Liam Shorte

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Superannuation – General Transfer Balance Cap Increases to $2.0 Million from 1 July 2025

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 circumstances and 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!

Liam Shorte B.Bus FSSA™ AFP

Financial Planner & Fellow SMSF Specialist Advisor™

Tel: 02 9899 3693, Mobile: 0413 936 299

PO Box 6002 NORWEST NSW 2153
Suite 40, 8 Victoria Ave, Castle Hill NSW 2154
Suite 4, 1 Dight St., Windsor NSW 2756

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

This information has been prepared without taking into account your objectives, financial situation, or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

4 Comments

by SMSF Coach - Liam Shorte on April 16, 2025 • Permalink

Posted in Contributions, education, Financial Planning, Retirement Planning, Salary Sacrifice, SMSF, SMSF Management, Superannuation, Superannuation Splitting, Tax Planning, TBAR reporting

Posted by SMSF Coach - Liam Shorte on April 16, 2025

https://smsfcoach.com.au/2025/04/16/superannuation-general-transfer-balance-cap-increases-to-2-0-million-from-1-july-2025/

Have you contributed over your Superannuation limit? Here is what happens next

So you or your employer have mistimed contributions or doubled up on a payment to you super. This can happen in a number of ways:

Employer paid June 2017 contribution in July last year without you knowing;
You worked out your salary sacrifice based on $25,000 less employer contributions on your salary but forgot they pay SG on bonuses too!;
Employer brought forward June 2018 contributions to ensure they got a tax deduction early;
You received a spouse contribution but did not realise this counted towards your cap;
You, your tax agent or super fund accountant has made an error in claiming tax deductions for nonconcessional contributions
Just a genuine mistake.

How do you manage the mistake?

Do nothing until the ATO issues you with a Determination that you have exceeded one of your caps. You cannot just take the funds back out of your SMSF. The ATO will issue the determination and then provide you with a Release Authority which can be processed on paper or (coming soon) via My.Gov.au/mygov

You need to approve the commutation of the excess contribution amount from your account by the ATO as soon as possible after you receive a determination. This will limit the amount of penalty interest that you will be liable to pay.

If you exceed the concessional contributions cap

If you have excess concessional contributions the ATO will issue you with an excess concessional contributions determination. The determination advises you that your excess concessional contribution amount has been included as assessable income in your tax return. It also advises what actions are required of you. The excess concessional contribution determination contains the:

amount of the excess concessional contributions
amount of the excess concessional contributions charge
period of the excess concessional contributions charge
rate of the excess concessional contributions charge.

With your determination, you will also receive an income tax return Notice of assessment/ Notice of amended assessment.

If the contribution information within the determination is incorrect, either:

contact your super fund accountant/administrator and your personal tax agent to have them re-report any incorrectly reported contributions
amend your tax return if you did not claim the correct personal super contribution deduction in your tax return, or did not claim it at the correct label.

If you exceed the non-concessional contributions cap

You now have 60 days (see details of how this has improved below) from the date of your determination, to choose one of the following options:

Option 1 – Release the excess from your super funds

You can elect to release all your excess non-concessional contributions and 85% of your associated earnings from your super funds.

The full associated earnings amount stated in your determination will be included in your assessable income and taxed at your marginal rate of tax. A non-refundable tax offset equal to 15% of your associated earnings is applied to recognise any tax paid by your super fund.

The ATO will issue a release authority to the super funds you nominate and they will pay this amount directly to the ATO.

Option 2 – Leave your excess non-concessional contributions in your super funds

If you choose not to release your excess non-concessional contributions from your super funds, you receive an excess non-concessional contributions tax assessment. The excess amount is taxed at the highest marginal tax rate. IF you have more than one account/fund then you must elect a fund to release your excess non-concessional contributions tax from.

You must select this option if your only fund is a defined benefit.

