries to prevent surprise and doubt.
With a Binding Death Benefit Nomination (BDBN) the member should:
Firstly, decide if a BDBN is the preferred option or do you deliberately wish to leave the decision and flexibility to the remaining trustees of the fund?
For pension accounts you may opt to use Reversionary Pensions for more certainty.
Complete the Binding Death Benefit Nomination (Preferably a Non-Lapsing BDBN) and sign and have it witnessed.
Then submit the signed form to the trustees of the SMSF and have the trustees minute the receipt and acceptance of the BDBN.
Also ensure that the SMSF Accountant/Administrator is provided a copy and updates the SMSF software they use to display that nomination in the annual financials (in the Member Statements) so that it can trigger a reminder to review them.
3. Include Regular Estate Plan Reviews
This case is a textbook example of why wills and BDBNs must be updated. A separation is one of the most critical times to review an estate plan. Proactively schedule reviews in your annual planning review with clients, especially after major life events to ensure their documents reflect their current circumstances and relationships.
For SMSFs: Review the current nominations and see if strategies like withdrawal and recontributions now mean that funds can be directly left to adult children or others because the taxable component has been reduced. You might leave a Mixed-Tax Components pension to the spouse but allocate Tax-Free Component pensions to others directly or via your estate.
4. Warn Clients Against “DIY” Drafts (Read the Deed for SMSFs)
The existence of an unsigned, unofficial document was the catalyst for years of litigation. Counsel your clients strongly against:
Creating draft wills or notes without immediate formalisation.
Storing important documents haphazardly. An unsigned draft can be misinterpreted as a final will, creating confusion and conflict.
For BDBN’s be careful with templates and if you are using one provided by your Trust Deed provider make sure it meets your needs or have your lawyer draft a more personalised one up for you.
5. Highlight the Staggering Cost of Litigation
The court’s costs order against Ms. Kemp underscores a harsh reality: estate litigation can quickly erode the value of the estate for everyone involved. Use this case to show clients the tangible financial risk of unclear planning. Comprehensive, professionally-executed estate planning and SMSF documents are an investment in protecting their legacy and their family’s future.
The Bottom Line
Kemp v Findlay is a stark reminder that the rules of formal execution exist for a reason: to provide clarity and prevent disputes. While the court’s flexible approach ensured Mr. Findlay’s intentions were ultimately honoured, it came at a significant financial and emotional cost to his family.
For SMSFs: The Trust Deed is often the crucial source outlining how formal execution of a BDBN is to be made. Take the time to read it carefully and don’t assume it complies with the SIS Act either.
As advisers, our role is to steer clients away from this precarious path. By emphasising proper execution, clear communication, and regular reviews, we can help them ensure their wishes are carried out smoothly, preserving their assets and their family’s harmony.
Have you reviewed your wills and BDBNs recently? This case is the perfect conversation starter for SMSF Trustees to encourage proactive estate planning with your partner or other SMSF member’s. Also a key issue for professionals to raise with their clients and possibly refer to an estate planning specialist.
Stay informed,seek advice and adjust strategies accordingly!
Warning before you jump into implementation of any strategy without checking your personal circumstances.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.
Please consider passing on this article to family or friends. Pay it forward!
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Failure to pay minimum pensions just got a lot more costly
You may need to ensure your accountant, financial planner and your fellow trustees is up to date with the latest rule changes affecting the start and ending of an SMSF pension which mostly affect those that fail to take the minimum pension amounts in a financial year.
SMSF trustees, accountants and financial advisers should take note of significant changes to pension commencement rules that came into effect on 1 July 2025. These changes impact how pensions are treated for tax purposes if a minimum pension is missed and could have serious implications for retirement planning strategies.
What’s Changed?
The Australian Taxation Office (ATO) has revised Tax Ruling 2013/5 (TR 2013/5), which governs when a pension starts and ceases.
Previously, the rules provided some flexibility with minimal adverse consequences. However, the ATO has now taken a stricter stance, which may have major implications not only for the current and the previous year’s, tax position but also on strategies designed to quarantine pensions with high tax free components from ones with mixed components.
Key Implications of the Changes
1. Pension Failures Confirmed to Take Effect at the Start of the Financial Year
Under the new rules, if a pension fails to pay the minimum pension, it is treated as ceasing at the beginning of the financial year rather than the end. This means:
The pension account converts to an accumulation account immediately at 1 July of the relevant tax year.
If an existing accumulation balance exists, the two amounts will merge for tax purposes, potentially disrupting carefully planned tax strategies. These strategies often revolve around blended families.
2. Transfer Balance Cap Complications
If a pension fails at the start of the year, the transfer balance cap debit must be applied at the 30 June in the year the pension ceased. Ref: ITAA97 Section 294-80(1) item 6. NOTE: In the earlier version of this article we wrongly advised it was a credit to the TBA and immediate when in fact it is a debit and occurs 30 June at end of financial year the pension ceased. Thank you to Mark Ellen of Accurium for picking up on our error.
The pension can only restart once the member rectifies any errors (e.g., failing to meet minimum pension draw down requirements), which may take 13 to 22 months from the date the pension has to be commuted under the enforced rules. Why? Because for many people the first they realise that they have not paid the full minimum pension payment is when their accountant or administrator drafts the financial which is often 9 months after the end of the financial year. e.g., 20 June 2025 financials not completed until March 2026 and that’s when mistake found. But then the Pension is deemed to have been commuted on 01 July 2024!
During this gap, market growth could lock a portion of the funds out of pension phase due to the Transfer Balance Cap issues, limiting tax efficiency and spoiling estate planning strategies.
3. Investment Market Risks
If markets rise while a pension is inactive, the increased account balance may exceed the available transfer balance cap. This means:
Some funds could remain stuck in accumulation phase, missing out on tax-free pension earnings.
Members may not be able to restore their pension to its original value, reducing retirement income benefits.
What Should SMSF Trustees, Accountants and Advisers Do?
Given these changes, it’s crucial to: ✔ Review pension compliance to avoid accidental failures. Request a Minimum Pensions Report from your Accountant/Adviser.
✔ Do not just rely on the last 30 June Financials as you need to ensure you include any new pensions that began in the current financial year
✔ Monitor minimum drawdowns before 30 June each year to prevent unintended cessations. Have someone cross check the payments for you.
✔ Beware that Market Linked and Term Allocated Income Streams have different minimum drawdowns
✔ Plan for tax implications if pensions lapse and merge with accumulation accounts. ✔ Consider timing and market risks when restarting pensions.
Final Thoughts
The ATO’s stricter interpretation of pension rules means SMSF trustees, accountants and advisers must be more vigilant than ever to avoid costly tax, estate planning and transfer balance cap issues. Proactive planning can help mitigate risks and ensure retirees maximise their superannuation benefits.
Stay informed,seek advice and adjust strategies accordingly!
Warning before you jump into implementation of any strategy without checking your personal circumstances.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.
Please consider passing on this article to family or friends. Pay it forward!
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Here we go again. We have only a short time left to the end of the 2025 financial year to get our SMSF in order and ensure we are making the most of the strategies available to us. Here is a checklist of the most important issues that you should address with your advisers before the year-end.
It’s been another busy year and I have not had as much time to put this together so if you find an error or have a strategy to add then please let me know. Links were working at the time of writing.
Warning before we begin,
You need to check your personal super balances, contribution limits, caps and tax position before implementing any of these strategies as your own particular circumstances may warrant alternative options.
It’s all about timing
If you are making a contribution, the funds must hit the super fund’s bank account by the close of business on 30 June. Some clearing houses hold on to money for up to 14 days before presenting them to the super fund. Some Retail and Industry funds are asking for funds at least to be contributed by the 18th-20th June!
In addition, pension payments must leave the account by the close of business unless paid by cheque in which case the cheques must be presented within a few days of the EOFY. There must have been sufficient funds in the bank account to support the payment of the cheques on 30 June but a cheque should only be your very last-minute option! You can also ask your adviser or administrator about a Promissory Note if time is against you but funds are ready.
So, for SMSFs get your payments in the fund by Monday 23rd June or earlier to be sure (yes I’m Irish) as the 30th is a Monday this year. This is even more important if using a clearing house for contributions.
