Super EASY! News and information for the clients of Superannuation Services Pty Ltd Autumn 2008 Brisbane PO Box 7284 East Brisbane Q 4169 Ph 07 3899 5637 Fax 07 3899 5638 Sunshine Coast PO Box 67 Glasshouse Q 4518 Ph 07 5496 9899 Fax 07 5496 9796 firstname.lastname@example.org www.superannuationservices.com.au A.C.N 080 604 717 A.B.N. 54 080 604 717 A Minister and a Commissioner walk into a conference hall… The Brisbane Convention Centre recently the conference by discussing his objectives The Senator also remarked that the current played host to the annual SPAA (Self- of simplicity, affordability and fairness in penalty regime for trustees who breach SIS is managed super fund Professional’s the super system. exceptionally harsh and consequently rarely Association of Australia) conference instigated. He explained penalties for non- He commented about the new borrowing for SMSF (Self-Managed Super Fund) compliance will be reviewed. It is likely we warrants in SMSF’s. Noting that while the will see fines and trustee disqualifications professionals. government would not be looking at changing imposed more frequently, with a possibility One thousand delegates comprising of legislation in the short term, they would for compulsory trustee training being financial planners, accountants, auditors certainly be keeping an eye on any aggressive introduced down the track. and lawyers from across Australia attended marketing of “borrowing packages” issued the three-day event. Featuring information by product providers. sessions and prominent guest speakers, Did you know? professionals from across the board used this Trustees are responsible The team here at Superannuation Services opportunity to learn more about managing was the first to offer professional training This was Senator Sherry’s main message in superannuation funds. to trustees of SMSF’s. his opening speech. He also brought with Below is a summary of the facts and figures him interesting statistics about new SMSF raised by two of the key speakers. trustees: Michael D’Ascenzo – Senator, The Hon. Nick Sherry – • 30% did not know about the Commissioner of Taxation, ATO Minister for Superannuation “sole purpose test” D’Ascenzo’s speech highlighted the and Corporate Law • 15% had no investment strategy significant growth in SMSF’s, with 47,000 With the recent negative press made about • 75% did not understand the restrictions funds already established in 2008 (up to mid SMSF’s, the expectation was Senator Sherry on related party transactions March). He further revealed $300 billion is would make mention of this as well as reveal • 66% could not specify the allowable now being held in SMSF’s—representing a new policy news. However he chose to open limit on in-house assets quarter of the superannuation industry. continues on page 2 Have you booked your place at the Trustee Training Conference in NZ? Please pass on to... Christchurch is the place to be this July. Find out all you need to know about managing your super fund at Superannuation Services’ Trustee Training Conference. But hurry, places are limited (see page 3 for more information). Don’t lodge your tax return before you read this… We are fast approaching the end of the is $50,000 (this includes the superannuation What’s worse, the whole excess then counts 2007/2008 financial year. There are now guarantee). towards your non-concessional cap— severe penalties in place for members who regardless of the fact you only have 55% Non-concessional contributions (formerly breach the new contribution “caps”. For left after penalty tax. known as “undeducted contributions”) are the first time ever, the cap on concessional now also capped. The annual cap is $150,000; (previously called “deductible”) If your non-concessional cap is breached, you are able to bring forward and claim contributions is limited in absolute terms over you face paying 45% tax on it. This includes for the next two years as long as no more all sources. the amount you put in, plus any gross amount non-concessional contributions are made in the two years that follow. This makes a total transferred from your concessional cap. New contribution rules that of $450,000 per person—in one hit—if under With the potential for such high taxes to could affect you age 65. (Special circumstances exist if you be paid, it is vital you keep an eye on the Previously, if you had more than one are nearing 65. Check with your financial contribution levels going into all your unrelated employer, or an employer and advisor or accountant for your rules.) were self-employed, there was the potential super funds from all sources (other than to utilise more than one age-based limit. What are the penalties for the government co-contribution). This may However this is no longer the case. With the breaching the “caps”? mean urgent review of your salary sacrifice new contribution laws, the cap is identified