If you do nothing

The ATO will ask your super funds to release and send amounts to them. They will also amend your income tax assessment to include your associated earnings. You will pay tax on your associated earnings at your marginal tax rate. Because of the delay the tax on associated earnings will be higher.

The ATO will use the money released to pay any tax or Australian government debts and refund any remaining balance to you

If you have no money left in super for any reason, they will amend your income tax assessment to include your associated earnings amount. You will pay tax on your associated earnings at your marginal tax rate.

If your only super interest is held in a defined benefit fund or a non-commutable super income stream and the fund cannot or will not voluntarily release The ATO will send you an excess non-concessional contributions tax assessment

STOP! my head is hurting!

Finally some simplification! From 1 July 2018 the release authority process for excess contributions and Division 293 liabilities will be consistent and streamlined. The changes will apply to the following release authorities:

excess concessional contributions
excess non-concessional contributions
excess non-concessional contributions tax
division 293 due and payable
division 293 deferred debt.

The changes include:

•Standard 60 day time frame for when an individual could request to release an amount from super (previously this ranged between 21 to 60 days)

•The individual makes a request when replying to the ATO’s determination (this can be done via their myGov account), but it is the ATO that submits the release authority to the super fund. Prior to the rule change, individuals could also submit the release authority directly to the super fund

•The payment is always made to the ATO, credited to the individual’s tax liability with any residual amounts then paid to the individual

•The default election for excess non-concessional contributions is to release the contribution and 85% of the associated earnings. This prevents what is generally the more detrimental position of applying the top marginal tax rate on the excess contribution unreleased, from occurring. For example this may have occurred in the past if the individual is away on holidays when they receive the notice of determination

Temporary timeframe extension for SMSF and APRA funds to release the money.

From 1 July 2018 the Commissioner of Taxation has temporarily extended the timeframes for the return and payment of streamlined release authorities from 10 to 20 business days.

The change applies to release authorities for excess contributions and Div 293 liabilities.

This temporary extension will continue until the ATO digitises their release authority process. When they change the process from paper to being managed via SuperStream the system will return to the legislated 10 business days.

This extension was given after practitioners raised concerns over their ability to meet this legislated time frame to return their release authority statement, with a paper form being the only channel available. Yeah like we trust Australia Post to get anything back quickly!

For further information please see the following https://www.ato.gov.au/…/Release-authority-streamlining-up…/

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.

1 Comment

by SMSF Coach - Liam Shorte on August 14, 2018 • Permalink

Posted in News & Stats, Pensions, Retirement Planning, SMSF Management

Posted by SMSF Coach - Liam Shorte on August 14, 2018

https://smsfcoach.com.au/2018/08/14/have-you-contributed-over-your-superannuation-limit-here-is-what-happens-next/

Who will mind my super and take care of me? – SMSF Member Incapacity and Estate Planning Checklist

What’s your plan for future incapacity

I recently did a co-presentation with Louise Biti from Aged Care Steps for the Self Managed Superannuation Fund Association on how SMSF Trustees can plan for incapacity or just that time when they no longer wish to run their fund. The response was great and the questions from the floor really brought it home to us that people are very concerned about how they pass control of their wealth and well-being to others. A copy of the presentation slides are available here . As part of my preparation I developed a simple checklist of issues that SMSF trustees should use when they consider their options. This list is not exhaustive so please add your own tips or suggestions in the comments section below.

When planning for the management of your funds in your SMSF you must first read the Deed!

You do have an Original copy of the Deed or a Certified copy don’t you?

Who do you want to manage your fund if you die or are incapacitated?

On death for Corporate Trustees you leave the shares in the trustee company via your will to the person(s) so they have a right to be a director of the trustee company.
For incapacity you provide an Enduring Power of Attorney (EPOA) and when required you resign as a director and they are appointed in your place. If it is your spouse and they are the only other member then they become Sole Director.
On death for Individual Trustees your Executor will usually have a right to be a trustee of the fund.
For incapacity you provide an Enduring Power of Attorney and when required you resign as a trustee and they are appointed in your place. If it is your spouse and they are the only other member then they need to find a second person to act as a trustee or move to a sole director company trustee.