Review your Concessional Contributions (CC) options including Unused Carry Forward Limits
The government changed the contribution cap from 1 July 2024 to $30,000 and remember that you have the ability to make concessional contributions up to age 67 even if not working and to 75 if you meet the Work Test . This is important for those who have retired but may have sold a property or shares and triggered a large capital gain during the year. Do not not exceed your limit unless you have Unused Carried Forward Concessional limits and Total Super Balance under $500K as of last 01 July 2024.
Check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super paid by employers, as they are all included in the limit.
This current 5 year period for Unused Concessional Contributions applies from 2019-20 so effectively, this means an individual can make up to $162,500 of CCs in a single financial year by utilising unapplied unused CC caps since 1 July 2019 and this years limit. Guidance on how to check your Unused Carried Forward Concessional limits via MyGov records available here. ..
This is the last year to use the 2019/20 unused Carried Forward Concessional Caps as they fall outside the 5 year rolling period from 30 June 2025.
Beware that once your Income including Salary, Investment income, Employer SGC, Personal Concessional Contributions goes over $250,000 you will be subject to Div 293 Tax
From 1 July 2025 the Super Guarantee also rises to 12%. Re-evaluate your contribution plans for 2025-26
Review plans for Non-Concessional Contributions (NCC) options
From 1 July 2022 the NCC contribution rules changed and currently the age limit of 75 (28 days after the end of the month your turn 75) applies to NCCs (that is, from after-tax money) without meeting the work test. Check out ATO superannuation contribution guidance.
NCCs are an opportunity to move investments into super and out of a personal, company or trust names.
For those couples where one has a higher balance that may be affected by the proposed Division 296 Tax, it is important to review you option to even-up spouse balances and maximise super in pension phase up to age 75. For couples where one spouse has exhausted their transfer balance cap and has excess amounts in accumulation or above $3m, they are able to withdraw from the higher balance and recontribute to the other spouse who has transfer balance cap space available to commence a retirement phase income stream. This can increase the tax efficiency of the couple’s retirement assets as more of their savings are in the tax-free pension phase environment and may help minimise Div 296 Tax.
If you have considerable additional funds to add to contribution then maybe contribute up to $120,000 before June 30 and then you may be able to contribute up to $360,000 after 1 July to maximise contributions.
From 1 July 2024 the Non-Concessional Cap rose to $120,000 per year or $360,000 under the 3 Year Bring Forward Rule.
RECONTRIBUTION STRATEGIES
Consider doing the drawdown before 30 June 2025 so that your Transfer Balance Cap and Total Super Balance on 1 July 2025 gets some additional space with the rise in the TBAR and TSB full limits to $1.2m. Note that if you had and existing pension(s) at 30 June 2024 your current limit will be anywhere between $1.6m and $2M after 1 July (Frustrating for Advisers!)
You can also make your tax components more tax free by using recontribution strategies. SMSF members can cash out their existing super and re-contribute (subject to their contribution caps) them back in to the fund to help reduce tax payable from any super death benefits left to non-tax dependants. From 1 July 2022 you can do this until they turn age 75 (contribution to be made with 28 days after the end of the month you turn 75).
Downsizer contributions
If you have sold your home in the last year and you are over 55, consider eligibility for downsizer contributions of up to $300,000 for each member.
From 1 jan 2023, the eligibility age to make downsizer contributions into superannuation was reduced from 60 to 55 years of age. All other eligibility criteria remain unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps.
The $300,000 downsizer limit (or $600,000 for a couple) and the $360,000 bring forward NCC cap allow up to $660,000 in one year contributions for a single person and $1,320,000 for a couple subject to their contributions caps.
PLEASE BE CAREFUL AS THE DOWNSIZER IS A ONCE ONLY STRATEGY AND IF YOU WOULD BENEFIT MORE IN OLDER YEARS USING THE STRATEGY THEN MAXIMISE NCCs FIRST.
Calculate co-contributions
Check your eligibility for the co-contribution, it’s a good way to boost your super. The amounts differ based on your income and personal super contributions, so use the super co-contribution calculator.
Examine spouse contributions
If your spouse has assessable income plus reportable fringe benefits totalling less than $37,000 for the full $540 tax offset or up to $40,000 for a partial offset, then consider making a spouse contribution. Check out the ATO guidance here.
You can implement this strategy up to age 75 as a Spouse Contribution is treated as a NCC in their account (and therefore counted towards your spouse’s NCC cap).
Give notice of intent to claim a deduction for contributions
A notice must be made before you commence the pension. Many people like to start pension in June and avoid having to take a minimum pension in that financial year but make sure you have claimed your tax deduction first. The same notice requirement applies if you plan to take a lump sum withdrawal from your fund.
Consider contributions splitting to your spouse
Consider splitting contributions with your spouse, especially if:
your family has one main income earner with a substantially higher balance or
if there is an age difference where you can get funds into pension phase earlier or
if you can improve your eligibility for concession cards or age pension by retaining funds in superannuation in the younger spouse’s name.
This is a simple no-cost strategy I recommend for everyone here.
Remember, any spouse contribution is counted towards your spouse’s NCC cap.
Act early on off-market share transfers
If you want to move any personal shareholdings into super (as a contribution) you should act early. The contract is only valid once the broker receives a fully-valid transfer form so timing in June is critical. There are likely to be brokerage costs involved.
Review options on pension payments
Ensure you take the standard minimum pension at your age-based rate. If a pension member has already taken pension payments of equal to or greater than the the minimum amount, they are not required to take any further pension payments before 30 June 2025. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.
Minimum annual payments for pensions for 2024/25 financial year onwards.
Age at 1 July
2024 – Standard Minimum % withdrawal
Under 65
4%
65–74
5%
75–79
6%
80–84
7%
85–89
9%
90–94
11%
95 or older
14%
If a pension member has already taken a minimum pension for the year, they cannot change the payment but they can get organised for 2025/26. No, you can’t sneak a payment back into the SMSF bank account unless you treat to as a new contribution!
If you need more than the minimum pension payments for living expenses then it may be a good strategy for amounts above the minimum to be treated as either:
a partial lump commutation sum rather than as a pension payment. This would create a debit against the pension member’s Transfer Balance Account (TBA). Please discuss this with your accountant and adviser first as all funds now have to report these quarterly to the ATO.
for those with both pension and accumulation accounts, take the excess as a lump sum from the accumulation account to preserve as much in tax-exempt pension phase as possible.
Check your documents on reversionary pensions
A reversionary pension to your spouse will provide them with up to 12 months to get their financial affairs organised before making a final decision on how to manage your death benefit. In NSW this may avoid issues with Binding Death Nominations and the Notional Estate (see Benz v Armstrong; Benz v Armstrong; Benz v Armstrong – 2022 NSWSC)
You should review your pension documentation and check if you have nominated a reversionary pension in the context of your family situation. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children.
The reversionary pension has become more important with the application of the $1.6-$2m million Transfer Balance Cap (TBC) limit to pension phase.
Tip:If you have opted for a nomination instead then check the existing Binding Death Benefit Nominations (many expire after 3 years in older deeds) and look to upgrade to a Non-Lapsing Binding Death Benefit Nomination. Check your Deed allows for this first.
Review Capital Gains Tax on each investment
Review any capital gains made during the year and over the term you have held the asset and consider disposing of investments with unrealised losses to offset the gains made. If in pension phase, then consider triggering some capital gains regularly to avoid building up an unrealised gain that may be at risk to legislation changes.
Collate records of all asset movements and decisions
Ensure all the fund’s activities have been appropriately documented with minutes, and that all copies of all statements, valuations and schedules are on file for your accountant, administrator and auditor.
The ATO has now beefed up its requirements for what needs to be detailed in the SMSF Investment Strategy so review your investment strategy and ensure all investments have been made in accordance with it and the SMSF Trust Deed, including insurances for members. See my article on this subject here.
Arrange market valuations (beware of the proposed Div 296 Tax Sting)
Regulations now require assets to be valued at market value each year, including property and collectibles. For more information refer to ATO’s publication Valuation guidelines for SMSFs.
On collectibles, play by the new rules that came into place on 1 July 2016 or remove collectibles from your SMSF.
Tip:The ATO is targeting audit compliance this year on Property Valuations in SMSFs as we approach the implementation of the proposed Division 296 Tax from 1 July 2025.
Tip 2: It would be better to ensure your properties truly match the market value on 1 July 2025 than to have a large rise in value recorded in future years that will trigger higher Div 296 Tax.
