Liam Shorte

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All posts tagged Tax Planning

How does the Budget 2016 affect contributions to an SMSF

I am breaking the Budget down in to bite size chunks with strategies to consider going forward for SMSF Trustees. The first part which dealt with pension strategies is available here . This second part deals with changes to contribution options, methods and caps.

Before I go into detail here is a summary of the changes that are relevant to SMSF members (No coverage of Defined Benefit Schemes in this article):

Concessional (Pre-Tax Contributions like employer superannuation guarantee (SGC), salary sacrifice and those contributions where you claim a tax deduction).

Reduction in the concessional contribution cap to $25,000 regardless of age
Carried forward concessional cap for account balances below $500,000 from 1 July 2018
All individuals under 65 will be eligible to claim a tax deduction for personal contributions (bye bye 10% rule). work test applies ot over those 65
Reduction in income threshold to $250,000 where additional super contribution tax applies
Reduction in contribution tax for people earning less than $37,000
Extension of low-income spouse contribution tax offset

Non-Concessional (Post Tax Contribution like personal after tax contributions and Government co-contributions).

Reduction in Non-concessional contribution cap limit to $100 per annum
Reduction of existing annual non-concessional bring forward provisions

Now the detail:

Reduction in the concessional contribution cap to $25,000 regardless of age

The concessional contribution cap will be reduced from the current level of $30,000 to $25,000 from 1 July 2017, irrespective of the age of the individual. The higher cap of $35,000 that currently applies to individuals over age 50 will be abolished. The reduced cap will continue to be indexed in future years in line with wages growth.

Carried Forward or Catch-up concessional contributions
From 1 July 2018 individuals will be able to make additional concessional contributions where they have not reached their concessional contributions cap in previous years. Access to these unused cap amounts will be limited to those individuals with a superannuation balance less than $500,000. Unused amounts accrued from 1 July 2018 will be able to be carried forward on a rolling basis for a period of five consecutive years.

This measure allows some additional flexibility in the timing of your contributions like making $125,000 for a tax deduction on the sale of a property or share portfolio if you did not make contributions in the previous 4 years. Your ability to save may vary throughout your career and this measure will assist to some extent, but falls well short of my preferred option for a lifetime cap on concessional contributions. The restriction based on size of account balance will add complication to the administration of this measure when multiple funds are involved.

All individuals under 65 will be eligible to claim a tax deduction for personal contributions

From 1 July 2017, all superannuation fund members up to age 65 will be able to claim an income tax deduction for personal superannuation contributions up to the concessional contribution cap ($25,000), regardless of their employment circumstances. This is good news for people who are partially self-employed and partially wage and salary earners, and individuals whose employers do not offer salary sacrifice arrangements, as they will benefit from this proposal. Personal contributions for which a tax deduction is claimed will count towards the concessional, rather than the non-concessional cap.

While I accept the government’s intention is to increase flexibility for more people to access the concessional contribution cap if they are able to do so, the mechanism requiring individuals to notify their fund of their intention to claim a tax deduction for their personal contributions will add considerable complexity to fund administration. the “she’ll be right” and “I’ll do it later factor” will lead to many missing opportunities.

Over 65’s will still need to meet the work test.

Reduction in income threshold to $250,000 where additional super contribution tax applies

From 1 July 2017, individuals with “relevant income” greater than $250,000 will pay an additional 15 per cent tax on their concessional contributions, down from $300,000. The additional tax, referred to as “Division 293 tax” after the section of the tax legislation which governs the tax, will be payable where the individual’s taxable income (including reportable fringe benefits and certain other amounts) plus concessional contributions (excluding those that exceed the concessional contributions cap) is greater than the $250,000 threshold.

Superannuation still remains attractive despite this change, the 30% tax applied to concessional contributions is still less than the marginal tax rate on earnings so contributing to super remains attractive. But with the lower $25,000 concessional contribution there will be limited scope for you to make optional concessional contributions. For example, if you earn $250,000 and your employer pays the 9.5% SG on your full salary this is an annual employer contribution of $23,750 which has almost fully utilised the new lower cap. If you are on a higher income with disposable income you may look for alternatives outside superannuation or top up your partner/spouse’s superannuation (and potentially receive a tax offset if they earn less than $37,000).

After earlier reports that the threshold would be reduced to $180,000, the proposed threshold of $250,000 means the tax will apply to only around 1 per cent of superannuation fund members. Retention of the existing mechanism which minimises the administrative costs to superannuation funds associated with this tax is welcome.

Reduction in tax for people earning less than $37,000

From 1 July 2017, the Government will introduce a Low Income Superannuation Tax Offset (LISTO) to reduce the tax on superannuation contributions for low-income earners. The measure will apply to individuals with taxable income less than $37,000, and will effectively refund the tax on concessional contributions up to an annual cap of $500. This measure will replace the Low Income Superannuation Contribution (LISC) which was scheduled to be abolished from 1 July 2017, however, the mechanism will be slightly different. Rather than the government making a direct
contribution to the individual’s superannuation account, the offset will apply to the contribution tax deducted by the superannuation fund. The Australian Taxation Office will determine an individual’s eligibility for the LISTO and advise their superannuation fund annually. The fund will then contribute the LISTO to the individual’s account. The government will consult on the implementation of this scheme.

Extension of low-income spouse contribution tax offset
The government will increase access to the low-income spouse superannuation tax offset by raising the income threshold for the low-income spouse from $10,800 to $37,000 and phasing out up to $40,000. This arrangement provides a tax offset of 18 per cent of contributions made by the contributing spouse, up to a maximum offset of $540 per annum.

Non-concessional contribution cap limit of $100,000 or phasing down towards $300,000 using the bring forward provisions

For 2016-17 the single year capped contribution amount is $180,000 and then from 1 July 2017 it reduces to $100,000. So this year you can still use the bring forward rule to contribute the full $540,000 before June 30th 2017 and that has been confirmed by treasury. However if you do not have enough to meet that full contribution limit you can still trigger your cap by contributing at least $180,001 before the end of the year. Note that you may also have already triggered that rule in one of the 2 previous financials years and be wondering how much of the cap you have remaining. Well this table will clarify that for you.

bring-forward-caps

In summary the Limit to Bring Forward Contributions based on year triggered are:

bring-forward-caps-summary

See a full explanation in this article : So How Much Can I Contribute to my SMSF Using the Bring Forward Rule

The cap now also limits the ability to use the cash-out and recontribution strategy for members who have triggered a condition of release. We normally used this between age 60 -65 to reduce the taxable component of your account balance. Before considering this strategy you should check the available lifetime cap with your administrator / advisor including all retail / industry funds you have been a member of at any time. Many SMSF members took annual pensions and simply recontributed the payments as NCC every year. DO NOT DO THIS! check your cap first PLEASE!

Phew! that was a lot!

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.

2 Comments

by SMSF Coach - Liam Shorte on May 5, 2016 • Permalink

Posted in Contribution Strategies, Contributions, Salary Sacrifice, Superannuation Splitting, Tax Planning

Posted by SMSF Coach - Liam Shorte on May 5, 2016

https://smsfcoach.com.au/2016/05/05/how-does-the-budget-2016-affect-contributions-to-an-smsf/

How does the Budget 2016 affect those with SMSF pension / Income streams

Budget 2016 Analysis

I am breaking the Budget down in to bite size chunks with strategies to consider going forward for SMSF Trustees. Let’s start with Pensions.