as arrangement. To avoid any trouble down If your concessional contributions from all the total from ALL employment sources. the line, talk to your employers before 30th sources and super funds are breached, then For those aged 50 and over the limit in 07/08 you are up for an extra 30% tax on top of the June 2008 to make sure you don’t breach is $100,000 and for the under 50’s, the limit 15% already paid by the super fund. the caps. continued from page 1 This phenomenal growth suggests their Warning to fund trustees understand the basic rules and regulations of profile will rise to such an extent, that it will SMSF’s and their trustee responsibilities. D’Ascenzo noted many trustees were propel SMSF’s into an industry in its own For anyone with questions regarding claiming too much in relation to interest right, and ensure tighter scrutiny is carried paid on the acquisition of assets such as their SMSF, this conference was a great out by the regulator. instalments warrants. This is an activity to opportunity to gain a thorough understanding The ATO is very concerned about compliance. be wary of, as interest is not necessarily of the rules and regulations for self-managed According to D’Ascenzo, their primary deductible. funds. If you missed out this year, don’t objective is to act as regulators, with tax despair, there are still a number of other By the end of the 07/08 financial year, collection coming a close second (very close events on offer, such as our Trustee Training D’Scenzo explained, the ATO expects to Conference in July (see page 3). we expect!). have completed 6,600 reviews and audits. As only 70% of all funds lodged their returns For more information about SMSFs see He stated the highest single infringement on time in the previous year, he advised the booklets “Self-managed superannuation noted by the ATO is loans taken from super trustees of funds to be diligent with lodging funds – Role and responsibilities of trustees” funds and sent to related parties. Stating, tax returns on time, or face answering to and “DIY Super – it’s your money, but not even arms-length transactions at market the ATO. yet”. You would have received these when interest rates are a problem if they’re setting up your fund with us at Superannuation not below 5% of the value of the fund. Another trend of concern to the ATO is Services. If you need a new copy, call us or ATO findings show 85% of enforceable trustees thinking that by appointing advisors, go to www.ato.gov.au. undertakings (where the ATO steps in and administrators and other professionals forces the trustee to fix a breach) were a to assist them with the running of their result of trustees exceeding this 5% in-house fund, they are absolved of responsibility. asset rule. The Commissioner stressed trustees must Preservation rules stay the same With all the recent changes in the industry, at least there has been one constant. The preservation rules have not changed one iota. Just to refresh you… Over 55 and still working? Conditions for release of funds: If you are making the transition into 1. Aged 65 or more retirement and want to know how to 2. Permanent retirement from the workforce after age 55 reduce your work hours and still have 3. Over 60 and leaving an employer who has contributed access to the same amount of income, to your fund read the article, “The Magic Pudding” 4. Permanent disability on page 4 of this newsletter. 5. Death Want to visit New Zealand in July? Why not join us there? You haven’t missed out! There’s still room for you to attend our Trustee Training Conference in July. Our venue for the event is in the plush surroundings of the Rydges Hotel, Christchurch, and will be held from Wednesday 2nd to Friday 4th July 2008. This is an invaluable opportunity for trustees of SMSF’s and investors considering starting a SMSF to gain an understanding of the process and responsibilities involved. If there’s anything you want to know, this is the event to attend! We will examine the ever-changing area of superannuation and investment products. Special focus is on the latest developments, Finally get answers to your Take advantage of this rare as well as insight into cutting-edge retirement questions! opportunity planning strategies. • Can you explain the rules and pitfalls So whether you’re a SMSF trustee or an Whatever your interest, you’re sure to associated with investment strategies in investor considering getting involved in one, come back armed with all the information language I can understand? we’ll point you in the right direction when you need to take control of your financial • What are the new components of it comes to your super. investments. my super? Places are limited and time is • What happens to my super if my spouse Gain expert advice from those and I both die? running out in the know • I want to make wise investments—what To be part of this exciting