Check the ownership of all investments.
Make sure the assets of the fund are held in the name of the trustees (including a corporate trustee) on behalf of the fund. Carefully check any online accounts and ensure all SMSF assets are separate from your other assets.
We recommend a corporate trustee to all clients. This might be a good time to change, as explained in this article on Why SMSFs should have a corporate trustee. If you have previously moved to a Corporate Trustee ten double check all accounts/investments were changed to the name of this trustee.
Review Estate Planning and loss of mental capacity strategies
Review any Binding Death Benefit Nominations (BDBN) to ensure they are valid, consider Non-Lapsing Nominations and check the wording matches that required by the Trust Deed. Ensure it still accords with your wishes.
Also ensure you have appropriate Enduring Powers of Attorney (EPOA) in place to allow someone to step into your place as trustee in the event of illness, mental incapacity or death.
Check your Trust Deed and the details of the rules. For example, did you know you cannot leave money to stepchildren via a BDBN if their birth-parent has pre-deceased you?
Review any SMSF loan arrangements
Have you provided special terms (low or no interest rates, capitalisation of interest etc) on a related party loan? Review your loan agreement and see if you need to amend your loan.
Have you made all the payments on your internal or third-party loans, have you looked at options on prepaying interest or fixing the rates while low?
Have you made sure all payments in regards to Limited Recourse Borrowing Arrangements (LRBA) for the year were made through the SMSF trustee? If you bought a property using borrowing, has the Holding Trust been stamped by your state’s Office of State Revenue? For Related Party LRBA’s the Variable interest rate is currently 9.35% (will be updated for 2026FY in late May)
Ensure SuperStream obligations are met
For super funds that receive employer contributions, the ATO is gradually introducing SuperStream, a system whereby super contributions data is made electronically.
All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.
All funds should be able to receive contributions electronically and you should obtain an Electronic Service Address (ESA) to receive contribution information.
If you change jobs your new employers may ask SMSF members for their ESA, ABN and bank account details.
Ensure you are meeting your Quarterly TBAR Reporting deadlines
From 1 July 2023 you need to be checking in with your accountant/administrator Quarterly
All SMSFs are required to report quarterly, even if the members total super balance is less than $1 million. This means you must report the event that affects the members transfer balance within 28 days after the end of the quarter in which the event occurs.
Example: All unreported events that occurred between 1 April and 30 June 2024 must be reported by 28 October 2023. This means you cannot report at the same time as your SMSF annual return (SAR) for the 2023-24 income year. More info here
ASIC fee increased from 1 July 2023
ASIC is increasing fees by $2 for the annual review of a special purpose SMSF trustee company $63 to $65. The Government is moving gradually to a “user pays” model so expect increases to accelerate in future years. Before 30 June, for $452 you can pre-pay the company fees for 10 years and lock in current prices with a decent discount. There is a remittance form linked here.
On 6 December 2024, regulations were released to allow the commutation of legacy pensions for a limited 5-year period. There is considerable additional detail in this feature so consult an adviser if you are affected, especially to ensure you do not lose other entitlements such as the age pension.
The regulations allow a five-year timeframe for lifetime or life expectancy pensions and MLIS to be commuted.
You have the following options:
▪ withdraw the funds from superannuation (all these clients have previously met a condition of release) ▪ rollover the amount to accumulation phase, or
▪ use the funds to commence an account based pension (if transfer balance cap space is available).
Under this measure, if a lifetime or life expectancy pension is commuted, any reserve supporting that income stream is also added to the commutation value. However, no amount from the reserve is counted tow
HAS NOT PASSED: Relaxing residency requirements for SMSFs– Labor Government has failed to move on this issue.
SMSFs and small APRA funds still do not have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years as the LNP government failed to pass it before the last election and Labor have put it on the backburner. The active member test was also to be removed, allowing members who are temporarily absent to continue to contribute to their SMSF.
Improving the Home Equity Access Scheme – Social security benefits for you or your mum and/or dad
The Home Equity Access Scheme formerly called The Pension Loan Scheme is now up and running. The Government introduced a No Negative Equity Guarantee for HEAS loans and allow people access to a capped advance lump sum payment.
No negative equity guarantee – Borrowers under the HEAS, or their estate, will not owe more than the market value of their property, in the rare circumstances where their accrued HEAS debt exceeds their property value. This brings the HEAS in line with private sector reverse mortgages.
Immediate access to lump sums under the HEAS – Eligible people will be able to access up to two lump sum advances in any 12-month period, up to a total value of 50% of the maximum annual rate of Age Pension (currently maximums are $14,937 for singles and $22,518.60 for couples).
Careful if replacing Income Protection or TPD Insurance (Total Permanent Disability)
Have you reviewed your insurances inside and outside of super? Don’t forget to check your current TPD policies owned by the fund with an own occupation definition as the rules changed a few years ago. So be careful about replacing an existing policy as you may not be able to obtain this same cover inside super again.
There were major changes to Income Protection insurance in 2021 so be very careful about switching insurer unless costs have blown out as new cover is often vastly inferior to current covers. Read more here before switching cover.
Large one-off Personal income or gain – Bring forward Concessional Contributions
For those who may have a large taxable income this year (large bonus or property sale) and are expecting a lower taxable next year you should consider a contribution allocation strategy to maximise deductions for the current financial year by bringing some or all of your 2026FY limit forward to this year. This strategy is also known as a “Contributions Reserving” strategy but the ATO are not fans of Reserves so best to avoid that wording! Just call is an Allocated Contributions Holding Account. See my article on this strategy here.
Providing Proof of Crypto Currency Holdings as of 30 June.
You should be using an exchange that is set up for SMSF accounts. They should provide a Tax Summary but it may cost extra. Some exchanges are now partnering with Specialised services that are experts in Australian to offer tax reports that meet Australian Audit requirements.
The auditor will also want to verify holdings by checking:
An exchange account is set up in the name of the fund
Wallet purchased using funds from the SMSFs cash account
Cold Wallet Audit management extra step: For annual audit purposes, take a screenshot of the assets held in your Ledger wallet (e.g. via the Ledger ‘Live’ App or similar) on 30 June 2023 and also on the day you submit your paperwork and email this to the tax agent at tax time.
29. NALE/NALI applies in the 2025 year (in the sense the ATO are going to enforce it) – please ensure that if members perform services for their SMSF which is their ‘day job’ (ie. Accounting work for Accountants, Building and repair work for tradies, etc) that these are charged at the appropriate commercial rate that they charge their clients. A good article explaining this in more detail here from ASF Audits
Don’t leave it until after 30 June, review your Self Managed Super Fund now and seek advice if in doubt about any matter.
Some for 1 July 2025
Check your Salary Sacrifice or Concessional Contributions as SG rises to 12%
The superannuation guarantee (SG) rate will increase from 11% to 11.5% on 1 July 2024. You’ll need to use the new rate to calculate how much of your $30,000 concessional cap will be available to salary sacrifice or make personal deductible contributions.
Div 296 Tax – valuations of all assets on 1 July 2025 will be crucial.
For those with balances over or close to $3m and used to using low end of property valuations for your asset value, you may need to rethink this strategy as you do not want a large increase in value in future years or it will be caught under the “unrealised gains” sting in the proposed Division 296 Tax.
Warning before you jump into implementation of any strategy without checking your personal circumstances.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation, just click the Schedule Now button up on the left to find the appointment options.
Please consider passing on this article to family or friends. Pay it forward!
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Before ever making Non-Concessional Contributions to your Superannuation of engaging in a re-contribution strategy you always need to check your personal Total Super Balance Cap.
The December 2024 Consumer Price Index (CPI) data has confirmed that the superannuation general transfer balance cap will rise by $100,000, to $2.0 million for the 2025–2026 income year. For SMSFs please remember that each member has their own Transfer Balance Cap (TBC). This increase marks the latest adjustment to the cap, which was first introduced in 2017. The transfer balance cap is a lifetime limit on the amount of superannuation that can be transferred into one or more retirement phase income streams (pension accounts) within your SMSF and/or across industry and retail funds, where earnings on superannuation are currently tax-free. Additionally, income or withdrawals after the age of 60 are generally tax-free. The cap was introduced to promote fairness in the distribution of superannuation tax concessions and to ensure the long-term sustainability of the superannuation system. While there are some flaws, it has been accepted as a fair system.