The government is removing the tax exemption for earnings on assets supporting ‘transition to retirement’ pension / income streams but has allowed the pension payments and withdrawals from superannuation by people over age 60 to remain tax-free. No special rules for Self Managed Superannuation funds so these rules apply to all.

Taxing Transition to Retirement Pension earnings

From 1 July 2017 in the TTR pension phase of superannuation the tax-exemption on earnings will no longer apply to transition to retirement (TTR) pensions from.

Most TTRs were started as a tax planning strategy using salary sacrifice and the exempt status of pension income. From 1 July 2017 tax will be applied to the earnings derived in a TTR pension.

In addition, you cannot elect for payments to be taxed as lump sums rather than as pension payments to gain a better tax outcome. We used this for people aged 55-60 and fully retired up until now

Strategy implications for current TTR clients:

SMSFs with existing TTRs for members may wish to maintain them until the changes take effect (and legislation is passed). At that point they should consider one of the following options:

Do a commutation of the pension and roll back to the accumulation phase of superannuation
Convert to a full account-based pension if a condition of release has been met
Continue the Transition to Retirement pension if it suits your circumstances.

Seek advice before making any rash decisions.

From 1 July 2017, 15% tax will be applied to the earnings derived in a TTR pension and combined with the lower concessional contribution caps these strategies are likely to be less effective and less popular but still offer some opportunities for clients so we will review the appropriateness on an individual basis before 1 July 2017

Pension transfer cap of $1.6 million

From 1 July 2017, the maximum amount of superannuation that a person can transfer into pension phase is limited to $1.6 million.

Clients who are already in pension phase before 1 July 2017 will be required to transfer any balance above $1.6 million back into accumulation phase. Clients who are starting pensions from 1 July 2017 cannot roll more than $1.6 million into the pension phase (in total), but the balance rolled over can grow over $1.6 million due to earnings without penalty. some CGT relief will be available on investments moving back to accumulation phase but I will deal with that in a later blog.

The capital value of any Defined Benefit Income Streams will be counted towards the $1.6m limit using a multiple of 16 times the annual income stream.

The ATO has promised a portal or access to a central place where people can check their balances across SMSF, retail, DB and industry funds will be available soon.

Amounts transferred in excess of $1.6 million to retirement will be taxed in a similar way to excess non-concessional contributions. That means both the excess amount and earnings on that excess amount in retirement phase will be taxed. So please do not ignore this limit which applies from 01 July 2017.

Strategy implications for current SMSF pension clients:

This measure limits the tax-free benefits generated from pension phase but do not limit the amount that can be saved in accumulation phase which is only taxed at a maximum of 15%. However the overall amount you can get in to Superannuation is limited by changes to contribution caps.

Those clients who have pension balances in excess of $1.6 million can choose to:

leave savings in the accumulation phase of superannuation where tax on earnings is applied at 15% or
withdraw to invest outside superannuation or
withdraw and recontribute to a spouse / partner with a lower superannuation balance who has not used up their caps.

The $1.6 million cap will be indexed in $100,000 increments in line with the consumer price index. Where a member has previously used up a proportion of their retirement balance limit, they will be able to us the remaining proportion of the indexed cap.

Investment Strategies

We will look at each available strategies to consider the tax implications and comparisons of investment options inside or outside superannuation.

For many the option to withdraw some funds when fully retired and seek other tax effective arrangements including using the Low Income Tax Offset and Seniors and Pensioners Tax Offset to minimise tax on earnings outside of super

For the funds kept in Superannuation we will look at ways to maximise returns from investments within the caps by looking at segregating assets supporting the pension and focusing those on high yield, high return assets that can grow the tax exempt pension balance through earnings above the minimum withdrawal rates. That means we will focus on cash, fixed interest and term deposits in the still concessionally taxed accumulation balance, taxed at a maximum 15%.

Other issues

We have been strong advocates of evening up balances in superannuation between partners and this strategy implemented over the last 10 years will benefit many clients.

The Government has also confirmed that they will remove tax barriers to the development of new retirement income products by extending the tax exemption on earnings in the retirement phase to products such as deferred start lifetime annuities and group self-annuitisation products (Yeah , I am not sure what they are either).

These products can provide more flexibility and choice for Australian retirees, and help them to better manage consumption and risk in retirement.

This change was recommended by the Retirement Income Streams Review. The Government has released the Review and agreed all its recommendations. The announcement also states that they will consult on how the new retirement income products will be treated under the Age Pension means test.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

2 Comments

by SMSF Coach - Liam Shorte on May 4, 2016 • Permalink

Posted in News & Stats, Pension Strategies, Pensions, Retirement Planning, Tax Planning

Tagged Account Based Pension, Baulkham Hills, budget, Castle Hill, DIY Super, Dural, Hawkesbury, income planning, Investment, Investment Strategy, pension phase, Pensions, Self Managed Superannuation Fund, SMSF, Tax Free Pensions, Tax Planning, Transition, Transition to Retirement

Posted by SMSF Coach - Liam Shorte on May 4, 2016

https://smsfcoach.com.au/2016/05/04/how-does-the-budget-2016-affect-those-with-smsf-pension-income-streams/

#SMSF Alert : ATO guidance on related party SMSF loans (LRBAs) – Update 2025-26

Rate for 2025-26 Related Property LRBA is 8.95% and Listed Shares 10.95%

Old Rate for 2024-25 Related Property LRBA was 9.35% and Listed Shares 11.35%

The ATO have issued long-awaited guidelines providing SMSF trustees with suggested ‘Safe Harbour’ loan terms on which trustees may use to structure a related party Limited Recourse Borrowing Arrangement (LRBA) consistent with dealing at arm’s length with that related party.

By implementing these “Safe Harbour” loan terms, SMSF trustees are assured by the ATO Commissioner that

..for income tax purposes, the Commissioner accepts that an LRBA structured in accordance with this Guideline is consistent with an arm’s length dealing and that the NALI provisions do not apply purely because of the terms of the borrowing arrangement.

It is absolutely essential that all non-bank SMSF borrowing arrangements (LRBAs) be reviewed prior now extended to 1 Jan 2017

Where has this come from?

The ATO first released and then re-issued ATO Interpretative Decisions in 2015 (ATO ID 2015/27 and ATO ID 2015/28), dealing with Non-Arm’s Length Income(NALI) derived from listed shares and real property purchased by an SMSF under an LRBA involving a related party lender – where the terms of the loan were not deemed to be on commercial terms.

These ATOIDs state that the use of a non-arm’s length LRBA gives rise to NALI in the SMSF. Broadly, the rationale for this view is that the income derived from an investment that was purchased using a related party LRBA, where the terms of the loan are more favorable to the SMSF, is more than the income the fund would have derived if it had otherwise being dealing on an arm’s length basis.

NALI is taxed at the top marginal tax rate, currently 47% – regardless of whether the income is derived while the fund is in accumulation phase where tax is normally 15% or in pension phase when the income would usually be tax exempt.

After that bombshell, the ATO announced that it would not take proactive compliance action from a NALI perspective against an SMSF trustee where an existing non-commercial related party LRBA was already in place, as long as such an LRBA was brought onto commercial terms or wound up by 30 June 2016.