event, contact All speakers are long-standing, experienced are the latest developments affecting the the team at Superannuation Services and and accredited members of the legal, financial market? we’ll secure your place. Registrations close planning and accounting professions with 1 June 2008. • How will my transition to retirement specialisation in superannuation. affect my super? Topics will shine light on many issues and • Are there any changes in legislation that provide practical solutions to real issues. affect me? The Magic Pudding Secrets to transition to retirement (TTR) strategies Below is an overview of the session Yvonne Get hold of a nice slice Bell and Jenny Power from Superannuation If you decide to salary sacrifice more of Services presented at this year’s SPAA your standard income to your super, you conference. benefit from paying a lower tax rate for The TTR pension came into force on 1st July that amount. And to make up the difference 2005 for persons aged 55 years and over, you took from your income, you can take who did not meet one of the conditions of out the TTR pension from your super and release for their super fund. pay a low tax rate (or none at all, if you’re It was considered if you could access some aged 60 years and over). It may sound like an industry-defined wage, which cannot be level of your superannuation to supplement you’re just adding to your super only to take legally reduced, then you wouldn’t bother. employment income, you’d be more likely it out again, however you stand to make to stay in the workforce for longer. more money for your super because you are Also worth remembering is some employers paying less tax. only pay your super guarantee (SG) on cash The motive behind this legislation is to salaries—not on the total package. So if that allow employees aged 55-65 to reduce Keep in mind, if your salary is low or other applies to you, you would need to factor their working hours, but still maintain an exceptions apply to you, you may not be able in this loss of SG on your salary sacrifice. adequate income. The industry originally to improve your super. Therefore, before This is becoming a more common problem believed this legislation would only apply any number crunching takes place you need in the resource sector, as big money is to employees who chose some level of part to work out what level of salary sacrifice being offered, but none is available to be time employment. However, unexpectedly, you can make. For instance, if you were on salary sacrificed. the government announced any employee in this age group is entitled, regardless of hours of employment. Case Study It’s a Magic Pudding The following example shows how much you potentially gain in one year by The TTR pension allows you to make your using a TTR pension strategy. super whatever you want it to be! It does so Total salary 100,000 by allowing you to access small amounts of your super as if it were a normal income. In Superannuation Account Balance $600,000 addition, depending on your circumstances, Tax Free Amount (1 July 2007) $50,000 you also have the opportunity to increase Fund Earning flat rate 8% your super balance through tax advantages. Amount SG paid on Total amount ($100,000) So, depending on your situation, it really is a MAGIC PUDDING! Date TTR ABP (Account Based Pension) commenced 1 July 2007 Are you eligible for the Balance of super fund at “Noble Society”? 30 June 2008 Gain in Salary net wealth In order for this strategy of wealth creation Pension Sacrifice by using TTR Without TTR With TTR to be effective, you need to be smart about pension pension pension the decisions you make and have a clear idea Under 60 $55,260 $71,000 $648,756 $660,888 $12,128 of what you want to achieve. Over 60 $47,350 $71,000 $648,756 $669,114 $20,358 The first step is to find out everything you can about your personal taxable income So just like the magic pudding in the favored children’s story, a TTR pension can and deductible expenses from all sources, uncover a whole world of possibilities. Take advantage of the opportunities that including access to any tax offsets. TTR exist for those aged 55 years and over, and boost your super fund and even your strategies are every bit a tax issue as they way of life. are about financial and lifestyle choices. For that reason, it is strongly recommended For more information about transition to retirement pensions, or to receive a copy you employ a financial advisor to get the job of this presentation, contact us at Superannuation Services or refer to the ATO done properly. website (www.ato.gov.au). Disclaimer: This bulletin has been published as a service to Superannuation Services Pty Ltd clients and should not be used or relied upon as a substitute for detailed advice. Articles or extracts may be reprinted with proper acknowledgement.
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