Unlike other superannuation caps, such as contribution caps, the general transfer balance cap and total super balance caps are adjusted annually based on the CPI, in $100,000 increments, rather than being indexed to Average Weekly Ordinary Time Earnings (AWOTE). The cap has increased progressively: from $1.6 million from 2017 to 2021, to $1.7 million from 2021 to 2023, to $1.9 million from 2023 to 2024, and will rise to $2.0 million for the 2025–2026 year. Please note the Concessional Contribution cap ($30K) and Non-Concessional Contribution Cap ($120K) are not increasing.
Personal Transfer Balance Cap (the thorn in the side if advisers!)
The personal transfer balance cap is specific to each individual when they first start a retirement phase income stream. Your personal cap will match the general transfer balance cap at the time. Therefore, if you start your retirement phase income stream on or after 1 July 2025, your personal transfer balance cap will be set at $2.0 million.
If you began your income stream before 1 July 2025, your personal transfer balance cap would range anywhere from $1.6 million to $1.9 million, depending on the specific year you started your first pension. If you didn’t use the full amount of your personal transfer balance cap at the time, a proportional increase may apply to your personal transfer balance cap on 1 July 2025. So don’t be surprised to be told you have a TBC if $1,713,325 as it can get that very personalised!
What if I contribute too much?
If you exceed your personal transfer balance cap, you must remove the excess from your income stream and either take it in cash or transfer it back into your superannuation account. An excess transfer balance tax would then be payable. The ATO will notify you if you’ve exceeded your cap.
Other Changes Related to Indexation
The indexation of the transfer balance cap will have a flow-on effect on other superannuation measures linked to this cap, including the total superannuation balance test. Starting from 1 July 2025, the total superannuation balance test will increase to $2 million. This balance determines eligibility for making after-tax non-concessional contributions and using the bring-forward rule.
If your total superannuation balance is below $2 million as of 30 June 2025, you’ll be able to make non-concessional contributions starting 1 July 2025, as long as you are under age 75. Additionally, the bring-forward rule will apply against the higher cap.
For those under 75 at 1 July 2025, and if you haven’t triggered the bring-forward rule in the previous financial years, you may contribute up to $360,000. Where an individual’s balance is close to $2 million, they can only make a contribution or use the bring forward to take their balance to $2 million but not beyond.
TSB on 30 June of prior financial year
Contribution and bring-forward available
Less than $1.76m
3 years ($360,000)
$1.76m to < $1.88m
2 years ($240,000)
$1.88m to < $12m
1 year ($120,000, no bring-forward available)
$2m and above
Nil
Changes to Government Co-Contribution and Spouse Contributions Tax Offset
Eligibility for a government co-contribution and entitlement to the spouse contributions tax offset will also be affected by the total superannuation balance test, which will be $2 million from 1 July 2025.
Opportunity
The increase in the superannuation general transfer balance cap (TBC) to $2.0 million for the 2025–2026 income year presents significant opportunities for individuals and SMSF Trustees looking to maximize their retirement savings. As the transfer balance cap (TBC) affects various aspects of superannuation, such as total superannuation balance (TSB) tests and eligibility for non-concessional contributions, it is essential to review your superannuation strategy in light of these changes. Working with an SMSF Specialist Advisor can help you optimize your superannuation contributions to your SMSF, plan for retirement, and ensure that you stay compliant with the latest regulations.
Warning before you jump into implementation of any strategy without checking your personal circumstancesand the specifics of the property you are considering.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then, why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one-on-one consultation (after 1 July 2025 due to our waiting list). Just click the Schedule Now button up on the left to find the appointment options.
Please consider passing on this article to family or friends. Pay it forward!
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
ATO approve $1 million threshold carve out SMSFs that have no members with a total superannuation balance (TSB) of $1 million or more will be able to report TBC transactions annually in line with current processes. This is a permanent carve-out for all SMSFs which meet this condition. The ATO have agreed with our position that individuals who are no risk of breaching the $1.6 million TBC should not be forced into a regular reporting framework. See here for more detail from ATO
I am getting many questions about the workings of the Transfer Balance Account Report (TBAR), Transfer Balance Cap (TBC) and Total Super Balance (TSB). So, in this 3-part series I will explain each one for you starting with your Transfer Balance Account Report. Most of this material is sourced from various ATO webpages and collated here for your guidance with my commentary.
So what is in your transfer balance account (TBA)?
There has always been a problem with the data available to the ATO in terms of how much people have in different phases of superannuation throughout the year with the ATO often having to wait until a few months after the end of the year for APRA fund reporting and nearly 11 months for SMSF data to flow through.
The transfer balance account is a new method designed by the ATO of tracking transactions and amounts in retirement phase. The balance of your transfer balance account determines whether you have space under your cap or if you have exceeded your transfer balance cap at the end of any given day. The transfer balance cap is a limit on the amount you can hold in retirement phase ($1.6 million in 2017–18).
You will start to have a transfer balance account on:
1 July 2017, if you are already receiving a retirement phase income stream at the end of 30 June 2017, or
the day you first commence receiving a retirement phase income stream.
It is important to understand that this TBA includes information from all your superannuation pension accounts via SMSF, Retail, Employer, Industry funds, annuity providers and other funds. It is on a consolidated basis and not per account.
All super providers, including self-managed super funds (SMSFs) and life insurance companies, with members in retirement phase will be required to complete and lodge this report to the ATO. The ATO will collate the data under your TFN and make available your consolidated Transfer Balance Account to you and your advisers.
Your transfer balance account measures your transfer balance, which is the sum of credits less the sum of debits posted to the account.
Now if you are like me then you tend to get totally confused when it comes to what is a debit and what is a credit so let’s take a refresher
My short code is “C+ and D-“ Credit = an addition to your total balance and Debit = a lowering of your total balance
It might be good to clear up some confusion by stating upfront that these events are not reportable.
Events that do not need to be reported include:
pension payments
investment earnings and losses
when an income stream is closed because the interest has been exhausted.
These are Credits to your account
Credits to your transfer balance account increase your transfer balance and reduce your available cap space. The most common transfer balance credit arises when you begin receiving a super income stream (pension) that is in the retirement phase.
The following amounts are credits to your account:
the total value of any super interests that support retirement phase income streams you are receiving on 30 June 2017
the value of new retirement phase income streams, including super death benefit income streams and deferred super income streams, that you begin to receive on or after 1 July 2017
the value of reversionary super income streams at the time you become entitled to them (although the timing of the credit may differ in certain circumstances)
the excess transfer balance earnings that accrue on any excess transfer balance amount you have.
For a capped defined benefit income stream, the credits above are calculated on the special value of the income stream.
The Treasury Laws Amendment (2017 Measures No.2) Bill 2017 provides for an additional credit where a super fund makes a payment towards a limited recourse borrowing arrangement. This payment increases the value of retirement phase interests.
The value of your super interests will be calculated by your super fund(s) accountant or administrator and notified to the ATO.
These are Debits to your account
Debits to your transfer balance account may:
reduce your excess transfer balance, and/or
increase your available cap space.
Events that cause your account to be debited include commutations, structured settlement contributions, and certain other events that cause a change in the value of your retirement phase interests.
Commutations
When a super income stream is fully or partially commuted, your transfer balance account is debited by the value commuted. The debit arises when you receive the lump sum, and applies whether you choose to transfer the lump sum to an accumulation account or withdraw it from super.
You must commute an income stream before you can roll it over to another fund.
Pension payments from your retirement phase account(s) are not commutations and are not debited from your transfer balance account.
Structured settlement contributions
A debit arises for a structured settlement that you receive (as payment for a personal injury you have suffered) and contribute towards your accumulation or retirement phase super interests.
Events resulting in a reduction of your super interest
You may be entitled to a debit in your transfer balance account if you lose some or all of the value of your super interests through events such as fraud, dishonesty, or void transactions under the Bankruptcy Act 1966.
Commutation authorities
The ATO may issue a commutation authority to super providers where a member has exceeded their transfer balance cap. A commutation authority will detail the amount that must be commuted for that member.
Payment split upon divorce or relationship breakdown
Super interests may be split as part of the division of property following a divorce or relationship breakdown. One party (the member spouse) will be required to provide a proportion of their retirement phase super interest(s) to the other party (the non-member spouse).