The Nitty Gritty Details of the Safe Harbour Steps

The ATO has issued Practical Compliance Guideline PCG 2016/5. As a result, provided an SMSF trustee follows these guidelines in good faith, they can be assured that (for income tax compliance purposes) their arrangement will be taken to be consistent with an arm’s length dealing.

The ‘Safe Harbour’ provisions are for any non-bank LRBA entered into before 30 June 2016, and also those that will be entered into after 30 June 2016.

Broadly, this PCG outlines two ‘Safe Harbours’. These Safe Harbours provide the terms on which SMSF trustees may structure their LRBAs. An LRBA structured in accordance with the relevant Safe Harbour will be deemed to be consistent with an arm’s length dealing and the NALI provisions will not apply due merely to of the terms of the borrowing arrangement.

The terms of the borrowing under the LRBA must be established and maintained throughout the duration of the LRBA in accordance with the guidelines provided.

	Safe Harbour 1	Safe Harbour 2
Asset Type	Investment in Real Property	Investment in a collection of Listed Shares or Units
Interest RateNote: as of 10 Jan 2019: The RBA no longer round the rates to the nearest 5 basis points.	RBA Indicator Lending Rates for banks providing standard variable housing loans for investors. Use the May rate immediately preceding the tax year. (2015/16 year = 5.75%)(2016-17 year = 5.65%)(2017-18 year = 5.8%)(2018-19 year = 5.8%)(2019-2020 year = 5.94%)(2020-2021 year = 5.1%) (2021-2022 year = 5.1%)(2022-2023 year = 5.35%)2024 FY = 8.85% (2024-25 year = 9.35%) (2025-26 year 8.95%)	Same as Real Property + a margin of 2%
Fixed / Variable	Interest rate may be fixed or variable.	Interest rate may be fixed or variable.
Term of Loan	Variable interest rate loans:Original loan – 15 year maximum loan term (both residential and commercial).Re-financing – maximum loan term is 15 years less the duration(s) of any previous loan(s) in respect of the asset (for both residential and commercial).Fixed interest rate loan: Rate may be fixed for a maximum period of 5 years and must convert to a variable interest rate loan at the end of the nominated period. The total loan term cannot exceed 15 years. For an LRBA in existence on publication of these guidelines, the trustees may adopt the rate of 5.75% as their fixed rate provided that the total period for which the interest rate is fixed does not exceed 5 years. The interest rate must convert to a variable interest rate loan at the end of the nominated period. The total loan term cannot exceed 15 years.	Variable interest rate loans:Original loan – 7 year maximum loan term.Re-financing – maximum loan term is 7 years less the duration(s) of any previous loan(s) in respect of the collection of assets.Fixed interest rate loan: Rate may be fixed up to for a maximum period of 3 years and must convert to a variable interest rate loan at the end of the nominated period. The total loan term cannot exceed 7 years. For an LRBA in existence on publication of these guidelines, the trustees may adopt the rate of 7.75% as their fixed rate provided that the total period for which the interest rate is fixed does not exceed 3 years. The interest rate must convert to a variable interest rate loan at the end of the nominated period. The total loan cannot exceed 7 years.
Loan-Value –RatioLVR	Maximum 70% LVR for both commercial & residential property. Total LVR of 70% if more than one loan.	Maximum 50% LVR.Total LVR of 50% if more than one loan.
Security	A registered mortgage over the property.	A registered charge/mortgage or similar security (that provides security for loans for such assets).
Personal Guarantee	Not required	Not required
Nature & frequency of repayments	Each repayment is to be both principal and interest.Repayments to be made monthly.	Each repayment is to be both principal and interest.Repayments to be made monthly.
Loan Agreement	A written and executed loan agreement is required.	A written and executed loan agreement is required.

Information sourced from Practical Compliance Guidelines PCG 2016/5.

Potential Trap to be aware of: Importantly, as part of this announcement, the ATO also indicated that the amount of principal and interest payments actually made with respect to a borrowing under an LRBA for the year ended 30 June 2016 must be in accordance with terms that are consistent with an arm’s length dealing.Information sourced from Practical Compliance Guidelines PCG 2016/5.

Where to find the Indicator Rate in future year:

The PGS referred to: Reserve Bank of Australia Indicator Lending Rates for banks providing standard variable housing loans for investors. Applicable rates:

For the 2015-16 year, the rate is 5.75%
For the 2016-17 year the rate is 5.65%
For the 2017-18 and 2018-19 years the rate is 5.8%
For the 2019-20 year the rate is 5.94%
For the 2020-21 year the rate is 5.1%
For the 2021-22 year the rate is 5.1%
For the 2022-23 year the rate is 5.35%
For the 2023-24 year the rate is 8.85%
For the 2024-25 year the rate is 9.35% until 30 June 2025
For the 2025-26 year the rate is 8.95%

For 2019-20 and later years, the rate published for May (the rate for the month of May immediately prior to the start of the relevant financial year)

It is the applicable rate under Column H of the above spreadsheet (click on link). The rate seems to have started in August 2015 but I assume we must use the May rate from now on.

In referencing the Indicator Rate you can use:
Ref: Title: Lending rates; Housing loans; Banks; Variable; Standard; Investor
Lending rates; Housing loans; Banks; Variable; Standard; Investor
Frequency: Monthly
Units: Per cent per annum
Source RBA
Publication Date 04-Apr-2016
Series ID: FILRHLBVSI

Example – Real Property taken from Practical Compliance Guideline PCG 2016/5 Example 1

A complying SMSF borrowed money under an LRBA, using the funds to acquire commercial property valued at $500,000 on 1 July 2011.

The borrower is the SMSF trustee.
The lender is an SMSF member’s father (a related party).
A holding trust has been established, and the holding trust trustee is the legal owner of the property until the borrowing is repaid.

The loan has the following features:

the total amount borrowed is $500,000
the SMSF met all the costs associated with purchasing the property from existing fund assets.
the loan is interest free
the principal is repayable at the end of the term of the loan, but may be repaid earlier if the SMSF chooses to do so
the term of the loan is 25 years
the lender’s recourse against the SMSF is limited to the rights relating to the property held in the holding trust, and
the loan agreement is in writing.

We do not consider that this LRBA has been established or maintained on arm’s length terms. The income earned from the property, which is rented to an unrelated party, may give rise to NALI.

At 1 July 2015, the property was valued at $643,000, and the SMSF has not repaid any of the principal since the loan commenced.

If after considering TD 2016/16, it is determined that the income earned from the property is in fact NALI, to avoid having to report NALI for the 2015-16 year (and prior years) the Fund has a number of options.

Option 1 – Alter the terms of the loan to meet guidelines

The SMSF and the lender could alter the terms of the loan arrangement to meet Safe Harbour 1 (for real property).

To bring the terms of the loan into line with this Safe Harbour, the trustees of the SMSF must ensure that:

The 70% LVR is met (in this case, the value of the property at 1 July 2015 may be used).

Based on a property valuation of $643,000 at 1 July 2015, the maximum the SMSF can borrow is $450,100. The SMSF needs to repay $49,900 of principal as soon as practical before 30 June 2016.

The loan term cannot exceed 11 years from 1 July 2015.

The SMSF must recognise that the loan commenced 4 years earlier. An additional 11 years would not exceed the maximum 15 year term.