What to consider in the choice of an EPOA/Executor

Are they good with money and making decisions?
Will they be willing to seek advice from specialists if necessary?
Will there be conflict between beneficiaries – Sibling rivalry? Blended families?
Should you consider 2 or more EPOAs/Executors for safety or support
a power of attorney (or POA) can either become effective immediately, or upon the occurrence of a future event (such as your mental incapacity).
A power of attorney can have specific clauses with instructions for the operation of the power.
If you have a spouse or dependant you may want to include Dependants Clauses to ensure your funds can be used for their needs.
You may want to consider a Conflict of Interest clause to allow a EPOA to make decisions that may suit them as well as you but to the detriment of other possible beneficiaries.

Who do you want to receive your SMSF account balance?

For Spouse / Dependants you should consider using a Reversionary Pension election or Non-Lapsing Binding Death Benefit Nomination direct to beneficiaries or via your will using Non-lapsing Binding Death Nomination to your Legal Personal Representative with option in your will to set up a Testamentary Trust. Normal BDBNs lapse after 3 years.
For Adult children you can use Non-Lapsing Binding Death Benefit Nomination direct to beneficiary or via your will using non-lapsing binding nomination to Legal Personal Representative with option in your will to set up a Testamentary Trust
For your parents, your siblings or non-family via your will using Non-lapsing Binding Death Benefit Nomination to your Legal Personal Representative with option in your will to set up a Testamentary Trust
Do any of the beneficiaries in your Will have special needs? For disabled beneficiaries consider a Special Disability Trust. For those poor with money or in a highly litigious career or in possible bankruptcy then a Testamentary Trust should be considered.

Who do you want to manage your care options if you are incapacitated?

Ensure you have an Enduring Power of Guardianship in place so that your lifestyle and medical treatment decisions can be made by a trusted family member or friend in the event that you become mentally incapable?
Do you have an Advanced Healthcare Directive in place in the event that you become terminally ill and are unable to articulate your wishes?
Have you spoken to your chosen Enduring Guardian so they are clear on your wishes and preferences, explained why you have made those decisions so that they can discuss these with any family members who have cause to question your wishes.

What to consider in the choice of an Enduring Guardian

Are they good with making personal decisions under pressure?
Will there be conflict with other family that they can handle– Sibling rivalry? Blended families?
Should you consider 2 or more EGs for safety or support

Information your Attorneys/Executors will need

Bank Accounts and Investments:

The BSB and account numbers for any accounts or credit cards you have.
The HIN, SRN of any Personal or SMSF shareholdings and
Account IDs for Share Brokers, Online Banking and Managed Fund holdings
Location of property deeds and contact details for Property manager

Insurance:

Details of policies such as the policy number and type of insurance.
Life and TPD cover, Motor vehicles, House Insurance, Private Medical Insurance and Funeral Plans

Advisers:

If you have an accountant, financial planner, lawyer or other professional advisor include their contact details.

Business Records:

If you have a business include details of where the company records are kept and the computer the ASIC Corporate Key is on.

Your secret place:
If important documents such as certificates of property title, jewellery and other valuables or personal items are being held in safe custody elsewhere or stashed in the attic then you should identify the location.

Your digital life:

Include all your email login in details and loyalty scheme account details. This includes your membership to social media and cloud data sites so your executors and family may be able to access your on-line data, including books or music files.
Appoint a Legacy Contact if you use Facebook.
Instructions on what is and isn’t to be shared with family

Direct Debits:

If you have any direct debits in place you should include details so that they can be cancelled pending a grant of probate.

Superannuation:

Do you have other superannuation accounts. Your most recent superannuation statement(s) should also be included. If it is self-managed super the financial statements should be included.