For either spouse, the debit arises either when the payment split becomes operative (under the Family Law Act 1975) or when they start to have a transfer balance account (whichever is later).
Failure to comply with pension or annuity standards
If your super fund fails to comply with the rules or standards for your income stream, that income stream may cease to meet the definition of a ‘superannuation income stream’. This means it will no longer be eligible for the earnings tax exemption.
The most common situation is where the super fund fails to pay the minimum pension amount required for a financial year under the regulatory rules. If this occurs, for transfer balance cap purposes, the income stream is taken to have stopped meeting the definition at the end of that financial year.
The debit equals the value of your income stream just before it stops meeting the definition. The debit arises in your transfer balance account when the income stream stops meeting the definition. This debit means you will be able to fully commute the income stream, and start a new one that complies with the pension or annuity standards, without breaching your transfer balance cap.
Self-managed super fund (SMSF) reporting
The ATO recognises that this is a major change for SMSFs so as a transitional concession, SMSFs will generally not need to commence reporting using the TBAR until 1 July 2018. The ATO is still currently consulting with industry on the model of event based reporting to apply from 1 July 2018.
TBAR lodgment is available from 1 October 2017 and submitted forms will be accepted from that time onwards if the choice is made to lodge earlier.
You should be talking to your Advisers, Accountants or Administrators to see how they plan to manage your reporting. If you have only been seeing them once a year then you may need to work out a solution for a quarterly update if you are in or near pension phase. You will need your various advisers to work as a team going forward to avoid late reporting. See Are your accountant, lawyer and financial planner working as a team for your benefit?
Although SMSFs with a member balance of over $1,000,000 will not generally need to commence TBAR reporting until 1 July 2018, SMSFs will need to ensure they have appropriately documented income stream valuations and decisions for the 2017-18 year. Until reporting begins, SMSF members must monitor the value of retirement income streams they receive to ensure they will not be in excess of the transfer balance cap from 1 July 2017 onwards.
The general exception to starting to report on 1 July 2018 does not apply:
if the ATO have issued an Excess Transfer Balance (ETB) Determination to a member because they have exceeded their cap and they choose to commute an income stream in their SMSF. Where this applies, the SMSF must report the commutation within 10 business days after the end of the month in which it occurred to avoid a commutation authority being issued. If the member chooses to commute an income stream the SMSF has not yet reported it to the ATO, the SMSF will also need to report the commencement date and value of the relevant income stream at the same time as a separate event
when a commutation authority is issued to an SMSF. The SMSF must abide by legislated reporting requirements. Refer to commutation authorities for more information.
To avoid the incorrect issue of an ETB Determination to a member, you are encouraged to report the following events as soon as possible if they occur before 1 July 2018:
any debit where an SMSF member is commuting an income stream because they have become aware they have exceeded their transfer balance cap
any debit that occurs prior to a member rolling over some or all of their retirement phase income stream out of their SMSF and starting a new retirement phase pension or annuity with another provider
any structured settlement contributions made to the fund on or after 1 July 2017.
Consequences of late reporting
Once your reporting has commenced, lodge the TBAR with the ATO as soon as practicable after the event has occurred to ensure your member’s transfer balance account is updated.
If you do not lodge the report by the required date your member’s transfer balance account will be adversely affected and they may be penalised. You may also be subject to compliance action and penalties.
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
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.
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
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.
There are many reasons to get a superannuation review especially if you are within 15 years of using your super funds more tax effectively (hint over age 45). A lot can be done to dramatically improve your retirement prospects given time. However if you leave it too late, the chances of making significant improvements are limited. Getting good financial advice can make all the difference to the quality of your retirement. You may not want a full advice service but you can just have a Superannuation and Insurance review. So here are a few reasons why a review could be one of the best decisions you make.
You’ve being putting money in to Super for over 20 years and not sure what it’s doing for you. You have more than one superannuation account and cannot keep a track of how them or how they are performing. Consolidating your accounts together could make keeping track of your savings much easier and moving house less of a hassle!
You may be considering adding funds or your tax agent may have recommended some salary sacrifice and you are suddenly more interested in getting value for money.
You may be interested and want to explore the use of a Self Managed Superannuation Fund known as a SMSF (it’s only one of the options available but we can help you assess if it is right for you).
You may not be satisfied with the level of service and advice you are receiving from your superannuation company and/or your adviser if you are getting any at all. Many people receive no service at all but continue paying fees year after year. Is it time for you to step-up and demand advice, we invite clients for a review at least twice per year.
You are concerned that your super or multiple accounts may not be performing very well. Sadly, most people in superannuation schemes have little or no idea how their funds are invested or performing from one year to the next. Reports get thrown in a drawer because the jargon is mind bending!
You may be unsure how much risk you are taking with your superannuation investments. It is undeniable that in order to increase your nest egg value, some risk will need to be taken. However the risk you are taking may not be suitable for you and categories like “Balanced or Core” don’t actually mean what they suggest!.
And how about just getting general health check on your super and how it is performing.
Like many people you have accumulated lots of accounts over the years from various jobs ( I recently consolidated 12 accounts for a couple). It may be beneficial to consolidate them all together in one account (wait don’t rush in, review insurance and fees first).
Identify poor performing superannuation funds and move them to investments that have greater potential for growth or a more consistent return.
You may have an SMSF or Superannuation account sitting in cash and just don’t know what to do as you have lost confidence.
You may have multiple/duplicate insurance arrangements across many funds and be paying premiums for cover that may never pay out.
How a superannuation review works
You are likely to have one or more personal accounts and they could be an industry fund, an employer group plan, a personal retail account, or even a transition to retirement pension .
A relationship with your advisor should last for many years. At Verante and the SMSF Coach, we take the time in our first meeting to understand you, explain how we operate, and what you should expect.
You decide whether you feel comfortable with us.
We determine how we can add value to your set of circumstances.
Together we discover what challenges and opportunities lay ahead.
The second step is our Discovery meeting as we spend a great deal of time gathering the necessary information to build a clearer picture of you. We discover you and your current circumstances – such as family, financials and aspirations. We also help you complete a Risk Profiling Questionnaire; this is designed to help identify what your attitude to risk is and your comfort with different classes of investment.
The third step is to obtain full details of all of your current superannuation, investment, debt and insurance arrangements. We ask superannuation companies more than 20 questions, so that we get a full and complete picture of your current situation.
The fourth step is where we complete a full and comprehensive analysis of your current arrangements, to identify if your super accounts are delivering on expectations, that insurance cover is valid and will protect you and your family and fees are under control.
Step five is to recommend a suitable strategies to move your Superannuation balance forward, should the review reveal that your existing accounts are not working as well as they should be.
Step six is to implement the recommendations, which may mean re-organising and consolidating your accounts into one super or even a pension fund.
And finally step seven is to keep your arrangements under regular review to ensure that it continues to perform and meet your objectives.
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!
Also delighted to be named in the 50 most influential investors and win the top awards in the 2017 and 2018 SMSF and Accounting Awards.
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.
Most people who have not sat with a planner or read in detail the newsletters from their superannuation funds would believe that they can only access their superannuation when they actually retire and stop working. But there are so many other circumstances that could trigger an all-important “Condition of Release” and make your retirement funds available to you. In this guide for SMSF trustees I will concentrate on meeting the Retirement Condition of Release but you can find out about the other conditions of release here (click it later).
Acknowledgement: I have relied on the excellent guidance of the AMP TAPin team for the majority of the content in this article. They write great technical articles for advisors and I try and make them SMSF trustee friendly.
What is the Retirement condition of release
The retirement condition of release is often subject to complexity and doubt. However, understanding the rules became even more important after 1 July 2017 resulting from the 2016 Budget measures. The tax exemption on investment earnings supporting a Transition to Retirement Income Stream- Accumulation Phase (TRIS – Accumulation) is no longer available. However, a TRIS will regain its tax exempt status once the ‘retirement’ condition of release is satisfied and it becomes a Transition to Retirement Income Stream- Retirement Phase (TRIS – Retirement Phase). Therefore, understanding what constitutes ‘retirement’ for an SMSF member in a TRIS is critical, to achieve that holy grail of a tax-free retirement pension.
Conditions of release – overview
Death is the only condition of release that requires compulsory cashing of benefits. There is no requirement under any other condition of release to either cash out a benefit or commence an income stream from your SMSF, and member accounts can remain in accumulation phase indefinitely.