The SMSF can use a variable interest rate. Alternatively, it can alter the terms of the loan to use a fixed rate of interest for a period that ensures the total period for which the rate of interest is fixed does not exceed 5 years. The loan must convert to a variable interest rate loan at the end of the nominated period.

The interest rate of 5.75% applies for 2015-16 and 5.65% p.a. applies from 1 July 2016 to 30 June 2017. The SMSF trustee must determine and pay the appropriate amount of principal and interest payable for the year. This calculation must take the opening balance of $500,000, the remaining term of 11 years, and the timing of the capital repayment, into account.

After 1 July 2016, the new LRBA must continue under terms complying with the ATO’s guidelines relating to real property at all times.

For example, the SMSF must ensure that it updates the interest rate used for the loan on 1 July each year (if variable) or as appropriate (if fixed), and make monthly principal and interest repayments accordingly.

Option 2 – Refinance through a commercial lender

The fund could refinance the LRBA with a commercial lender, extinguish the original arrangement and pay the associated costs.

For any period after 1 July 2015 that the original loan remains in place, the SMSF must ensure that the terms of the loan are consistent with an arm’s length dealing, and relevant amounts of principal and interest are paid to the original lender.

The SMSF may choose to apply the terms set out under Safe Harbour 1 to calculate the amounts of principal and interest to be paid to the original lender for the relevant part of the 2015-16 year.

Option 3 – Payout the LRBA

The SMSF may decide to repay the loan to the related party, and bring the LRBA to an end before 30 January 2017.

For any period after 1 July 2015 that the original loan remains in place, the SMSF must ensure that the terms of the loan are consistent with an arm’s length dealing, and the relevant amounts of principal and interest are paid to the original lender.

The SMSF may choose to apply the terms set out under Safe Harbour 1 to calculate the amounts of principal and interest to be paid to the original lender for the relevant period.

Each option will have many advantages and disadvantages – so it is important to understand what the practical implications of each option are, and how physically you will approach each option. Seek specialised advice on this matter as it is not a strategy suitable for DIY implementation

Important Note to 13.22C or Unrelated Unit Trust Investors

The guidelines provided in this PCG are not applicable to an SMSF LRBA involving an investment in an unlisted company or unit trust (e.g. where a related party LRBA has been entered into to acquire a collection of units in an unrelated private trust or a 13.22C compliant trust). As such, trustees who have entered into such an arrangement will have no option but to benchmark their particular loan arrangement based on commercial loan terms, or to bring the LRBA to an end.

Please visit out SMSF Property page to get details on all available strategies for SMSF property investors.

UPDATE (Relief for those caught by Budget measures)

In a letter to an industry association, the Treasurer, Scott Morrison, has outlined transitional arrangements to allow additional non-concessional contributions above the proposed lifetime limit in certain limited circumstances. Contributions made in the following circumstances may be permitted without causing a breach of the lifetime cap:

where the trustees of a self managed superannuation fund (SMSF) have entered into a contract to purchase an asset prior to 3 May 2016 that completes after this date and non-concessional contributions were planned to be made to complete the contract of sale. Non-concessional contributions will be permitted only to allow the contract to complete provided they are within the relevant non-concessional cap that was applicable prior to Budget night, and
where additional contributions are made in order to comply with the Australian Taxation Office’s (ATO) Practical Compliance Guideline (PCG) 2016/5 related to limited recourse borrowing arrangements, provided they are made prior to 31 January 2017.

Additional non-concessional contributions made under these proposed transitional arrangements will count towards the lifetime cap, but will not result in an excess.

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

U40, 8 Victoria Ave., Castle Hill NSW 2154

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

6 Comments

by SMSF Coach - Liam Shorte on April 6, 2016 • Permalink

Posted in Audit, Borrowing, Loans, LRBA, News & Stats, Property, SMSF Management, Trustee

Posted by SMSF Coach - Liam Shorte on April 6, 2016

https://smsfcoach.com.au/2016/04/06/smsf-alert-ato-guidance-on-related-party-smsf-loans-lrbas/

Do you need a review of your Superannuation? Current volatility suggests you should

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

1 Comment

by SMSF Coach - Liam Shorte on February 11, 2016 • Permalink

Posted in Financial Planning, Insurance Strategies, Superannuation

Tagged Account Based Pension, Asset Allocation, Baulkham Hills, Castle Hill, consolidate super, DIY Super, Dural, Hawkesbury, Investing, Investment, pension phase, private company valuations, Self MAnaged Super, Self Managed Superannuation Fund, superannuation account, superannuation review, Tax Planning, TTRAP, Windsor

Posted by SMSF Coach - Liam Shorte on February 11, 2016

https://smsfcoach.com.au/2016/02/11/do-you-need-a-review-of-your-superannuation-current-volatility-suggests-you-should/

SMSF Jargon busting – Who are the related parties of an SMSF?

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

6 Comments

by SMSF Coach - Liam Shorte on February 3, 2016 • Permalink

Posted in SMSF

Posted by SMSF Coach - Liam Shorte on February 3, 2016

https://smsfcoach.com.au/2016/02/03/smsf-jargon-busting-who-are-the-related-parties-of-an-smsf/

SMSF End of Financial Year Checklist 2015

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

Be careful not to allow your accountant, administrator or financial planner to reset any pension that has been grandfathered under the new pension deeming rules that came in on Jan 1st 2015 without getting advice on the current and possible future consequences at the current and higher deeming rates.

1. It’s all about timing!

First thing to note is that June 30th falls on a Thirsday this year so be careful about doing anything for your fund after the 27th as funds transferred risk not reaching the destination account before the deadline. Remember it is when the funds are received by the Superannuation fund that counts.

2. Review Your Concessional Contributions – 30K under 49 and $35K if you were 49-64 this year and then work test applies for 65+.

Maximise contributions up to concessional contribution cap but do not exceed your Concession Limit. The sting has been taken out of Excess contributions tax but you don’t need additional paperwork to sort out the problem. So check employer contributions on normal pay and bonuses, salary sacrifice and premiums for insurance in super as they may all be included in the limit.

3. Review your Non-Concessional Contributions (consider before May 3rd – budget night)

Have you considered making non-concessional contributions to move investments in to super and out of your personal, company or trust name. Maybe you have proceeds from and inheritance or sale of a property sitting in cash. As shares and cash have increased in value you may find that personal tax provisions are increasing and moving some assets to super may help control your tax bill. Are you nearing 65? then consider your contribution timing strategy to take advantage of the “bring forward” provisions before turning age 65 to contribute up to $540,000 this year or $180K this year and up to $540,000 next year before you turn 65.

4. Co-Contribution

Check your eligibility for the co-contribution and if you are eligible take advantage. Note that the rules have changed and it is not as attractive as previously but it is free money – grab it if you are eligible.

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

5. Spouse Contribution

If your spouse has assessable income plus reportable fringe benefits totaling less than $13,800 then consider making a spouse contribution. Check out the ATO guidance here

6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)

You should review your ability to make contributions as if you if you have reached age 65 you must pass the work test of 40 hours in any 30 day period during the financial year, in order to continue to make contributions to super. Check out ATO superannuation contribution guidance

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

8. Notice of intent to claim a deduction for contributions
If you are planning on claiming a tax deduction for personal concessional contributions you must have a valid ‘notice of intent to claim or vary a deduction’ (NAT 71121). If you intend to start a pension this notice must be made before you commence the pension. Many like to start pension in June and avoid having to take a minimum pension but make sure you have claimed your tax deduction first.