IMPORTANT POINT: Talk regularly to your Executors and Powers of Attorney and Enduring Guardian
Discuss your wishes in terms of lifestyle, healthcare and treatment options with your chosen Attorney and Guardian and if possible with the broader family and make sure that they understand your wishes. Australian’s are very reluctant to talk about illness or death but it is essential to ensure your wishes are followed and to avoid family conflict.

As I mentioned at the start this list is not exhaustive so please add your own tips or suggestions in the comments section below.

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

Best Apolitical Analysis of Franking Credit Refund Removal Debate

Over this last week I have read so many politically biased responses to Bill Shorten’s proposed strategy to stop the refunds of franking credits that I despaired and I know it is going to be a political football rather than part of comprehensive tax reform. Then I came across a really well explained and positioned argument from Scott Phillips of The Motley Fool fame that takes the politics out of the analysis. I immediately reached out to Scott and asked him could I re-post it for my readers who may be finding the debate confusing or hard to explain to others. So here goes:

Why Bill Shorten is wrong — and right — on dividends

Scott Phillips

What’s that? Bill Shorten has announced a new policy on the refund of franking credits?

I hadn’t noticed.

Okay, that’s not true. I noticed. And, based on feedback on Twitter over the last week, many of you noticed, too.

If Shorten wanted to stir a hornet’s nest, he got just that. Maybe it’s clever politics. Maybe the focus groups told the pollsters this was a smart political strategy.

It sure as heck isn’t good policy, in my view.

Before you fire off an email to either abuse me or suggest I be knighted, let me explain.

I’m going to start with three premises that I think most people can agree on:

The tax system should be fair
You shouldn’t have to pay tax twice on dividend income; and
The tax system, as it stands, is broken.

That last point seems to be Shorten’s main thrust. And it’s a battle cry taken up by many partisans:

“We have a problem, and I have a solution. If you don’t like my solution, you’re saying we don’t have a problem.”

To which I reply:

“We absolutely have a problem. But your solution is a poor one. There are better ways to skin this cat.”

And before we go any further, please leave your political affiliations at the door. This week, on Twitter, I have bagged and praised Labor for different policies. I’ve done the same in the past to the Libs. If you can’t put aside your team jersey and engage in a discussion of ideas, then there’s not much for you in what follows.

But if you’re interested in good policy, read on.

Bill Shorten’s policy, as announced, goes something like this:

“We’re happy for you to reduce your tax using franking credits, but we’re not going to give you a refund.”

There are a few problems with that approach:

First, it implies that if you pay tax, you’re welcome to use the credits to reduce your tax burden to zero.

Second, those credits somehow magically are worthless once you hit zero, meaning that to me they’re worth something, but to a retiree in a 0% tax bracket, they’re worth nothing.

How can franking credits be worth different amounts to different people in different circumstances? Search me… I’m buggered if I know.

And third, and this is what’s stirred up most heat among those who have gone into bat for the policy:

“I pay tax and my taxes shouldn’t go to give a refund/handout to people who already have a lot of money.”

Now, don’t get me wrong. I think the current situation — regarding the ability to pay exactly zero tax on certain income in retirement that might be up to $80,000 — is crackers.

But, Shorten’s policy doesn’t fix that problem. Here’s why:

Consider three people, all of whom have SMSFs in pension phase, and who — according to the current tax rules — pay 0% tax: Banking Betty, Rental Richard and Dividend Davina.

Banking Betty deposits $100,000, and earns $2,000 each year in interest. Betty doesn’t pay any tax.
Rental Richard has a $100,000 property that pays him $2,000 each year in rent. Richard doesn’t pay any tax.
Dividend Davina buys $100,000 worth of shares that earned a profit of $2,000. The company paid tax of $600, so Davina gets $1,400. Davina doesn’t pay any tax.

See the difference here? Because Davina’s investment is in the form of shares in a company, she gets less than the other two. Even though she’s not supposed to pay any tax, the company paid tax, so she gets less.