If you do leave your member account in accumulation phase, it will be subject to an income tax rate of up to 15% instead of a 0% tax rate for investments backing a pension income stream. There is also now a $1.9m limit on how much can be transferred into an income stream with people who already had some money in pension phase having as pro-rata limit of between $1.6m and $1.9m. You can Check on MyGov.> ATO service> Super Tab> Information to see your limit.
The most common conditions of release to access your account are:
Reaching preservation age of 60 and retiring.
Transitioning to retirement (after attaining preservation age): SMSF members who are under 65 and have reached preservation age, but remain gainfully employed on a full-time or part-time basis, may access their benefits as a non-commutable income stream called a Transition to Retirement Income Stream- Accumulation Phase (TRIS – Accumulation Phase) . However from 1 July 2017 that income stream will not be tax exempt until you meet a further Retirement Condition of Release.
Reaching age 65: a Member who is 65 years old may access their benefits anytime without restrictions.
Retirement condition of release
For superannuation purposes, a member’s retirement depends on their age and future employment intentions. A person cannot access superannuation benefits under the retirement condition of release until they reach preservation age. Once you reach your preservation age, the definition of retirement depends on whether the person has reached age 60.
If a person has never been gainfully employed in their life, they cannot use the retirement condition of release to access their Preserved Benefits. Such a person would need to satisfy another condition of release to access their benefits (eg reaching age 65, invalidity, terminal illness, severe financial hardship).
Age 60 but less than 65
When a person has reached age 60, retirement occurs when an arrangement under which the person was gainfully employed has ceased on or after the person reached age 60. It does not matter that the person may intend to return to the workforce. This condition presents an opportunity for many people to move a taxed pension to tax exempt phase earlier.
Example: Reaching age 60
Michelle has worked as a nurse for many years. She resigns from this employment on her 61st birthday. Three months later, Michelle takes up a 3 day position as a grief counsellor. Because Michelle has ceased employment as a nurse after her 60th birthday, she can access all her superannuation accumulated up until that point.
Situations sometimes arise where a person, aged 60 or over, is in two or more employment arrangements at the same time. According to APRA Prudential Practice Guide SPG 280, the cessation of one of the employment arrangements is the condition of release in respect of all preserved benefits accumulated up until that time. The occurrence of the ‘retirement’ condition of release in these circumstances will not enable the cashing of any benefits which accrue after the condition of release has occurred. A person will not be able to cash those benefits until another condition of release occurs (eg,s he also leaves her second employer).
Example: Two employment arrangements
Frank (age 63) works part-time as a school janitor. During the school holidays, he had a short-term six-week contract to work as a Census form collector. The contract finished in September 2021.
Because Frank has ceased one of his employment arrangements, he can access all his superannuation up until that point. However, any later contributions made (employer and personal contributions) and earnings will be preserved.
Director and Employee of own company
Sometimes a person is both an employee and director of their own company. They may wish to cease their employment duties with the company, but retain their directorship. The question arises as to whether such a person (age 60 – 64) can access their preserved superannuation benefits.
If a person is engaged in more than one arrangement of employment, the person can cease any arrangement of employment to meet the ‘age 60’ definition of retirement.
Therefore, as long as a person’s two roles are separate and they terminate in their capacity as an employee of the company, then even though they are still employed in the capacity as director, that person can access their preserved superannuation entitlements.
Note that there must be a distinct termination, ie cessation of all duties as an employee, and the person should now only operate in the capacity as a director for the company.
We see this lot where often a spouse had helped out for years but as the children join the business or the business matures, the requirement for the spouse to continue turning up day-to-day reduces. They can step away from the duties as an employee but they may still handle the liaison with the tax agent on the financials, ASIC re company registration and the ATO to pay tax instalments, which are more akin to Directors Duties.
When is a person gainfully employed?
Someone is said to be ‘gainfully employed’, for superannuation purposes, where they are employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation, or employment.
Gainful employment can either be on a part-time or full time basis.
Part-time means at least 10 hours per week and less than 30 hours per week.
Full time means at least 30 hours per week.
The definition of gainful employment involves two clear components:
Employment or self-employment, and
Gain or reward.
The term employee is not specifically defined in the SIS Act for this purpose; its common law meaning must be considered. One definition of employee is ‘a person in a service of
another under any contract of hire (whether the contract was expressed or implied, oral or written), where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed’.
In contrast, self-employed people work for themselves instead of an employer, drawing an income from a trade, profession, or business that they operate personally. It would be expected that someone who claims to be self-employed would be running their own business (e.g. have a business plan, financial records, an ABN, a regular and frequent level of activity in the business, advertising etc).
The superannuation legislation provides no guidance as to what ‘running a business’ is. However, taxation law does. In particular, paragraph 13 of Tax ruling 97/11 outlines relevant indicators of running a business:
whether the activity has a significant commercial purpose or character;
whether the taxpayer has more than just an intention to engage in business;
whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity;
whether there is repetition and regularity of the activity;
whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business;
whether the activity is planned, organised and carried on in a business-like manner such that it is directed at making a profit;
the size, scale and permanency of the activity; and
whether the activity is better described as a hobby, a form of recreation, or a sporting activity.
Gain or reward is not defined in the superannuation legislation and therefore takes its ordinary meaning. The Macquarie Dictionary defines gain as ‘to get an increase, addition or profit’. Reward is defined as ‘something given or received in return for service, merit, hardship, etc’.
In the context of satisfying the gainful employment definition, it follows that the service, merit, or hardship must be completed with some expectation of an increase, addition, or profit. That is, there must be a direct link (or nexus) between the activity undertaken and the reward provided for the activity. The actual level or amount of gain or reward does not necessarily have to be commensurate with the level of effort or activity undertaken. So, the level of reward could be relatively small yet still suffice – as long as there is a direct link to the activity being performed. Further, the reward doesn’t necessarily have to be received as cash, but could be received as services, fringe benefits, or other valuable consideration.
The gain or reward element is typically difficult to satisfy in the case of charity or volunteer work. Non-paid work for a charity, for example, would clearly not qualify as gainful employment. Mere reimbursement of expenses would not seem to constitute gain or reward.
Also, as discussed earlier, gainful employment for superannuation purposes requires an individual to be either employed or self-employed. Most charities or volunteer organisations will not consider their charity or volunteer workers to be employees.
Transition to retirement pensions – impacts of meeting retirement condition of release
Transition to Retirement Income Stream (TRIS) condition of release allows a member to access their superannuation as a non-commutable income stream once they have reached preservation age called a Transition to Retirement Income Stream- Accumulation Phase (TRIS – Accumulation Phase) . A non-commutable income stream for TRIS purposes is subject to a maximum annual draw down of 10% per annum. Preserved Benefits cannot be accessed through a TRIS as a lump sum until it meets the new “Pension phase” position.
From 1 July 2017 the tax exemption on investment earnings supporting a TRIS – Accumulation Phase is no longer available. The actual income stream (pension payments) will still be tax free after 60. However, a TRIS will regain its tax exempt status once the ‘retirement’ condition of release is subsequently satisfied, for example, where the individual terminates employment at any stage on or after age 60. Its a fairly simple process to confirm to your Pension provider that you have met that further condition of release and they may authomatically move you to Transition to Retirement Income Stream- Retirement Phase (TRIS – Retirement Phase) at 65 anyway, but its worth confirming with them in writing.
It will be vital for SMSF trustees to immediately contact their Accountant/Administrator should the member retire permanently from the workforce, or terminate employment on or after age 60. When the administrator is notified that a no cashing restriction condition of release occurs (eg retirement), the balance of the TRIS account (at that stage) will be converted to a Retirement phase account-based pension (ABP), and the tax exemption on earnings will apply. However, it will then also count towards the individual’s $1.6 – $1.9m million pension transfer balance cap and needs to be reported to the ATO within the new reporting guidelines
Reaching age 65 will automatically result in a TRIS pension becoming a Transition to Retirement Income Stream- Retirement Phase (TRIS – Retirement Phase) and obtaining tax exemption on earnings, if within the individual’s $1.6-$1.9 million pension transfer balance cap.
Evidencing cessation of gainful employment
The cessation must be genuine. Genuine terminations of employment will typically involve the payment of accrued benefits, such as annual and long service leave. SMSF trustees should retain written evidence of the member’s cessation of gainful employment on file and copy to the administrator so the fund auditor has access.