9. Contributions Splitting
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 pension by retaining funds in superannuation in younger spouse’s name.
This is a simple no/low-cost strategy I recommend everyone look at especially with the Government moving on taxing higher balance accounts. See my blog about this strategy here.

10. Off Market Share Transfers (selling shares from your own name to your fund)
If you want to move any personal shareholdings into super you should act early. Here are the links to the Standard Forms for Computershare and here is the Link Market Services Form

11. Pension Payments
If you are in pension phase, ensure the minimum pension has been taken. For transition to retirement pensions, ensure you have not taken more than 10% of your opening account balance this financial year.

The minimum payment amounts have been by 25% for the 2012-13 years. The following table shows the minimum percentage factor (indicative only) for each age group.
Age Minimum % withdrawal (in all other cases)
Under 65 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
95 or more 14%

Sacrificial Lamb

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

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

12. Reversionary Pension is often the preferred option to pass funds to a spouse or dependent child.
You should review your pension documentation and check if you have nominated a reversionary pension. If not, consider your family situation and options to have a reversionary pension. This is especially important with blended families and children from previous marriages that may contest your current spouse’s rights to your assets. Also consider reversionary pensions for dependent disabled children

13. Review Capital Gains Tax Position of 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 government changes in legislation like those proposed this year. Remember if you plan to sell an asset for the next 2 years the Temporary Budget Repair Levy may mean 2% extra tax

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

Review your investment strategy and ensure all investments have been made in accordance with it, and the SMSF trust deed. Also, make sure your investment strategy has been updated to include consideration of insurances for members. See my article of this subject here. Don’t know what to do…..call us.

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

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

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

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

17. Market Valuations – Now required annually

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

18. In-House Assets

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

19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

Have you reviewed your insurances inside and outside of super? Check your TPD policies owned by the fund for own occupation definition as the rules about deductibility for these policies have changed. Here is a link to a good guide about this subject from Money Management

20. Do you need to update to a Corporate Trustee

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

21. Check the ownership details of all SMSF Investments

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

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

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

23. Review any SMSF Loans

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

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

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.

Happy EOFYS!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

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

Posted in Checklists, Contribution Strategies, SMSF, Tax Planning

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

https://smsfcoach.com.au/2015/05/27/smsf-end-of-financial-year-checklist-2015-2/

SMSF End of Financial Year Checklist 2015

1. It’s all about timing!

First thing to note is that June 30th falls on a Tuesday this year so be very careful about doing anything for your fund after the 26th as funds transferred from Friday the 26th risk not reaching the destination account before the deadline. Remember it is when the funds are received by the Superannuation fund that counts.

2. Review Your Concessional Contributions – 30K under 49 and $35K if you were 49-64 this year and then work test applies for 65+.

3. Review your Non-Concessional Contributions

4. Co-Contribution

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

5. Spouse Contribution

If your spouse has assessable income plus reportable fringe benefits totaling less than $13,800 then consider making a spouse contribution. Check out the ATO guidance here

6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)

9. Contributions Splitting
Consider splitting contributions with your spouse, especially if:
• your family has one main income earner with a substantially higher balance or
• if there is a n age difference where you can get funds into pension phase earlier or
• If you can improve your eligibility for concession cards or pension by retaining funds in superannuation in younger spouse’s name.
This is a simple no-cost strategy I recommend everyone look at especially with the Government moving on taxing higher balance accounts. See my blog about this strategy here.

10. Off Market Share Transfers (selling shares from your own name to your fund)
If you want to move any personal shareholdings into super you should act early. Here is the Standard Form for Computershare and here is the Link Market Services Form

Sacrificial Lamb

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

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

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

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

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

17. Market Valuations – Now required annually

18. In-House Assets

19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

20. Do you need to update to a Corporate Trustee

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

21. Check the ownership details of all SMSF Investments

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

23. Review any SMSF Loans

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

Happy EOFYS!

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

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by SMSF Coach - Liam Shorte on June 6, 2014 • Permalink

Posted in Checklists, Contribution Strategies, SMSF, Tax Planning

Posted by SMSF Coach - Liam Shorte on June 6, 2014

https://smsfcoach.com.au/2014/06/06/smsf-end-of-financial-year-checklist-2015/

Reminder: Minimum annual payments for Superannuation Income Streams in 2014 / 15 including SMSF Pensions.

Yes the Government have been messing about with the system so much over the last few years that many clients have been totally confused and had to confirm their minimum pension payments for last year so I thought I would just remind everyone of this years limits so they can put their payment plans in place.

How much to take to stay compliant with your pension

If you started a pension or annuity on or after 1 July 2007, a minimum pension amount is required to be paid each year. There is no maximum amount other than the balance of your super account, unless it is a transition to retirement pension in which case the maximum amount is 10% of the account balance.

The minimum payment amounts will not be reduced for the 2014-15 year. The following table shows the minimum percentage factor (indicative only) for each age group.

Age	Minimum % withdrawal (2014-15)
Under 65	4%
65-74	5%
75-79	6%
80-84	7%
85-89	9%
90-94	11%
95 or more	14%

Note that these withdrawal factors are indicative only. To determine the precise minimum annual payment (especially for market linked income streams), see the pro-rating, rounding and other rules in the Superannuation Industry (Supervision) Regulations 1994.

For rules and limits on other Payments from super here are the relevant links to the ATO site.

Low rate cap amount

Untaxed plan cap amount

Minimum annual payments for super income streams

Preservation age

Super lump sum tax table

Super income stream tax tables

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options. Please reblog, retweet, put on your Facebook page if you found information helpful.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

1 Comment

by SMSF Coach - Liam Shorte on October 1, 2013 • Permalink

Posted in Pension Strategies, Pensions, Tax Planning

Tagged Baulkham Hills, Castle Hill, Corporate, Death, DIY Super, Dural, Individual Trustee, Pensions, Self MAnaged Super, SMSF, Strategy, superannuation, Tax Planning, Transition, TRAP, TRIS, Trustee, Windsor

Posted by SMSF Coach - Liam Shorte on October 1, 2013

https://smsfcoach.com.au/2013/10/01/reminder-minimum-annual-payments-for-superannuation-income-streams-in-2014-15-including-smsf-pensions/

Question on Multiple Progress Payments When Buying a House & Land Package in a SMSF

Question received:

Hi Liam

You recently mentioned that you it’s possible to do construction within a SMSF where there could be draw downs? Did you do an article on this somewhere that I could research?

Answer:

The following is general advice only and you should get very specific advice on your own proposed strategy before spending any money on implementing these strategies. Do not rely on general information in an article to put in place any strategy.

I wrote a general article on purchasing House and Land Packages which is linked at the end of this article. But to address the matter of draw downs in specific I will deal with it here. Yes you can engage in construction of a property under a LRBA (Limited Recourse Borrowing Arrangement) or Super Fund Borrowing as it is commonly know. It is also possible to have progress payments if the LRBA is structured properly.

The ATO provides example 10 in SMSFR 2012/1, which concerns the purchase of a house and land package by a SMSF under a LRBA. The ATO had said in that example that “because the contractual arrangement is for the acquisition of land with a completed house on it, and settlement occurs once construction of the house is finished, the deposit and the payment on settlement can be funded under a single LRBA.