Under current rules, she’d get the $600 back, delivering on the current government policy of a 0% tax rate, and equalising the return for each of those investors.

Bill Shorten, in effect, is penalising people for owning shares.

Now, let’s address the elephant in the room. Yes, because the company has already paid tax on that $2,000, Davina does officially get a refund. And the optics of that are bad: it looks like somehow the taxpayer is subsidising Davina.

But it’s all a question of cash flows and timing. The ATO just gives Davina back the money the company paid in tax.

And remember, a company is just a legal structure to organise your ownership interest in an asset. Shares in a company aren’t all that different in effect to accounts at a bank. Your bank account is evidence that you have a claim to a share of that bank’s assets, even if you don’t know specifically which notes you deposited.

Imagine a scenario under which Banking Betty’s bank withholds 30% of her interest and sends it to the government as tax. And where Rental Richard’s property manager is obligated to send 30% of his rental income to the ATO.

Both of these investors would have to fill out a tax return and the ATO would send them a refund — because tax was paid on their income, even though the tax rate should have been 0%.

Would Bill Shorten stop Betty and Richard getting their money back?

I doubt it.

But somehow, because Labor has (unfortunately, disingenuously) used extreme examples to make their point, and because they’ve dressed it up as a handout, they’ve mischaracterised the situation.

Somehow Dividend Davina is a fatcat living high on the hog, while Betty and Richard are perfectly entitled to pay no tax.

Essentially, because of the asset class they decide to invest in, our three protagonists are being treated differently.

Sound fair to you?

No, me neither.

Yes, the idea of a ‘refund’ for someone who has paid no tax feels, somehow, deeply wrong. But it’s because tax was paid by the company, on behalf of a shareholder who shouldn’t be paying tax, so the ATO is essentially just righting that wrong.

Still with me? Excellent!

Still fuming that well-off people pay no tax? Me too.

What? Didn’t I just spend 984 words (don’t waste time counting them. I checked) defending those people?

Well, yes. And no.

Here’s where both parties are engaging in a phony war of words. And we’re poorer for it.

Having an essentially uncapped income at a 0% tax rate is madness.

Yes, yes, it’s not technically uncapped, for a host of reasons. So let’s say $80,000 among friends.

You and I pay a decent slug of tax on an $80,000 income. And there’s no reason that a well-off retiree should be able to draw a completely untaxed income of a similar amount, when they likely have a very decent asset base — say a home and a seven-figure superannuation balance.

It’s simply not sustainable, especially as more boomers retire, to have that slice of the economic income pie remain completely untaxed.

But — and this is important — that doesn’t mean we should simply ban franking credit refunds and assume that fixes the problem.

Let’s go back to our alliterative actors, Betty, Richard and Davina.

If Betty was earning $80,000 in interest, should that be untaxed? Should Richard’s $80,000 in rent be untouched by the taxman? Should Davina’s $80,000 in dividends remain completely unscathed?

I don’t think so. But again, it’s not a question of the source of the income; it’s the size.

Under Bill Shorten’s plan, Davina would be worse off, but Betty and Richard laugh all the way to the bank. Does anyone, seriously, think that’s a good basis for a tax plan?

I didn’t think so.

Here’s what I’d do: I’d have a generous tax-free threshold for income from superannuation, maybe $10,000 or so above the pension level. It’s not unreasonable that you’re allowed a little extra, given the sacrifice you made to save for your retirement.

But above that level, I’d implement a progressive tax scale not unlike the one that applies to regular income: The more you earn, the higher your marginal tax rate.

Simple, no?

Fair, yes?

That way, the tax code doesn’t discriminate on the basis of the asset class. There are no free lunches. And the unsustainable tax situation that currently applies to Super is fixed.

So Bill Shorten, and Chris Bowen, it’s time to admit defeat and go back to the drawing board. Feel free to use my template, above.

And Scott Morrison and Malcolm Turnbull, please stop with the emotive and negative language and grandstanding.