Penalties apply to members, trustees and those who promote ‘illegal early access schemes’ to improperly access superannuation prior to meeting a condition of release.
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 Teams or Zoom. Just click the Schedule Now button up on the left to find the appointment options.
Liam Shorte B.Bus FSSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 9899 3693, Mobile: 0413 936 299
PO Box 6002 NORWEST NSW 2153
40/8 Victoria Ave, Castle Hill NSW 2154
Corporate Authorised Representative of Viridian Select Pty Ltd ABN 34 605 438 042, AFSL 476223
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Bob Farrell is a Wall Street veteran with over 50 years of experience in the investment business. He started as a technical analyst at Merrill Lynch in 1957. Bob’s ten investment rules have come from his decades of experience with all sorts of markets: dull, bull, bear, bubbles, and crashes. I thought I would share with you a short version of these Top Ten Rules to guide SMSF Trustees in reviewing their fund’s Investment Strategy
Markets tend to return to the mean (average price) over time. Basically, this means that after a strong uptrend or downtrend, prices tend to move back toward the long-term average.
Excesses in one direction will lead to an opposite excess in the other direction. Similar to above. It is not a coincidence that the ASX 300 has not reached the previous high 9 years after the pre-GFC top in 2008.
There are no new eras—excesses are never permanent. “This time is different” are the four most dangerous words in investing.
Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways. Corrections are as ugly as advances are exciting.
The public buys the most at the top and the least at the bottom. Greed and fear drive the investing public far more than logic.
Fear and greed are stronger than long-term resolve. This is a corollary to number 5. It is easy to say you are a long-term investor when your account is rising; much more difficult when you find yourself down 40%.
Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names. A rally that has few stocks rising shows modest conviction and is more indicative of a market about to falter. Conversely, a rally that encompasses a broad number of stocks tends to be indicative of a “healthy” bull run.
Bear markets have three stages—sharp down, reflexive rebound, and a drawn-out fundamental downtrend. Bear markets often start with a sharp, swift decline, then a sharp rebound, then the longer, grinding down of the third stage.
When all the experts and forecasts agree, something else is going to happen. If everyone expects something “unexpected” to happen, the greater likelihood is it doesn’t. By definition, a “black swan” event is something few see coming, but after the fact, many say it should have been foreseen by everyone.
Bull markets are more fun than bear markets. Psychologically, it is easy to invest in a bull market; after all the market confirms your “skill” and “brilliance” by going up. In a bear market, fear, panic, and even depression take over as nothing seems to go your way.
Recently Lance Robert’s website, realinvestmentadvice.com, reviewed Bob’s investment rules with great illustrated graphs to back up the veracity of those 10 investment rules. I would highly recommend a visit to that article for those needing further detail.
Mr. Farrell’s rules are not meant as hard and fast rules but something to keep in mind as you review you strategy and to ensure you do a fair critical review rather than just coasting along. There are always exceptions but these are good rules to keep in mind when reviewing your Self Managed Superannuation Fund investment strategy and positioning your portfolio for long-term investing success.
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.
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.
OK, It has happened. I always worried that British pride and fear of immigration would lead to this outcome. So where to from here? What does it mean for SMSF Investors?
The situation is unprecedented and there is no verified or tested procedure for EU exit. This means there is uncertainty as to what happens next. You can expect that:
Article 50 of the EU constitution – the law governing the process of the UK’s divorce from the EU – will be triggered
This will kick-start the formal two-year process determining the terms of the UK’s EU exit, including the shape of its future access to the EU Single Market
There will be significant pressure on Prime Minister David Cameron to resign (Update: that has happened) and for Scotland to review its position within the UK
In the short run, Self Managed Superannuation Fund investors can expect:
Shock to investor confidence and increased asset price volatility primarily in the EU but also with Aussie companies who have exposure to that region especially the UK (BTT, CYBG, Henderson, HVN, IRESS)
This vote combined with global economic conditions, high asset valuations, our election next month and the progress towards the U.S. election in November will all likely contribute to volatility through the second half of the year.
Further strength in the Aussie Dollar short-term and declines in the pound (time to pay in advance for the UK trip of a lifetime!)
Downward pressure on equities, especially financial sector stocks and companies with overseas earnings. Time to buy the world at a discount. If not confident then look to great proven managers like Magellan and Platinum to pick the opportunities and ETFs from Vanguard, Ishares, State Street and Betashares for core or sector specific exposure.
Flight to safety will see USD and GOLD seen as safe havens. We can point you to the right people if interested in Bullion
Upward pressure on corporate bond yields owing to increased uncertainty and the worsening short term growth outlook – as with equities, the financial sector is most
exposed. Look to proven managers in this fixed interest and credit space like Vimal Gor at BT Investment Management to guide you.
Modest declines in-house prices are possible, as our banks may find it harder to raise overseas debt and therefore pass on increased costs to borrowers and hence curtail new purchases.
The leave vote will create short-term volatility and hurt growth prospects as markets deal with increased uncertainty. Inevitably however, the increased volatility should open up potential opportunities to benefit tactically through buying of those companies and assets that show solid traits of being well capitalised and with good management that should be able to best withstand the uncertainty. In a nutshell you will get a one-off opportunity to buy quality assets as a discount but you must search for quality among the chaff.
From time to time, as with the Greek debt Crisis, equity markets experience heightened, event-related volatility. A good adviser will ensure that you focus on your long-term goals and understand:
Volatility is a normal part of long-term investing and equity returns premium revolve around getting higher than cash returns for accepting that volatility.
Avoid being swayed by media hype and overly negative sentiment.
SMSF trustees and other long-term investors are usually rewarded for taking additional equity risk when there is “blood on the streets”
Market corrections can create attractive opportunities to buy quality assets at a discount. Afraid to pick sectors then use a multi-manager like Russell Investments to spread the risk
Some active investment can help navigation in periods of increased volatility. That is why we at Verante believe in passive/active blended portfolio design
So what to do?
Make sure you have some cash ready for purchases
Review your portfolio for any stocks or assets over exposed to Europe and seek research or comment on them
Wait for some sign of the market bottoming and take small and targeted purchases in discounted sectors without getting carried away.
Research , research and more research or outsource / work with SMSF specialist advisors like us who have made the contacts and done the leg work in portfolio design.
Finally a table that sums up the fact that those who have to live with this decision were against it.
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
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.
There are many reasons to get a superannuation review especially if you are within 15 years of using your super funds more tax effectively (hint over age 45). A lot can be done to dramatically improve your retirement prospects given time. However if you leave it too late, the chances of making significant improvements are limited. Getting good financial advice can make all the difference to the quality of your retirement. You may not want a full advice service but you can just have a Superannuation and Insurance review. So here are a few reasons why a review could be one of the best decisions you make.
You’ve being putting money in to Super for over 20 years and not sure what it’s doing for you. You have more than one superannuation account and cannot keep a track of how them or how they are performing. Consolidating your accounts together could make keeping track of your savings much easier and moving house less of a hassle!
You may be considering adding funds or your tax agent may have recommended some salary sacrifice and you are suddenly more interested in getting value for money.
You may be interested and want to explore the use of a Self Managed Superannuation Fund known as a SMSF (its only one option but we can help you assess if it is right for you).
You may not be satisfied with the level of service and advice you are receiving from your superannuation company and/or your adviser if you are getting any at all. Many people receive no service at all but continue paying fees year after year. Is it time for you to step-up and demand advice, we invite clients for a review at least twice per year.
You are concerned that your super or multiple accounts may not be performing very well. Sadly, most people in superannuation schemes have little or no idea how their funds are invested or performing from one year to the next. Reports get thrown in a drawer because the jargon is mind bending!
You may be unsure how much risk you are taking with your superannuation investments. It is undeniable that in order to increase your nest egg value, some risk will need to be taken. However the risk you are taking may not be suitable for you and categories like “Balanced or Core” don’t actually mean what they suggest!.
And how about just getting general health check on your super and how it is performing.
Like many people you have accumulated lots of accounts over the years from various jobs ( I recently consolidated 12 accounts for a couple). It may be beneficial to consolidate them all together in one account (wait don’t rush in, review insurance and fees first).
Identify poor performing superannuation funds and move them to investments that have greater potential for growth or a more consistent return.
You may have an SMSF or Superannuation account sitting in cash and just don’t know what to do as you have lost confidence.