This was followed up by a request for more details in a National Tax Liaison Group (NTLG) Superannuation Technical Sub=group meeting in December 2012 where they were asked to confirm more than 2 payments could be made, so not just deposit and final settlement payment but progress payments.

Please read section 7.4 of the NTLG Superannuation Technical Sub-group – meeting minutes December 2012

The result:

So they confirmed that it does not have to be only two payments. There can be multiple progress payments under the one single LRBA HOWEVER only if the terms of the LRBA allows the SMSF trustee to make multiple draw-downs for that purpose or if the SMSF funds the progress payments from its own funds.

You should also read the March 2013 minutes Section 7.5 Limited recourse borrowing arrangements and the payment of deposits. Please note NTLG minutes are for guidance by the ATO and are not binding rulings so get personalised advice..

So in summary:

The non-negotiable components of a successful LRBA for a House and Land package must include:

the single acquired asset is at all times a completed house and land, and
the security for the loan is at all times over the land and completed house, and
the LRBA must allow drawdowns for the deposit, progress payments and settlement.

As this is a very specialised process and requires specific wording to the LRBA agreement you need to work with a SMSF Specialist Advisor, experienced Mortgage Broker and a Lawyers who know how to draft personalised documentation. Do not trust a bank to provide all the documentation on a loan like this as they will only be interested in protecting their interest and that may not provide you with the documentation to meet the Section 67A exemptions.

It may be better to consider arranging a loan with an offset account (never a redraw facility as that would breach the rules) that is draw down in full initially and the excess stored in the offset account and used to fund the progress payments as the build progresses.

Please read my previous blog for more background on this subject Can I borrow to buy a house and land package off the plan in my SMSF?

Why not click here to Schedule a Meeting by phone, face to face or via Skype 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 online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

3 Comments

by SMSF Coach - Liam Shorte on September 25, 2013 • Permalink

Posted in Borrowing, Loans, LRBA, Property

Posted by SMSF Coach - Liam Shorte on September 25, 2013

https://smsfcoach.com.au/2013/09/25/question-on-multiple-progress-payments-when-buying-a-house-land-package-in-a-smsf/

Making the most of the Transition to Retirement Pension over age 59

After my last blog article I have been asked for some guidance on how to maximise the Transition to Retirement (TTR) & Salary Sacrifice strategy under the new SG and Concessional Contribution (CC) limits for those over 59. Also readers wanted to know more about the “resetting” pensions to move each year’s contributions to Pension phase.

This general advice applies equally to those using an Self Managed Superannuation fund (SMSF) , Industry, Retail or Employer fund.

Pensions are not set in stone. Review them regularly

Resetting the pension periodically (eg annually) from age 60, can help TTR users to get more money into a tax-free environment. Also, the additional income payments, which would be tax-free, could be re-contributed into super by utilising any remaining CC cap or by making non-concessional contributions (NCCs).

Example: Strategy Changes for those age 59 or over

When strategy commenced Marie, an Administration Manager in Castle Hill, is 60 years of age and earns a salary of $90,000 pa plus Employer SG for a total package of $98,100. On 1 July 2012, she:

used her entire super balance of $250,000 to start a TTR pension
based on our recommendations elected to receive TTR pension payments of $10,703, and
arranged with her employer to salary sacrifice $16,900 in to super to use up her full $25,000 limit applying that year.

The key point to mention is that using this strategy Marie maintained her exact same after-tax income but selected it from the most tax effective sources..

Then we had the latest government changes to Super from the Budget.

SG increased to 9.25%
Concessional Contribution limit for those over 59 on 01 July 2013 increased to $35,000

So strategy changes were needed. On 30 June 2013, she had $22,101 in her accumulation account and $260,387 in her pension. On 1 July 2013, she:

stopped her current TTR pension, merged the money with her accumulation balance and started a new TTR pension with $282,488. (Resetting)
elected to receive pension payments of $17,105 from the Transition to Retirement pension, and
increased her salary sacrifice contributions to $26,675 again to use up the $35,000 limit and maintain the same Net Take Home Pay.

The outcome

The table below summarises her income and super contributions in 2012/13 (with and without using the TTR strategy) and the changes she made in 2013/14 in response to the super changes.

	In 2012/13		Adjustments in 2013/14
	No TTR	With TTR	with TTR
Salary	$90,000	$73,100	$63,325
TTR Income	Nil	$10,703	$17,105
Tax	-$22,597	-$16,400	-$13,027
Net Take Home Income	$67,403	$67,403	$67,403
SG	$8,100	$8,100	$8,325
Salary Sacrifice	Nil	$16,900	$26,675
Total CCs*	$8,100	$25,000	$35,000

*CCs = concessional contributions (SG + Salary sacrifice or Self Employed Contributions)

By making the adjustments, she will:

get an extra $22,101 into the tax-exempt pension to take greater advantage of the 0% tax rate that’s payable in the fund on investment earnings
salary sacrifice an extra $9,775 into super taxed at 15% instead of her marginal 38.5% rate
take full advantage of the higher Concessional cap of $35,000, but also taking into account the SG increase to 9.25%
reduce her income tax by $3,373
reduce the total tax paid by $1,873, after taking into account the 15% tax that will be deducted from the additional $10,000 of concessional contributions, and
maintain the same after-tax income or net take home pay

Marie can also restart her pension at the beginning of each financial year until she retires at age 65 to maximise the amount in pension phase and make any further changes required as a result of future rule changes.

This is a strategy that has very little to do with the actual investments in your fund so you can see it as a “low/no risk” strategy that enhances your retirement savings without taking on additional investment risk.

Now to make the most of the tax-exempt pension environment you may alter your investments to seek more income or franking credits but it is not compulsory.

It’s not too late to get your plan in place for 2013/14 tax year so why not click here to Schedule a Meeting by phone, face to face or via Skype 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 online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

1 Comment

by SMSF Coach - Liam Shorte on September 10, 2013 • Permalink

Posted in Contribution Strategies, Pension Strategies, Tax Planning

Posted by SMSF Coach - Liam Shorte on September 10, 2013

https://smsfcoach.com.au/2013/09/10/making-the-most-of-the-transition-to-retirement-pension-over-age-59/

Aged 59 – 64 and not on a Transition to Retirement Pension – SHAME ON YOU!

Yes, that’s me shouting!. In this day and age with utility prices rising , people struggling to save and interest rates so low that it is making pensioners weep, we are still finding many people not using the simple, relatively risk-free strategies available to them to reduce their income tax and tax on the earnings of their superannuation savings.

Day in day out I meet new prospective clients, some with SMSFs and some in industry or retail superannuation funds who worry about paying Advice Fees but have ignored the ability to save ten of thousands of dollars in tax, over those pre-retirement years, using the same system that most of their peers are enjoying in a tax-free pension environment.

DON’T WASTE MONEY PAYING TAX WHEN YOU DON”T HAVE TO.

In fact I am willing to promise that you can improve your annual retirement income by on average 5% by implementing the Transition to Retirement Pension coupled with a Salary Sacrifice strategy for 5-10 years before retirement.

Benefits of a Transition to Retirement Strategy

Give your retirement savings a boost – your super balance will keep growing as you make self-employed contributions or your employer continues to make contributions into your super account.