Politics should be a battle of ideas, not soundbites The best idea, well explained, should win, regardless of political party or ideological affiliation.

And, ladies and gentlemen of the Parliament, the Australian people will give you bonus points for explaining it clearly and for anything that reduces the complexity of our tax affairs, while ensuring fairness.

Indeed, Turnbull and Morrison’s political forebear, John Howard spoke to the National Press Club in 2014 when he shared the stage with former Labor PM, Bob Hawke. At that event, according to the Sydney Morning Herald , Howard said

“We have sometimes lost the capacity to respect the ability of the Australian people to absorb a detailed argument. They will respond to an argument for change and reform [but] they want two requirements. They want to be satisfied it’s in the national interest, because they have a deep sense of nationalism and patriotism. They also want to be satisfied it’s fundamentally fair.”

I’d like to think that’s still true.

I agree with Bill Shorten’s characterisation of the problem. I disagree completely with his solution.

I imagine I lost the most partisan readers — of both stripes — a few minutes ago. If you’re still reading, thank you for engaging in a discussion of ideas.

I hope I’ve convinced some of you. Of those I haven’t convinced, I hope I’ve at least done a decent job of addressing the issue, without bias, grandstanding or misdirection. Thanks for reading.

At the very least, I hope I’ve productively added to the conversation. It’s the least each of us can do.

Fool on! Scott is @TMFScottP on Twitter and can be found here on The Motley Fool

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

5 Comments

by SMSF Coach - Liam Shorte on March 18, 2018 • Permalink

Posted in Franking Credits, Investor Education, Pensions, Tax Planning

Posted by SMSF Coach - Liam Shorte on March 18, 2018

https://smsfcoach.com.au/2018/03/18/best-apolitical-analysis-of-franking-credit-refund-removal-debate/

Introducing our new Financial Knowledge Centre – for DIY Research

At SMSF Coach and our Financial Planning arm Verante, we believe in your financial wellbeing and improving your understanding of financial concepts.

We understand that the financial industry is full of jargon and concepts that can be difficult for people to get their head around or remember.

So to learn more about money and finance, our Financial Knowledge Centre is a great place to start.

It contains a huge library of articles, life events, videos, quiz’s and calculators, so that you can learn about managing money while having a bit of fun at the same time.

The best part of all is that you work at your own pace and we offer a free trial to one and all but it will always be free to our clients as part of our advice service.

Watch this short video which explains what is available in this vast knowledge base.

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It includes a whole module on SMSF education and

Self-Managed Super Funds section includes:

–	SMSF Overview
	What is an SMSF?
+	The Decision Making Process
+	The Costs of running an SMSF
+	Setting up an SMSF
+	Appointing trustees
+	Individual Trustee vs. Corporate Trustee
+	Ongoing Administration
+	Accepting Rollovers and Contributions
+	Investment decisions and rules
+	Insurance Considerations
+	Tax Considerations for SMSFs
+	Paying Benefits from an SMSF
+	Death of an SMSF member
+	Estate Planning
+	Getting more help
+	Closing a SMSF
+	Federal Budget 2017/18 Proposals
+	SMSF Summary

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

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

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

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

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

The trust deed must be:

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

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

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

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

So what should you do.

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

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

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

2 Comments

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

Posted in Audit, Deeds, SMSF Management, Trustee

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

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

Guide to Transfer Balance Account Reporting (TBAR) for SMSF Trustees – Updated for $1m carve out

UPDATE

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.