You may have multiple/duplicate insurance arrangements across many funds and be paying premiums for cover that may never pay out.
How a superannuation review works
You are likely to have one or more personal accounts and they could be an industry fund, an employer group plan, a personal retail account, or even a transition to retirement pension .
The first step is to complete a Risk Profiling Questionnaire; this is designed to help identify what your attitude to risk is and your comfort with different classes of investment.
The second step it to complete a Fact Find about your personal circumstances so that we have a full understanding of you current situation, your future goals and objectives.
The third step is to obtain full details of all of your current superannuation and insurance arrangements. We ask superannuation companies more than 15 questions, so that we get a full and complete picture of your current situation.
The fourth step is to complete a full and comprehensive analysis of your current arrangements, to identify if your super accounts are working as they should be, that insurance cover is valid and will protect you and your family and fees are under control.
Step five is to recommend a suitable investment strategy to move your Superannuation balance forward, should the review reveal that your existing accounts are not working as well as they should be.
Step six is to implement the recommendations, which may mean re-organising and consolidating your accounts into one super or even a pension fund.
And finally step seven is to keep your arrangements under regular review to ensure that it continues to perform and meet your objectives.
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
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.
So you have a great idea to move some assets to your SMSF but you want to stay within the rules and keep your fund compliant. Then you hit the jargon associated with Superannuation rules and regulations.
You need to understand who are “related parties” of your SMSF for two reasons, to ensure compliance with the acquisition from a related party rules and to determine the in-house assets.
A related party is defined in the Superannuation Industry Supervision) Act 1993 known as the SIS Act. This is the bible when it comes to Superannuation so you should save that link above. Anyway in the SIS Act sec 10(1) a related party is defined as:
Fund member
Standard employer-sponsor of the fund or
Part 8 associate of a fund member or a part 8 associate of a standard employer-sponsor of the fund.
Ok the first one is easy. Any member including you yourself is a related party.
Standard Employer
A standard employer sponsor of a fund is an employer who contributes to the fund due to an agreement between the employer and the trustee of the fund. These were common in the early days of SMSFs but largely non-existent now.
Where an employer only contributes to a fund due to an agreement between the member and the employer such as under a salary sacrifice arrangement, they will not be considered a standard employer sponsor.
If an SMSF has a standard employer sponsor, which would be uncommon, the relationship will be noted either in the trust deed or in an attached schedule to the deed.
Part 8 associate
Now prepare for a headache to hit you hard after reading this one.
Part 8 associates are broken down in the legislation to Part 8 associates of individuals, companies and partnerships. However, if there is no standard employer sponsor, we only need to examine the part 8 associates of the members who will always be individuals.
The part 8 associates of a member are:
a relative of the member (parent, grandparent, brother, sister, uncle, aunt, nephew, niece, linear descendant or adopted child of the member or their spouse or a spouse of the aforementioned)
other members of the SMSF (a person who is not a member but acting as individual trustee or director under an Enduring Power of Attorney is not necessarily a Part 8 associate)
a partner of the member (legal partnership, not ‘business partners’ i.e. company directors) and their spouses and children
the trustee of a trust the member controls and
a company sufficiently influenced by, or in which majority voting interest is held by the member and their Part 8 associates either individually or together.
A member of the fund will be deemed to control a trust where the member and/or their part 8 associates are:
entitled to a fixed entitlement of more than 50 per cent of the capital of the trust,
entitled to a fixed entitlement of more than 50 per cent of the income of the trust,
able or accustomed (formally or informally) to direct the trustees to act in accordance with their directions or
able to appoint or remove trustees.
A company will be deemed to be controlled by a member where the directors are accustomed or under an obligation to act under the instructions of the member and/ or their Part 8 associates or the member and/ or their part 8 associates have more than 50 per cent of the voting rights.
OK, so I warned you to beware of the headache inducing nature of dealing with “Part 8 Associates”. Was I right or was I RIGHT!
The best advice I can give you is to get advice before transferring assets and ask for the advice and get that advice in writing so all parties are sure of the scenario and no mistakes are made.
Are you 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.
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.
Whether you are a long-term investor or an opportunist, many investors find comfort in knowing that many others are investing the same way they are and they get caught up in the media hype on a certain sector. Think of the Dot Com craze in the late 90’s when many invested in this sector even though they did not understand it well and as prices rose even the hesitant among investors poured more money in for fear of missing out or FOMO as I prefer to term it. A good adviser should help you identify the risk of these fads and keep you well diversified.
Here is a good educational video from Franklin Templeton Investments on the subject.
I believe that you always need to do your own research on an investment and then cross check that with others. Be prepared to listen to those who may seem wacky, over optimistic or pessimistic before making your decisions. A good Self Managed Super Fund advisor should be able to get you a selection of research from different sources to stress test any investment.
Bubble’s go back a long time, even centuries and while we are weary of each investment that crashes we rarely learn enough to avoid the next one. From my personal collection is one of my favourite prints called Gekko’s Tulip Mania which you may have seen in the movie Wall Street 2. I have it hanging on my office wall as a constant reminder! You can read more on this bubble at Wikipedia – Tulip Mania
“This is the greatest bubble story of all time… they call it the Tulip Mania.” – Gordon Gekko
For those looking for a truly Australian history of bubbles I would recommend reading a 2003 paper by the John Simon and published by the RBA available free online called Three Australian Asset-price Bubbles
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.
The full pricing and allocation details for Australian public applicants has been indicated in a Government Press Release. Applicants will be able to get confirmation of their individual allocation from Tuesday, 25 November 2014 by visiting medibankprivateshareoffer.com.au or calling 1800 998 778. Applicants will need to have their Application Reference Number available.
Transaction confirmation statements will be sent to successful applicants from Thursday, 4 December 2014.
The Government has also exercised its right to claw back a further 20 per cent of the shares previously allocated to the Broker Firm Offer which will no doubt annoy the Broking community even further after a huge scale back in their offer. I cannot help feel there will be a huge amount of shareholders with mediocre holdings and headaches for their accountants and advisers trying to track applications, allocations, scale backs and refunds of excess funds.
Medibank Private will list on the ASX at 12.00pm AEDT on Tuesday, 25 November 2014. Its ASX code will be MPL.
Final price per share paid by institutional investors
$2.15
Discount per share on final insto price for retail investors
Medibank Private Share Offer – How Much Will You Get
General Public Offer
Applicants who applied under the General Public Offer have received allocations as follows:
General Public Offer Applicants who did not pre-register who applied for
Receive*
$2,000
The full amount you have applied for
$2,001 to $7,000
$2,000 + 75.00% of your Application within this band
$7,001 to $14,000
$5,750 + 20.00% of your Application within this band
Over $14,000
$7,150 + 5.00% of your Application within this band
General Public Offer Applicants who pre-registered who applied for
Receive*
$2,000 to $2,300
The full amount you have applied for
$2,301 to $7,000
$2,300 + 86.25% of your Application within this band
$7,001 to $14,000
$6,353.75 + 23.00% of your Application within this band
Over $14,000
$7,963.75 + 5.75% of your Application within this band
Policyholder Offer
Applicants who applied under the Policyholder Offer have received allocations as follows:
Policyholder Offer Applicants who did not pre-register who applied for
Receive*
$2,000 to $2,300
The full amount you have applied for
$2,301 to $7,000
$2,300 + 86.25% of your Application within this band
$7,001 to $14,000
$6,353.75 + 23.00% of your Application within this band
Over $14,000
$7,963.75 + 5.75% of your Application within this band
Policyholder Offer Applicants who pre-registered who applied for
Receive*
$2,000 to $2,600
The full amount you have applied for
$2,601 to $7,000
$2,600 + 97.50% of your Application within this band
$7,001 to $14,000
$6,890 + 26.00% of your Application within this band
Over $14,000
$8,710 + 6.50% of your Application within this band
For example, a General Public Offer Applicant who did not pre-register who applied for $10,000 will receive:
Application band
Receive*
$2,000
$2,000 (100% of $2,000)
$2,001 to $7,000
$3,750 (75% of $5,000)
$7,001 to $14,000
$600 (20% of $3,000)
Over $14,000
n/a
Total
$6,350
* The final allocation of Shares will be subject to rounding and application of the Final Price to any allocation above $250,000.
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.
The SMSF Coach 