Lower you taxable income – If you choose to salary sacrifice some of your pre-tax income into your super, you can further boost your retirement savings. This is because your salary sacrifice contributions are taxed at a lower rate (15% for those earning less than $250K) when they go into your super so that saves an immediate:

19.5% for anyone earning more than $37,000 and less than $80,000 as your marginal tax rate is 34.5% inclusive of Medicare on every dollar over $37,000
24% for anyone earning more than $87,000 and less than $180,000 as your marginal tax rate is 39% inclusive of Medicare on every dollar over $80,000
34%* for anyone earning more than $180,000 and less than $300,000 as your marginal tax rate is 49% inclusive of 2% Medicare and 2% Temporary Budget Repair levy on every dollar over $180,000

Oh yes, that 2% extra Temporary Budget Repair levy applies to those earning over $180,000 per year.

July 1 2017 changes: From this date by moving to pension phase your balance in the transition to retirement pension account no longer moves to a “tax exempt” status so it will continue to pay tax at up to 15% on dividend income, rental income or capital gains. That is why it is essential you look for or are aware of triggers to move to a full Account Based Pension

A Transition to Retirement (TTR) strategy remains valid after the changes announced in the 2016 Budget.

Pay less tax and keep the same take home amount
You can enjoy generous tax concessions for both retirement income streams and super contributions while still taking home the same net amount. you are just taking the money from the most tax effective source. Remember after you turn 60, you won’t pay any tax on your pension income stream payments.

Pre July 1 2017 Case Study: Ann aged 59 on 01 July 2013 has $300,000 in Superannuation. She has an annual income of $95,000 and wants to keep her take home pay the same but look at a TTR combined with salary sacrifice to improve her retirement savings.

Results for 2016-17 Year
Without Transition to Retirement Strategy
Drawdown Percentage 0.000 %
Package $104,025
Plus Assessable Pension Income $0
Less Concessional Contributions $9,025
EQUALS TAXABLE INCOME $95,000
Less tax and Medicare $24,682
Plus Rebate $0
EQUALS AFTER TAX INCOME $70,318
Plus Exempt Pension Income $0
Less Non Concessional Contributions $0
EQUALS TAKE HOME INCOME $70,318

Accumulation Start Balance $300,000
Plus 85% of Concessional Conts $7,671
Plus Non Concessional Conts $0
Plus Interest $13,701
EQUALS ACCUM END BALANCE $321,372
FUND ASSETS END BALANCE $321,372
With Transition to Retirement Strategy
Drawdown Percentage 5.600 %
Package $104,025
Plus Assessable Pension Income $0
Less Concessional Contributions $35,000
EQUALS TAXABLE INCOME $69,025
Less tax and Medicare $15,361
Plus Rebate $0
EQUALS AFTER TAX INCOME $53,664
Plus Exempt Pension Income $16,800
Less Non Concessional Contributions $146
EQUALS TAKE HOME INCOME $70,318 (so same net take-home pay)

Pension Start Balance $300,000
Less Pension Payments $16,800
Plus Interest $14,585
EQUALS PENSION END BALANCE $297,785
Accumulation Start Balance $0
Plus 85% of Concessional Conts $29,750
Plus Non Concessional Conts $146
Plus Interest $782
EQUALS ACCUM END BALANCE $30,678
FUND ASSETS END BALANCE $328,464

In this example Ann keeps the same take home pay of $70,318, adds an extra $7,092 to her Retirement Savings and pays $4,071 less in tax. That’s just one year with no change to her investment profile as it has nothing to do with the actual investments. If you do not need the pension income then just put it back in to the fund as a non-concessional contribution,

Don’t ignore these crucial annual savings as they add up to that extra holiday a year in retirement.

There are benefits to this strategy for anyone over 55 but it becomes a “win-win” situation once in the 59-64 age group. So don’t ignore this strategy and please pass it on to others you think it may suit.

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

7 Comments

by SMSF Coach - Liam Shorte on September 4, 2013 • Permalink

Posted in Contribution Strategies, Pension Strategies, Retirement Planning, SMSF Management

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

https://smsfcoach.com.au/2013/09/04/aged-59-64-and-not-on-a-transition-to-retirement-pension-shame-on-you/

One Page SMSF End of Financial Year Checklist 2013

Ok last day to get your SMSF fund in order and ensure we are making the most of the strategies available to us. Here is a one page checklist of the most important issues that you should address with your advisors well before the year-end. For more detail on each issue visit the full article on The SMSF Coach – EOFY 2013 Strategies

	1. It’s all about timing! Forget about doing anything for your fund after the Thursday June 27th
	2. Review Your Concessional Contributions – 25K , 25K, 25K max
	3. Review your Non-Concessional Contributions
	4. Co-Contribution
	5. Spouse Contribution
	6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)
	7. Check any payments you may have made on behalf of the fund.
	8. Notice Of Intent To Claim A Deduction
	9. Contributions Splitting
	10. Off Market Share Transfers (selling shares from your own name to your fund)
	11. Pension Payments
	12. Reversionary Pension is often preferred option to pass funds to spouse or dependent child.
	13. Review Capital Gains Tax Position of each investment
	14. Review and Update the Investment Strategy not forgetting to include Insurance of Members
	15. Collate and Document records of all asset movements and decisions
	16. June Contributions Deductible this year but can be allocated across 2 years.
	17. Market Valuations of all assets now required
	18. In-House Assets – keep below the 5% limit at all times
	19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)
	20. Do you need to update to a Corporate Trustee
	21. Check the ownership details of all SMSF Investments
	22. Review Estate Planning and Loss of Mental Capacity Strategies.

As always please contact me if you want to look at your own options as we are currently taking on new clients. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

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by SMSF Coach - Liam Shorte on June 27, 2013 • Permalink

Posted in Audit, Checklists, Contribution Strategies, Financial Planning, SMSF, SMSF Management

Posted by SMSF Coach - Liam Shorte on June 27, 2013

https://smsfcoach.com.au/2013/06/27/one-page-smsf-end-of-financial-year-checklist-2013/

Can My SMSF Buy And Lease Plant And Equipment To My Business

Plant or Equipment in an SMSF?

I get this question on Plant and Equipment financing regularly from business clients with an SMSF. The technical answer is yes subject to complying with the regulatory provisions of SIS Act. In reality for most businesses the answer is most likely NO as there are so many ways you can breach one or more of the rules governing this area. Let’s look at some of those rules.

Firstly it is a requirement that a SMSF and any assets it considers purchasing must meet the Sole Purpose Test.

Sole purpose test

• Section 62: trustee must ensure fund is maintained solely for core purposes, such as benefits to members upon retirement and ancillary purposes

Other relevant issues include:

Formulating Investment Strategy

Section 52: trustee must formulate and give effect to investment strategy that has regard to whole of circumstances including:

• risk involved in making, holding and realising, and likely return from investments having regard to objectives and expected cash flow requirements

Lending to members, relatives and financial assistance:

Section 65: A trustee must not lend fund money or provide financial assistance to:
• member of fund OR relative of a member

• ‘Financial assistance’ has no technical meaning and their frame of reference is language of ordinary commerce … one must examine commercial realities of transaction and decide whether it can properly be described as giving of financial assistance (Charterhouse Investment Trust Ltd v Tempest Diesels Ltd [1986] BCLC 1, 10)

In-house asset rules:

An In-house asset is:
• loan to ‘related party’
• investment in ‘related party’
• investment in a ‘related trust’
• asset subject to lease between trustee and a related party (this is the one that matters in your case)

However a SMSF can have up to 5% of fund’s assets in invested “in-house” assets without breaching the rule so if the equipment’s value were less than 5% of the funds total value then you would not be in breach of this rule….but remember the other rules hold equal importance. Also it is important that this rule is met on an ongoing basis so if stock markets drop or cash is taken out of the fund for pensions you need to revisit the value of the in-house asset.