Source: See more detail and some examples at https://www.ato.gov.au/Individuals/Super/Super-changes/New-transfer-balance-cap-for-retirement-phase-accounts/New-transfer-balance-account—credits-and-debits/

And here

https://www.ato.gov.au/Super/Self-managed-super-funds/Administering-and-reporting/Superannuation-Transfer-Balance-Account-Report/

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

3 Comments

by SMSF Coach - Liam Shorte on November 1, 2017 • Permalink

Posted in Pension Strategies, Pensions, Retirement Planning, SMSF Management, TBAR reporting

Posted by SMSF Coach - Liam Shorte on November 1, 2017

https://smsfcoach.com.au/2017/11/01/guide-to-transfer-balance-account-reporting-tbar-for-smsf-trustees/

SMSF Game Changer – proposed monthly Transfer Balance Account Reporting to shake up Accountant services

What seems like a worthwhile SMSF reporting requirement to help trustees that is being introduced from next year has potential to push local accountants out of the SMSF administration sector and play into the hands of major administrators.

In order to help administer the new transfer balance cap reporting, the Australian Taxation Office (ATO) is in the process of developing a self managed superannuation fund (SMSF) event based reporting regime. This new regime is likely to be in the form of a report to be called the Transfer Balance Account Report or TBAR. (Don’t you love another 4 letter acronym).

At this stage nothing has been finalised but the TBAR reporting regime is expected to be as follows:

Where the event is a pension being commuted (ie stopped) in part or in full or a rollover occurs – that must be reported to the ATO with 10 business days after the end of the month that the event occurs.
Where the event is the commencement of a pension – that must be reported within 28 days of the end of the quarter that the event occurs.

Transition Period

The ATO is also expected to introduce a transition period for events that occur in the first part of the 2018 year (ie from 1 July 2017):

Where the event is the commencement or commutation of a pension, that event does not need to be reported until the SMSF is due to lodge its 2017 tax return (typically before May 2018)
However, all events that occur after that date have to be reported in the normal manner (ie monthly or quarterly)
The transition period will not apply to some events – such as rollovers

For many accounting practitioners, and SMSF trustees, this will be a fundamental change in how they manage the administer of their SMSFs. Where an SMSF trustee needs to commence, or commute a pension they can no longer see their accountant / administrator once a year. They will have to see their administrator before, or soon after, an event occurs. While accountants may have to prepare “real time” accounts so that they can lodge such reports. They will find it hard to pass on the additional costs to trustees and many will just not be able to cope with regular reporting.

Timing Problem

It is unlikely that many, if any, existing SMSFs administered by suburban accountants are capable of reporting on a monthly basis. For example, just a simple end of year reconsolidation of accumulation and pensions will now be reportable by the 10th August each year but many tax reports from investment managers, AREITS and platforms don’t come out until after this date. We presently minute the request on 1 July but finalise implementing on receipt of financials later in the year.

Don’t panic: Many SMSFs will have no TBAR reporting obligations because they have no pensions or they are not starting any new pensions or commuting any existing pensions.

However, if you are an SMSF trustee that maybe affected by the new Transfer Balance Account Report (TBAR) regime, you should ensure that your accountant / administrator have systems, staffing and processes in place that will enable your fund to comply with this new reporting obligation.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

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

2 Comments

by SMSF Coach - Liam Shorte on May 25, 2017 • Permalink

Posted in News & Stats, Pensions, Retirement Planning, SMSF Management

Posted by SMSF Coach - Liam Shorte on May 25, 2017

https://smsfcoach.com.au/2017/05/25/smsf-game-changer-proposed-monthly-transfer-balance-account-reporting-to-shake-up-accountant-services/

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At SMSF Coach and our Financial Planning arm Verante, we believe in your financial wellbeing and improving your understanding of financial concepts.

Watch this short video which explains what is available in this vast knowledge base.

No Credit Card required.

It includes a whole module on SMSF education and

Self-Managed Super Funds section includes:

Share this:

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

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UPDATE

So what is in your transfer balance account (TBA)?

These are Credits to your account

These are Debits to your account

Commutations

Structured settlement contributions

Events resulting in a reduction of your super interest

Commutation authorities

Payment split upon divorce or relationship breakdown

Failure to comply with pension or annuity standards

Self-managed super fund (SMSF) reporting

Consequences of late reporting

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Transition Period

Timing Problem

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