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									                  Super EASY!
News and information for the clients of Superannuation Services Pty Ltd                                                  Autumn 2008
                     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
                      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
                                                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
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
                                                      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
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 (

          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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