Arm’s length requirements:

Section 109(1): A trustee must not invest unless:

• the trustee and the other party are dealing with each other at arm’s length OR
the terms and conditions are no more favourable to the other party than if they were at arm’s length
• Section 109(1A): If trustee invests and is required to deal with investment with another party not at arm’s length, must deal as if were at arm’s length

• The term ‘at arm’s length’ is not defined in the SIS Act so open to interpretation

• implies dealing that is carried out on commercial terms again subject to interpretation

• useful test to apply is whether prudent person, acting with due regard to own commercial interests, would have made the investment (APRA v Derstepanian (2005) 60 ATR 518, 524)

So example of how this works:

Let’s say you have $600,000 in your SMSF and you want to purchase an excavator for $25,000 to lease to your own business.

The SMSF Trustees do their research and minuted how they calculate a lease rate that takes into account market return on their investments, allows for the depreciation of the asset and insists on the insurance of the vehicle with its interest noted on the policy to protect its investment. They are satisfied that this provides a decent return for the fund not correlated to the other assets of the funds invested in shares and term deposits. Sole Purpose, S62 and S52 satisfied.
They amend the SMSF Investment Strategy to include this type of asset with the target allocation to “Other Assets” or specifically have an allocation to “Plant & Equipment”
They ascertain that the business could be approved to obtain finance for the excavator from a third-party on similar terms. Section 65 met as clear finance available elsewhere and that this is not the reason why the arrangement is being entered into.
As the value of the excavator ($25k) is less than 5% of the fund ($30K) it does not breach the In house asset rule. This needs to be monitored annually.
They arrange for a written commercial lease agreement comparable with the standard lease available in the market to be entered into by all parties. S109(1) satisfied

So in summary, yes it can be done but in reality there are so many ways you can trip up that it is really not worth the hassle and raising the eye of the ATO or challenging your Auditor’s patience. Your first step is to engage your Accountant and a SMSF Specialist before considering these types of strategies. I would be interested to receive comments from people who have implemented these strategies.

Why not checkout my article ” What can my SMSF invest in?” as a good place to start.

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 online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

Image courtesy of Supertrooper at FreeDigitalPhotos.net

18 Comments

by SMSF Coach - Liam Shorte on June 19, 2013 • Permalink

Posted in Investment Strategies, Property, SMSF, SMSF Management

Posted by SMSF Coach - Liam Shorte on June 19, 2013

https://smsfcoach.com.au/2013/06/19/can-my-smsf-buy-and-lease-plant-and-equipment-to-my-business/

How Much Super is Enough for Retirement? – Easy to follow video

I am always ready to beg, borrow and …well grab with both hands useful information that helps people understand the biggest retirement planning question. “How much do I need to Retire?” I wrote an article last year for MYOB which got over 100,000 hits so this must be one of the burning questions. You can read my article by clicking here but if you are someone who prefers a simple visual explanation, then some clever clogs at AMP has designed this easy to follow cartoon type presentation of one of the solutions most commonly put forward to that question.

The Rule of thumb they use is ….well have a look and see what you think? Now if you want to take control of your retirement planning and get some decent advice then please click here to Schedule a Meeting by phone, face to face or via Skype. If you want to review your options we can guide you through the uncertainty. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or online via Skype.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

Leave a comment

by SMSF Coach - Liam Shorte on June 12, 2013 • Permalink

Posted in Financial Planning, Retirement Planning

Tagged Account Based Pension, Baulkham Hills, Castle Hill, Dural, Pension Kits, Pensions, Rule of Thumb, Self MAnaged Super, Self Managed Superannuation Fund, SMSF, Strategy, superannuation, Tax Planning, Transition to Retirement, Trustee, TTRAP, Windsor

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

https://smsfcoach.com.au/2013/06/12/how-much-super-is-enough-for-retirement-easy-to-follow-video/

Can I still transfer shares I own to my SMSF?

YES you definitely can if they are listed shares, unlisted cause a lot more issues.

In an unexpected move back on 30 May 2013 the Government decided not to proceed with the proposed banning of off-market transfers of listed securities (shares, listed hybrids etc) by people to their self managed super fund (SMSF). This means that shares can still be transferred between SMSFs and related parties off-market as of March 2021

The Government had previously announced that off-market transfers of listed securities between SMSFs and related parties would be banned from 1 July 2013. It was announced as a measure to prevent people abusing the system even though there was little proof of any abuse being widespread. Hopefully, the fact that they went so close to legislating such measures will serve as a warning to those who tinker at the margins of abusing the facility. I would expect the ATO to use the new penalty regime to target a few clear cases of abuse to ensure that the message gets through loud and clear! (more…)

2 Comments

by SMSF Coach - Liam Shorte on May 30, 2013 • Permalink

Posted in Contribution Strategies, SMSF

Tagged Baulkham Hills, Castle Hill, DIY Super, equities, fines, hybrids, Investment, off market, OMT, SMSF, Strategy, superannuation, Tax Planning, Transferring shares, Trustee

Posted by SMSF Coach - Liam Shorte on May 30, 2013

https://smsfcoach.com.au/2013/05/30/can-i-still-transfer-shares-i-own-to-my-smsf/

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All posts tagged Tax Planning

Concessional (Pre-Tax Contributions like employer superannuation guarantee (SGC), salary sacrifice and those contributions where you claim a tax deduction).

Non-Concessional (Post Tax Contribution like personal after tax contributions and Government co-contributions).

Now the detail:

In summary the Limit to Bring Forward Contributions based on year triggered are:

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Taxing Transition to Retirement Pension earnings

Pension transfer cap of $1.6 million

Investment Strategies

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Where has this come from?

Information sourced from Practical Compliance Guidelines PCG 2016/5.

Where to find the Indicator Rate in future year:

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How a superannuation review works

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Standard Employer

Part 8 associate

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1. It’s all about timing!

2. Review Your Concessional Contributions – 30K under 49 and $35K if you were 49-64 this year and then work test applies for 65+.

4. Co-Contribution

5. Spouse Contribution

6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)

Sacrificial Lamb

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

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

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

17. Market Valuations – Now required annually

18. In-House Assets

19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

20. Do you need to update to a Corporate Trustee

21. Check the ownership details of all SMSF Investments

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

23. Review any SMSF Loans

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1. It’s all about timing!

2. Review Your Concessional Contributions – 30K under 49 and $35K if you were 49-64 this year and then work test applies for 65+.

4. Co-Contribution

5. Spouse Contribution

6. Over 65? Do you meet the work test? (The 40 hours in any 30 days rule)

Sacrificial Lamb

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

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

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

17. Market Valuations – Now required annually

18. In-House Assets

19. TPD Insurance (Total Permanent Disability – basically “never work again” insurance)

20. Do you need to update to a Corporate Trustee

21. Check the ownership details of all SMSF Investments

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

23. Review any SMSF Loans

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Question received:

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DON’T WASTE MONEY PAYING TAX WHEN YOU DON”T HAVE TO.

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